DB Pension Funds - What happens as the pensioners die off?

Thrugelmir

ffacoffipawb said:

Thrugelmir said:

Schemes cost money to run and require considerable administration effort. The sponsoring company will no doubt wish to offload the responsibility of a closed scheme at the earliest available opportunity. 

Around three years ago I was offered a CETV to leave a DB scheme that closed to new members in 1999. Declined the offer. In December last year advised that my benefits were to be transferred and underwritten by an insurance company. In essence an annuity linked to RPI. 

Lucky call. 100% protection too.

Although a PLC was in essence family run. Sold company in 1999 to a US private equity firm. As family heavily involved there was a vested interest in maintaining the solvency of the scheme for all members. Never had any concerns. In other circumstances would have taken a different route. 

Eldi_Dos

Brynsam, this is the situation facing several small plumbing firms in Scotland,principal can not retire because of this.

MarkCarnage

In many, perhaps most cases, there would be a buyout to an insurance company as already said if a scheme got below a critical mass of members. 
The deficit is a snapshot in time, and is not 'accurate' in the sense that nothing can be accurate when so many assumptions are involved about a stream of cashflows extending into the blue yonder. Valuations on a solvency basis are on such a conservative basis that no scheme would be invested in the full matching assets - if they were anywhere near fully funded on this basis, they would/should have done a buyout.
There will be schemes falling into the lifeboat. The concerns would be that if conditions became dire enough that the lifeboat itself might become too full.