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<< Older News  |  September 23, 2021

News

All News > Funding of DB Plans

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Withdrawal Liability Disclosures: Do They Turn Multiemployer Plans Into Hotel California?
Belfint Lyons Shuman Link to more items from this source
Sept. 22, 2021

"[FASB] amended Accounting Standards Codification 715-80 (Disclosures About an Employer's Participation in Multiemployer Plans) with the same goal of timely and continued transparency. The resulting additional disclosures allow financial statement users to assess the potential future cash flow implications relating to an employer's participation in multiemployer pension plans, and also indicate the financial health of all of the significant plans in which the employer participates."

Tags: Funding of DB Plans  •  Multiemployer Plans

Text of IRS Notice 2021-54: Weighted Average Interest Rates, Yield Curves, and Segment Rates for September 2021 (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Sept. 21, 2021

"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[.]"

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

PBGC FY 2020 Projections Report (PDF)
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Sept. 21, 2021

59 pages. "As a result of ARP, the Multiemployer Program shows significant improvement under all scenarios and, under favorable scenarios, a slightly positive projected net position in FY 2030.... As the net position of the Single-Employer Program continues to improve, the potential for a return to negative net position is reduced, even with very high claims."

Tags: Funding of DB Plans  •  Multiemployer Plans  •  PBGC

PBGC 5-Year Multiemployer Program Report (PDF)
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Sept. 21, 2021

18 pages. "ARP is expected to extend the solvency of PBGC's Multiemployer Program for a period of more than 20 years, with half of projected scenarios resulting in insolvency by the end of FY 2055 and half of projected scenarios resulting in either indefinite solvency or insolvency after FY 2055."

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

Second Quarter 2021 U.S. Single-Premium Pension Buy-Out Sales Double Sales Results from Prior Year
LIMRA Link to more items from this source
Sept. 16, 2021

"U.S. single premium buy-out sales totaled $5 billion in the second quarter, up 119% from second quarter 2020 ... In the first half of 2021, buy-out sales were $6 billion, down 11% from prior year results."

Tags: Funding of DB Plans  •  Retirement Plan Investments

How Pandemic-Related Increase in Retirements Affects DB Plans
PLANSPONSOR; free registration may be required Link to more items from this source
Sept. 16, 2021

"During normal times, a sharp jump in the number of workers who decide to retire early does not bode well actuarially for DB plans.... But the pandemic was not a normal occurrence, and it might be that other mitigating factors like the mortality rate may dampen any effect early retirements have on the system."

Tags: Funding of DB Plans

Competitive Pricing Rate for Pension Risk Transfer Costs Remains Level in August
Milliman Link to more items from this source
Sept. 16, 2021

"During August, the average estimated cost to transfer retiree pension risk to an insurer remained nearly level, decreasing from 102.3% of a plan's total liabilities to 102.2% of those liabilities. This means the average estimated retiree PRT cost for the month is now 2.2% more than those plans' retiree accumulated benefit obligation (ABO). Meanwhile annuity purchase costs reflecting competition amongst insurers also stayed flat, at 100.1% for August."

Tags: Funding of DB Plans  •  Retirement Plan Design

Creative Ideas for Managing Pension Plan Risk
River and Mercantile Link to more items from this source
Sept. 15, 2021

"Paying lump sum benefits to active participants ... Redesigning pension glide paths ... Utilizing call options in glide paths ... Enhancing downside interest rate protection ... Using an independent expert to place annuities ... Obtain unbiased assessment of plan termination readiness."

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

Text of PBGC Interest Rate Assumptions for Valuing Benefits in Single-Employer Plans, Fourth Quarter 2021
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
[Official Guidance]
Sept. 14, 2021

"The fourth quarter 2021 interest assumptions will be 2.40 percent for the first 20 years following the valuation date and 2.11 percent thereafter. In comparison with the interest assumptions in effect for the third quarter of 2021, these interest assumptions represent a decrease of 5 years in the select period (the period during which the select rate (the initial rate) applies), an increase of 0.27 percent in the select rate, and a decrease of 0.12 percent in the ultimate rate (the final rate)."

Tags: Funding of DB Plans  •  Retirement Plan Administration

The Impact of Public Pension Deficits on Households' Investment and Economic Activity
Jinyuan Zhang, via SSRN Link to more items from this source
Sept. 13, 2021

"Comparing households residing on opposing sides of states' borders ... households hold 0.70 dollars more in deposits and 0.35 dollars less in stocks for each additional dollar of pension deficit.... [H]ouseholds respond consistently when states reduce pension deficits; they shift savings from deposits to stocks."

