By Rob Starr, Big4.com Content Manager
Brad Howard recently joined EY to help lead their pension risk practice. He has over fifteen years of experience consulting with retirement plan sponsors and insurance providers. Brad advises clients’ CFOs, CHROs, and Market Innovation functions regarding different human capital and related finance matters. These include actuarial services, pension funding and risk strategies, plan terminations, asset-liability management, capital strategy, tax planning, and retirement and welfare benefit plan design. Prior to joining EY, he led Deloitte’s Pension Risk Transfer advisory services.
Big4.com got the chance to speak with him as he settled into his new job. We started talking
about the changes in the pension risk realm over the past few years and what he’s noticed as an expert working in the field.
“They’ve been pretty profound beginning in 2012 with some regulatory changes that were fully phased in making some options less expensive for hundreds of plan sponsors,” he said adding that was the time when voluntary lump sum windows started being offered on a large scale. This was the origin of the one-time cash offer made to former employees in lieu of their entitlement to future benefits and the move constituted a double-edged sword.
“This was a value add to employees and at the same time offering a way for plan sponsors to cost effectively offload their obligation,” he said.
There were also a few landmark mega group annuity purchases that changed the pension risk practice landscape dwarfing anything that had come before according to Howard who is a member of the American Academy of Actuaries, a Fellow of the Society of Actuaries, Fellow of the Conference of Consulting Actuaries, and an Enrolled Actuary.
Psyche of plan sponsors
He also points to the strong growth in 2013/2014 as benchmarks highlighting the change in the psyche of plan sponsors.
“When you start to look at the costs of these plans, the arguments to offload the obligation have become very compelling,” he says adding the trend could accelerate as analysts and investors focus on them more. He also says EY is poised to offer a suit of offerings that address needs from a corporate finance, compliance and talent management perspective.
“The demand is there. The market potential is huge and there’s a clear need for independent and unbiased advisors to help plan sponsors evaluate this and help companies looking to shore up their balance sheet.”
We also talked about the factors that will continue to influence these plans and the decisions that need to be made surrounding them.
“Some of the things that could provide tailwinds revolve around where interest rates go, but strong equity markets can provide additional opportunities,” he said adding there were also significant possibilities of regulatory changes including the likelihood the lump sum amounts for voluntary cash out programs will increase.