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News

All News > Funding of DB Plans

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Pension Funding Update, February 2021
River and Mercantile Link to more items from this source
Mar. 5, 2021

"Pension discount rates continued increasing in February, and are up almost 0.50% so far in 2021, which means lower liabilities for pension plan sponsors.... [M]ost pension plans will see at least modest improvements in their funded status for the month. Those with higher equity allocations will see the largest improvements."

Tags: Funding of DB Plans

Single Employer DB Funding Relief in the American Rescue Plan Act: Technical Issues Presented by Current Proposal
October Three Consulting Link to more items from this source
Mar. 4, 2021

"Although many sponsors will welcome the funding relief in ARPA, in its current form that legislation does present some technical issues, mainly due to the early/retroactive effective dates of some proposals."

Tags: Funding of DB Plans  •  Retirement Plan Design  •  Retirement Plan Policy

De-Risking in 2021, Part 2: The De-Risking Decision in the Context of Rising Interest Rates
October Three Consulting Link to more items from this source
Mar. 4, 2021

"If this relationship between (older, lower) lump sum valuation rates and current rates continues for the rest of 2021 ... paying out a lump sum in 2022 will generally be a 'better deal' for the sponsor than paying it out in 2021. And second, if a lump sum is paid out in 2021, the additional cost (resulting from the use of the older, lower valuation rate) will show up as an increase in balance sheet net liabilities."

Tags: Funding of DB Plans  •  Retirement Plan Design

Multiemployer Pension Reform Ruled Eligible for the COVID Relief Act
Seyfarth Link to more items from this source
Mar. 3, 2021

"On [March 1], the Senate Parliamentarian ruled that the multiemployer pension plan bailout provisions in the $1.9 trillion American Rescue Plan (a.k.a. the latest COVID-19 relief bill) would be eligible for a simple majority vote in the Senate as part of the budget reconciliation process, and thus will remain as part of the relief bill likely to become law shortly."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

Pension Finance Update, February 2021
October Three Consulting Link to more items from this source
Mar. 3, 2021

"Pension finance enjoyed its best month in more than three years in February, buoyed by higher stock prices and higher interest rates.... Plan A gained 5% and is now up more than 7% for the year, while the more conservative Plan B added 1% and is now up more than 1% through the first two months of 2021[.]"

Tags: Funding of DB Plans

Pension Relief Plan in COVID-19 Stimulus Bill
Burypensions Link to more items from this source
Mar. 2, 2021

"Section 9704 would establish a fund within the PBGC and appropriate amounts as necessary to provide special financial assistance to certain multiemployer DB plans. The special financial assistance would not have to be repaid."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

FAS87 ASC715 Discount Rates and Moody's Rates, February 26, 2021
BenefitsLink Message Boards Link to more items from this source
Mar. 2, 2021

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).

Tags: Funding of DB Plans

Fourth Quarter U.S. Single-Premium Pension Buy-Out Sales Jump 21%
LIMRA Link to more items from this source
Mar. 2, 2021

"There were 177 new buy-out contracts sold covering 259,342 participants in the fourth quarter. For the full year, there were 432 buy-out contracts sold, representing 408,277 participants. In the fourth quarter 2020, there were two buy-in contracts totaling $1.6 billion. This is the highest quarterly total for buy-in products ever reported. For the year, buy-in product sales totaled $1.8 billion, 4% below 2019 sales results."

Tags: Funding of DB Plans

Is Relief on the Way for Struggling Multiemployer Pension Plans?
Jackson Lewis P.C. Link to more items from this source
Feb. 26, 2021

"Questions regarding how many pension plans will require relief, and practical considerations about how the PBGC will secure the funding to relieve the eligible plans, remain up in the air. Interestingly, there may be fewer eligible funds than predicted."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  Retirement Plan Policy

With Lower Returns on the Horizon, Public Pensions Will Turn to Riskier Assets
MarketWatch Link to more items from this source
Feb. 26, 2021

"State and local government pension systems are increasingly dependent on investment returns, and at risk of increasingly volatile results, as funding levels remain depressed and systems increasingly start to pay out more than they take in[.]"

