BenefitsLink logo
EmployeeBenefitsJobs logo
Free Daily News and Jobs

“BenefitsLink continues to be the most valuable resource we have at the firm.”
-- An attorney subscriber
Featured Jobs

Sr. Business Systems Analyst (Denver CO / Telecommute)
Get the BenefitsLink app LinkedIn
Twitter
Facebook

News Items, by Subject

Actuarial - funding of pensions


View Headlines Now Viewing Excerpts and
Headlines

Pension De-risking in 2019
"Increases in lump sum valuation interest rates have made de-risking in 2019 significantly less expensive than it was in 2018. It is also less expensive vs. a lump sum valuation made using current (first quarter 2019) interest rates. Changes in mortality assumptions in 2019, vs. 2018, have also reduced the cost of lump sums." (October Three Consulting)
2018 Corporate Pension Peer Analysis
"2018 headline funded status improved 1.5%, to 87.2%, although with dramatic volatility: Average funded status declined an estimated 7.2% in Q4. The average plan returned -3.9% for the calendar year, the worst performance since 2008. The decline was the largest detractor from funded status during 2018. A tailwind from higher discount rates, thanks to rising interest rates and widening credit spreads, provided the largest lift to funded status, followed by sponsor contributions." (J.P. Morgan Asset Management)
Legislation Giving Participants More Say in MPRA Benefit Cuts Reintroduced in Senate
"The proposed Pension Accountability Act was introduced by Ohio Sens. Rob Portman, a Republican, and Sherrod Brown, a Democrat, both of whom served on last year's Joint Select Committee on Solvency of Multiemployer Pension Plans, which expired before a reform package could be approved. The bill amends the Multiemployer Pension Reform Act by making participant votes binding in all situations and only counting returned ballots." (Pensions & Investments)
[Guidance Overview] IRS Notice on Lump-Sum Windows for Retirees Creates More De-Risking Opportunities
"Plan sponsors should carefully consider [1] the possibility of further guidance from the IRS on retiree lump-sum windows ... [2] numerous other administrative complexities such as QDROs, how retiree medical premiums are being paid, etc.... [3] the PBGC and [DOL] implications of adding a retiree lump-sum window.... [S]ponsors should ensure that all participant communications are as clear and comprehensive as possible[.]" (Groom Law Group)
[Guidance Overview] IRS Allows Retiree Cashouts Again -- Consider the Benefits and Risks
"Notwithstanding the IRS about-faces, If you read it carefully, Notice 2019-18 does not clearly state that cashing out retirees is permissible. It is possible that retirees who squander their payments could come back to sue sponsors, particularly if the communications they received were poor. Although retirees may not be likely to win such suits, defending ERISA litigation takes time and money. Plan sponsors who want to offer these cashouts should be aware of litigation risk." (Cohen & Buckmann, P.C.)
[Official Guidance] Text of IRS Notice 2019-21: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for March 2019 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)." (Internal Revenue Service [IRS])
[Official Guidance] Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, April and Second Quarter 2019
"The April 2019 lump sum interest assumptions will be 1.25 percent for the period during which a benefit is (or is assumed to be) 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 March 2019, these assumptions represent no change in the immediate rate and are otherwise unchanged.... The second quarter 2019 interest assumptions will be 3.07 percent for the first 20 years following the valuation date and 3.05 percent thereafter. In comparison with the interest assumptions in effect for the first quarter of 2019, these interest assumptions represent no change in the select period ... a decrease of 0.02 percent in the select rate, and an increase of 0.21 percent in the ultimate rate (the final rate)." (Pension Benefit Guaranty Corporation [PBGC])
California Supreme Court Rules No Vested Right to Airtime Purchases; Leaves California Rule Intact
"The Court initially concluded that the Contracts Clause generally does not prohibit the prospective reduction or elimination of statutory terms and conditions of public employment. The Court recognized only two exceptions: [1] when the statute or the circumstances of its enactment clearly evince legislative intent to create a contract right, and [2] when certain benefits of public employees, primarily pension benefits, are protected as an implied contract right." [Cal Fire Local 2881 v. CalPERS, No. S239958 (Cal. Mar. 4, 2019)] (Hanson Bridgett LLP)
