Headlines about "Actuarial - funding of pensions"

Gathered from the web by the editors at BenefitsLink.com.
Employers Finding More Reasons to De-risk Retirement Plans (PDF)
"[S]ettlement strategies could cause further deterioration of the plan's funded status that might prevent settlements unless additional contributions are made to neutralize the 'math' of funding ratios.... If there is a strong committee view on interest rates, consider adding a dual trigger to the glide path based on interest rate levels to ease into the hedging portfolio over time.... Lump sum cashouts may trigger one-time settlement charges under US GAAP sooner rather than later. A cashout strategy should be structured with this in mind." (Buck Consultants)

Mercer U.S. Pension Buyout Index, March 2014 (PDF)
"During March, as indicated by the Index, the average cost of purchasing annuities from an insurer increased slightly from 108.4% to 108.6% of the accounting liability. The economic cost of maintaining the liability remained level at 108.7% of the balance sheet liability." (Mercer)

New Mortality Table Recommended by Society of Actuaries
"The most significant piece of [Exposure Draft RP-2014] is the new set of generational mortality tables. These tables reflect significant improvement in mortality relative to the rates in the current regulatory framework (RP-2000 plus Mortality Improvement Scale AA). To put that in English: the conclusion of the [Society of Actuaries] is that the current rules significantly understate how long DB plan participants will live because they do not reflect changes (improvements) in life expectancy that have happened since Scale AA was published." (October Three Consulting)

Public Pension Plan Investment Return Assumptions (PDF)
"Although public pension funds, like other investors, experienced sub-par returns in the wake of the 2008-09 decline in global equity values, median public pension fund returns over longer periods meet or exceed the assumed rates used by most plans....[At] 9.0 percent, the median annualized investment return for the 25-year period ended December 31, 2013, exceeds the average assumption of 7.72 percent ... while the 10-year return is below this level.... Among the 126 plans measured in the Public Fund Survey, more than one-half have reduced their investment return assumption since fiscal year 2008." (National Association of State Retirement Administrators [NASRA])

Managing Risk and Opportunity: Trends and Challenges in Defined Benefit Plans (PDF)
19 pages. Excerpt: "[R]isk management strategies appear to encompass three distinct categories: plan design, funding and investment, and settlement activities. Almost 50 percent of companies with plan assets in excess of $5 billion plan to manage risk only through investment practices, and none expect to transfer all of their obligations to a third party. In contrast, most plans with fewer than $5 billion in assets are not planning to rely only on investment practices. They also plan to manage risk through settlement activities." (Millennium Trust Company)

Pensions Still Cloud Stockton Bankruptcy Exit
"Stockton's plan to leave a huge pension debt untouched was still an issue last week as the city council, hoping to end a two-year bankruptcy, approved settlements for 95 percent of the claims. The settlements include Assured Guaranty and National Public Finance Guarantee, the main opponents of Stockton's eligibility for bankruptcy. The bond insurers argued that an early plan to cut bond debt, but not pension debt, treated creditors unfairly. Now the last major creditor that has not settled, Franklin Bonds, argues that if Stockton exits bankruptcy without cutting pension debt, the city could slide back toward insolvency like Vallejo." (Calpensions)

Heinz 'Derisks' Pension Plans
"The company recently merged [a] plan for salaried employees ... with another one that was set up for nonunion hourly employees, a move the company said simplifies administration. The two plans combined include 5,173 participants, with 521 of those still active. The rest are retired or separated from service. Effective April 30, the combined plan is to be terminated.... Heinz has also merged two other plans, known as Plan B and Plan C, which cover both active and former employees covered under collective bargaining agreements ... That second combined plan is not being terminated, but the company is offering lump sum payments for vested participants and annuities for retirees already receiving benefits." (Pittsburgh Post-Gazette)

