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True actuarial consulting for a leading manufacturer

Conrad Siegel worked with a Pennsylvania-based manufacturer that has been a global leader in its field for over 30 years. The company provides highly specialized products that serve a wide variety of applications across industries such as aerospace, automotive, construction, marine, medical, and energy.

Challenges

The actuary that provided consulting services for the company’s Postretirement Medical Benefits was no longer providing the necessary services. Conrad Siegel was hired to take over the consulting for the postretirement benefits.

Shortly thereafter, the client was also evaluating their defined benefit pension plan which had been frozen for many years. Their current actuary was simply performing the minimum required service without much consulting.

The organization was interested in developing a plan for their frozen pension to control costs and reduce risk. Conrad Siegel worked alongside the company’s CFO throughout the entire process.

After working with Conrad Siegel for several months, the company decided to explore consolidating providers and having Conrad Siegel provide all the actuarial consulting for the organization.

Solution

Conrad Siegel took a true consultative approach to the relationship which started with understanding the company’s goals and concerns, specifically with its frozen pension.

Different derisking strategies were discussed and the two sides developed an approach that would ultimately shrink the pension plan, reduce costs, and make the plan more manageable.

To help the company reach its goals for the plan, Conrad Siegel coordinated:

  • An annuity purchase for retirees
  • A lump sum window for former employees not yet collecting retirement benefits.
“Since moving both our Pension and Postretirement Medical services to Conrad Siegel we have not only reduced our liability and costs, but we have a much clearer understanding of the actuarial process for both plans. Our consultant has taken the time to really explain what was being done, why, and exactly what the impact would be. We definitely made the right choice with Conrad Siegel.”
– CFO

Results

Both the annuity purchase and lump sum window were completed which reduced over 70% of the plan’s liability.

Conrad Siegel coordinated the entire process and was also able to uncover errors by the previous actuary which ultimately helped further reduce liability.

Through this process, the organization was able to:

  • Make their pension more manageable and reduce liability.
  • Ensure they are better prepared to eventually terminate the plan.
  • Save on costs related to plan administration and PBGC premiums.
  • Reduce participant count enough to eliminate their audit fees.