Headlines about "Actuarial - misc"
Gathered from the web by the editors at BenefitsLink.com.
Asset Income Is Now Less Important Than Earned Income for Replacement Ratio Calculations
Excerpt: "The percentage of aggregate income for persons aged 65 or older attributed to earnings has risen in nearly 30 years from 15.9% to 26.0%, while the percentage attributed to asset income has dropped from 22.4% to 12.8%. and the percentage attributed to pension income has dropped from 19.5% to 15.3%. Aggregate income from Social Security and pensions has remained steady at about 58% over the same period, according to statistics compiled by the Congressional Research Service (CRS) from the Current Population Survey collected by the U.S. Census Bureau." (Wolters Kluwer)
PBGC Implements USERRA Final Rule
Excerpt: "The nation's private-sector pension insurer on Monday unveiled a final rule making it easier for returning service members to receive pension and other benefit credits for time spent in the military. A news release from the Pension Benefit Guaranty Corporation (PBGC) said the rule implements provisions of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). That law provides that an individual who leaves a job to serve in the uniformed services is generally entitled to reemployment by the previous employer and, after being rehired, to receive credit for benefits, including employee pension plan benefits, that would have accrued but for the employee's absence due to the military service." (PLANSPONSOR.com; free registration required)
[Opinion] Risks Rising at the PBGC?
Excerpt: "Are you wondering what I am wondering? Why would a private equity partner want to become the director of the PBGC? Want to take a stab on where they're going to rebalance their portfolio? I can already see PE funds lining up to fill out the requests for proposals. Another thing I can tell you is that the PBGC's ongoing deficits will require a massive bailout down the road. That's why Uncle Ben will let this bubble blow for as long as he possibly can." (Leo Kolivakis)
PBGC Presss Release on the Annual Management Report for Fiscal Year 2009
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) ended fiscal year 2009 with an overall deficit of $22 billion, according to the agency's Annual Management Report submitted to Congress today. The result compares with the $11.2 billion deficit recorded at the previous fiscal year-end on September 30, 2008." (Pension Benefit Guaranty Corporation via BenefitsLink.com)
Pension Benefit Guaranty Corporation Annual Management Report for Fiscal Year 2009 (PDF)
99 pages. Excerpt: "[Some of the Fiscal Year 2009 Financial Statement Highlights are as follows:] PBGC's combined financial condition declined by $10.80 billion, increasing the Corporation's deficit to $21.95 billion as of September 30, 2009, from $11.15 billion as of September 30, 2008. PBGC's portfolio achieved a return on investment of 13.2%. The single-employer program's net position declined by $10.40 billion, increasing the program's deficit to $21.08 billion. The multiemployer program's net position declined by $396 million, increasing that program's deficit to $869 million. The primary factors in the single-employer program's net loss included a charge of $10.55 billion due to an unfavorable change in interest factors, $4.23 billion in losses from completed and probable terminations, $3.92 billion in charges due to passage of time, and $383 million of administrative and other expenses. These factors were offset by $6.33 billion in investment income, $1.82 billion in net premium income, and a credit of $573 million from actuarial adjustments." (Pension Benefit Guaranty Corporation)
[Guidance Overview] IRS Relief for Hybrid Plans Pending Soon to be Released Regulations (PDF)
Excerpt: "[T]he IRS issued Announcement 2009-82 providing relief for plan sponsors of statutory hybrid defined benefit plans (including cash balance plans) to comply with the Pension Protection Act of 2006 (PPA) requirement to not have interest crediting rates in excess of a market rate of return." (Buck Consultants)
[Official Guidance] Text of IRS Announcement 2009-82: Hybrid Plan Guidance (PDF)
2 pages. Excerpt: "The Treasury Department and the Internal Revenue Service are announcing relief for sponsors of statutory hybrid plans that must amend the interest crediting rate in those plans. Plan sponsors may rely on this announcement pending publication of the anticipated additional guidance described below. Treasury and the Service expect to issue in the near future final regulations and proposed regulations relating to statutory hybrid plans. The regulations will include rules interpreting the requirement in ? 411(b)(5)(B)(i) of the InternalRevenue Code that such plans not have an interest crediting rate in excess of a market rate of return. The rules in the regulations specifying permissible market rates of return are not expected to go into effect before the first plan year that begins on or after January 1, 2011." (Internal Revenue Service via American Benefits Council)
[Guidance Overview] IRS Offers Relief on Interest Crediting Rate Amendment
