Pension risk transfer (PRT) has become a common corporate finance move. GM, Verizon, IBM, AT&T, Lockheed Martin, RTX and many others have moved billions of dollars of pension obligations to insurance companies. If your company did a PRT, here is what actually changed and what did not.
What pension risk transfer is
A pension risk transfer is a transaction where a company pays an insurance company a lump sum premium, and in exchange the insurer assumes the obligation to pay monthly benefits to a defined group of retirees. From the retiree's perspective, the source of the check changes. From the company's perspective, the liability is gone from their balance sheet and they no longer bear the investment risk of the pension trust.
The most common PRT structure is a group annuity purchase. The company picks an insurer, or several, to take over a group of pension liabilities. The insurer then becomes your counterparty for monthly benefit payments going forward.
What changes for you
Your benefit amount does not change. The annuity contract is written to pay the benefit you were owed under the plan. If you were getting $2,400/month, you get $2,400/month from the insurer.
What does change: the source of those payments, the tax reporting documents (now from the insurer rather than your former employer), and your PBGC coverage changes too. Once your pension obligation is transferred to an insurance company, the Pension Benefit Guaranty Corporation no longer guarantees it. The insurer's claims-paying ability replaces PBGC backing.
PBGC vs. state guaranty associations
PBGC is the federal backstop for private defined benefit pension plans, guaranteeing up to $7,789.77/month for a retiree at age 65 in 2026 (adjusts annually; see pbgc.gov). Once you are moved to an insurance company, that federal backstop is gone. Instead, you are covered by your state's insurance guaranty association. Most state guaranty associations protect annuity contracts up to $250,000 in present value. For retirees with modest monthly benefits, this is comparable protection. For retirees receiving $5,000 or more per month with long life expectancies, the PBGC's per-month guarantee may have been more protective.
How to evaluate your insurer's financial strength
Check the insurer's financial strength ratings from AM Best (A or better), Moody's (A3 or better), and S&P (A- or better). All major PRT insurers carry high ratings, but ratings can change. Insurer failures in the annuity market are rare but not impossible. Executive Life's 1991 failure is the best-known case, and sorting it out took years.
What to do when you are notified
You should get a letter before or around the time of the transfer, identifying the insurer taking over your payments. Keep this letter. It establishes your annuity contract with the insurer. Contact the insurer to set up your account and verify that all your personal information transferred correctly, including name, address, and banking details for direct deposit. Do not wait for a payment to miss. Proactively confirm the transfer before your first payment is due from the new source.
The scale of pension risk transfer activity
Pension risk transfer has become one of the dominant corporate finance transactions of the past decade. Large employers have used it again and again. IBM moved about $16 billion of obligations for about 100,000 people to Prudential and MetLife in 2022 and about $6 billion for 32,000 more to Prudential in 2024. AT&T moved $8.067 billion for about 96,000 participants to Athene in 2023. Lockheed moved about $9.2 billion across two Athene deals in 2021 and 2022, and RTX moved about $2.3 billion for about 60,000 retirees to Prudential in December 2025.
General Motors started the modern wave in 2012 with a $25.1 billion annuity premium to Prudential plus $3.6 billion in lump sums, aimed at a $26 billion cut in its salaried obligation. Verizon moved about $7.5 billion for about 41,000 management retirees to Prudential in 2012 and about $5.9 billion for 56,000 retirees to Prudential and RGA in 2024. The common thread: these are mostly frozen or closed plans, and the companies want the liability off their balance sheets permanently.
Why companies do PRTs now rather than later
A few forces push sponsors toward PRTs. Higher interest rates since 2022 lowered the value of pension liabilities and improved funding, which makes a transfer cheaper to do. More insurers compete for the business. And PBGC premiums, raised by the Bipartisan Budget Act of 2015 among other laws, make keeping a frozen plan more expensive every year, partly because the flat-rate premium is charged per participant.
Your rights when a PRT is announced
You can't veto a PRT. Your protection is the fiduciary standard for choosing the insurer. Under the Department of Labor's Interpretive Bulletin 95-1, the fiduciaries picking an annuity provider must choose the safest available annuity, not just the cheapest, and many sponsors hire an independent fiduciary to make the choice. If you think the selection was careless or the insurer is weak, you can file a complaint with the DOL's Employee Benefits Security Administration.
The lump sum window and PRT timing
If your plan offers voluntary lump sum election windows and is also a candidate for pension risk transfer, the timing matters. A completed PRT typically eliminates the lump sum election option going forward. Group annuity contracts issued in PRTs do not include individual lump sum election provisions. Once your pension is transferred, you receive a monthly payment from the insurer with no option to commute it.
If you are considering whether to take a lump sum from a plan that has done previous PRTs or has indicated interest in doing another, the window may be the last opportunity. GM, Verizon and IBM all followed lump sum offers or earlier transfers with more transfers, and a transferred group doesn't get another lump sum window. This is a real consideration for deferred vested participants still waiting.
