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How to Shut Down a Frozen Defined Benefit Pension Plan

The Principal offers enhanced defined benefit termination program and new guide

April 17, 2012 (Des Moines, Iowa) – A significant number of defined benefit plan sponsors have frozen their plans but continue to feel the financial strain of low interest rates and volatile markets. Many lack a clear strategy for taking the next logical step: shutting down the plans altogether.

The Principal Financial Group® offers an enhanced defined benefit termination program—including a new white paper—Best Practices for Executing a Termination Strategy; Winding Down Your Hard-Frozen Defined Benefit Plan—to help financial professionals and their clients manage and close down defined benefit plans in a timely, cost-efficient manner.

The Principal® is among a limited number of service providers able to offer a start-to-finish program for shutting down a defined benefit plan.

“Many plan sponsors are anxious to get their defined benefit plans off their books. But even if economic conditions rebound, shutting down a plan is time-consuming and complex,” said Janet Kubik, vice president of retirement and investor services at The Principal, the number one provider of defined benefit plans[1]. “That’s why it is so important to develop a clear strategy for terminating a plan.”

The enhanced defined benefit termination program provides resources, education and actuarial consulting to help financial professionals and their clients walk through the key steps for shutting down a plan:

  • Developing a termination strategy by evaluating cost, funding strategies and the impact of asset allocation
  • Effective execution of a Dynamic Asset Allocation Strategy
  • Administration of the plan termination process
  • Final risk transfer—distribution of assets to settle obligations

The two-part white paper series elaborates on each step. Part I (PDF: 782 KB) offers best practices for developing a formalized exit strategy. Part II (PDF: 139 KB), the newest paper in the series, offers best practices for building a termination strategy all the way to final distribution of participant assets.

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About the Principal Financial Group

The Principal Financial Group® (The Principal®)[2] is a global investment management leader including retirement services, insurance solutions and asset management. The Principal offers businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $335.0 billion in assets under management[3] and serves some 18.0 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG.


Based on number of total DB clients, PLANSPONSOR Magazine, February 2011.
“The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
As of December 31, 2011.

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