District Court Rejection of Challenges to Verizon Annuity Purchase Supports Derisking Strategy (PDF)
"[T]he court simply reiterated its prior ruling that Verizon was not acting as fiduciary when it amended the plan to direct the annuity purchase because 'the disputed decisions involve Verizon's role as settlor, not Plan fiduciary' ... [T]he court rejected the claim that Verizon's decision to purchase annuities from a single provider, Prudential, the day after it amended the plan to provide for it, was a fiduciary breach.... [T]he court stated, 'at bottom, plaintiffs are disagreeing with the rights of a settlor under ERISA, and such a disagreement must be addressed to Congress through requests for legislative changes to ERISA, not through litigation that complains of the decisions that ERISA empowers a plan sponsor as settlor to make.'" [Lee v. Verizon Communications, No. 3:12-CV-4834-D (N.D. Tex. Apr. 11, 2014)] (Groom Law Group)

[Opinion] Text of Letter from American Academy of Actuaries to Congressional Leaders on Pension Funding Provisions of Recent Legislative Proposals (PDF)
"MAP-21 was designed to provide short-term funding requirement relief to plan sponsors in light of economic conditions and included a schedule on which its impact would be reduced. Recent proposals ... would defer this phase-out, and by doing so, [lower] the ongoing funding requirements. Extending these temporary provisions accelerates tax revenue while deferring the pension cost to future generations, distorts the pension measurements, and undermines the benefit security of plan participants while increasing the risk exposure to the PBGC." (American Academy of Actuaries)

The Risks of Derisking DB Plans
"Assets that left the plan early in 2012 and 2013 missed out on the double-digit return potential of those years. When participants are offered a lump sum election opportunity, those in poor health are more likely to accept the offer ... Thus, the plan may be subject to more unfavorable mortality experience ... [A] lump sum transaction is likely to decrease a plan's funded status ... and will have to maintain a certain funding level in order to avoid lump sum restrictions. The lower funded status will generally result in higher plan sponsor contribution costs. It may also result in a higher PBGC variable-rate premium." (Milliman, via Actuarial Digest)

Unions Want to Use $100M in Federal Housing Relief Money to Plug Detroit Pension Hole
"Under the plan being discussed, Detroit Emergency Manager Kevyn Orr would get access to $100 million earmarked for Michigan from a fund the U.S. Treasury Department established in 2010 to provide relief in the wake of the housing crisis. Michigan would send the federal money to Detroit for blight reduction, as has been done in the past. Mr. Orr then could take other funding already earmarked for blight elimination and use that in a plan to help make up a $3.5 billion shortfall in the retirement system for city workers[.]" (The Wall Street Journal; subscription may be required)

CalPERS Raises Pension Contribution Requirements for State, Schools
"The State will pay a total of approximately $4.3 billion towards pensions and schools will pay $1.2 billion. These required contributions are an increase by more than $450 million for the State and $55 million for school employers over current rates. New demographic assumptions adopted by the CalPERS Board in February have the largest impact on rates for the State plan due to public employees living longer." (CalPERS)

Detroit Pension Deal Approved by One Retirement System
"The tentative settlement with the General Retirement System ... would cut pensions for general city workers and retirees by 4.5 percent and eliminate cost-of-living adjustments ... The tentative deals represent much smaller decreases in benefits than Detroit had been seeking." (Reuters)

PBGC Secures $208M for Saint-Gobain Retirees
"Under a settlement with the [PBGC], Saint-Gobain Containers, Inc., has made $207.5 million of additional contributions to its pension plan.... The settlement will help preserve the plan and resolves PBGC's concerns about the plan's sponsor being sold to a company with fewer financial resources.... PBGC pressed the parties for better funding because the sale put retirement benefits at risk by moving the plan from a financially strong sponsor to Ardagh [(a Luxembourg-based glass and metal packaging company)], which carries a high level of debt. When the parties [had] declined to provide financial protection for the plan, PBGC took steps to terminate the plan to protect retirement benefits." (Pension Benefit Guaranty Corporation [PBGC])

[Opinion] Text of Comments by American Benefits Council to Treasury Department on Proposed Liquidity Shortfall/Funding Regs (PDF)
"[T]he proposed regulation, Section 1.430(j)-1(f), Example 11, Paragraph (iii), states that ... the contribution continues to be required even though the shortfall no longer exists, contrary to the applicable statutory language ... Application of such a rule would lead to plan sponsors having to make disproportionate contributions, in many cases contributing for the exact same shortfall multiple times. This is not consistent with the statute, prior interpretations of the same language, or sound administration of the law." (American Benefits Council)

