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61 pages. Full text of Nov. 9, 2023 exam with answers, published online by IRS.

"[M]ost (97%) corporate pension plans can achieve full funding without a significant draw on corporate cash, based on the respective firms' latest disclosures as well as market and interest rate movement so far in 2023.... 62% of companies' pension plans would be fully funded in less than 10 years with a contribution rate of only 1% of corporate cash flow, while an additional 35% of companies' pension plans could be fully funded in less than 10 years at a 3-5% contribution rate."

"This rule amends the [PBGC's] regulation on Allocation of Assets in Single-Employer Plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2024. This table is needed to compute the value of early retirement benefits and, thus, the total value of benefits under a plan.... This rule is effective January 1, 2024."

"During October, the estimated cost to transfer retiree pension risk to an insurer in a competitive bidding process increased from 101.1% of a plan's accounting liabilities (accumulated benefit obligation, or ABO) to 101.9% of those liabilities.... During the same period, the average annuity purchase cost across all insurers in our index rose 90 basis points, from 103.5% to 104.4%."

9 pages. Topics include: [1] Full yield curve; [2] SECURE 2.0 correction provisions; [3] JBEA rules; [4] Ways to streamline funding method changes for spinoffs; [5] Proposed mortality regulations; [6] Section 420 transfers; [7] Allocation of prior year contributions to plans involved in a spinoff.

"For plan sponsors, having a fully funded plan, or ... one with a significant surplus, opens up a number of ... options. Without the need to outpace the interest rates incorporated in the calculation of liabilities, the plan may move to an investment strategy that trades higher returns for lower risk. Risk may also be transferred out of the plan through a lump sum offer to participants, an annuity purchase from an insurer, or a complete termination, which may involve both."

157 pages. "The PBGC Single-Employer Program's financial status showed improvement and has been in a positive net financial position, which is projected to grow over the next 10 years. The PBGC Multiemployer Program improved during FY 2023 to a positive net position and is likely to remain solvent for more than 40 years.... As of the end of FY 2023, PBGC had received 135 SFA applications requesting a total of $71.0 billion in SFA and had approved 100 applications for $53.5 billion in SFA"

"Earlier this month, the [PBGC] Office of Inspector General (OIG) published a report disclosing that the PBGC overpaid the Central States fund by $127 million after the plan included 3,479 dead participants in its bailout request ... In a letter sent to [Teamsters President Sean O'Brien], Cassidy urged the Central States Pension Fund to fulfill their commitment to return the $127 million overpayment to American taxpayers and requested information as to how the union will prevent this kind of poor mismanagement in the future."

"A third straight month of declines in financial markets during October 2023 lowered the estimated funded status of the 100 largest U.S. public pension plans from 73.2% as of September 30, 2023, to 71.4% as of October 31, 2023 ... During October 2023, the deficit between the estimated plan assets and liabilities increased from $1.636 trillion at the beginning of the month to $1.750 trillion at the end of the month."

"This notice provides guidance on the corporate bond monthly yield curve, the corresponding spot segment rates ... and the 24-month average segment rates ... [as well as] the interest rate on 30-year Treasury securities ... as in effect for plan years beginning before 2008 and the 30-year Treasury weighted average rate[.]"

"The funding status of U.S. corporate pension plans increased in October, largely due to a reduction in liabilities stemming from an increase in discount rates, which were offset by negative investment returns. According to some trackers, pension funding status is at its highest point in decades."

"[T]he benchmarking approach a pension uses tends to change after they bring in new external consultants -- which public plans do often. ... [T]hese changes often lead to pensions choosing benchmarks that are easier to beat than the measures they had been using.... Beating or missing return expectations can affect how pension boards determine the plan's asset allocation. Consultants, meanwhile, gain more business when their pension clients beat the benchmarks."

10 pages. "[T]he dollar value of deficits does not necessary decline after a risk transfer, and funded ratios commonly decline unless the plan contributes at the same time.... [L]iability duration may increase as a result of a risk transfer, reducing interest rate hedge ratios (unless adjustments to the asset allocation are made). Still, reducing future benefit payments typically means less overall risk in absolute terms."

"The aggregate funded ratio for U.S. corporate pension plans increased by an estimated 0.6 percentage points in October, ending the month at 105.5% ... This month's change in funded ratio can be attributed to a 4.0% decrease in liability value, partially offset by a 3.4% decrease in asset value. The aggregate funded ratio is estimated to have increased by 6.8% and 6.4% year-to-date and over the trailing twelve-month periods, respectively."

"In 2009, The Post closed its pension plan to new employees -- and those who remained in the plan had their benefits frozen after Amazon founder Jeff Bezos acquired the newspaper. The pension fund itself, however, didn't freeze. As federal filings show, it has fattened to the point that it can finance 240 exit packages without breaking an actuarial sweat."

"[L]iabilities will typically decrease one to two percent as a result of changing from the 2023 static mortality to the 2024 updated generational mortality.... The ability to pay benefits under certain payment options may be affected by the proposed changes.... For plans that might otherwise be under restrictions, a decrease triggered by the new mortality table could increase the plan's AFTAP above one of the thresholds that trigger a benefit payment restriction."

"[On] a national basis, contributions made by employers -- states and local governments -- in 2022 accounted for 78 percent of all contributions received by public pension plans. The remaining contributions were paid by public employees.... [Of] the $10+ trillion in public pension revenue received during the 30-year period since 1993, 37 percent, or more than $3.8 trillion, came from contributions paid by employers and employees."

"LDI can significantly reduce interest rate risk and help moderate market volatility ... LDI can also help provide stable cash flows, making it easier for plan sponsors to meet pension obligations.... But LDI also poses potential challenges, the most significant of which may be the ability to actively manage the LDI portfolio vs. the plan's liabilities to avoid underperformance, downgrades, and defaults."

"Pension finances were tricked by falling stock markets but treated by higher interest rates in October, a pattern repeated for three straight months now, producing modest declines for pension sponsors."

"The funded status of the 100 largest U.S. corporate defined benefit pension plans increased by $5 billion during October ... As of October 31, the funded ratio climbed to 104.2%, from 103.6% at the end of September, reaching a new high for the year. The funded status surplus increased to $50 billion."

18 pages. "The major provisions of this regulatory action amend PBGC's regulations on: [1] Special Financial Assistance by PBGC to clarify the calculation methodology for the condition requiring a phased recognition of SFA in a plan's determination of withdrawal liability for plans that receive SFA; and [2] Termination of Multiemployer Plans to update the reference to the dollar limit for lump-sum distributions in the closeout of sufficient multiemployer plans. In addition, this regulatory action makes other clarifications, corrections, and updates."

"There are several factors affecting a public pension plan's ability to invest in illiquid assets: plan demographics and maturity, funded ratio, and funding policy, to name a few.... [Of] all the plan characteristics [NCPERS] analyzed, a plan's funding policy had the largest impact on a plan's ability to invest in illiquid assets."

An unofficial monthly report 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).

PBGC [has] posted a table showing the applicable present values for 2024 plan years. A two-column spreadsheet version of the table is also available.

"The regulation reflects the first update to the base mortality rates since 2018 and has a surprise adjustment to the mortality projection scale to reflect the impact of COVID-19 for 2020 through 2023. The final rule lets most sponsors using plan-specific mortality tables continue relying on them for 2024, but another IRS proposal addresses substitute mortality tables for 2025 and later valuation years."