PT  - JOURNAL ARTICLE
AU  - Dan Tremblay
AU  - François Pellerin
TI  - Liability Transfer Using Annuity-in-Kind Portfolios: <em>An Effective Risk Management Approach for Plan Sponsors</em>
DP  - 2013 Sep 21
TA  - Special Issues
PG  - 37--44
VI  - 2013
IP  - 1
4099  - https://pm-research.com/content/2013/1/37.short
4100  - https://pm-research.com/content/2013/1/37.full
AB  - Sponsors of defined-benefit pension plans are increasingly considering the annuitization of liabilities as an effective tool for risk management. In the context of annuitization, the transfer of assets through an annuity-in-kind (AIK) portfolio may be the most cost-effective way to complete the transaction, as an AIK portfolio may merit a discount on the premium charged by the annuitizing counterparty. This article describes some of the challenges of both planning and executing a liability transfer using an AIK portfolio, with some discussion of how to mitigate those challenges. It concludes by revealing a few key ways in which plan sponsors can begin to prepare for the possibility of an AIK transfer in the future, even if a large risk transfer event is not under immediate consideration. Indeed, the construction of an AIK-friendly asset portfolio may be a powerful risk management tool in itself.