S&P 500 Company Pension Plans' Funding Ratio Jumps to Nearly 90% in 2013
"Using 10-K filings by companies in the S&P 500 index that have defined benefit pension plans, the latest study reveals the aggregate funding ratio of those plans jumped to 89.8% at the end of 2013. It is a dramatic 12.2 percentage point increase from the 77.6% aggregate funding ratio reported as of Dec. 31, 2012." (Pensions & Investments)

Pension Funded Status Drops by $5 Billion in March
"The funded status of the 100 largest corporate defined benefit pension plans dropped by $5 billion during March ... The deficit increased to $266 billion from $261 billion at the end of February, due to both a drop in the benchmark corporate bond interest rates used to value pension liabilities and flat asset returns during March. As of March 31, the funded ratio fell to 84.0%, down from 84.3% at the end of February." (Milliman)

[Official Guidance] Text of 2014 PBGC Premium Payment Instructions (PDF)
"Electronic filing is mandatory for all plans.... This document provides information for plans paying premiums for plan years beginning in 2014, including instructions for each data element that must be reported. If you are filing for a previous year, you must follow the instructions for that year." (Pension Benefit Guaranty Corporation [PBGC])

Watch Out for the 'Risk' in Derisking!
"From a plan management standpoint, once a plan hits its 'peak liability' -- the inflection point where benefit payments will trump the interest cost and service cost going forward -- a plan sponsor has very little time.... Plan events such as lump-sum windows, group annuity purchases, and even full-scale terminations are quite popular these days as plan sponsors look to reduce the size of their pension plan liability. It's important to remember, though, that these derisking strategies are fiduciary events." (Vanguard)

[Official Guidance] Text of PBGC Monthly Interest Rate Update for May 2014
"The May 2014 interest assumptions under the benefit payments regulation will be 1.50 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 April 2014, these interest assumptions are unchanged." (Pension Benefit Guaranty Corporation)

Key Findings from the Survey of Calendar-Year Multiemployer Plans' 2014 Zone Status Under PPA '06
"The percentage of calendar-year plans in the green zone is 65 percent, up from 61 percent in 2013. The percentage of plans in the yellow zone is 8 percent, down from 11 percent one year earlier. The percentage of plans in the red zone is 27 percent, which is similar to last year's percentage (28 percent). The average Pension Protection Act of 2006 funded percentage as of January 1, 2014 is 88 percent, which is an increase from 85 percent in 2013." [Results are summarized in a one-page infographic.] (Segal)

Once Thought Secure, Multiemployer Pensions Teeter and Fall
"The pensions of millions of Americans are being threatened because of trouble in a part of the retirement world long considered so safe that no one gave it a second thought.... Multiemployer pensions are not only backed by federal insurance, but they also were thought to be even more secure than single-company pensions because when one company in a multiemployer pool failed, the others were required to pick up its 'orphaned' retirees." (The New York Times; subscription may be required)

Rhode Island's Deal on Pension Overhaul Falls Apart
"After mediation, the state and unions in February agreed to ease the impact of the overhaul by rolling back the retirement age for many current workers to 65 from 67, increasing the frequency of cost-of-living adjustments and restoring a traditional defined-benefit retirement plan for more-veteran employees.... Eligible police officers rejected the deal, prompting a state-court judge to send the two sides back to mediation this past week ... Rhode Island's governor and treasurer announced Friday that mediation talks had broken down and the dispute was headed to court." (The Wall Street Journal; subscription may be required)

[Guidance Overview] Multiemployer Pension Plans May Need Amendments to Comply with IRS Guidance on Same-Sex Marriage Provisions
"The Notice requires that amendments be adopted by a multiemployer pension plan as follows: [1] If the plan's terms with respect to the requirements of section 401(a) define a marital relationship by reference to section 3 of DOMA or are otherwise inconsistent with the outcome of Windsor or the guidance in Rev. Rul. 2013-17 or the Notice, then an amendment to the plan that reflects such outcome or guidance must be adopted. [2] An amendment is required if a plan sponsor chooses to apply the rules with respect to married participants in a manner that reflects the outcome of Windsor for a period before June 26, 2013. The amendment must specify the date as of which, and the purposes for which, the rules are applied in this manner.... For a multiemployer pension plan, an amendment required in [1] is not subject to the requirements of section 432 of the Code ... while an amendment required in [2] is subject to those requirements." (Cary Kane ERISA Lawyer Blog)