Excerpt: "The Treasury Department and the Internal Revenue Service have announced relief for sponsors of statutory hybrid plans that must amend the interest crediting rate in those plans. The IRS said plan sponsors may rely on announcement 2009-82 pending publication of anticipated additional guidance. Anticipated guidance includes rules interpreting the requirement in ? 411(b)(5)(B)(i) of the Internal Revenue Code that hybrid plans not have an interest crediting rate in excess of a market rate of return. The rules specifying permissible market rates of return are not expected to go into effect before the first plan year that begins on or after January 1, 2011." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Notice of Funding-Based Restriction on Lump-Sums Not Required for Participants in Pay Status
Excerpt: "CCH Note: The Treasury Department was authorized by the Worker, Retiree, and Employer Recovery Act of 2008 (P.L. 110-458) to prescribe rules (in consultation with the Labor Department) governing the ERISA-required notice of funding based limitations on distributions. The instant guidance has been issued pursuant to this authority. In addition, the IRS has further indicated that it will set forth (and presumably expound upon) the relief in upcoming guidance." (Wolters Kluwer)
GAO Testimony: Pension Benefit Guaranty Corporation: Workers and Retirees Experience Delays and Uncertainty when Underfunded Plans Are Terminated
Testimony presented by Barbara D. Bovbjerg, director, education, workforce, and income security, before the Senate Committee on Health, Education, Labor, and Pensions, October 29, 2009. 18 pages. Excerpt: "The committee asked GAO to discuss our recent work on PBGC. Specifically, this testimony describes: (1) PBGC's process for determining the amount of benefits to be paid; and (2) PBGC's recoupment process when the estimated benefit provided is too high and a retiree receives an overpayment that must be repaid. To address these objectives, GAO relied primarily on a recent report titled Pension Benefit Guaranty Corporation: More Strategic Approach Needed for Processing Complex Plans Prone to Delays and Overpayments (GAO-09-716, Aug. 2009). In that report, GAO made numerous recommendations. PBGC generally agreed and is taking steps to address the concerns raised. No new recommendations are being made in this testimony." (U.S. Government Accountability Office)
[Official Guidance] PBGC Announces Maximum Insurance Benefit for 2010: Remains At $54,000 Per Year
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) today announced that the maximum insurance benefit for participants in underfunded pension plans terminating in 2010 will be $54,000 per year for those who retire at age 65. The amount is higher for those who retire later and lower for those who retire earlier or elect survivor benefits . . . . The PBGC maximum insurance benefit is indexed to a contribution and benefit base in Social Security law. Because that amount does not increase for 2010, the PBGC maximum insurance benefit is unchanged from 2009." (Pension Benefit Guaranty Corporation)
Measurement of Healthcare Quality and Efficiency: Resources for Healthcare Professionals
Excerpt: "The objective of this report is to serve as a resource on quality and efficiency measures that demonstrate the performance of hospitals and physicians. Besides outlining key areas of consideration for quality and efficiency measurement, this report also describes futureopportunities for actuaries and other health professionals interested in this evolving area." (Society of Actuaries)
[Guidance Overview] Administrative Remedies Need not be Exhausted in Cash Balance Case
Excerpt: "The U.S. District Court for the Eastern District of Kentucky has declined to dismiss a case against BP Corporation North America over calculations used in its cash balance plan, saying the plaintiff was not required to exhaust his administrative remedies under the plan. The court found that Robert French's complaint challenges the overall legality of BP's plan methodology, so administrative exhaustion would be futile and is not required. The court said a 6th U.S. Circuit Court of Appeals opinion makes clear that when a plaintiff's 'suit [i]s directed to the legality of [a plan], not mere interpretation of it[,] exhaustion of the plan's administrative remedies would be futile.'" (PLANSPONSOR.com; free registration required)
[Guidance Overview] IRS's Final Rule on Pension Funding and Benefit Restrictions (PDF)
2 pages. (Milliman)
[Guidance Overview] Final Regs on Benefit Restrictions for Underfunded Plans, Measurement of Plan Assets and Liabilities
Excerpt: "Underfunding presumptions: The regulations set forth a series of presumptions that are used to apply the Code Sec. 436 benefit limitations in situations where the plan's enrolled actuary has not yet issued a certification of the plan's AFTAP for the plan year and that describe the interaction of the application of those presumptions on plan operations with plan operations after the plan's enrolled actuary has issued a certification of the plan's AFTAP for the plan year. The rules in the final regulations have been revised from those in the proposed regulations." (Wolters Kluwer)
