Variable annuity pension plans: An emerging retirement plan design

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By Kelly S. Coffing, Mark C. Olleman | 19 March 2014

Please note that the Variable Annuity Pension Plan (VAPP) is now the Milliman Sustainable Income Plan™ (SIP).

There is a retirement crisis in the United States. Due to the loss of pension plans, many people will not have adequate lifelong income.

Retirement security is improved with lifelong income and professionally managed assets. Variable Annuity Plans are not new, but they deserve a second look by plan sponsors seeking a more secure retirement plan for participants that also mitigates some of the risk of traditional defined benefit plans. Milliman has responded with the Milliman Sustainable Income PlanTM (SIP) — a variation on the basic design that keeps liabilities and assets in balance while dramatically reducing the chance of retiree benefit decreases. SIPs provide lifelong income, and can also provide inflation protection over time and minimize contribution volatility. In addition, benefit stabilization features can make SIPs even more manageable for retirees.

Reproduced with permission from Benefits Magazine, Volume 51 Number 4, April 2014, pages 24-31, published by the International Foundation of Employee Benefit Plans (, Brookfield, Wisconsin. All rights reserved. Statements or opinions expressed in this article are those of the author and do not necessarily represent the views or positions of the International Foundation, its officers, directors or staff. No further transmission or electronic distribution of this material is permitted. Subscriptions are available (