Six Tips for DB Cash-Out Programs

Mercer has released a list of six tips for plan sponsors that are considering a participant cash-out program for their defined benefit (DB) plans.

DB plan sponsors face many challenges in providing a successful cash-out program and must consider the numerous implications for participants in explaining and addressing the right decision for the individual, said Andrew Yerre, a partner at Mercer.

The top six considerations for DB plan sponsors include: 

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  1. Positioning the lump sum cash-out option as another choice for participants to consider;
  2. Providing effective and personalized communication to participants to help guide them through their decision-making process;
  3. Analyzing data to ensure that it is complete and accurate;
  4. Being prepared to answer questions from a variety of stakeholders about the business rationale behind the cash-out offering;
  5. Understanding the fiduciary responsibilities as the plan sponsor; and
  6. Choosing a provider who can effectively execute the entire cash-out program.

In addition to these six tips, Mercer posted related materials on its website, including a white paper, videos and articles. These additional resources about cash-out programs are available here.

“Pension cash-out programs are one of the options that plan sponsors can consider when looking to reduce risk associated with these plans,” said Jonathan Barry, a partner in Mercer’s retirement area. The role of a plan sponsor as a skilled communicator in this process, he added, cannot be overstated.

Janus Names Equities CIO

Enrique Chang was named chief investment officer (CIO) of equities and asset allocation at Janus Capital Group Inc.

Chang will oversee Janus’ equity, risk management and alternatives teams, and will partner with Janus leadership to develop multi-strategy portfolio solutions. He will assume management of the equity investment team and focus solely on portfolio management. Chang will report to Janus CEO Richard Weil.

For the last six years, Chang was CIO and executive vice president at American Century Investments and a member of the American Century Companie Inc. board of directors. He joined American Century in 2006 and was named CIO in January 2007. Chang was responsible for a team of more than 150 investment professionals including portfolio managers, analysts and traders across all investment sectors. He led the company’s asset allocation committee and investment management senior leadership team. Previously, Chang was president and CIO for Munder Capital Management. He also held senior investment management positions at Vantage Global Advisors, J&W Seligman and Co., and General Reinsurance Corporation.

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He holds a bachelor’s degree in mathematics from Fairleigh Dickinson University, and master’s degrees in finance/quantitative analysis, statistics and operations research from New York University.

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