Independent annuity provider review under IB 95-1

Optimizing Foundations prepares the independent insurer review that plan fiduciaries need when a defined benefit plan buys annuities, whether in a full plan termination or a partial pension risk transfer. The review follows the Department of Labor's Interpretive Bulletin 95-1 and produces a written report, dated before the contract is signed, that documents how the fiduciaries reached their decision.

What the review covers

• Screen. Insurers active in the market for contracts of this size and type, and the reasons any were excluded.
• Factor analysis. Each finalist against every factor in the bulletin: investment portfolio quality and diversification, size relative to the contract, capital and surplus, lines of business and exposure, contract structure and separate account protection, and state guaranty association coverage for the actual participant population.
• Current topics. Private equity ownership, affiliated and offshore reinsurance, private credit and less liquid assets and the concentration of transactions among insurers, which the Department of Labor identified in its 2024 report to Congress and which fiduciaries should address in the record.
• Contract terms. Administrative provisions, the treatment of data errors discovered after closing and the protections for participants.
• Report. A written fiduciary report supporting the conclusion, with the analysis the committee relied on.

How the work runs

The review runs in parallel with the termination or settlement calculations, so the financial results and the fiduciary record are developed together. The participant data that goes to the insurers is reconciled before bidding, because errors found after closing are corrected under the contract's terms at the sponsor's cost. The firm's article on choosing an annuity provider explains the standard.

Common questions

Is an independent review required? The bulletin requires fiduciaries to take steps calculated to obtain the safest annuity available, and an independent expert's review is the accepted way to show those steps were taken. Litigation over insurer selection has made the written record more important, not less.

Does the firm place the annuity? No. The firm advises the fiduciaries and documents the decision. It receives no compensation from insurers or brokers.

Every deliverable described here is reviewed by a second credentialed actuary before delivery. This page is general information about the firm's services and is not advice for any specific plan.