Investment considerations for frozen pension plans

January 21, 2021

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Jim Gannon, CFA, FSA, EA

Jim Gannon, CFA, FSA, EA

Eric Klein, CFA, CFP®

Eric Klein, CFA, CFP®

Frozen pension plans have different investment and operational considerations than those of open and ongoing plans. One concern is the possibility of "trapped capital," which occurs when the sponsor has difficulty using and/or recapturing a plan surplus. Ultimately, preparing for an end-state pension portfolio requires specialized planning and an emphasis on liquidity needs, time horizon, and duration management.

Explore our research to learn more about these and other considerations for frozen plans, including the benefits of a glide-path strategy, implications of negative cash flow, and the trade-offs between hibernation and termination.

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Notes

  • All investing is subject to risk, including the possible loss of the money you invest.