[Guidance Overview] In Re: Citigroup Pension Plan ERISA
Excerpt: "A somewhat surprising, technical decision that permits Citigroup to skirt ERISA prohibitions against 'backloading,' which occurs when a pension plan awards covered employees disproportionately higher benefit accruals for later years of service." (Wrobel & Schatz LLP)
[Guidance Overview] For 2010, Only PBGC Single Employer Premium to Increase, No Change in PBGC Guarantee Limit Anticipated (PDF)
2 pages. Excerpt: "For 2010, the per capita flat-rate Pension Benefit Guaranty Corporation (PBGC) premium for single employer plans will increase by one dollar and the per capita flat-rate premium for multiemployer plans will be unchanged. The PBGC has not yet released its monthly maximum guarantee for 2010, but because there was no change in the 'old law Social Security wage base' ($79,200), Segal does not expect the maximum benefit guaranteed by the PBGC under private-sector single employer pension plans that terminate during 2010 to change from the 2009 level." (The Segal Group, Inc.)
[Guidance Overview] The Roles of the ESOP Trustee in the ESOP Valuation Process (PDF)
8 pages. Presentation at the ESOP Association Mid-Atlantic Chapter Conference, October 16, 2009, Charlottesville, VA. (Morgan, Lewis & Bockius LLP)
PBGC Annual Charge Increases for 2010
Excerpt: "Defined benefit sponsors will see their per-participant insurance premiums to the Pension Benefit Guaranty Corp. (PBGC) go up by $1 next year. Business Insurance reported a federal law mandating a premium adjustment to reflect changes in the national average weekly wage during the prior year will bump the annual figure from $34 to $35." (PLANSPONSOR.com; free registration required)
[Official Guidance] PBGC Interest Assumptions for Valuing and Paying Benefits from Terminating Single-Employer Plans Having November 2009 Valuation Dates (PDF)
2 pages. (Pension Benefit Guaranty Corporation)
CalPERS Offered Incentives to Inflate Pension Funds' Value/Plans' Benefits
Excerpt: ".A labor-friendly CalPERS board offered local governments an incentive eight years ago to boost public employee pension benefits, now called 'unsustainable' by some. CalPERS said it would reward higher benefits by inflating the value of the local government's pension investment fund, making it easier to pay for more generous pensions. Booming pension fund earnings in previous years were cited in a self-congratulatory board resolution approving the incentive in 2001. But the stock market boom had already cooled by then." (Capitol Weekly)
[Guidance Overview] Claim for Fiduciary Breach Can't Rest on Oral Statements Altering Plan Terms, Appeals Court Rules
Excerpt: "A claim for breach of fiduciary duty cannot be based on oral statements that would alter an ERISA plan document, the US Second Circuit Court of Appeals has ruled (Ladouceur v. Credit Lyonnais). Participants were allegedly told that pension accruals after a company merger would take into account pre-merger service, when in fact accruals were based solely on post-merger service. Since an oral statement cannot change the written terms of an ERISA plan, the court reasoned, 'we see no reason to give the statement effect by re-characterizing it as a breach of fiduciary duty.'" (Mercer LLC)
Selecting and Documenting Mortality Assumptions for Pensions (PDF)
29 pages. Excerpt: "This practice note was prepared by the Pension Committee of the American Academy of Actuaries (Academy) to provide information to actuaries on current and emerging practices in the selection and documentation of the mortality assumptions for measuringobligations of defined benefit pension plans and other post-retirement benefits plans. It represents collective, but not unanimous, views of the individual members of the Committee. The intended users of this practice note are the members of actuarial organizations governed by the Standards of Practice of the Actuarial Standards Board." (American Academy of Actuaries)
[Opinion] The Real Problem with Public Employee Pensions
Excerpt: "The Washington Post reports today ('Steep Losses Pose Crisis for Pensions') on the sorry state of funding in state and local employee pensions, focusing on the impact of recent poor stock returns. While a poor investment climate certainly hasn't helped, it's not the biggest reason public employee funds are in bad shape. A bigger reason the plans are underfund is that, in effect, we told them they can be. State and local pension plans use different and far less demanding accounting rules than do corporate pensions, even though public employee benefits are guaranteed by law while corporate pension benefits are not. The key issue is how to 'discount' future benefit obligations to the present, which tells us how much plans must have on hand today to fund their future liabilities. A high discount rate lowers the present value of a future obligation, while a low discount rate implies a higher present value." (American Enterprise Institute)
[Guidance Overview] Pension Calculation Dispute Thrown Out on Appeal
