Contributory DB Plans - PPA

[Guest Grant]

Anyone have a mandatory DB Contributory Plan?

If so, how to handle the ee contributions for determing Target Normal Cost?

Is it Gross Normal Cost minus ee contribs? Something Else?

Any help appreciated, thanks.

[SoCalActuary]

Anyone have a mandatory DB Contributory Plan?

If so, how to handle the ee contributions for determing Target Normal Cost?

Is it Gross Normal Cost minus ee contribs? Something Else?

Any help appreciated, thanks.

That's one of the sticking points about technical corrections. The current PPA wording failed to consider that funding is partly by employees. But the TC bill would allow the offset, based on the expected ee contribs.

We need that bill to get thru Congress!!!

You can consider the possibility of valuing only the employer provided benefits in your valuation, and then argue that it was a good-faith attempt. Thus, you would value the funding target after removing the employee paid benefit, and the plan assets after removing the accumulated employee accounts. The target normal cost would only cover the benefits accruing this year that exceed the employee-paid portion.

But don't take this suggestion as anything more than a theoretical approach.