AIG freezes its own DB pension plans
As of January 1, 2016, American International Group (AIG) will freeze defined benefit (DB) pension plans for its U.S. employees and enhance its offering of 401(k) defined contribution (DC) plans. In so doing, AIG ceases incurring additional pension liabilities and transfers risk onto the shoulders of its employees.
De-risking pensions by reducing DB exposure is a common course of action since the mid-2000s, recommended by insurers and consultants alike. Nowadays, DC plans are the preferred way of providing pension benefits to employees. However, depending on the specific wording of the DC plan and on the allocation of assets across different investment classes, employees may not know in advance how much retirement income they will receive until they actually start drawing their pensions, adding to their uncertainty.