Texas Supreme Court Affirms Cuts to Future Public Pension Benefit Accruals
"[T]he court held that the term 'benefits' as used in ... the Texas Constitution did not apply to future benefits, meaning that the formula to calculate future interest under the [deferred retirement option plan (DROP)] was not a protected benefit.... Because the amendment to the plan had no impact on funds deposited before the amendments became effective, no Section 66 violation existed." [Eddington v. Dallas Police and Fire Pension System, No. 17-0058 (Tex. Mar. 8, 2019)] (Husch Blackwell)
Texas Supreme Court Says Changes to Local Pension Plan Were Constitutional
"The Texas Supreme Court affirmed an earlier state appeals court ruling that changes to the [Deferred Retirement Option Plan(DROP)]interest rate and distribution policy at the Dallas Police & Fire Pension System that were approved in 2014 were constitutional." [Eddington v. Dallas Police and Fire Pension System, No. 17-0058 (Tex. Mar. 8, 2019)] (Pensions & Investments)
First Public Sector-Specific Mortality Tables Released (PDF)
"There is wide variation in the mortality tables used by public sector plans. A broad analysis of recent experience shows clear mortality differences among participants in different job categories in the public sector. Teachers have significantly higher life expectancies than other employment classifications at most ages." (Segal Consulting)
New Pension-Cut Court Decisions in California Begin with Little Change
"The ruling was a rare pension court loss for unions, led by Cal Fire Local 2881. While awaiting the next case, lawyers are analyzing the 45-page ruling ... for any hint of clarifying or reshaping the California Rule. Among the main points in the ruling is that public employment is ordinarily statutory, rather than contractual, and can be modified by the governing body." [Cal Fire Local 2881 v. CalPERS, No. S239958 (Cal. Mar. 4, 2019)] (Calpensions)
[Guidance Overview] PBGC Proposed Regs Would Simplify Multiemployer Plan Withdrawal Liability Calculations
"[U]nder the proposal an employer's withdrawal liability is determined in two steps. First, the plan sponsor determines withdrawal liability payments based on the reduced plan benefits after taking into account the benefit reductions and benefit suspensions. Next, the plan sponsor adds to this the employer's proportional share of the value of the benefit reductions and benefit suspensions." (Buck)
PBGC Proposed Rule Provides Methods for Computing Withdrawal Liability (PDF)
"[T]he proposed withdrawal liability rules: [1] Reflect previous guidance on disregarding adjustable benefit reductions. [2] Provide simplified methods for complying with the [MPRA] requirements to disregard benefit suspensions. [3] Provide new guidance on which contribution increases should be reflected when determining an employer's withdrawal liability assessment and annual payment amount." (Milliman)
House Panel Hears Ideas for Solving 'Urgent' Multiemployer Crisis
"Without congressional action, participants in struggling plans face benefit cuts of 50% or more; when the PBGC multiemployer program itself becomes insolvent as projected to happen by 2025, those cuts will deepen to 90% ... Over a 30-year horizon, an estimated $32 billion to $103 billion in taxes would not be paid if some plan participants lose their pension benefits, while government social safety program costs could increase $170 billion to $240 billion." (Pensions & Investments)
[Opinion] Testimony of American Academy of Actuaries to Senate HELP Subcommittee: Why Congress Must Address the Multiemployer Pension Crisis (PDF)
12 pages. "The trustees of the plans that are projected to be insolvent face a very difficult situation.... The contribution rate increases needed to achieve recovery are so great that if they were imposed, the employers would be unable to remain in business or would choose to withdraw from the plans. For the plans that are unable to meet the criteria for benefit reductions under MPRA, they have no alternative other than to spend down their assets and wait for insolvency to occur.... Congress faces a dual challenge. Action is need ed to address the looming crisis that will occur when both plans and the PBGC exhaust their resources and reach the point of insolvency." (American Academy of Actuaries)
[Opinion] The Attack on Defined Benefit Plans' Actuarial Equivalence: Reasonable Becomes Unreasonable
