Increase of Prefunding Balance?

[Bob in USA]

Is it reasonable that the Prefunding Balance can jump from $145M to $982M in one year? Previously the balance ranged between $100M to $200M. (That's about 25% of the Total Plan Assets).

Is this something to worry about? What might cause it?

The data came from my pension annual funding notice. I'm retired now.

[figure 8]

You shouldn't be too worried about the PFB. All it basically represents are the contribution amounts that were in excess of the minimum required contribution, carried forward with interest each year.

So most likely the plan sponsor a) contributed an amount to the plan that was well in excess of what was required, b) experienced a tremendous return on assets for the year, or c) a combo of a) and b) (and probably the most likely option).

[John Feldt ERPA CPC QPA]

Also, with the change in tax rates starting in 2018, the company may have chosen to make a much larger contribution for 2017. For example, an extra $100M contribution for 2017 could reduce the corporate taxes by $35M for 2017, but that same $100M contribution, if made for 2018, might only reduce the 2018 corporate taxes by $21M. If they had the cash available to do that, it makes a lot of sense tax-wise. 

[Brudestrom, FSA, EA]

This is a very large plan (PFB almost $1B.) Seems kind of unlikely that the sponsor's contribution made to take advantage of 2017's higher tax rates would already be reflected in the AFN, given that the Schedule SB probably hasn't even been filed yet.