Headlines about "Actuarial - funding of pensions"
Gathered from the web by the editors at BenefitsLink.com.
Multiemployer Plan Withdrawal Liability Can Be Trap for the Unwary
"The [Seventh Circuit recently held] that a bright-line 'categorical' rule applies when a property owner in common control with a withdrawing employer leases property to that employer: the leasing activity is categorically a trade or business within the meaning of Section 4001(b)(1). The court justified its categorical rule because it is unlikely that leasing to a commonly-controlled withdrawing employer would ever be a truly passive investment. It is more likely that the goal is to split up the withdrawing employer's assets. Categorically labeling this activity a trade or business prevents businesses from shirking ERISA obligations by fractionalizing operations into separate entities." (McGuireWoods LLP)
Pennsylvania Pension Crisis Will Hit Homeowners and Taxpayers Hard
"[Pennsylvania's] two pension systems -- for state government workers (SERS) and public school employees (PSERS) -- are, together, more than $47 billion in debt. It's a shortfall that taxpayers must cover, amounting to an average $1,000 increase in contributions per household by 2017. In the Pittsburgh region alone, property taxes are expected to rise between $190 and $440 a year as a result." (Pittsburgh Tribune-Review)
[Opinion] Clean Up Detroit's Pension Mess
"Detroit's pension assets are a big, inviting honey pot. And a lot of folks lately have put their hands in the honey jar. It may be time to put someone else in charge of these assets. Detroit Emergency Manager Kevyn Orr noted in his first report on the state of the city that the city's pension funds ... may have overestimated the value of their assets. The report cites a difference of hundreds of millions of dollars[.]" (Detroit News)
[Official Guidance] PBGC Interest Assumptions for Benefits Payable in Terminated Single-Employer Plans, June 2013
"The June 2013 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for May 2013, these interest assumptions represent a decrease of 0.25 percent in the immediate annuity rate and are otherwise unchanged." (Pension Benefit Guaranty Corporation)
Coming to Your Emotional Rescue: Dynamic Asset Allocation
"Because of concerns plan sponsors may have in adopting a liability-driven investing (LDI) strategy, using [dynamic asset allocation (DAA)] helps transition to LDI over time.... As the funded status improves (or as interest rates increase), this strategy shifts plan funds from equities into longer-duration fixed income investments." (The Principal Blog)
Another Business Owner Caught by Withdrawal Liability
"The Seventh Circuit ... declared a bright-line rule that where the owner of a withdrawing business leases property to that business, the leasing activity qualifies as a trade or business. If that trade or business is owned personally by the owner of the withdrawing business, the leasing activities and the withdrawing business would be aggregated under the controlled group rules and both would be responsible for the withdrawal liability assessment. In this case, ... the business owner personally was responsible for the $3.6 million withdrawal liability." [Central States Southeast and Southwest Pension Fund v. Nagy, No. 11-3055 (7th Cir. Apr. 22, 2013)] (Leonard, Street and Deinard)
Economic Indicators to Include Focus on Pensions
"The goal of enhancing transparency about employer-provided defined benefit retirement plans is laudable. However, in reading the fine print, one wonders if the opposite will occur and users of post-implementation data will be more confused." (Pension Risk Matters)
[Guidance Overview] Preview of the 2013 Comprehensive Revision of the National Income and Product Accounts: Changes in Definitions and Presentations (PDF)
"To measure pension entitlements when they are accrued, BEA will adopt the accrual accounting approach for measuring pension income, relying on actuarial estimates of pension costs In implementing the accrual approach, BEA will treat defined benefit pension plans as 'pass-through' entities that are effectively owned by the household sector and will classify these plans as financial corporations that receive contributions and property income on behalf of plan participants but do not have income or saving of their own." (Bureau of Economic Affairs)