Tags: Funding of DB Plans  •  State and Local Government Plans

It's Time to Consider a Deliberate Pension Plan Funding Policy
River and Mercantile Link to more items from this source
Feb. 26, 2021

"This article looks at where contribution requirements are headed and the considerations pension plan sponsors should have in determining how much to contribute to their pension plan trust."

Tags: Funding of DB Plans

IFRS Conversion Considerations: Employee Benefits
Schneider Downs Link to more items from this source
Feb. 25, 2021

"Organizations considering a conversion to the International Financial Reporting Standards (IFRS) from U.S. Generally Accepted Accounting Policies (U.S. GAAP) should note that there are differences surrounding employee benefit plans. This could result in a significant impact to the financial statements, particularly for organizations with large defined benefit plans."

Tags: Accounting  •  Funding of DB Plans

North Carolina Lowers Earnings Assumption for State Employee Pension Plan
CarolinaCoastOnline Link to more items from this source
Feb. 25, 2021

"[T]he assumed rate of return for investments in the North Carolina Retirement Systems Fund will be reduced from 7% to 6.5%. The move was unanimously approved by the boards representing teachers, state employees and local government employees on Jan. 28."

Tags: Funding of DB Plans  •  State and Local Government Plans

Pension De-Risking: Don't Be Duped by the Name
Kantor & Kantor Link to more items from this source
[Opinion]
Feb. 25, 2021

"There are new insurance companies that have been formed for this type of business and there are old insurance companies that restructured the way they had historically operated. The structure is highly complex and rides the legal edge of several intersecting regulations, all of which may be extremely risky both for the insurance companies and for the employees whose pensions are insured."

Tags: Funding of DB Plans  •  Retirement Plan Investments

Provisions in Budget Reconciliation Bill Would Affect Single-Employer and Multiemployer Pension Plans
Congressional Research Service [CRS] Link to more items from this source
Feb. 23, 2021

"This In Focus describes ... provisions of the Butch Lewis Emergency Pension Plan Relief Act of 2021 ... A separate In Focus ... details Section 9704 in Subtitle H.... [1] Temporary delay of designation of multiemployer plans as in endangered, critical, or critical and declining status.... [2] Temporary extension of the funding improvement and rehabilitation periods for multiemployer plans in critical and endangered status for 2020 or 2021.... [3] Adjustments to funding standard account rules.... [4] Extended amortization for single employer plans.... [5] Modification of special rules for minimum funding standards for community newspaper plans.... [6] Cost of living adjustment freeze." [IF 11766, Feb. 23, 2021]

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

Puerto Rico Governor Rejects Key Deal with Creditors to Reduce Debt Due to Pension Cuts
NBC News Link to more items from this source
Feb. 23, 2021

"Puerto Rico's governor announced Tuesday that a federal control board reached a key deal that would reduce the U.S. territory's overall debt by nearly 80 percent, but that his administration is rejecting it because it would require cuts to the island's crumbling public pension system."

Tags: Funding of DB Plans  •  Puerto Rico Plans

Bill Would Provide Special Financial Assistance to Multiemployer Plans
Congressional Research Service [CRS] Link to more items from this source
Feb. 23, 2021

"Section 9704 [of the Butch Lewis Emergency Pension Plan Relief Act of 2021] would establish a fund within the PBGC and appropriate amounts as necessary to provide special financial assistance to certain multiemployer DB plans. The special financial assistance would not have to be repaid." [IF11765, Feb. 23, 2021]

Tags: Funding of DB Plans  •  Multiemployer Plans  •  Retirement Plan Policy

New Jersey Governor to Propose Full Pension Payment for First Time Since 1996
The Wall Street Journal; subscription may be required Link to more items from this source
Feb. 23, 2021

"New Jersey Gov. Phil Murphy ... will call for a $6.4 billion payment to the pension system in his budget address Tuesday ... The Murphy administration has been ramping up pension payments and originally intended on making a payment of $5.76 billion for the fiscal year that begins in July."