Excerpt: "Three pension participants who sued their employer over a pension calculation dispute can't pursue their claims because they have no written proof the employer misrepresented plan rules, a court has ruled. The 2nd U.S. Circuit Court of Appeals, in issuing that decision, upheld a ruling by U.S. District Judge Naomi Reice Buchwald of the U.S. District Court for the Southern District of New York." (PLANSPONSOR.com; free registration required)
Managing Retirement Benefits Amid Capital Market Disruption
13 pages. Excerpt: "Prudential commissioned this research program on how finance executives are managing retirement benefits in today's environment because Prudential believes that finance executives are critical to managing the risks inherent in such benefit programs. This research demonstrates that finance executives are more involved than ever in theircompanies' retirement benefit programs, and are prepared to take concrete steps to strengthen them. Employers shoulder the risks within a DB plan, such as the possibility of a sharp market decline that creates the needfor higher cash contributions. This research shows that a majority of employers are actively seeking solutions to help manage such risks. Companies can benefit by incorporating several key elements into their DB risk management approach." (Prudential Retirement)
[Opinion] ERIC Urges Supreme Court to Reverse Appeals Court Failure to Provide Judicial Deference Under ERISA Plan
Excerpt: "The case arose when company employees sued their ERISA retirement plan and administrator challenging the method used to calculate how their current benefits are offset to reflect prior distributions. The employees claimed that the plan violated ERISA's provisions relating to summary plan description, notice, and anti-cutback rules." (The ERISA Industry Committee)
[Opinion] American Benefits Council Amicus Brief with U.S. Court of Appeals for Second Circuit in Conkright v. Frommert (PDF)
25 pages. Excerpt: "Amici and their members seek to ensure that voluntary employee benefit plans remain a workable and vital feature of the American employment landscape. When courts refuse to defer to a plan administrator's reasonable exercise of discretionary authority, some employers may question the wisdom of continuing to maintain such plans in the future." (American Benefits Council)
[Guidance Overview] Proposal Updates Eligibility to Provide Actuarial Services to ERISA Plans
Excerpt: "The Joint Board for the Enrollment of Actuaries has released proposed amendments to the regulations governing the performance of actuarial services under the Employee Retirement Income Security Act (ERISA)." (PLANSPONSOR.com; free registration required)
[Official Guidance] Text of Proposed Regs from Joint Board for the Enrollment of Actuaries: Performance of Actuarial Services Under ERISA (PDF)
61 pages. Excerpt: "This document contains proposed amendments to 20 CFR part 901 relating to the enrollment of actuaries under section 3042 of [ERISA]. The proposed amendments would update the eligibility requirements for performing actuarial services for ERISA-covered employee pension benefit plans, including the continuing education requirements, and the standards for performing such actuarial services. . . . The Joint Board has determined that the [existing] regulations need to be updated to reflect changes in the law and in industry practice." (Joint Board for the Enrollment of Actuaries)
[Guidance Overview] No Fiduciary Breach Where Plan Rolled Back Retiree's Mistakenly High Monthly Benefit Payment
Excerpt: "The trustees of a defined benefit plan did not breach their ERISA fiduciary duty when they decreased a retiree's monthly benefit because the plan had made mistakes when it first calculated the benefit amount, the U.S. Court of Appeals in Philadelphia (CA-3) has ruled in Bocchino v. Trustees of District Council Ironworkers Funds of Northern New Jersey." (Wolters Kluwer)
[Opinion] American Benefits Council Letter on Effect of Potential Decline in CPI-U on the 2010 Retirement Plan Limits (PDF)
5 pages. Excerpt: "The American Benefits Council (Council) is submitting this letter in connection with the forthcoming announcement of the retirement plan limitations for 2010. . . . As you know, various dollar limits with respect to retirement plans are adjusted annually basedon the Consumer Price Index for July, August, and September (the Third Quarter CPI-U). The affected provisions include, among others, Code sections 401(a)(17), 402(g), 408(k), 408(p), 409, 414(q), 415(b), and 415(c) (collectively, the Limits). It is possible that the 2009 Third QuarterCPI-U will fall from 2008 levels, and we understand that the Internal Revenue Service is actively considering whether all or some of the 2010 Limits will be less than the 2009 Limits in the event of such a decline. As discussed in detail [in this letter], the Council strongly believes that a decline in the Limits would send the wrong message about the importance of retirement saving and that the law is best interpreted to preclude a year-over-year decline in the Limits." (American Benefits Council)
Ledbetter Act Revives Pension Accrual Age Discrimination Claim
