tuni88

One of our valued employees retired a couple years ago at age 66 and took a lump sum distribution from our DB plan. We occasionally had her back for a day or two but now am contemplating having her back more or less full time for about 2 months. The plan says we have to suspend her pension during that period. What pension? Does she have one? If she has one, what do we do? Anybody faced this before?

Huh? Did you read the original post? And whatever makes you think I'm trying to determine a discount rate? I don't have the slightest interest in how its done, just want a prediction of what it'll actually be when all the "theoretizing" is done. It's hard, I know. What do you think it'll be?

pax Go back to the premise of my original question. I'm not asking for a theoretical actuarial response. I'm looking for guesses as to what I'll actually find when I do the same unscientific 10-minute study this fall for the handful of companies that I own who sponsor a DB pension plan. If it's too unactuarial for you, then pretend you take a sample of several hundred public companies. What do you guess will be the mode for the discount rate at 6/30/07 after the dust has settled? It seems to me the answer will be either 6% or 6.25%. Maybe it will be bi-modal. tuni88

Doug, Thank you for your straight answer that you think 6.25% will be the likely prevailing discount rate at 6/30. (aside to Blinky - take a lesson here.) Follow-up question: You attached some rate indexes at 6/30/06 and 6/30/07. What were the values at 12/31/06 and is there a web site where one could find them all in one place? tuni88

Really? Asking how the consensus or average disclosure rate will change after 6 months is poor? You don't have a guestimate?

I knew the question would be too difficult.

Based on a non-random, too-small sample of 16 corporate sponsors of DB pension plans with fiscal years ending 12/31, about 1/2 used 5.75% as the end of year disclosure discount rate for their pension plans and about half used 6%. I know this is really, really hard for you actuaries, but I conclude from this that the world at large was disclosing at more or less 5.875% on 12/31/06. Now transport yourself a couple months into the future when the disclosures as of 6/30/07 are being made public. What do you suppose the 5.875% will have moved to? I could offer a prize to be awarded this fall to the responder who comes closest. But, nah.

Yeah, I know. I'm not interested in shopping around for an auditor who will say 6% is acceptable. Our auditor is our auditor - I want to know if I can push back when he says 5.75% ought to be the rate. Does anyone have a feel for how auditors, in general, are reacting when 6% is proposed to them?

We want to use 6% as our 12/31/06 discount rate for our pension plan. I keep hearing that 5.75% is the rate likely to raise the fewest eyebrows, if any. Anybody using 6% with no push back from auditors?

1. Will the IRS re-publish the table each year or will the actuary have to figure it out? 2. Since it isn't "the same table," won't that be a change in actuarial assumptions? 3. "To be determined" - by who and when?

Aon Consulting provided us with a really great piece on replacement ratios.

For the last several years we have used a single mortality table (83GAM) for the ERISA valuation, PBGC premiums, current liability, and FAS87. Now along comes RP-2000 that we must use for 2007 current liability, at a minimum. (Is there anything else we have to use it for?) We'll choose the two combined tables rather than worry about the annuitant/nonannuitant split. It seems we could use these tables for the ERISA valuation, PBGC premiums, and FAS87 for 2007 also. But if we do that, is there anything in the new PPA that will require us to make to make yet another change for any of those purposes in 2008? Will we be required to start using the annuitant/nonannuitant split, for example?

It seems like it could be a tremendous boon to a company with a pension plan that is currently nearly fully funded and has plenty of cash looking for a place to put it. Do you know of a link where I could read a summary? Thanks.

For 2008, the new funding rules allow a company to contribute and deduct an amount that would leave the plan with assets that cover up to 150% of unfunded Current Liability. (Right?) There was some speculation that that provision would reach back to both 2006 and 2007 also. Does it?

When will FAS158 be required for us? (We are a non-public company.) Our fiscal year is the calendar year through 12/31/06, followed by a short year 1/1/07 to 6/30/07, then full years thereafter from 7/1 to 6/30. Our pension plan year remains as the calendar year. As I understand it, we don't have to adopt until the year beginning 7/1/07. Is that right? Or do we get until 7/1/08? Does anyone have an answer to my previous question regarding the mortality table to use for lump sums in 2007? Thanks for your help.

Has there been a change yet in the mandated mortality table? If not, when will a new table be required and which table is it going to be?

It seems last year on 12/31/05 the least-likely-to-be-challenged discount rate might have been 5.50%. What do you pension actuaries out there think will be the least challenged discount rate for 12/31/06?