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Measuring UVBs for Variable-Rate Premiums: The Alternative vs. Standard Method Election Due October 16, 2023
October Three Consulting Link to more items from this source
Aug. 31, 2023

"The combination of [1] an unprecedented gap between standard and alternative interest rates due to the sharp increase in rates since 2021 and [2] the steep increase in the premium rate, from 0.9% of UVBs in 2013 to 5.2% in 2023, means that the dollar amounts at stake with respect to the VRP calculation dwarf all past years. For a typical $100 million plan, the decision could easily be worth $1 million or more."

Tags: Funding of DB Plans  •  PBGC

GAO Says PBGC's SFA Interest Rates OK Under Appropriations Law
Segal Link to more items from this source
Aug. 22, 2023

"The General Accountability Office (GAO) has determined that the PBGC did not violate its appropriations authority when adopting two interest rates for projecting the amount of multiemployer DB relief in the form of special financial assistance (SFA) needed. The GAO's narrow decision on appropriations law was in response to a query from the PBGC's Inspector General whether the PBGC's final rule approach raised issues under the Antideficiency Act."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Approves $36 Million in SFA for Local 305 CIO Fund
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Aug. 18, 2023

"[PBGC] has approved the application submitted ... by the Retirement Plan of the Retirement Fund of Local 305 CIO's Pension Fund. The plan, based in Mineola, New York, covers 918 participants in the service industry ... [and] will receive approximately $36.3 million in special financial assistance ... The plan was projected to become insolvent and run out of money in 2024."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Looks to Modernize Actuarial Assumptions
PLANSPONSOR; free registration may be required Link to more items from this source
Aug. 18, 2023

"The proposal would update the PBGC's mortality table to be more current, update interest rate assumptions to better reflect current market conditions and simplify the administrative expense calculation."

Tags: Funding of DB Plans  •  PBGC

Text of PBGC Proposed Regs: Valuation Assumptions and Methods
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Aug. 17, 2023

46 pages. "This proposed rule would update the interest, mortality, and expense assumptions used to determine the present value of benefits for a single-employer pension plan under subpart B of the [PBGC's] regulation on Allocation of Assets in Single-Employer Plans, to determine components of mass withdrawal liability for a multiemployer pension plan, and for other purposes." [Also released: PBGC's Valuation Methodology: Derivation of ERISA 4044 Yield Curve, which describes the principles and methods that would be used to create the 4044 yield curve beyond what was included in the preamble to the Proposed Regs.]

Tags: Funding of DB Plans  •  PBGC

PBGC Provides ERISA 4010 Filing Relief
Bolton Link to more items from this source
[Guidance Overview]
Aug. 17, 2023

"Plans that would be required to report to PBGC under ERISA 4010 for a single year are typically not plans that pose a significant risk to the single employer insurance system. Recognizing this, as well as the unusual market conditions prevalent in the reference period, PBGC is granting a one-time waiver of the 4010 reporting requirements with respect to an 'information year' for plans and plan sponsors that meet [certain] criteria."

Tags: Funding of DB Plans  •  PBGC

PBGC Provides One-Time 4010 Filing Waiver for Certain Employers
Proskauer Link to more items from this source
[Guidance Overview]
Aug. 15, 2023

"Absent relief from the PBGC, many entities that are not typically subject to 4010 reporting would have been required to submit a filing this year.... To take advantage of the waiver, the filer must notify the PBGC by email no later than 15 days before the 4010 report would otherwise be due."

Tags: Funding of DB Plans  •  PBGC  •  Reporting to Government Agencies

PBGC Gives Some DB Plan Sponsors 4010 Reporting Relief
Mercer Link to more items from this source
[Guidance Overview]
Aug. 15, 2023

"Sponsors of plans with valuation dates from Oct. 1, 2022, through March 1, 2023, may -- but are not required to -- recalculate their plans' funding target attainment percentage (FTAP) using current market interest rates and market value of assets. If the resulting FTAP is at least 85% (rather than the customary 80%) and certain other conditions are met, the plan won't trigger PBGC 4010 reporting."