Excerpt: "In 2004, Wayne Tomlinson and other employees brought a class action against their employer, El Paso Corp., for age discrimination caused by changes made to accrual rules when the company switched from a defined benefit plan to a cash balance plan in 1997. Tomlinson alleged that the company selectively froze the pension benefits of workers 40 and older. He alleges that he didn't know enough about the changes to file his action until 2004. The action was originally dismissed in January of this year as untimely, but plaintiffs' attorneys filed a motion to reconsider after the Ledbetter Act was signed into law." (Workplace Prof Blog)
US Airline Pilots Association Sues Pension Benefit Guaranty Corporation
Excerpt: "The US Airline Pilots Association (USAPA) today filed a lawsuit against the Pension Benefit Guaranty Corp. (PBGC) in federal court seeking the removal of the PBGC as trustee of US Airways pilots` pension plan and requesting the immediate appointment of a temporary trustee to perform the investigatory functions that the PBGC has refused to perform on behalf of pension plan beneficiaries since 2003. USAPA asserts that the PBGC breached its fiduciary duty to the fund and its thousands of beneficiaries by failing to comply with its duties required under the Employee Retirement Income Security Act of 1974 (ERISA)." (Reuters)
2009 Q&As: PBGC Meeting with ABA Joint Committee on Employee Benefits (PDF)
27 pages; May 6, 2009. Excerpt: "Each year, the Joint Committee on Employee Benefits (JCEB) of the American Bar Association meets with officials of federal agencies in Washington, D.C., to discuss issues of interest to employee benefits practitioners. . . . The question and answer transcripts . . . are based on these informal discussions between private sector representatives of the JCEB and agency officials." (American Bar Association)
How Do Analysts Process Pension Information?
Excerpt: "This paper evaluates whether analysts can see through the financial statement, so as to value defined benefit (DB) pension funding status based on economic values of pension assets and obligations. The literature is divided on whether earnings forecasts and stock prices reflect economic pension information. Previous studies correlate pension variables with analysts' earnings forecasts or stock prices. The analysts' information processing has previously been a 'black box.' We opened this black box by interviewing and physically inspecting the analysts' spreadsheets to determine how they treated pensions in their valuation. By choosing the firms with highest probability of earning management in pensions (most abnormal pension assumptions), there will be a reward for the analysts to use correct pension information. However, we found that analysts do not incorporate relevant pension information into their valuation spreadsheets. Thus our study provides further evidence that skilled and influential market participants, the analysts, do not efficiently incorporate information into their forecasts and stock valuations." (Social Science Research Network)
More Employers Seeking Labor Department Approval to Fund Benefits Through Captives
Excerpt: "Midland, Mich.-based Dow Coring Corp., a joint venture of Dow Chemical Corp. and Corning Inc. and a manufacturer and supplier of silicone-based chemicals, wants to use its Devonshire Underwriters Ltd. captive to fund life and long-term disability benefits. Dow Corning uses Devonshire to fund a variety of risks, including workers compensation, automobile liability and general liability risks." (Business Insurance)
Public Pensions are Increasingly the Focus of SEC Activitiy
Excerpt: "Several recent actions taken by the Securities and Exchange Commission SEC) indicate that there is increasing attention being paid to public pensions ? and not just in their role as institutional investors. While the SEC's proposed restrictions on so-called 'pay to play' activities of investment advisors was not a surprise, an 'informal inquiry' into certain public pension fund activities initiated by the SEC's Division of Enforcement, and the recent announcement of the creation of a new 'Municipal Securities/Public Pension Unit' to look into unfunded and underfunded pension liabilities, among other things, are sounding alarm bells. Even the SEC's acting chief accountant has gotten into the act, expressing concerns with pension plan smoothing activities." (National Council on Teacher Retirement)
[Opinion] Restructuring the Pension Benefit Guaranty Corporation's Board
Excerpt: "One step towards remedying the PBGC's chronic problems would be to increase the effectiveness of its Board of Directors (Board). It currently has a small Board that meets relatively infrequently and lacks certain attributes, such as committee structures, that would make it easier to dive into greater depth on the key issues. Comparisons of the PBGC's Board structure with that of analogous public entities demonstrates that its three-person Board format and sparse meeting schedule is unusual. The remainder of this paper will discuss potential changes that could improve the Board's effectiveness." (Brookings Institution)
The Tripling of the PBGC's Deficit: What Does it Tell Us?