Tags: Funding of DB Plans  •  State and Local Government Plans

Editor's Pick Working Paper on State and Local Pensions: The Case for Fundamental Reforms (PDF)
Office of the Assistant Secretary for Policy, U.S. Department of Labor [DOL] Link to more items from this source
Feb. 22, 2021

99 pages; Jan. 15, 2021."This Report's central aim is to illuminate the pension problems faced by state and local governments, policymakers, and taxpayers -- and to encourage states and localities to address these problems."

[BenefitsLink note: This document was published by DOL on Jan. 19, 2021, removed from the DOL website on Jan. 20, 2021, and subsequently released by the authors.]

Tags: Funding of DB Plans  •  State and Local Government Plans

Prospects Brighten for Much Needed Pension Rescue Bill as It Heads to House Floor Vote
Pension Rights Center Link to more items from this source
[Opinion]
Feb. 22, 2021

"Given the level of support, and the importance of the issue being solved, [PRC was] disappointed by the Washington Post's February 17 editorial that was critical of multiemployer relief being included in the COVID relief package. In fact, COVID-relief legislation is exactly where multiemployer reform belongs."

Tags: Funding of DB Plans  •  Multiemployer Plans

De-Risking in 2021, Part 1
October Three Consulting Link to more items from this source
Feb. 19, 2021

"[F]or 2021 (thus far) interest rates are increasing -- valuation interest rates are up around 35 basis points since the beginning of the year -- and that fact presents a number of significant and complicating issues for sponsors considering de-risking."

Tags: Funding of DB Plans

House Committee Advances Important Pension Funding Changes as Part of New COVID-19 Legislation
Groom Law Group Link to more items from this source
Feb. 19, 2021

"[The Butch Lewis Emergency Pension Plan Relief Act of 2021] contains broadly available funding rule changes for single-employer and multiemployer pension plans, and significant financial assistance to deeply underfunded multiemployer pension plans. It would also increase PBGC multiemployer premiums and freeze the indexing of the Internal Revenue Code section 415 and 401(a)(17) compensation limits effective for plan years beginning after 2030."

Tags: Funding of DB Plans  •  Multiemployer Plans

Multiemployer Pension Plans Experience Highest Aggregate Funding Level Since 2007
Milliman Link to more items from this source
Feb. 18, 2021

"As of December 31, 2020, the aggregate funded percentage of all multiemployer plans climbed to 88%, from 85% the year prior. This marks the highest aggregate funding level for these plans since December 31, 2007, before the global financial crisis. Strong investment returns for the year helped buoy pension funding in 2020, despite a turbulent year full of market volatility and economic stressors due to the COVID-19 pandemic."

Tags: Funding of DB Plans  •  Multiemployer Plans

Annuity Purchase Update: February 2021 Interest Rates
October Three Consulting Link to more items from this source
Feb. 18, 2021

"Plan funding status improved ... Annuity purchase cost increased: Annuity purchase interest rates increased; Annuity purchase activity decreased ... Annuity purchase cost is 98%-103% of the pension accounting value (GAAP PBO). Now is the time to analyze annuity purchase cost versus PBGC savings."

Tags: Funding of DB Plans

South Dakota Continues to Lead the Nation in Public Pension Returns, Without the Need for Proxy Advisors
Institute for Pension Fund Integrity [IPFI] Link to more items from this source
[Opinion]
Feb. 17, 2021

"[U]nfunded liabilities remain the norm [for public pensions], with fund managers continuing to make politicized but underperforming investment decisions rather than prioritizing returns for beneficiaries.... South Dakota is a shining example, with a funding ratio of over 100 percent and investment returns that are 71 basis points stronger than the 60/40 index portfolio."

Tags: Funding of DB Plans  •  State and Local Government Plans


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