Administration June 26, 2017

The Hartford Transfers 29% of Pension Plan Obligations

The company will be purchasing a group annuity contract from Prudential.
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For 38% of defined benefit plan participants at The Hartford, benefit obligations will be transferred over to Prudential Financial, per a recent agreement between the two companies.

The Hartford will be purchasing a group annuity contract to transfer $1.6 billion—or 29% of the company’s $5.6 billion in U.S. qualified pension plan liabilities. Effective June 30, 2017, the move will hand over responsibility of present and upcoming pension benefits for nearly 16,000 past workers to Prudential. While the agreement means a shift in accountability, the change will not affect pension benefits for any participants.

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“We are pleased that this transaction preserves these pension benefits while reducing the company’s long-term pension obligations,” says Marty Gervasi, chief human resources officer for The Hartford.

Relocated participants to Prudential will be sent a notice from The Hartford by July’s close, and then receive detailed information from Prudential in mid-October. However, all participants will continue to collect pension benefits from The Hartford until November 1, 2017, when payment and administration will turn over to Prudential. Those participants unaffected will remain in The Hartford’s plan.

Transaction expectations, based on March 31, 2017, shares outstanding, includes a pension settlement charge to net income of approximately $485 million after-tax, and a decrease to stockholder’s equity of approximately $140 million, or $0.37 per diluted share. To sustain pre-transaction-funded status, The Hartford will contribute $300 million by year-end 2017.

Benefits June 26, 2017

Employers See CDHPs As Critical to Health Care Benefit Success

Rising health care costs are still the biggest factor driving CDHP adoption.
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Brokers and employers are critical to the proliferation of consumer directed health care plans (CDHPs) in the market, including high deductible health plans and account-based offerings such as flexible spending accounts (FSAs), health savings accounts (HSAs), and health reimbursement arrangements (HRAs), according to a report released by CDH solution provider, Alegeus.

With 60 million CDHP accounts in the market as of 2016 and an 11% estimated compound annual growth rate (CAGR) from 2014 to 2020, 74% of employers rate CDHPs to be a critical component of their future benefits strategies and an essential tool to combat the rising cost of health benefits.

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Rising health care costs are still the biggest factor driving CDHP adoption. This is true for both brokers and employers, but many employers have a strong desire to empower and provide valuable benefits to their employees.

Self-service features and customer support are mission critical. Employers want to ensure a superior consumer experience. They view digital self-service channels as the most critical account features, such as a robust mobile app and online account access.

Alegeus found employers need support to drive participation in CDHPs. More than half of employers desire help from their benefit solution providers for training, messaging, communication planning and development of marketing materials that assist with driving employee CDHP adoption.

The report may be downloaded from here.

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