Excerpt: "This paper attempts to put the PBGC's $33 billion deficit in context, by answering the following questions: How sure are we of the $33 billion figure? What made the deficit go up so fast? . . . . What does this mean for the PBGC's financial future? How can we fix the financial problems?" (Brookings Institution)
[Guidance Overview] Discretionary Authority: Limited to Claims Decisions or Extended to All Plan Interpretations?
Excerpt: "As I read the facts, once the offset method was deemed an impermissible cutback the problem arose as to fashioning a remedy that would take the place of the prohibited phantom account method. So I don't see the petitioner changing its rationale so much as attempting to renew its interpretation of the plan provisions in a manner that implements the plan provisions forbidding duplication of benefits but in a way that does not constitute a cut back." (Roy Harmon III via Health Plan Law)
[Guidance Overview] Recent Rulings Suggest Plaintiffs May Need To Prove Discriminatory Motive To Prevail under ERISA's Rate of Accrual Provision, Section 204(b)(1)(H)(i) (PDF)
Pages 6-7 of 9 pages. Excerpt: "ERISA ? 204(b)(1)(H)(i), 29 U.S.C. ? 1054(b)(1)(H)(i), prohibits the reduction or cessation of the rate of benefit accrual in defined benefit plans 'because of the attainment of any age.' A series of rulings by the Seventh, Third, Second, Sixth and Ninth Circuits rejected claims that, since younger workers had more years to accrue interest credits under cash balance pension formulas, those formulas inherently violated Section 204(b)(1)(H)(i). In so ruling, these courts reached the commonsense conclusion that ERISA did not make unlawful the time value of money." (Proskauer Rose LLP)
Supreme Court Will Review Decision Concerning Whether Employer Followed Proper Procedures When Changing Pension Benefits Calculation Rules
Excerpt: "The court has granted certiorari to Sally L. Conkright et al. Petitioners vs. Paul J. Frommert et al., a class-action brought on behalf of participants in a pension plan sponsored by Xerox Corp., Norwalk, Conn. The plaintiffs sued the administrators of the Xerox Corporation Retirement Income Guarantee Plan and the plan itself, alleging the plan had violated the participants' rights under the Employee Retirement Income Security Act by adding a mechanism that involved use of 'phantom account' factor and the hypothetical growth of an employee's previous lump-sum retirement benefits distribution to calculate current benefits." (The National Underwriter Company; free registration or paid subscription required)
[Guidance Overview] Untapped Opportunities for Actuaries in the Health Industry
Excerpt: "In 2006 and 2007, two separate surveys, as well as interviews with actuaries in senior level positions in the health industry, pointed out a significant risk to our profession: actuaries with health actuarial technical skills, and especially those with comprehensive health care knowledge, are in short supply." (Society of Actuaries)
Court of Appeals Hearing is Friday on Treatment of Indiana Pension Fund as Bondholder in Chrysler Deal
Excerpt: "A U.S. Court of Appeals agreed on Tuesday [June 2] to hear a challenge to Chrysler LLC's sale of most of its assets to a group led by Italian automaker Fiat . . . . A three-judge panel for the U.S. Court of Appeals for the Second Circuit will hear arguments in the appeal on Friday at 2 p.m. EDT (1800 GMT) in New York, according to a court order on Tuesday." (New York Times)
[Opinion] A Sickening Outcome for GM's 377,000 Retirees
Excerpt: "A trust fund set up a few years ago to protect [retiree healthcare] benefits [for 377,000 retirees] -- while allowing General Motors to clean up its balance sheet --is seriously underfunded. Now, the United Automobile Workers union is about to discover that it's no better at managing escalating health care costs than GM. . . . As part of the deal, the union agreed to forgive $20 billion that GM owes to the retiree health care trust." (Joann Muller in Forbes)
UAW OKs Healthcare Benefits Reduction for GM Retirees; DB Plan to Continue