"These lawsuits are questioning actuarial equivalence assumptions with regard to retirees who have already begun receiving benefit payments; thus they are questioning the rates applicable to benefits earned in the past. To go back historically and determine what actuarial equivalence mortality and interest rates should have been used (i.e. considered reasonable) over the history of the plan would be both administratively costly and nearly impossible." (Watkins Ross)
February 2019 Pension Finance Update
"Pension finance enjoyed a second straight good month to start 2019, as both stocks and interest rates moved higher. Both model plans ... improved in February: Plan A gained 2% and is now up 5% for the year, while Plan B gained less than 1% and is ahead almost 2% through the first two months of 2019[.]" (October Three Consulting)
[Opinion] The Troubling Decline in Private Sector DB Plan Coverage: Write to Your Senators (PDF)
"The Butch Lewis Act (S. 2147) ... is another proposed federal government rescue program to throw taxpayer dollars at a social problem... [P]rivate sector defined benefit plans pose a much larger set of problems due to the declining pension coverage of private sector employees whose pension benefits are not subject to collective bargaining." (H. C. Foster and Company)
FAS87 ASC715 Discount Rates and Moody's Rates, Updated February 28, 2019
An unofficial monthly report as of January 31, 2019, of the Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages (used as benchmarks by some corporate pension plans). (David Rigby, via BenefitsLink Message Boards)
Forecasting Investment Returns and Expected Return Assumptions for Pension Actuaries (PDF)
38 pages. "Information included in this document is intended to illustrate how actuaries select or recommend an expected investment return assumption or assess capital market models from an outside party and may also facilitate discussion with investment professionals to better understand the basis for their assumptions." (American Academy of Actuaries)
2018 Report Card on Pension Plan Funding
"This article looks at and grades the various drivers of pension plan funded status that occurred in 2018. When plan sponsors pull these factors together they will find opportunities in 2019 to manage volatility, and execute pension risk transfers to lower plan risk and cost. Finally, with the looming sunset of funding relief sponsors will want to have an eye towards future cash calls." (River and Mercantile Solutions)
[Opinion] What is Financial Stress Testing and Why Does It Matter?
"[Pew Research Center is] known for traveling to states and pushing for mandatory stress testing.... [M]ost public pension plans already conduct financial stress tests.... Pew's method of stress testing focuses on downside events only: times when the pension plan's investment returns fall significantly below expectations. This effectively rigs the outcome because the plan is going to look bad if you are only considering worst case scenarios." (National Public Pension Coalition)
[Opinion] Corporate Giveaways and the Funding of Public Pensions
"Public pensions are proven economic engines, generating $1.2 trillion in economic output in 2016 and supporting 7.5 million jobs.... In Kentucky, [a] state with a long history of underfunding public pension plans, the state actually gives away more each year through tax expenditures than it collects in tax revenue. [The] annual cost of funding pensions in Kentucky is only two-thirds of the cost of those corporate giveaways." (National Public Pension Coalition)
Annuity Purchase Update: February 2019 Interest Rates
"During 2018, the market experienced a favorable upward trend of rising interest rates which generally increased U.S. defined benefit plan funding ratios.... However, as interest rates began to drop in January and February 2019, annuity purchase costs began to increase along with plan liabilities. Significant cost volatility persisted these past 12 months." (October Three Consulting)
Piling On: Corporations Support the New York Times in Multiemployer Pension Calculation Dispute
"Several large employers are disputing how much money the New York Times owes a union multiemployer pension fund. Recently, six companies ... filed an amicus brief supporting the New York Times in its case before the US Court of Appeals for the Second Circuit.... The underlying issue in this case involves an actuarial method called the 'Segal Blend,' which often is used to value unfunded vested benefits and calculate withdrawal liability (an exit fee) from a union multiemployer pension plan." (McDermott Will & Emery)
Evidence Supports the Value of Actuarial Second Opinions for Plan Sponsors