Hibernation Versus Termination: Evaluating the Choice for a Frozen Pension Plan
"As a frozen corporate defined benefit pension plan matures, the need for a decision on exit strategy gets closer. One option is plan termination (the purchase of annuities for all participants, which effectively transfers all liabilities to an insurance company). Another strategy is 'hibernation,' whereby the sponsor continues to manage the plan at a low level of cost and with some uncertainty about future cost. What are the primary considerations for plan sponsors evaluating the latter option?" (Russell Investments)

Moody's Finds Public Pension Plans Lag Corporate Plans in Managing Credit Risk
"While corporations have federal agencies, accounting rules and shareholders monitoring how well they fund their pension plans and manage the related credit risk, state and local governments do not.... The report notes the 50 largest corporations have a median pension liability as a percentage of total debt (including pensions) of 24%, while the government median is 73% for states and 49% for large local governments. The state data are for fiscal year 2012 and the local government number is based on fiscal 2011 data." (Pensions & Investments)

Public Pensions and the Lessons of Success
"Given all the headlines about Illinois' seemingly endless struggle to reform its pensions ... the Illinois Municipal Retirement Fund (IMRF), the state's second-largest public pension, is a model of fiscal responsibility. What distinguishes the IMRF from Illinois' other three statewide plans, which are struggling, is that all 2,969 governments that participate in it are required to pay 100 percent of their annual required contribution. As a result, the IMRF has remained more than 80 percent funded, even after the investment losses that public and private plans suffered from the 2008 recession." (Governing)

The Fiscal Health of State Pension Plans: Funding Gap Continues to Grow
"This fact sheet has been revised since initially issued to reflect updated data and feedback from five states (ID, MD, NH, NJ, SD). As a result, total pension debt facing state pension plans has been revised to $915 billion from $914 billion. Pew analysis also shows that 15 states made their full contributions rather than 14." (The Pew Charitable Trusts)

[Official Guidance] Text of IRS Notice 2014-27, April 2014 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), ... the 24-month average segment rates[,] ... the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate ... and the minimum present value segment rates ... as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by [MAP-21]." (Internal Revenue Service [IRS])

CalPERS Retirement Benefits: Assessing Compensation Changes (PDF)
"Comparatively, California state and local government spent 0.06 percent less than the national average on total employee compensation, 0.37 percent less on salaries and 0.30 percent more on retirement benefits. In 2010, California government expenditures supporting public employee compensation were consistent with other states. PEPRA, however, changes overall compensation by decreasing benefits for new employees and by requiring some employees to contribute toward their DB plan's normal cost." (CalPERS)

Pension Finance Watch, March 2014
"Equities provided a small overall increase, while bond yields dropped slightly in March. These factors combined to nudge the Towers Watson Pension Index down 0.7% for the month, to 75.2." (Towers Watson)

Deal Voted Down in Rhode Island Pension Overhaul
"A proposed settlement that would end the legal fight over Rhode Island's 2011 landmark pension overhaul, which has been a model for other states looking to rein in runaway pension costs, was rejected by ... [p]olice union members, the smallest of the six groups that had to approve the proposal ... Sixty-one percent of police union members voted against the settlement." (ABC News)

CalSTRS Members Get $300 Million from Surplus
"On a split vote, the CalSTRS board last week gave members in two unusual retirement accounts, which have a guaranteed minimum return, a $300 million credit from a surplus. To some board members it looked like bad timing and a policy out of step with the times. CalSTRS is seeking a multi-billion dollar rate increase for the main under-funded pension system.... Others said they wanted to keep the promise made to members when the board adopted the policy, which gives members a credit when surpluses above the amount needed for the guaranteed return reach a certain level." (Calpensions)

Funded Ratio Lower in March for Corporate Pension Plans
"[T]he estimated funding levels of pension plans sponsored by S&P 1500 companies fell 2% in March to 85%. While flat equity markets and interest rates did not affect funded ratios during the month, Mercer made adjustments based upon actual funded status released in filings for the 2013 year end. The collective deficit of $332 billion as of March 31, 2014, is up $56 billion from the estimated deficit of $276 billion as of February 28, 2014,[.]" (Mercer)