PBGC: How We Are Changing the Narrative on Retirement Security
"By changing the way we think about our mission and do our jobs, we are able to produce different outcomes that actually enhance retirement security. In the cases of American Airlines and Hawker Beechcraft, PBGC turned conventional wisdom upside-down by beginning with the end of the story in mind, doing what many thought impossible or at the least very unlikely.... None of these successes would have been possible if we narrowly viewed our mission as being the place where pension plans come to die when businesses go bust." (Pension Benefit Guaranty Corporation)
FTSE350 Pension Deficits Rise Above 100bn GBP
"[T]he accounting deficit of defined benefit pension [plans] for the UK companies increased over the month of April.... [T]he estimated aggregate IAS19 deficit for the defined benefit [plans] of the FTSE350 companies stood at 108bn GBP (equivalent to a funding ratio of 84%) at 30 April 2013." (Mercer)
Detroit Emergency Manager Might 'Suggest Modifications' to Two City Pension Plans
"Detroit's two public pension funds are under intense scrutiny and might undergo structural changes to reduce the unfunded pension liabilities.... What is not clear ... is the true funded status of the $2.77 billion Detroit General Retirement System and the $3.4 billion Detroit Police and Fire Retirement System." (Pensions & Investments)
Pension Finance Watch, April 2013
"The impact of a significant decline in long bond yields was only partially offset by positive investment results. As a result, the Towers Watson Pension Index fell 1.6% in April to 66.0. Even with this month's decline, the index value remains up 5.9% for the year." (Towers Watson)
New York State Pension Value Rises to Record High $160.4 Billion
"The value of the New York state pension fund rose to a record $160.4 billion in year ending March 31, recovering after the financial crisis wiped out almost one-third of its assets ... The New York State Common Retirement Fund, which provides benefits to almost 1 million state and local workers and their beneficiaries, had an estimated 10.4 percent rate of return in fiscal 2013[.]" (Bloomberg)
Union Actuary Says U. Calif. Retirement Plan Overstates Pension Costs
"[A]n actuarial consultant hired by unions contends [one California] state pension system, the UC Retirement Plan, uses conservative methods that keep short-term pension costs high to justify employee rate increases. The consultant suggests, among other things, that the UC plan's 'conservative' investment earnings forecast, 7.5 percent, could be increased to 7.75 percent. Some critics say pension funds should use a bond-based forecast, around 5 percent or even lower." (CalPensions)
[Opinion] No Matter What Pension Bill Passes in Illinois, a Lawsuit Is Guaranteed
"Folks, there is going to be a lawsuit no matter what the Illinois General Assembly does.... So let's quit thinking that this matter won't inevitability be settled in court. The question worth asking is: What do we want to be the test case to go before the Illinois Supreme Court? Should it be a law that, if it passes constitutional muster, will solve the pension crisis once and for all, or one that will simply kick the issue down the road for some future General Assembly to address?" (Illinois Policy Institute)
[Opinion] For California Pensions, Math Is Already at Work
"A pension plan is not supposed to contain just enough assets to 'cut checks' to those next in line to receive them. Being fully funded is what allows the pension fund to realize the full returns intended. When a plan is only partially funded, every dollar not invested results in missed investment returns the plan was supposed to realize." (Fox & Hounds)
[Opinion] How the IRS Wrecked Your Pension
"[B]y the late 1990s, a whole lot of [multiemployer] pension plans ... didn't want to go to employers and explain why their contributions suddenly weren't tax deductible any more. But the IRS rules ... were very clear: if the fund was overfunded, you had to either stop making contributions, or increase the benefits. And the IRS refused to budge. So the pension plans increased the benefits. The [plans] emerged from the dotcom crash not only with less funding than they should have had, but also burdened with a much richer set of benefits they had to pay out." (The Daily Beast)