"Nearly 70% of finance professionals believe their company has made significant business decisions based on bad financial data.... Roughly one-fourth said they were concerned about errors they know to exist, but hadn't identified.... With required contributions annually in the millions or even hundreds of millions or billions of dollars for many longer-term plans, the cost-value trade-off of a second opinion seems clear. If a plan sponsor got meaningful value one year in ten from such a second opinion, they will have paid for all ten of them many times over." (Benefits and Compensation with John Lowell)
Public School Teachers Strike for Higher Pay Amid Growing Retirement, Benefit Costs
"While average inflation-adjusted teacher salaries have been relatively stagnant since 1990, benefits costs have risen from 16.8 percent of expenditures in 1990 to 23 percent of today's much larger expenditure base.... Almost every state increased teachers' retirement benefits in the booming 1990s. But the additional promises were not accompanied by responsible funding plans. Overfunded at the turn of the millennium, by 2003, teacher pension plans were collectively short by $235 billion. By 2009, pension debt had more than doubled, to $584 billion." (USA TODAY)
[Opinion] Pritzker's Plan for Illinois Pensions: 'Clever' Tricks
"The big problem with the 'pay more later' idea -- which is 'we can't pay much more right now, but because of growth/inflation/whatever, we'll be able to pay more later' in longer form -- is that it doesn't necessarily become easier to pay more in the future. Ask Detroit and Puerto Rico, which saw substantial population drops in small periods of time, in a vicious cycle that lead to more-and-more unaffordable debt payments." (STUMP)
Public Pension Plan Sponsors Struggle to Contribute Sufficiently to Plans
"Between 2005 and 2016, employer contributions to 133 large state and municipal pension plans more than doubled from $42.4 billion to $88.1 billion; however, during that same period, the unfunded liabilities of these plans grew 245% from $290 billion in 2005 to $1.0 trillion in 2016 ... Most of the plans studied received insufficient contributions to reduce their unfunded liabilities[.]" (PLANSPONSOR; free registration required)
[Official Guidance] Text of IRS Notice 2019-16: Weighted Average Interest Rates, Yield Curves, and Segment Rates Applicable for February 2019 (PDF)
"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates used under Section 417(e)(3), and the 24-month average segment rates under Section 430(h)(2) ... In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I)." (Internal Revenue Service [IRS])
[Official Guidance] Text of PBGC Interest Rate Update for Benefits Payable in Terminated Single-Employer Plans, March 2019
"The March 2019 lump sum interest assumptions will be 1.25 percent for the period during which a benefit is (or is assumed to be) 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 February 2019, these assumptions represent no change in the immediate rate and are otherwise unchanged." (Pension Benefit Guaranty Corporation [PBGC])
Actuarial Approach for Retiree Spending and Pension Funding Use the Same Basic Actuarial Principles
"These basic actuarial principles include: [1] Making deterministic assumptions about the future; [2] Reflecting the time value of money; [3] Reflecting the concept of probabilities; [4] Reflecting mortality; [5] Use of actuarial present values; [6] Use of a generalized individual model that compares the present value of assets with the present value of liabilities; [7] Periodic gain/loss adjustment to reflect experience different from assumptions (annual valuations), and [8] Conservatism." (Ken Steiner, FSA Retired)
Public Pension Plan Investment Return Assumptions (PDF)
"[A]lthough the average nominal public pension fund investment return has been declining, because the average rate of assumed inflation has been dropping more quickly, the average real rate of return has risen, from 4.21 percent in FY02 to 4.56 percent in FY17. One factor ... is public pension funds' higher allocations to alternative assets, particularly to private equities, which usually have a higher expected return than other asset classes." (National Association of State Retirement Administrators [NASRA])
An Actuarial Analysis of Public Pension Plan Contributions in the U.S. (PDF)
24 pages. "Most of the plans studied received insufficient contributions to reduce their unfunded liabilities ... The percentage of plans whose contributions were insufficient to reduce unfunded liabilities as a dollar amount ... but were sufficient to reduce unfunded liabilities as a percent of payroll ... increased from 36% in fiscal year 2003 to 77% in 2017 ... [Of] plans whose contributions did not reduce unfunded liabilities as a dollar amount, ... more than half also fell short of the plans' Actuarially Determined Contributions (ADC) or other target contributions" (Society of Actuaries)