Don't Let 2014 DB Opportunities Pass You By
"Because of the large average funding increases that occurred in 2013, sponsors should take action to retain their robust funding, while at the same time recognizing that funded status is a key influencer in decision-making going forward.... Know your plan's maximum funding level... Consider a glide path to help achieve your maximum funding level... Reduce execution risk with a dynamic investment policy statement... Consider immunization or termination... Offer a lump-sum option." (Vanguard)

Retirees Are Living Longer -- But That Shouldn't Take Anyone by Surprise
"For a very long time, life expectancy has been increasing, so every few years the assumptions used for valuing pension plans need to be updated to capture that. Because the table currently in use (RP-2000) has become out of date, it's creating a situation in which mortality experience for most plans is systematically creating losses at each new valuation." (Russell Investments)

Pension Plans with Highest Equity Exposure Were Biggest Winners in 2013
"A 7.5% decrease in plan liabilities from higher discount rates and a 9.9% average return on plan assets combined to produce a historic $198.3 billion improvement in the funded status deficit from year-end [2012] In this unprecedented 'win-win' year, the plans with the highest allocations to equity investments performed the best. Although cash contributions in 2013 were $30 billion less than expected, the overall funded ratio still soared to 87.9% (92.3% for plans with calendar-year fiscal years)." (Milliman)

Funded Status of Corporate Pensions Falls to 92.1 Percent
"The funded status of the typical U.S. corporate pension plan declined 0.5 percentage points in March 2014 to 92.1 percent as liabilities increased faster than assets ... [L]iabilities rose 0.7 percent, outpacing the 0.3 percent increase in assets during the month. Year to date, the funded status of corporate plans is down 3.1 percentage points[.]" (BNY Mellon)

Managing Risk and Opportunity: Trends and Challenges in Defined Benefit Plans (PDF)
"Mindset of DB plan management is shifting from a total return approach to the practice of managing assets and liabilities. Plan sponsors have begun to assess the value and risks of the pension obligations within the context of their core business. Risk management strategies appear to encompass three distinct categories: plan design, fund and investment, and settlement activities. Strategies employed will vary in structure and execution but may include: Liability Driven Investment (LDI) Strategies; Lump Sum Distributions; Annuities: Buy-ins and Buy-outs." (Millennium Trust Co.)

Pension Finance Update, as of March 31, 2014 (PDF)
"Pension finances deteriorated slightly in March, and both 'model' plans ... ended the first quarter of 2014 in modestly negative territory. Traditional 'Plan A' lost about 1% last month and is now down almost 4% for the year, and 'Plan B' slid less than 1% during March, ending the quarter almost 2% in the red.... (Plan A is a traditional plan (duration 12 at 5.5%) with a 60/40 asset allocation, while Plan B is a cash balance plan (duration 9 at 5.5%) with a 20/80 allocation with a greater emphasis on corporate and long-duration bonds.)" (October Three Consulting)

Funding Ratio Progress Slowed Down for Corporate Pensions During First Quarter of 2014
"[The] U.S. Pension Fund Fitness Tracker saw the funding ratio of the typical corporate U.S. pension plan drop by approximately four percentage points to 91% in the first quarter of 2014.... Investment returns of 2.1% could not offset the 6.1% increase in liability values, causing pension plans to give back some of the gains made in 2013." (UBS AG, via BusinessWire)

Chicago Pension Compromise Would Boost Contributions
"The deal with the unions is intended to improve funding for the municipal plan, which is 38% funded, and the laborers plan, which is 58% funded. Workers participating in the two plans would see their contributions rise 0.5% each of the next five years to 11% of pay from the current 8.5%. The deal also would increase the city's contribution to the two pension funds by a fixed amount each year until 2020, when the city would have to put in the amount required by actuaries to have 90% funding for both plans." (Pensions & Investments)

Multiemployer Pension Protection Version 2.0: More Robust Legislation Needed to Address Plans' Funding Challenges
"Failure to extend the PPA would have 'detrimental effects' on both multiemployer plans that are operating under recovery programs, and those that might eventually need to do so, the [American Academy of Actuaries' Pension Practice Council] says.... It cites several challenges driving the need for a more robust successor multiemployer plan funding regime, including: [1] The exhaustion of funds that faces the most severely underfunded plans.... [2] Financial jeopardy for the PBGC's multiemployer insurance program itself, caused by the looming insolvency of many multiemployer plans and PBGC's current deficit." (American Academy of Actuaries)