The New Pension Reporting Standard: What It Means for Governments 401(k)
"On a basic level, GASB Statement 68 requires that the difference between a plan's assets (the plan net position) and the present value of projected benefits for past service (total pension liability) be reported as a net pension liability in accrual-based financial statements. In addition, the standard provides new guidance on how to measure a plan's assets, total pension liability, and pension expense." (The CPA Journal)
In Reversal, PBGC Covers Pension of Hospital Center After IRS Revokes 'Church Plan' Status
"[I]n 2003, after the hospital became affiliated with Cathedral Healthcare System Inc., the [IRS] determined that the hospital's pension plan had become a church plan, which removed it from PBGC's protection. Soon after that, the hospital began winding down its operations and laying off employees. Over the past several years, at the request of the Pension Rights Center, PBGC worked with the hospital's former staff and the IRS to revisit that designation. IRS recently set the designation aside and PBGC can now cover the pensions." (Pension Benefit Guaranty Corporation)
Illinois Senate Approves Union-Backed Pension Plan for State Employees
"The Illinois Senate approved a union-backed plan to cut the retirement benefits of nearly 700,000 teachers, state workers and retirees today, taking a vote that is directly at odds with House approval of a competing pension plan last week. Unless one side blinks and approves the other's plan by the May 31 scheduled adjournment, another legislative session will pass without movement on one of the state's most serious financial challenges." (Chicago Daily Herald)
CalPERS Claims Bankrupt San Bernardino Has More Cash Than First Admitted
"When it declared bankruptcy the city said it was overwhelmed by pension debt and could barely make payroll, and did not have the cash to keep current on its payments to CalPERS, America's biggest public pension system with assets of $256 billion. But a CalPERS attorney asserted in a court hearing on Tuesday that the city had $26.8 million in the bank as of January of this year -- far more than the $4.2 million that the city said it had on hand." (Thomson Reuters)
Plunging Interest Rates in April Inflate Corporate Pension Funding Deficit by $37 Billion (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans deteriorated by $37 billion during April ... . As of April 30, the funded ratio fell to 81.2%, down from 82.8% at the end of March. The projected benefit obligation (PBO), or pension liabilities, increased by $60 billion during April, raising the Milliman 100 PFI value to $1.711 trillion from $1.651 trillion at the end of March[.]" (Milliman)
BancorpSouth Announces Voluntary Early Retirement Program
"The early retirement offer has been made to 418 employees, or approximately 10 percent of the Company's workforce, who were eligible because they met job classification, age, and years-of-service criteria as of March 31, 2013. The program offers pension plan enhancements based on each eligible employee's age and years of service. Of the 296 employees who have already responded, 194 have accepted the offer." (BancorpSouth)
Pension Finance Update, April 30, 2013 (PDF)
"After a strong first quarter, pension finances took a step back last month, with lower interest rates pushing pension liabilities up by more than assets, though plans remain solidly 'in the black' so far this year. The two 'model' plans ... both saw funded status decline 1%-2% last month, but, for the year, [the] traditional 'Plan A' is ahead by 6%, while 'Plan B' remains about 1% up." (October Three)
State and Local Government Spending on Public Employee Retirement Systems, May 2013 Update (PDF)
"Changes to benefit levels and required employee contributions adopted by states and cities have been diverse, dependent in part on such factors as the legal authority to make changes to benefits or required employee contribution rates, and the plan's financial condition prior to the 2008-09 market decline. Generally, states and cities with a history of paying their required pension contributions are in better condition and have needed more minor adjustments to benefits or financing arrangements compared to those with a history of not adequately making their contributions." (National Association of State Retirement Administrators)