Key Investment Themes for Consideration by Corporate DB Plan Sponsors in 2019
"[1] Determine if the Investment Committee Governance structure is optimal in executing decisions.... [2] Re-assess your de-risking glide path.... [3] Re-evaluate composition of liability-hedging assets.... [4] Examine concentration risk in multi-LDI manager structures and explore merits of complementary and diversifying strategies.... [5] Evaluate portfolio structure of return-seeking assets.... [6] Establish an investment strategy to manage potential pension-risk-transfer activities." (NEPC)
PBGC Pilot Mediation Project Is Now Permanent
"The Mediation Program remains voluntary and available only for certain cases and eligible plan sponsors. Cases are generally ineligible for the program if: [1] the plan sponsor has a minimal ability to pay; [2] there is a pending court proceeding; or [3] there is limited time to act and the plan sponsor has declined to sign a standstill or tolling agreement." (Proskauer's ERISA Practice Center)
[Official Guidance] Treasury Department Approval of Southwest Ohio Regional Council of Carpenters Pension Plan Application for Reduction of Benefits (PDF)
"In consultation with the [DOL] and the [PBGC], Treasury has determined that the Fund is eligible to reduce benefits under MPRA and that your application satisfies the requirements of subparagraphs (C), (D), (E), and (F) of section 432(e)(9) of the Internal Revenue Code, as added by MPRA.... [No] reduction of benefits can take effect before a vote of the participants and beneficiaries of the Fund with respect to the proposed reduction." (U.S. Department of the Treasury)
Corporate Pensions Experience Great Start to 2019 (PDF)
"The funded status of the 100 largest corporate defined benefit pension plans improved by $19 billion during January ... The funded status deficit narrowed to $148 billion from $167 billion at the end of December 2018, the result of investment gains earned in January.... As of January 31, the funded ratio rose to 91.0%, up from 89.7% at the end of December." (Milliman)
PBGC Strikes Deal with Sears on Sale to Edward Lampert, ESL Investments
"The agreement is subject to approval by the U.S. Bankruptcy Court ... Details ... will not be disclosed publicly until the court makes them available. This agreement also clears the way for the PBGC to assume responsibility for Sears' two pension plans, which are covered under PBGC's single-employer insurance program." (Pensions & Investments)
Expiring Smoothing Provisions May Require Cash Calls to Fund Pensions Beginning in 2021
"Absent another law to further extend the pension smoothing provisions, we expect plan funding targets to increase at greater speed than the levels experienced in recent years beginning in the 2021 plan year. This projected increase in funding target liability, absent an offsetting increase in plan assets, is likely to deteriorate a plan's funded status.... Even plans that have experienced funding holidays for the last several years could see a cash contribution required in the 2021 plan year." (Milliman Retirement Town Hall)
Multiemployer Solvency Crisis: An Analysis of Proposed Adjustments to the PBGC's Benefit Guarantee
"[I]ncreasing the PBGC's benefit guarantee to $70 per year of service leads to a $44 billion increase in the projected present value of PBGC assistance payments. Freezing the plan five years before projected insolvency and cutting benefits to their guaranteed levels under current law leads to a $33 billion reduction in projected PBGC assistance payments. If implemented together, [these two provisions] lead to a $34 billion increase in projected PBGC assistance payments." (The Pension Analytics Group)
Average Funding Ratio for Public Pension Plans Increases in 2018
"Results of the 2018 NCPERS Public Retirement Systems Study showed that the average funding ratio for all plans that responded rose to 72.6% in 2018, from 71.4% in 2017. For pension plans that participated both years, the average funding ratio jumped to 72.2%.... [O]ne-year investment returns averaged 13.4% for all pension plans reporting in 2018, well above the 7.8% average return reported in 2017." (Pensions & Investments)
[Opinion] House Multiemployer Bill Emulates Single-Employer DB Risk Strategies -- With a Twist