The Fiscal Health of State Pension Plans: Funding Gap Continues to Grow
"New data for fiscal year 2012 show that state-run retirement systems had a $914 billion shortfall. When promises by local governments were factored in, the total pension debt was over $1 trillion.... In spite of recent strong investment returns, the new data show that the funding gap for state plans has continued to grow -- increasing by $157 billion from 2010 to 2012." (The Pew Charitable Trusts)

Mercer U.S. Pension Buyout Index, February 2014 (PDF)
"During February ... the average cost of purchasing annuities from an insurer decreased slightly from 108.5% to 108.4% of the accounting liability. The economic cost of maintaining the liability remained level at 108.7% of the balance sheet liability." (Mercer)

States, Cities Tackle Pension Liabilities; Watch Illinois, Detroit for Lessons
"Despite raising employee contributions to pension plans, cutting benefits or renegotiating pension contracts, many jurisdictions may be failing to inject enough of the kinds of mechanisms that would bring the significant changes needed to achieve long-term fiscal stability, and that leaves many places, along with those counting on their pensions for retirement, still at risk." (Bloomberg BNA)

The Cash Balance De-Risking Solution
"For traditional defined benefit (TDB) plans, there is a well-established de-risking playbook: [1] freeze the plan, [2] migrate to a matching bond portfolio and/or pay lump sums and/or buy annuities. The benefit of reduced or eliminated uncertainty comes at a cost of higher upfront or expected contributions, but with that caveat, the playbook works reasonably well. While cash balance (CB) plans are generally less risky to employers than TDB plans, CB plan sponsors are finding that, when it comes to de-risking, the TDB playbook doesn't work, and a fresh approach is needed." (PLANSPONSOR)

Pension Annuitization Attractiveness Hangs On
"The Dietrich Pension Risk Transfer Index, which tracks the relative attractiveness of annuitizing pension liabilities, is basically unchanged this month. As of March 1, 2014 the Index sits at 95.27; falling slightly due to continued slides in interest rates. The index's annuity discount rate proxy of 3.12% lost 6 basis points from last month." (Dietrich & Associates)

How Prevalent Is the '13th Check' from Public Pension Plans?
"How common is it for a public retirement plan to issue 13th checks? While there are a few known states and municipalities that distribute them, there is not, in fact, comprehensive data on their prevalence.... Typically payments are linked to some sort of investment return-gain sharing. Such payments can be either ad hoc or automatic. Actuarial recognition would also vary from spontaneous to advanced, respectively. While 13th checks can be an extra payment, others reflect a cost-of-living adjustment-in other words, deferred compensation used to offset or reduce the effects of inflation on retirement income." (PensionDialog)

Defined Benefit Plans Brace for a One-Two Punch
"Not only do employers face a 52% increase by 2016 in the regulatory cost of administering their pension plans, but also a $150 billion surge in liabilities from longer-living retirees. The looming costs and growing liabilities are forcing many companies to consider ways to cut pension expenses, accelerating a decades-long shift away from defined-benefit pensions plans -- which guarantee a set payout for life -- to plans that shift the burden of retirement savings to workers." (The Wall Street Journal; subscription may be required)

CalSTRS Rate Hike: A Start, Full Phase-In or Delay?
"Legislators were told last week an additional $181.7 billion would be needed for full funding in 20 years. If payments are spread out to ease the budget bite, the additional amount needed to reach full funding in 60 years is a staggering $618 billion. The point made by comparing the large numbers: Delaying a funding increase drives up the total cost, not to mention forcing future generations to pay for the services of workers received by the current generation." (Calpensions)

A Pension Fund Invests Against the Rules, and Wins
"[The Tampa firefighters and police officers pension fund] pretty much breaks all the conventional rules of fund management. But then there are the numbers .... Over the last 20 years, the Tampa fund has generated an average annualized return of 9.88 percent as of last Sept. 30, which puts it in the top 1 percent of public pension plans with assets of more than $1 billion ... The fund's 10-year annualized return (9.72 percent) and 25-year return (10.48 percent) also rank in the top percentile." (The New York Times; subscription may be required)