Monitoring your insurer's financial condition
After a PRT, check your insurer's financial strength rating annually. AM Best ratings of A or better are standard for PRT insurers. Moody's and S&P use their own scales (A3 and A- respectively as minimum acceptable ratings). If your pension went to a smaller or newer insurer, watch its ratings more closely.
Your state's insurance guaranty association provides backup coverage up to $250,000 in present value in most states (some states have different limits). The National Organization of Life and Health Insurance Guaranty Associations, NOLHGA, maintains a directory of state association coverage limits at nolhga.com. This is your primary resource for understanding your backstop protection after a PRT replaces your PBGC coverage.
Practical steps after receiving a PRT notice
When you receive a PRT notice, take these steps right away. Verify the insurer's AM Best rating at ambest.com directly, not just from the notice materials. Log in to or create an account with the insurer to confirm your benefit amount, payment schedule, and personal information transferred correctly. Verify your beneficiary designations transferred. Insurance companies handle beneficiary designations differently than pension plans, and the default if nothing is on file may not match your intent. Confirm your direct deposit information or check mailing address is current with the new insurer.
If you find an error in the transferred benefit amount or payment date, raise it in writing promptly. Document all communications. If the insurer is unresponsive or disputes a discrepancy, contact the Department of Labor's Employee Benefits Security Administration at 1-866-444-3272. EBSA has authority over plan fiduciaries in PRT transactions and handles participant inquiries about pension rights during and after transfers.
The largest pension risk transfers in US history
GM's 2012 deal, a $25.1 billion premium paid to Prudential, was the one that started the modern wave. Verizon's $7.5 billion Prudential deal came the same year. Since then the deals listed above, from IBM, AT&T, Lockheed and RTX, have each moved billions more. The common thread is frozen or closed plans with aging populations and sponsors that want the liability gone for good.
How to verify your PRT was handled correctly
Federal law sets specific requirements for PRT transactions. The fiduciaries choosing the insurer must select the safest available annuity under DOL Interpretive Bulletin 95-1, which means weighing the financial strength of competing insurers rather than just price. A plan fiduciary cannot choose the lowest bidder alone without considering financial strength.
If you believe your PRT was not handled in accordance with these standards, file a complaint with the Department of Labor's Employee Benefits Security Administration (EBSA) at dol.gov/agencies/ebsa or call 1-866-444-3272. EBSA enforces ERISA fiduciary standards and investigates whether plan fiduciaries followed proper procedures. Complaints can be filed online. EBSA also operates free pension counseling services through regional offices for participants who need guidance understanding their rights after a transfer.
The first weeks after your PRT notice are the best time to catch errors. If the benefit amount stated doesn't match your original pension statement, raise it in writing with both the original plan administrator and the new insurer right away. Your evidence: the original pension statement showing your correct benefit amount, annual 1099-R forms from prior years, and any election forms you signed at retirement. Document the discrepancy precisely, including dollar amounts and the specific pension statement date you are referencing.
Beneficiary designations require a separate proactive step. Insurance companies typically do not automatically carry over beneficiary designations from the pension plan. Many participants discover after a PRT that their beneficiary designation is blank or defaulted to a generic option at the insurer. Log in to the insurer's participant portal soon after the transfer and update your beneficiary designation explicitly. The default rules at the insurer may not match your intent, and this oversight has caused significant disputes in estates where the insurer paid benefits to the wrong person after a participant's death.
Tax reporting after a PRT: what changes on your 1099-R
After a pension risk transfer, the 1099-R you receive each January changes in a few ways. Before the PRT, the payer listed on your 1099-R was your former employer or their pension trust. After the PRT, the payer is the insurance company. The payer's federal EIN changes, which can trigger questions from tax software that compares the current year's 1099-R to prior years. This is normal and expected; it does not indicate a problem with your benefit.
The distribution code and taxable amount should remain the same. Monthly pension payments are coded as code 7 (normal distribution) on a 1099-R for recipients over age 59.5. The taxable amount reflects the full payment if your original pension contributions were pre-tax, which is standard for most defined benefit pension plans. If you had after-tax contributions to the plan, the exclusion ratio calculation that produced your pre-PRT 1099-R should transfer to the insurer. Verify this with the insurer in the first year after the transfer, because some insurers require additional documentation to correctly apply an exclusion ratio inherited from a prior plan's records.
Federal tax withholding is typically elected separately with the insurer. Your prior withholding election from the pension plan may or may not carry over automatically. Check with the insurer in the first payment cycle that your withholding rate is correct. An unintended change in withholding does not affect your tax liability but can produce an unexpected year-end balance due or a surprise refund. Confirm by logging into the insurer's portal and reviewing the withholding election on file.
PRT and your beneficiaries: what happens to payments after you die
Most group annuity contracts issued in pension risk transfers are life-only annuities: payments stop when you die. If you elected a joint and survivor option, payments continue to your designated survivor at the elected percentage after your death. The PRT does not change the survivor terms you elected at retirement. The insurer inherits the obligation to pay your survivor exactly what the original plan was obligated to pay.