"[T]he Rehabilitation for Multiemployer Pensions Act (RMPA) recently introduced in the House by Representative Richard Neal (D-MA) ... proposes to address multiemployer DB risk using two strategies single-employer plans have been increasingly implemented over the past decade: [1] Purchasing annuities to transfer risk permanently to an insurance company. [2] Hedging interest rate risk using liability driven investing (LDI) strategies featuring high quality, duration matched bonds.... Putting the uncertainty of the PRA loan repayments aside, the bill protects retiree pensions better than anything else being proposed." (The Principal Blog)
[Official Guidance] Treasury Department Approval of Toledo Roofers Local No. 134 Pension Fund Application for Reduction of Benefits (PDF)
"Treasury has determined that the Plan is eligible to reduce benefits under MPRA and that your application satisfies the requirements of subparagraphs (C), (D), (E), and (F) of section 432(e)(9) of the Internal Revenue Code, as added by MPRA. This notification is not a final authorization to implement the benefit reduction described in your application. Pursuant to Code section 432(e)(9)(H), no reduction of benefits can take effect before a vote of the participants and beneficiaries of the Plan with respect to the proposed reduction." (U.S. Department of the Treasury)
[Official Guidance] Treasury Department Approval of Mid-Jersey Trucking Industry and Local 701 Pension Fund Application for Reduction of Benefits (PDF)
"Treasury has determined that the Plan is eligible to reduce benefits under MPRA and that your application satisfies the requirements of subparagraphs (C), (D), (E), and (F) of section 432(e)(9) of the Internal Revenue Code, as added by MPRA. This notification is not a final authorization to implement the benefit reduction described in your application. Pursuant to Code section 432(e)(9)(H), no reduction of benefits can take effect before a vote of the participants and beneficiaries of the Plan with respect to the proposed reduction." (U.S. Department of the Treasury)
[Official Guidance] Text of PBGC Proposed Regs: Methods for Computing Withdrawal Liability, Multiemployer Pension Reform Act of 2014
68 pages. "[PBGC] proposes to amend its regulations on Allocating Unfunded Vested Benefits to Withdrawing Employers and Notice, Collection, and Redetermination of Withdrawal Liability. The proposed amendments would implement statutory provisions affecting the determination of a withdrawing employer's liability under a multiemployer plan and annual withdrawal liability payment amount when the plan has had benefit reductions, benefit suspensions, surcharges, or contribution increases that must be disregarded. The proposed amendments would also provide simplified withdrawal liability calculation methods." (Pension Benefit Guaranty Corporation [PBGC])
Public Employees Living Longer, Deepening State Pension Crisis
"In the private sector, defined-benefit pensions must follow mortality tables issued by the federal government. No such strictures bind public pensions.... Longer lives for public employees will mean higher costs, and not just for pension plans. Many state and local governments promise to pay for the health care of their retired workers, but few have enough money set aside to do so." (City Journal)
Public Plans Receive Their Own Mortality Tables
"Officially known as the Pub-2010 Public Retirement Plans Mortality Tables Report, it is the first look at public-sector mortality distinct from the private sector. The findings are based on the experience of 35 public systems covering 78 retirement plans between 2008 and 2013, broken down by three job categories: general employees, public safety employees and teachers. The tables also suggest a correlation between higher income and lower mortality." (Pensions & Investments)
Drivers of U.S. Mortality Improvement (PDF)
13 pages. "Experts from inside and outside the insurance/retirement industry were invited to participate in a daylong Expert Panel Forum discussion to provide input about drivers of U.S. mortality improvement for the short and long term. The issues addressed included: [1] What are going to be the key drivers of U.S. mortality? [2] How will key drivers of mortality interact? [3] How might factors discussed change mortality rates for different age groups, most noticeably below and above age 65?" (Society of Actuaries)
Multiemployer Pension Reform Efforts Continue After Demise of Congressional Joint Select Committee, Part 2
