Finance chiefs are stepping up their efforts to move pension obligations off company balance sheets through annuity purchases and other financial tools, taking advantage of well-funded plans and a respite from the scramble over the past year to deal with the Covid-19 pandemic.

For years, sponsors of single-employer pension plans have purchased annuities from an insurer for all or some of their employees with vested benefits, thus shrinking a plan’s assets and liabilities and simultaneously strengthening a company’s balance sheet. Pension plans often fluctuate in size based on market volatility and interest-rate changes that can create unexpected difficulties for chief financial officers.

Companies spent $8.7 billion on annuitizations in the first half of the year, up nearly 30% from the prior-year period, according to consulting firm Mercer LLC.

At the start of the pandemic, many companies paused these transfers as finance chiefs focused on preserving cash, operating remotely and generally addressing Covid. But funding levels at the plans have improved overall in recent months, due in part to the strength of the stock market. Also, a March law allowed some sponsors of single-employer plans to reduce the contributions they will have to make in coming years.

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