Tags: Funding of DB Plans  •  PBGC

PBGC Provides One-Time 4010 Filing Waiver for Certain Employers
Proskauer Link to more items from this source
[Guidance Overview]
Aug. 14, 2023

"Absent relief from the PBGC, many entities that are not typically subject to 4010 reporting would have been required to submit a filing this year. As explained in [Technical Update Number 23-1], the 'atypical and almost unprecedented interaction of market conditions' in late 2022 and early 2023 is expected to drive many plans' 4010 FTAP below 80% 'for the first time in a long time (or perhaps ever).' The same plans might have 4010 FTAPs at or above the 80% threshold if the calculation used a market-based approach that does not smooth out discount rates and asset values over time."

Tags: Funding of DB Plans  •  PBGC  •  Retirement Plan Administration

Recent Updates Regarding the Special Financial Assistance Program
Morgan Lewis Link to more items from this source
[Guidance Overview]
Aug. 14, 2023

"Plans that are eligible for SFA should be aware of new processes established by PBGC on July 27, 2023 for [1] requesting an independent death audit from PBGC, [2] expedited processing of minimally revised applications, and [3] submitting revised lock-in applications. PBGC has also added a new template for plans to summarize assumptions."

Tags: Multiemployer Plans  •  PBGC

PBGC Update: 4010 Reporting Waivers and Benefit Payment Regs
Groom Law Group Link to more items from this source
[Guidance Overview]
Aug. 11, 2023

"Recognizing [that] market conditions [in late 2022 and early 2023] may produce unusually low funding results in the actuarial valuations, [in Technical Update 23-1] PBGC is providing a waiver if certain conditions are satisfied ... The general changes in the Final Regulations are ... [1] No lump sums once PBGC is trustee.... [2] Increased limit for small lump sum distributions.... [3] Clarification to QPSA payments.... [4] Lump sums required for estates.... [5] Withdrawal of mandatory employee contributions.... [6] Payment corrections.... [7] Method for valuation of assets."

Tags: Funding of DB Plans  •  PBGC  •  Retirement Plan Administration

Text of PBGC Technical Update 23-1: One-Time 4010 Filing Waiver
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Aug. 8, 2023

"In recognition of the atypical market conditions of late 2022 and early 2023, and the way those conditions impact assets and liabilities for purposes of determining whether a 4010 filing is required, this Technical Update provides a one-time waiver of the 4010 filing requirement for filers meeting specified criteria.... Entities using this waiver must notify PBGC no later than 15 days before the date the 4010 filing would have been due if not for the waiver."

Tags: Funding of DB Plans  •  PBGC  •  Reporting to Government Agencies

PBGC Reports Program Solvency and Surplus
planadviser Link to more items from this source
Aug. 4, 2023

"Industry experts seek scaling back of premiums as the pension insurance agency expects to remain solvent long into the future."

Tags: PBGC  •  Retirement Plan Administration

Window of Opportunity Available for Reducing 2023 PBGC Premiums
Morgan Lewis Link to more items from this source
[Guidance Overview]
Aug. 3, 2023

"Plans subject to an alternative method election prior to 2019 can elect to switch back to the standard method for 2023. If a plan elected to use the alternative method in 2019 or later, the plan would not be able to switch back to the standard method. However, such a plan may still benefit from electing the full yield curve approach. ... [E]lections must be made by October 16, 2023 for calendar year plans."

Tags: PBGC  •  Retirement Plan Administration

PBGC Projections Report: FY 2022 (PDF)
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Aug. 3, 2023

"PBGC's Multiemployer Program is likely to remain solvent for more than 40 years, similar to the projection in last year's Projections Report.... Projections of Multiemployer Program solvency are highly dependent on the solvency of plans that have or will receive Special Financial Assistance (SFA) .... Some of these plans have or will receive larger SFA amounts than previously expected due to 2022 asset losses but are also projected to have higher future rates of asset returns than projected in last year's model.... The Single-Employer Program is projected to remain in a positive net financial position over the next decade in nearly all the modeled scenarios."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Approves $260 Million in SFA for IUE-CWA Plan
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Aug. 3, 2023

"[PBGC] has approved the application submitted ... by the IUE-CWA Pension Plan. The plan, based in Pittsburgh, Pennsylvania, covers 13,760 participants in the manufacturing industry [and] will receive approximately $260 million in special financial assistance ... The plan was projected to become insolvent and to run out of money in 2029."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC Approves $62 Million in SFA for Newspaper Guild International Plan
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Aug. 3, 2023

"[PBGC] has approved the application submitted ... by the the Newspaper Guild International Pension Plan. The plan, based in Washington, D.C., covers 5,824 participants in the printing industry [and] will receive approximately $62 million in special financial assistance ... The plan was projected to become insolvent and run out of money in 2034."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

Changing the Question for PBGC Premium Savings
Principal Financial Group Link to more items from this source
July 31, 2023

"Instead of directly requesting a change in filing method from the PBGC, sponsors can find a different route to lower premiums by changing the basis on which their minimum funding target liability under the Pension Protection Act (PPA) is calculated."