Illinois Pension Reform Proposal Looks to Stop Non-Employees from Getting Pensions
"The moves follow Tribune/WGN-TV disclosures that found dozens of people enrolled in state pension systems without holding state jobs. They ranged from employees of the Illinois Principals Association and other school groups that lobby state government to about 40 employees with the Special Olympics. The discovery illustrated how private employees gained entrance into the worst-funded state retirement system in the nation with a pension debt approaching $100 billion." (Governing)
[Official Guidance] Text of IRS Notice 2013-32: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates for May, 2013 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under Section 430(h)(2) ... the interest rate on 30- year Treasury securities under Section 417(e)(3)(A)(ii)( II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under Section 417(e)(3)(D) as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by [MAP-21]." (Internal Revenue Service)
PBGC Provides Data on Single-Employer DB Plan Freezes (PDF)
At the 2013 Enrolled Actuaries Meeting held recently in Washington, DC, PBGC staff shared some data relating the frequency and incidence of plan freezes based on information reported in premium filings. A copy of the slides shown at that meeting is available at the link. (Pension Benefit Guaranty Corporation)
PBGC Director Josh Gotbaum, Panelists Talk Pension Reform
"Josh spoke with Bob Litan, director of research at Bloomberg Government, about PBGC's efforts to safeguard the pensions of millions of Americans. Another trending topic Director Gotbaum spoke about: multiemployer pension plans and PBGC's multiemployer program. Then, the conversation gained added insights from panelists Earl Pomeroy, Cary Franklin, Norman Stein, and Randy DeFrehn." (Pension Benefit Guaranty Corporation)
Pension Finance: Fall in Interest Rates Dominates April Results
"The impact of a significant decline in long bond yields was only partially offset by positive investment results. As a result, the Towers Watson Pension Index fell 1.6% in April to 66.0. Even with this month's decline, the index value remains up 5.9% for the year." (Towers Watson)
[Guidance Overview] PBGC Releases Enforcement Guidelines for ERISA Section 4062(e) Financial Assurance Program
"A company is not financially sound in a new case if in the judgment of the Office of Negotiations & Restructuring (ONR) and the Chief of Negotiations and Restructuring, it has signs of financial weakness, including, but not limited to: A lack of ongoing operations. Existing or imminent: changes in business fundamentals, such as a large drop in demand; or transactions that would result in a credit ratings downgrade. An insignificant amount of assets or operations in the US." (Practical Law Company)
S&P 1500 Pension Plan Funding Levels Slip 2% in April (PDF)
"After significant improvements during the first quarter of 2013, the pension plans sponsored by S&P 1500 companies suffered a setback during April, with the aggregate deficit increasing by $47 billion during the month, resulting in a $419 billion deficit as of the end of April 2013 ... The funded ratio (assets divided by liabilities) fell from 82% to 80%, which is still an improvement over the estimated 74% at December 31, 2012." (Mercer)
CalPERS Won't Refinance San Bernardino Debt
"The giant pension fund, alarmed by the unprecedented decision to stop making required pension contributions, is in no mood to give the city an easy out that might tempt other struggling local governments to take the same path. Restarting general fund pension contributions will not cause [CalPERS] to drop its opposition to San Bernardino's eligibility for bankruptcy[.]" (CalPensions)
[Opinion] Canada Pension Plan Expansion: Signs Point to Trouble for All Canadians
"This plan would hike CPP benefits by 10 percentage points from 25% to 35% of maximum pensionable earnings (MPE), raise the MPE by $10,000 from today's $51,100 to $61,100, and implement all of this within 10 years.... Employees would pay up to $1,100 more a year in premiums. Employers would pay up to $1,100 more a year, per employee. The self-employed would pay up to $2,200 more a year (they must pay both shares of CPP)." (Financial Post)
[Opinion] Is Expansion of the Canada Pension Plan Expansion Potentially Bad for Canadians?