Excerpt: "[I]nstead of GM contributing about $20 billion in cash and other contributions, the new VEBA will receive a note, payable in cash, with a principal amount of $2.5 billion. The note will make cash payments of $1.38 billion, including accrued interest, in 2013, 2015 and 2017. The VEBA also will receive preferred stock in the restructured company with a face value of $6.5 billion. The stock will pay an annual cash dividend of $585 million for as long as the VEBA holds the stock. Finally, the VEBA will receive 17.5% of the common stock issued by the restructured GM . . . ." (Business Insurance)
CMS Announces 2010 Indexed Medicare Rx Amounts
Excerpt: "Recently announced 2010 limits for Medicare Part D prescription drug benefits reflect annual adjustments that affect employers' calculations when applying for the retiree drug subsidy (RDS). Upcoming changes to the RDS application process will require actuaries to register again with additional identifying information and revise how lists of covered retirees are submitted and processed. The latest update to the RDS User's Guide includes a chapter on the appeals process." (Mercer LLC)
PBGC Deficit Sparks Fears of Bailout
Excerpt: "The financial position of the Pension Benefit Guaranty Corp. again is rapidly deteriorating, triggering fears that a taxpayer-funded bailout may be needed to shore up the government's pension plan insurer. The PBGC disclosed last week that its deficit hit a record $33.5 billion at the end of its 2009 fiscal first half on March 31, compared with $11.2 billion at the close of fiscal 2008." (Pensions & Investments)
PBGC May Need Aid as Deficit Soars
Excerpt: "The federal agency that guarantees corporate pensions was $33.5 billion in the red at the end of March, triple its deficit six months earlier, the agency's head told a Senate committee yesterday. The recession threatens to add to the strain on the Pension Benefit Guaranty Corp. by pushing more companies into bankruptcy and leaving the struggling agency responsible for their pensions. . . . If the PBGC's condition continues to deteriorate, the government could come under pressure to shore it up with taxpayer funds, the GAO said in testimony to the Senate's Special Committee on Aging." (The Washington Post; free registration required)
Milwaukee County Settles Pension Case for $45 Million
Excerpt: "The Milwaukee County Board approved a $45 million settlement of the county's pension lawsuit against Mercer Tuesday, following a nearly two-hour closed-door session. The vote in favor of settling the case in mid-trial was 18-0. There was no public discussion of the settlement, but supervisors broke into applause after the vote. The Pension Board approved the settlement on an 8-0 vote shortly after supervisors acted. Members of the board exchanged hugs with some of the lawyers who handled the case following that vote. The county expects to receive about $32 million after paying its attorneys and litigation costs, officials said. The funds, by previous resolution, will go to the county's pension fund." (Milwaukee Journal Sentinel)
Deficit at PBGC Tripled in the Last Six Months to a Record High
Excerpt: "The agency, the Pension Benefit Guaranty Corporation, faced a shortfall of just $11 billion as of October. The combined effect of lower interest rates, losses on its investment portfolio and rising numbers of companies filing for bankruptcy produced the jump in its projected deficit, officials said Wednesday. Because the agency has $56 billion in assets -- most of which is invested in Treasury bonds -- it is not facing any prospect of default in the short term, officials said." (The New York Times; free registration required)
Former PBGC Director Invokes Fifth Amendment Rights at Senate Hearing
Excerpt: "Charles E.F. Millard, the former head of the nation's private pension plan insurer, refused to answer questions by the Senate Special Committee on Aging during a Wednesday legislative hearing on Capitol Hill regarding the Pension Benefit Guaranty Corporation (PBGC). . . . Millard, whom Congress announced it is now investigating for possible improper interactions with financial services firms at a time when the agency was considering an allocation change . . . was scheduled to be the first witness. After the first question by Kohl, Millard said he had been advised by his attorneys, who were present with him, to decline to answer any questions by the committee." (PLANSPONSOR.com; free registration required)
Acting PBGC Head Recommends Dumping Money Management Contracts
