Companies and other pension plan sponsors use bulk purchase annuities to remove some of the pension fund liabilities from their balance sheet. When a company enters into a bulk purchase annuity agreement with an insurance company, the insurer effectively assumes financial responsibility for assuring a steady stream of retirement income payments to the company’s pension plan members. By doing this, the pension plan sponsor is transferring to the insurance company certain risks related to investments, inflation and longevity. The insurance company receives a premium which is typically a combination of cash and plan assets.