What does change after a PRT: the contact for survivor benefit claims is now the insurer, not the original plan administrator. Survivors must contact the insurer to report the retiree's death and start survivor payments. Make sure your survivor knows who to call.
If you elected a period-certain guarantee (a provision where payments continue to your estate for a minimum number of years even if you die early), the insurer inherits that obligation as well. Period-certain provisions are less common in defined benefit plans than in commercial annuities, but if your plan had one, confirm with the insurer that it was included in the transferred benefit terms. Raise any difference between your original election documents and what the insurer shows on file in writing, as soon as you see it.
How to find out who is responsible for your pension today
For retirees and deferred vested participants who may have lost track of their pension over the years, finding the current administrator requires a few specific steps. Start with the most recent 1099-R you received from pension payments. The payer name on that form is the current paying entity, whether it is your former employer, a pension trust, or an insurance company. The payer's EIN on the 1099-R can be looked up in the IRS database if the name is unfamiliar.
If you have not received 1099-Rs or are unsure whether your pension was transferred, contact your former employer's HR or benefits department and ask directly who currently administers the pension for former employees. Large employers typically maintain this contact information even decades after an employee's departure. If your former employer no longer exists due to bankruptcy, acquisition, or closure, the PBGC maintains records of terminated pension plans and can tell you whether your plan was transferred to PBGC or to an insurer. The PBGC can be reached at pbgc.gov or 1-800-400-7242.
For deferred vested participants who have not yet started receiving benefits, the Department of Labor maintains the Form 5500 database at efast.dol.gov, where you can look up pension plan filings by employer name and plan year. Form 5500 filings identify the plan administrator, trustee, and any changes in plan administration. This is particularly useful for people who worked at companies that were acquired multiple times, where the pension may have been transferred between several plan sponsors before landing at its current administrator.
If you genuinely cannot locate your pension and believe you have vested benefits, the National Registry of Unclaimed Retirement Benefits at unclaimedretirementbenefits.com allows searches by Social Security number. The Pension Benefit Guaranty Corporation also operates a pension search for plans it has taken over. States maintain their own unclaimed property databases, which sometimes include uncashed pension checks for retirees whose contact information was lost. The Social Security Administration, through its My Social Security portal, shows reported wages by employer and year, which can help you identify which employers you need to contact about potential pension rights.
The long-term outlook for pension risk transfers
PRT activity shows no sign of stopping. Frozen plans keep aging, and sponsors keep wanting pension liabilities off their balance sheets.
For participants in frozen defined benefit plans, this means the probability of a PRT affecting your pension increases with time, particularly for plans that have been frozen for 10 or more years and where the plan sponsor is in a sector (manufacturing, automotive, telecommunications, aerospace) that has historically been active in PRTs. The safest posture is to stay informed, maintain current contact information with your plan administrator, and review your benefit statement annually to catch any changes in who is administering your payments before they become problems that require correction.
If you are a deferred vested participant still waiting to start your pension, a PRT before your benefit commencement typically locks in a fixed annuity with no lump sum election option going forward. If your plan offers a lump sum election window and you have been on the fence, a potential PRT announcement is a reason to decide within the existing window rather than waiting. Once the transfer executes, the window closes permanently for the transferred group. If you receive a lump sum election notice from your plan and the plan has completed prior PRTs or indicated interest in further risk reduction, treat the election window as potentially the last one available. The administration cost of maintaining a frozen plan with hundreds or thousands of individual lump sum election rights is one reason companies periodically offer windows and eventually pursue a full PRT. Once the full population is transferred to an insurer, no further voluntary windows are administratively possible, because the insurer's group annuity contract does not include individual commutation rights. The transition from a company-administered pension plan with individual election rights to an insurance group annuity contract is a one-way door. Understanding that permanence is the most important thing deferred vested participants can take from the current PRT environment.
Pension risk transfers: what participants should do now
Active employees and deferred vested participants in large corporate defined benefit plans should monitor their annual funding notices and any PRT-related announcements from the plan sponsor. When a PRT is announced, the notice will specify the insurer, the effective date, and the participant election window (if any). Act within that window. Verify the insurer's financial strength rating before and after the transfer. Update contact information with the new insurer immediately after the transfer is complete. The benefit is preserved by law. Your responsibility is to ensure the insurer has accurate records and knows where to send the payments. Pension risk transfers aren't going away. The participants who handle them best stay informed, keep their contact records current and check their benefit amounts early.
Use the present value calculator to understand the financial value of the annuity you are being protected by -- most participants in pension risk transfers are surprised by the present value of their guaranteed lifetime income. For participants who had or have a voluntary lump sum window available before the transfer, use the lump sum vs. annuity calculator to model whether taking the lump sum before the PRT would have been financially superior given your specific circumstances. Browse the employer pages for context on your specific plan's PRT history, funded status, and insurance carrier details if your employer is listed.