Excerpt: "Vince Snowbarger, acting director of the Pension Benefit Guaranty Corporation, has recommended three controversial contracts with Wall Street firms be dropped, according to a letter released Wednesday. U.S. Secretary of Labor Hilda L. Solis revealed the Snowbarger recommendation to the agency's board in a letter sent to and released by U.S. Senator Herb Kohl (D-Wisconsin), chairman of the Senate Special Committee on Aging, which conducted a hearing into the private-sector pension insurer on Wednesday . . . ." (PLANSPONSOR.com; free registration required)
Testimony on Pension Benefit Guaranty Corporation: Financial Challenges Highlight Need for Improved Governance and Management (PDF)
May 20, 2009, Testimony by Barbara D. Bovbjerg, director, education, workforce, and income security, before the Senate Special Committee on Aging. 1 page. Excerpt: "Specifically, this testimony addresses two issues: (1) PBGC's financial vulnerabilities, and (2) the governance, oversight, and management challenges PBGC faces." (Pension Benefit Guaranty Corporation)
Shortfall Triples at U.S. Pension Benefit Guaranty Corporation
Excerpt: "The federal agency that backstops corporate pension plans reported that its deficit tripled in the last six months, to $33.5 billion. Despite the shortfall, the agency said it has enough assets to pay benefits for many years, even if the holder of one of the largest retirement programs, General Motors Corp., were to file for bankruptcy. The news came as the Pension Benefit Guaranty Corp.'s former director invoked the Fifth Amendment in response to lawmakers' questions about possible mismanagement under the Bush administration. The PBGC's inspector general last week issued a report saying that the former director had violated prohibitions on contacting bidders that were seeking investment contracts." (The Wall Street Journal)
Congress Considers Tough Rules to Oversee PBGC
Excerpt: "The rapidly deteriorating financial health of the federal agency that guarantees 44 million Americans' pensions is raising alarms in Congress, where key lawmakers are demanding tougher rules to insure vigilant oversight of its multibillion-dollar investment portfolio. The recession is forcing into bankruptcy an increasing number of companies with underfunded pension plans, leaving the Pension Benefit Guaranty Corp. with billions of dollars more to pay out in pension checks to retirees in the future. Its long-term deficit tripled in the past six months to a startling $33.5 billion." (AP via The New York Times; free registration required)
Hearing: No Guarantees: As Pension Plans Crumble, Can PBGC Deliver?
May 20, 2009. Excerpt from May 14, 2009, press release. 'On Wednesday, May 20, U.S. Senate Special Committee on Aging Chairman Herb Kohl (D-WI) will hold a hearing to consider whether the federal government's Pension Benefit Guaranty Corporation (PBGC) has the capability to fulfill its mission to insure the pensions of nearly 44 million Americans, at a time when several of the country's largest automobile companies are teetering on the edge of bankruptcy." (U.S. Senate Special Committee on Aging)
Senate Committee Hearing Examines PBGC
Excerpt: "As the current economic downturn weighs on the nation's pension plans, a Senate Committee plans to examine what it means to the nation's private pension plan insurer. Today the U.S. Senate Special Committee on Aging Chairman will hold a hearing - provocatively titled 'No Guarantees: As Pension Plans Crumble, can PBGC Deliver?' - to 'consider whether the federal government's Pension Benefit Guaranty Corporation (PBGC) has the capability to fulfill its mission to insure the pensions of nearly 44 million Americans, at a time when several of the country's largest automobile companies are teetering on the edge of bankruptcy,' according to a press release." (PLANSPONSOR.com; free registration required)
PBGC's Deficit Triples to $33.5 Billion
Excerpt: "The federal agency that guarantees corporate pensions was $33.5 billion in the red at the end of March, triple its deficit six months earlier, the agency's head has told a Senate committee. The recession threatens to add to the strain on the Pension Benefit Guaranty Corp. by pushing more companies into bankruptcy and leaving the struggling agency responsible for their pensions." (The Washington Post; free registration required)
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