Pacific Life, a provider of life insurance products, annuities, and mutual funds, has launched a new Insured Liability Driven Investment (LDI), a new guaranteed solution for plan sponsors seeking to de-risk their defined benefit pension plan.
Pacific Life said that the new solution offers plan sponsors improved funding status stability and reduced financial statement volatility by providing more complete protection against credit, interest rate, liquidity, and cash flow mismatch risk.
Pacific Life director, Institutional & Structured Products, Retirement Solutions Division Dave Fanger said Insured LDI offers plan sponsors an asset-liability match from two perspectives.
"From an economic perspective, the cash flow schedule associated with Insured LDI will match the cash flows of the plan’s pension benefit obligation as provided by the plan sponsor. From an accounting perspective, the valuation of the asset, and the related liability, move together with changes in discount rates since both are valued using the same discount curve," Fanger said.
Pacific Life vice president, Institutional & Structured Products, Retirement Solutions Division Richard Taube said in addition to the primary risk management benefits of Insured LDI, the company also paid particular attention to market demands for simplicity, flexibility, liquidity, and transparency.
"This is a turnkey solution that mitigates risk and is easy to explain. And recognizing that corporate needs and pension plan experience change over time, Insured LDI provides contractholder options to amend cash flows, take additional withdrawals, annuitize, or terminate prior to maturity,"
"Contract value is based on an externally published discount curve, and separately paid fees are clearly disclosed. All transactions are at contract value with no hidden fees or surrender charges," Taube said.