Pension risk transfer strike pricing

We’re committed to helping employers achieve success by offering Principal^® Pension Risk Transfer Strike Pricing. Our patent-pending technology offers differentiated end benefits to employers seeking to reduce and/or eliminate pension risk through a pension risk transfer annuity purchase that can result in significant savings.

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Today, the pension risk transfer market is typically priced by insurers at one point in time during a three-month or longer traditional sales process, which does not allow the employer to know what the true final price of the annuity transaction will cost. As a result, there is a lack of true price transparency until this final quote date.

In contrast to the traditional method typically used today, strike pricing takes a fraction of the time to set up, and all bids thereafter would be final and purchasable daily.

Principal^® Pension Risk Transfer Strike Pricing calculates the daily price for a transfer of pension liabilities to an insurer in real time. As part of doing their due diligence, it puts the employer in control to purchase on their terms by delivering price transparency through daily real-time pricing (actual pricing, not an estimate) in combination with flexibility for customization by the employer that can result in significant savings.

Benefits:

• Transparency: Daily real-time pricing is more valuable than a few bids at one point in time.
• Control: As part of an employer’s due diligence process, it allows them to purchase on their own terms with a focus on optimization versus risk and/or accounting results.
• Flexibility: Customization (multiple bids, targets, notifications, benchmarks) equals optimization and puts the employer in the driver’s seat.

Without strike pricing employers get into this exercise not having a good sense of the actual cost of an annuity transaction. Knowing actual costs helps them plan more effectively, understand any post-placement impacts to the plan and avoid surprises late in the process.