"Eligible plans could apply for a loan in an amount needed to fund the plan's obligations for the benefits of participants and beneficiaries in pay status at the time the loan is made. Plans that receive a loan would then be required to fund the plan's obligations to those in pay status in one of the following ways: [1] purchasing annuity contracts from an insurance company ... [2] investing the loan proceeds in a cash or fixed income (bond) portfolio designed to match the specific benefit liabilities ... [3] invest in some other portfolio prescribed by the Secretary of the Treasury in regulations." (Morgan Lewis)
Pension Finance Update, January 2019
"January was a very good month for stocks.... Bonds gained ground last month as well, driven by lower interest rates. Treasury bonds earned a fraction of 1% in January, while corporate bonds earned 1%-3% as credit spreads narrowed by more than 0.1%. A diversified bond portfolio earned 1%-2% in January, with long credit enjoying the biggest gains. Overall, [the] traditional 60/40 gained 5%-6% in January, while the conservative 20/80 portfolio grew about 3%." (October Three Consulting)
How to Talk to Employers About DB Plans (or, 'Pensions in Plain English') (PDF)
"The purpose of this column is to translate some key actuarial and investment concepts into something approaching plain English, and to provide a framework for helping an employer who has a DB plan understand what they have and what to do with it. The purpose is not to teach the basics, but to attempt to show a path toward communicating the basics meaningfully." (Pentegra, in Journal of Pension Benefits)
[Opinion] No, Pension Obligation Bonds Aren't a Form of 'Refinancing'
"The city owes pension liabilities.... In principle, they could indeed 'pay off' the benefits, if they purchased annuities for retirees, or if they offered lump sum buyouts to plan participants. And corporations are doing this increasingly often ... [P]ublic pensions are, with few exceptions, valued using the expected return on assets as their valuation interest rate, rather than, as with corporate pensions, a bond rate.... When a city does the same math, the cost of buying annuities is considerably higher than the (artificially) lower liability valuation. And workers would be foolish to accept a lump sum at lower value." (Forbes)
FAS87 ASC715 Discount Rates and Moody's Rates, Updated January 31, 2019
An unofficial monthly report as of January 31, 2019, of the Moody's Daily Long-term Corporate Bond Yield Averages and Moody's Daily Treasury Yield Averages (used as benchmarks by some corporate pension plans). (David Rigby, via BenefitsLink Message Boards)
Annuity Purchase Update: 2018 Interest Rates
"During 2018, the market experienced a favorable upward trend of rising interest rates which generally increased U.S. defined benefit plan funding ratios. As interest rates climbed, plan liabilities dropped which led to a reduction in annuity purchase costs. However, as interest rates began to drop in January 2019, annuity purchase costs began to increase along with plan liabilities." (October Three Consulting)
PBGC Finalizes and Expands Mediation Program
"In order to request to participate in the program, the sponsor of a terminated plan must submit within 120 days of the plan termination date certain information ... regarding the sponsor's and its controlled group's net worth, including, for example, audited financial statements, information regarding sales or sales offers, and appraisals." (Groom Law Group)
CalSTRS Wants to Double Co-Investments
"CalSTRS's overall private equity returns for the one-year period ending March 31 totaled 15.5%, the largest return of any asset class. CalSTRS currently has 8.1% of its overall portfolio devoted to private equity, but its long-term target is 13%." (Chief Investment Officer [CIO])
[Opinion] Are U.S. Public Pensions Cooked?
"[To] 'stress test' the funded status of US public pensions or any pension for that matter, you need to look at various scenarios where interest rates decline marginally or precipitously over the next two or three years.... [A] lot of US public pensions have not done this or if they have, they're not sharing their results because it will scare the bejesus out of their members." (Pension Pulse)
Weyerhaeuser Transfers $1.5 Billion in U.S. Pension Plan Liabilities
"The transaction, which is expected to close later in the first quarter, will transfer the benefit payments of about 28,500 U.S. retirees and beneficiaries who receive benefits of less than $1,085 a month[.]" (Pensions & Investments)
 
About Us

Testimonials

Privacy Policy

Post a Job

Advertise in the BenefitsLink Newsletters

Add Your Company to the Directory of Vendors and Software

Submit a News Item, Press Release, Webcast or Conference

Contact Us

Payment Portal

© 2019 BenefitsLink.com, Inc.