Tags: Funding of DB Plans  •  PBGC  •  Retirement Plan Administration

PBGC Updates SFA Information, Including Census Data Required Documentation
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
July 28, 2023

These updates include changes to the application instructions requiring the submission of census data to enable PBGC to perform an independent death audit to identify deceased pension plan participants and the submission of an assumptions summary. In addition, PBGC has provided a process for plans to request expedited processing of revised applications and a process for plans to submit revised lock-in applications in limited circumstances. These application requirements and other updates, including a new Template 10, are reflected in the General SFA Application Filing Instructions, SFA Application Amendment Cover Letter, and Lock-in Application.

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

Should You Switch to the Standard Method to Calculate Your 2023 PBGC Premiums?
Milliman Link to more items from this source
July 24, 2023

"For plan sponsors that have the option to switch from the alternative method to the standard method in 2023, there are significant savings to be seen. However, making this switch locks the plan sponsor into the standard method for the next five years. If interest rates fall over this period, then the savings seen in 2023 could be wiped out by higher PBGC premiums in future years. Given uncertainty about future interest rates, when is the right time for a plan sponsor to switch methods and lock themselves in for the next five years?"

Tags: Funding of DB Plans  •  PBGC

PBGC Finalizes Rule on Asset Valuation and Benefit Payments
Mercer Link to more items from this source
[Guidance Overview]
July 14, 2023

"The final rule -- which is largely unchanged from the proposal -- primarily codifies PBGC's own procedures for paying benefits from trusteed plans. The rule shouldn't directly affect ongoing plans, but some sponsors with hard-to-value plan assets may need to adjust their asset valuation methods in certain circumstances."

Tags: Funding of DB Plans  •  PBGC

PBGC Modifies Benefit Payment Regs for Terminated Single-Employer Plans
PLANSPONSOR; free registration may be required Link to more items from this source
[Guidance Overview]
July 12, 2023

"The final rule explains that when a single-employer plan terminates, either under a distress situation or in an involuntary termination, the PBGC normally becomes the trustee for that plan and is responsible for administering its benefits. Once under the PBGC's trusteeship, lump sum payments are not permitted unless the amount payable to a beneficiary is ... $5,000 or less.... The PBGC clarifies that this general prohibition on lump sum payments applies even when the participant requested a lump sum prior to plan termination, but it has not yet been paid out."

Tags: PBGC  •  Retirement Plan Administration

Text of PBGC Final Regs: Benefit Payments and Allocation of Assets
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
July 10, 2023

26 pages. "This final rule amends PBGC's regulations on benefit payments, allocation of assets, and termination liability to increase transparency of PBGC benefits administration, clarify and simplify language, increase flexibility, codify practices, and harmonize regulatory provisions with statutory provisions."

Tags: PBGC  •  Retirement Plan Administration

OIG Report: Audit of PBGC's Review of Initial Special Financial Assistance Applications (PDF)
Office of Inspector General, Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
July 3, 2023

"PBGC should better document its analysis of potential application issues and management concurrence regarding the resolution of those issues to better ensure management oversight. Second, to improve PBGC's ability to detect discrepancies in plan calculations for suspended benefits and a plan's reported Contribution Base Unit (CBU) history, the Corporation should develop and implement additional controls to assess (a) plan calculations for previously suspended benefits and (b) a plan's reported CBU history."

Tags: Multiemployer Plans  •  PBGC

PBGC Regulatory Agenda, Spring 2023: Includes New Reg Project
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
June 14, 2023

Changes from the Fall 2022 PBGC Regulatory Agenda:

Added to Proposed Rules:
[1212-AB56] Technical Amendments; SECURE 2.0 Act and Other Updates

Moved from Proposed to Final Rules:
[1212-AB54] Actuarial Assumptions for Determining an Employer's Withdrawal Liability

Tags: Funding of DB Plans  •  PBGC  •  Retirement Plan Administration  •  Retirement Plan Design

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