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Active defined benefit |
Buy-in |
Longevity swap |
Buy-out |
SFT
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| Challenger capability | Challenger can assist internal teams with advising and implementing asset and liability overlays to reduce equity, interest rate and inflation risk. | The trustee purchases an income stream to match the defined benefit liabilities and retains responsibility for administering and reporting the existing account. | The trustee pays a fixed schedule of payments to Challenger Life, in exchange for the actual payments for the covered members. | Challenger Life has full responsibility for meeting all pension liabilities, including investment and administration. The defined benefit pension is rolled over to a Challenger lifetime annuity. | Transfers members from the existing super fund into the Challenger Retirement Fund. Challenger trustee takes over all ongoing liability to the member. |
| Member relationship | Super Fund | Super Fund | Super Fund | Challenger | Challenger |
Defined benefit plan de-risking can provide a welcome relief to plan sponsors by reducing the impact that volatile investment markets can have on earnings. In addition to removing investment risk, de-risking also protects the plan sponsor against unexpected increases in longevity, allowing them to focus on their core business activities and providing peace of mind.