"There is no doubt that expanding the [Canada and Quebec Pension Plans] will be involve raising contributions from employees and employers but they will be phased in over many years. More importantly, there is a huge cost of doing nothing, allowing more Canadians to slip through the cracks, falling into pension poverty." (Pension Pulse)
[Opinion] MAP-21 Funding Rules Signal Kiss of Death for Pensions
"A little-known rule change that allows companies to contribute fewer dollars to pension funds is signaling just how meaningless the retirement vehicle has become. 'This proves that pensions are pretty much dead,' said Greg McBride, chief economist at Bankrate.com. The change is just another charade to mask the underfunding of pensions and increases the odds of having less money for retirement.'" (CNBC)
[Opinion] Tough Vote on Illinois Pension Reform? Hardly
"Bottom line for current and future pension recipients: You'd still be getting a generous deal -- benefits that all of your friends in the private sector will subsidize, but far higher than what they'll receive from Social Security. You're still in a defined benefit retirement plan at a time when governments elsewhere are starting to shift toward defined contribution plans similar to 401(k)s.... The characterization of this bill as an attack on teachers and public sector workers is pure fiction." (Chicago Tribune)
State Employee Pension Reforms Pass Illinois House
"Employees would kick in 2 percent more toward their pension costs, with the increased contribution spread out over two years starting in July.... Minimum retirement age raised for those 45 and younger ... Cost-of-living increases would not start until a retiree has reached 67 or has been retired five years, whichever comes first." (Chicago Tribune; free registration required)
Pension 'De-Risking' Strategies and Issues (PDF)
Webinar presentation slides. Titles include: Asset and liability-based strategies to de-risk defined benefit pension plans; Fiduciary considerations for de-risking strategies, including fiduciary issues relating to plan investments; Design and implementation considerations for de-risking strategies; and Lessons learned from 2012 de-risking activities. (Morgan Lewis)
Illinois House Passes Sweeping Pension Reform Bill in Close Vote
"The Madigan bill, which is designed to eliminate a $96.8 billion funding shortfall over 30 years, relies on changes to retirement benefits that unions say are a violation of the state constitution. Union leaders have said they will challenge the measure in court if it becomes law ... No actuarial analysis of Madigan's measure has yet emerged, but the speaker said it would fully fund the pension system by 2044 and reduce the state's pension payment by $1.5 billion in fiscal 2015." (Reuters)
[Guidance Overview] PBGC Posts 4062(e) Enforcement Guidelines on Web Site
"[T]he PBGC generally considers a company creditworthy if: (I) The company has unsecured debt-equivalent ratings from both Moody's and S&P, and the ratings are at least Baa3 by Moody's and BBB- by S&P; (II) The company is rated by only one of those agencies, and the rating is at least Baa3 or BBB-; or (III) The company is rated by neither of those agencies, and: (i) The company has a D&B Financial Stress Score of 1477 or higher; and (ii) The company's secured debt (disregarding debt incurred to purchase real estate or equipment) does not exceed 10 percent of its asset value." (Proskauer's ERISA Practice Section Blog)
Global Pension Finance Watch, First Quarter 2013
"The first three months of 2013 saw generally strong investment returns in all global markets, but a varying range of movements in prevailing interest rates. The net result was solid improvement in the Towers Watson Pension Index in all seven tracked global markets. Trailing 12-month results indicate similarly strong asset returns, but the effects were offset by significant decreases in benchmark discount rates." (Towers Watson)
[Official Guidance] Text of PBGC Proposed Submission of Information Collection for OMB Review; Comment Request; Data to Study Multiemployer Plan Guaranty Program
"PBGC is researching the effects of potential changes to its multiemployer program. PBGC's objective is to quantify the effect of potential policy proposals on multiemployer plans that are or could enter critical status with respect to projected dates of insolvency, amount of financial assistance that PBGC would be required to provide, and the benefit changes plan participants would experience. To assist in this research PBGC intends to request that OMB approve a survey of multiemployer pension plans, their actuarial service providers, and their stakeholders, including unions and relevant professional and trade organizations.... This information collection would be voluntary on the part of respondents and any information provided in response to this request would not be used for any PBGC enforcement activities." (Pension Benefit Guaranty Corporation)