2013 PPA 'Zone' Status of Calendar-Year Multiemployer Plans
"In 2013, a solid majority of plans -- 59 percent -- were in the green zone. This percentage represents a very slight decline from 2012 (60 percent). The percentage of plans in the yellow zone was the same for 2013 as for 2012: 14 percent. Between 2012 and 2013, the percentage of plans in the red zone increased by 1 percentage point, from 26 percent to 27 percent. The average PPA '06 funded percentage for all surveyed plans was 84 percent in 2013, the same percentage as in 2012." (Segal)

Financial Health of Largest U.S. Corporate Pension Plans Improved Sharply in 2013
"[T]he pension deficit for the 100 largest pension sponsors among U.S. publicly traded organizations fell 57%, from $295.5 billion at year-end 2012 to $125.9 billion at year-end 2013, a decrease of $169.6 billion. The pension deficit for these companies hasn't been this small since 2007, when plans had a surplus of $82.3 billion. Meantime, the overall average funded status jumped 13 percentage points, from 78% at the end of 2012 to 91% at the end of 2013. That is the best funding level since the end of 2007, when the average stood at 103%." (Towers Watson)

[Guidance Overview] IRS Employee Plans News, March 19, 2014 (PDF)
Topics include: [1] Cycle C determination letter applicants who intend to adopt a pre-approved cash balance plan may withdraw their applications by May 31, 2014, if they sign Form 8905, Certification of Intent to Adopt a Pre-approved Plan, by March 31, 2014; [2] FAQs on withdrawing Cycle C applications; and [3] Unreasonable assumptions in actuarial certifications of post-retirement medical benefit reserves may have consequences. (Internal Revenue Service [IRS])

[Guidance Overview] PBGC Adopts Uniform Premium Due Date
"This change, which eliminates the system under which premium due dates varied based on the type of premium and the size of the plan, will accelerate the premium due date for small plans, which has been four months after the end of the premium payment year, by 6-1/2 months. While the final rule is applicable for 2014 and later plan years, a transition rule provides a four month delay in the new due date for small plans for the first plan year beginning after 2013 in order to ease potential cash flow problems raised by commentators." (Benefits Bryan Cave)

Nondiscrimination Changes Needed to Slow Move to 'Hard Freezes,' Commenters Tell IRS
"The chilly atmosphere for the nation's beleaguered defined benefit retirement system will get even colder if the federal government fails to find a way to help plan sponsors that have closed their plans to new hires out of a conundrum that will prompt many of them to completely freeze all employees out of the plans, business and employee benefit groups and employers said in comment letters to the Internal Revenue Service." (Bloomberg BNA)

California Pension Reform Measure Abandoned After Court Ruling
"Backers of a ballot measure to cut California's public pensions, which was seen as a model for other states, abandoned their campaign to win voter support ... after Sacramento Superior Court Judge Allen Sumner rejected a lawsuit filed by [San Jose mayor Chuck] Reed and other measure proponents against Kamala Harris, California's Democratic attorney general, for what they said was biased, union-friendly language for the voter initiative." (Reuters)

[Official Guidance] Text of PBGC Monthly Interest Rate Update for April 2014
"The immediate interest rate for valuing lump sum payments for the month of April 2014 is 1.50% and the deferred interest rate I1 is 4.00%, I2 is 4.00%, and I3 is 4.00%. (The immediate interest rate for March 2014 was 1.50% for lump sum payments; the deferred interest rate I1 was 4.00%, I2 was 4.00%, and I3 was 4.00%). The spot first, second, and third segment rates for determining the variable rate premium amount for premium payment years commencing in March 2014 are, respectively, 1.17%, 4.29%, and 5.36%." (Pension Benefit Guaranty Corporation [PBGC])

[Official Guidance] Text of IRS Notice 2014-16: March 2014 Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"This notice provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), ... the 24-month average segment rates[,] ... the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate ... and the minimum present value segment rates ... as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by [MAP-21]." [Also see Excel spreadsheet for corporate bond monthly yield rates.] (Internal Revenue Service [IRS])


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