Illinois House Speaker Submits Pension Reform Proposal
"[The proposal] calls for workers employed by the state, Illinois universities and school districts outside of Chicago to pay more, get reduced retirement benefits and retire later if they're younger than 45. In exchange, unlike in the current law, the state's five major pension funds would be authorized to go to court to collect what they're owed if the state fails to make its required annual contributions.... Under the new scheme, the state would be required to pay an extra $1 billion a year above and beyond the required actuarial level starting in 2019." (Crain's Chicago Business)
Putting Longevity Risk In Its Place (PDF)
"Compared to market risks, we estimate longevity risk to be small. On a stand-alone basis, this risk is about 0.4% of funded status annually (one-standard deviation range). And in the context of a typical plan's equity market and interest rate exposures, the risk is even smaller" (NISA Investment Advisors; free registration required)
[Guidance Overview] New FASB Disclosures Kick In for Non-Public Entities Participating in Multiemployer Pension Plans (PDF)
"The new disclosures will be effective for annual periods ending after December 15, 2012 for non-public entities ... [T]he FASB focused on three main objectives for the disclosure -- disclosure of the overall health of the plan, the level of the employer's participation in the plan, and the employer's contributions to the plan -- and will require this information for individually significant plans. The standard does not define the term 'significant.'" (PricewaterhouseCoopers)
Kodak Hands Camera Film Business to U.K. Retirees
"Kodak will hand over to the U.K. Kodak Pension Plan, its largest creditor, its 'personalized imaging' and 'document imaging' businesses ... The pensioners will then be able to either run the businesses or sell them as they see fit. Kodak will no longer owe the pensioners $2.8 billion[.]" (MarketWatch.com)
Adjustable Pension Plan Design Begins to Gain Converts
"The plan design shares the investment risk between employees and employers while providing more retirement income security than a typical defined contribution plan.... Under [one such] plan, participants will receive either a guaranteed floor benefit or the adjustable benefit tied to investment performance, whichever is greater.... What differentiates the adjustable plan from a cash balance plan is that the cash balance plan benefit is determined by a benchmark such as 10-year Treasuries; the adjustable plan's benefit depends on actual investment performance of the plan." (Pensions & Investments)
Girl Scouts Ask Congress for a Do-Over on Pension Plan Exemption
"In 2010, Congress ... allowed the few charity plans with multiple entities such as the Girl Scouts to follow pre-PPA pension funding rules until 2017. But later that year the Girls Scouts were forced to freeze the pension plan as investment losses suffered during the 2007-09 recession and low discount rates caused the funding level to plummet to 63% ... Today, the plan has $433 million in assets and $819 million in liabilities." (Pensions & Investments)
Fund Manager Survey Highlights Need for Agility
"[F]und managers expected that equities were likely to offer pension funds the best returns during 2013. Global equities were expected to be the top performer according to 31% of those polled.... [N]early a quarter (24%) predicted that emerging market equities would finish as the best performer for the year, ahead of other regions, even though they had a weak start to the year with marginal falls in the first quarter." (Aon Hewitt)
PBGC Seeks Involuntary Plan Termination before Plan Sponsor's Proposed Share Sale
This complaint demonstrates PBGC�s willingness to seek involuntary plan terminations when it is unable to negotiate additional contributions or other security for underfunded defined benefit plans within the context of corporate transactions, even when the plan sponsor will continue as a going concern after an arms-length transaction." (Proskauer's ERISA Practice Section Blog)
Dietrich Pension Risk Transfer Index Fell in March
"The Dietrich Pension Risk Transfer Index fell slightly, from 86.98 in March to 86.61 on April 1, 2013 -- a change Dietrich attributed to declining interest rates. The index tracks the relative attractiveness of annuitizing pension liabilities, and was designed as a mechanism for pension stakeholders to monitor settlement market conditions." (PLANSPONSOR.com)
Interview with PBGC Director Josh Gotbaum on Bankruptcy, Saving Pensions and Singing
"Everybody's first reaction is, I'm in bankruptcy and need to get rid of as many commitments as possible. But we tell companies that we are the largest unsecured creditor if a plan is terminated and you need to consider whether you want to, or even need to, add to your unsecured claims. And we ask companies whether they have considered the consequences to their employees." (Thomson Reuters)
Cypen & Cypen Newsletter, April 25, 2013
Selected topics include: [1] A misguided "solution" to a nonexistent problem with the Florida public employee retirement plans; [2] Milliman revised study of the Florida Retirement System reflects 30-year projection of open defined benefit plan and impact of closing the defined benefit plan to new members; [3] The retirement gamble -- why you cannot afford to retire; and [4] When pension systems are under pressure, you need to look at the backstop. (Cypen & Cypen)
[Guidance Overview] PBGC Withdraws Two Territorial Coverage Opinion Letters Impacting Puerto Rican Retirement Plans
"The status of PBGC coverage for Puerto Rico defined benefit plans is one that has been the subject of review and analysis by the PBGC for quite some time. Most recently, on April 19, 2013, the PBGC withdrew two older opinion letters (Opinion Letters 77-172 and 85-19), which addressed whether defined benefit plans established and maintained in Puerto Rico are covered by Title IV of ERISA. This withdrawal may be an indication that further guidance for Puerto Rico based defined benefit plans is forthcoming." (Proskauer's ERISA Practice Section Blog)
[Opinion] Teachers Putting Hedge Funds on Detention?
"Unions are growing increasingly frustrated by the constant attacks on defined-benefit plans and with good reason. Their members pay a lot into these plans so they can enjoy the security and peace of mind that comes with a DB plan. The last thing they want to hear is some hedge fund or private equity manager who made it stinking rich by growing assets from their members' contributions publicly slamming DB plans." (Pension Pulse)
Can Multiemployer Pensions Build a 21st Century Plan?
"In the four years since the financial crisis, the National Coordinating Committee for Multiemployer Plans (NCCMP) ... has been working to create solutions to the problems besetting multiemployer pensions. ... The first set of recommendations looks at how to strengthen the multiemployer pension system already in place.... The second area of concern deals with the 5 to 10 percent of red-zone multiemployer plans that are deemed 'deeply troubled'.... [B]ut it is the commission's third recommendation -- for new structures to deliver future pension benefits -- that offers truly forward-thinking solutions." (Institutional Investor)
[Guidance Overview] Retirement Plans Spring Roundup of Retirement Plan Developments (PDF)
"[This article] recaps recent developments for defined benefit and defined contribution retirement plans [including] the revised funding interest rates in MAP-21 and other guidance for these plans on reporting and disclosure obligations.... participant fee disclosure and fiduciary issues ... Hurricane Sandy relief and other items of general interest, such as COLAs and revisions to compensation rules." (Buck Consultants)
Moody's Revised New Approach to Adjusting Reported State and Local Government Pension Data
"Moody's four adjustments to reported pension information are ... Actuarial accrued liability (AAL) will be discounted using a high-grade, long-term taxable bond index rate.... Asset valuation smoothing will be eliminated in favor of reported fair value of assets as of the actuarial reporting date.... New cost metric equal to 'amortized adjusted net pension liability' will be reported.... For multiple-employer, cost-sharing pension plans, liabilities will be allocated proportionately according to each employer's share of the total contribution." (Segal)
New PEPTA Legislation Introduced in House and Senate
"In effect, PEPTA would require every public pension plan to essentially keep two sets of books. One would ... reflect the reality of balanced investment portfolios ... that have, over the past 25 years, averaged 8.8 percent returns ... The other set would pretend that all public plan assets were invested in U.S. Treasury bonds (even though this is not the case for any public plan), which currently yield around 3 percent. The result would be two substantially different measurements of a plan's unfunded liabilities maintained by the Treasury Department." (National Council on Teacher Retirement)
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