Tags: Federal Government Plans  •  Funding of DB Plans

Third Circuit Upholds Withdrawal Liability Award Under MPPAA's 'Evade or Avoid' Provision
Jackson Lewis P.C. Link to more items from this source
Sept. 9, 2021

"The arbitrator, the [federal district court], and ultimately the [Third Circuit] ... found the last-minute change resulting in a direct transfer of 24.5% of equity at Renco's insistence highly indicative of an evade or avoid motive.... [This case] reminds us that a transaction can (and often does) have more than one principal purpose, and that only one such purpose need have an evasive motive to trigger the application of Section 4212(c)." [Steelworkers Pension Trust v. The Renco Group, Inc., Nos. 19-3499, 19-3504 and 19-3507 (3d Cir. Aug. 26, 2021)]

Tags: Funding of DB Plans  •  Multiemployer Plans

U.S. Pension Briefing, August 2021
River and Mercantile Link to more items from this source
Sept. 8, 2021

"Pension discount rates increased by 0.05% during August, translating to pension liability decreases of approximately 0.5%–0.7% for a typical pension plan.... Asset market performance was generally positive for August, US fixed income stayed stable, and US equities were up 2-3% for the month.... [P]ension plans should see an improvement in funded status during August."

Tags: Funding of DB Plans  •  Retirement Plan Investments

PBGC Releases Final Installment of 2019 Data Tables
Pension Benefit Guaranty Corporation [PBGC] Link to more items from this source
Sept. 7, 2021

This installment includes various breakdowns of the number of PBGC-insured defined benefit plans, number of plan participants, hybrid plans, frozen plans, premium revenue, plan funding, and risk transfer activity. Some of the breakdowns are by industry, location, plan size, and plan funded status.

Tags: Funding of DB Plans  •  PBGC

Editor's Pick Suburban Chicago Residents Risk Losing Homes Over Rising Pension Costs
RiverBender.com Link to more items from this source
Sept. 7, 2021

"As unfunded pension obligations have grown, so has the percentage of property tax dollars devoted to paying these costs. In Cook County, from 1999 to 2019, 76% of additional property tax dollars spent on municipal police and 74% of additional property tax dollars spent on municipal firefighters went to pensions rather than to public safety costs."

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

Wilshire Estimates Increase in Aggregate Funded Ratio for U.S. Corporate Pension Plans in August (PDF)
Wilshire Associates Link to more items from this source
Sept. 2, 2021

"The aggregate funded ratio for U.S. corporate pension plans increased by an estimated 1.2 percentage points month-over-month in August to end the month at 94.0 percent.... The monthly change in funding resulted from a 0.7 percent decrease in liability values compounded by a 0.6 percent increase in asset values. The aggregate funded ratio is estimated to have increased by 6.2 and 9.8 percentage points year-to-date and over the trailing twelve months, respectively."

Tags: Funding of DB Plans

Pension Finance Update, August 2021
October Three Consulting Link to more items from this source
Sept. 2, 2021

"Pension finances improved in August due to strong stock markets and modestly higher interest rates.... Plan A improved close to 2% in August and is now up almost 11% for the year, while the more conservative Plan B gained a fraction of 1% last month and is now up almost 3% through the first eight months of the year."

Tags: Funding of DB Plans  •  Retirement Plan Investments

FAS87 ASC715 Discount Rates and Moody's Rates, August 31, 2021
BenefitsLink Message Boards Link to more items from this source
Sept. 1, 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

Proposed Extension of Interest Rate Stabilization Percentages for Single Employer Plans
Congressional Research Service [CRS] Link to more items from this source
[Guidance Overview]
Sept. 1, 2021

"Delaying the widening of the corridor means that the present value of future benefit obligations does not increase until a later specified date, and companies do not have to increase their required plan contributions until that point. Lower plan contributions increase companies' taxable income, which results in increased Treasury revenue. JCT estimated that this provision would result in a net increase of $2.9 billion for the U.S. Treasury." [IN11735, Aug. 31, 2021]

Tags: ARPA  •  Funding of DB Plans

Many Union Retirees Fearing Financial Disaster Wait for Pension Rescue
MarketWatch Link to more items from this source
Aug. 30, 2021

"[ARPA offered] taxpayer-funded financial assistance to certain troubled [multiemployer] pension plans ... allowing them to restore benefits to retirees who suffered cuts. But the implementation of the rescue plan has been met with a barrage of criticism from plan trustees, participants and members of Congress who say it's too tight-fisted with the financial assistance and could leave some plans in a worse financial position than they are in now."

Tags: ARPA  •  Funding of DB Plans  •  Multiemployer Plans

The Best and Worst States for Governmental Pensions
Yahoo! Finance Link to more items from this source
Aug. 30, 2021

"Private companies rarely offer pensions anymore, and states are struggling with pension commitments they made decades ago.... See which states are well-prepared to continue funding their pension systems, and which ones might find themselves in fiscal hot water in the near future."

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

Board Co-option and the Defined Benefit Pension Policy
Yunhui Han, via SSRN Link to more items from this source
Aug. 30, 2021

"[This study implements] a novel board monitoring measure as the percentage of directors appointed after the CEO assumes office, Board Co-option, and find[s] that as Board Co-option increases, board monitoring decreases, and risk shifting through pension plan underfunding and pension assets allocation towards risky securities intensifies.... [The] findings suggest that not all directors are effective monitors in the context of corporate pension policies. It seems only non-co-opted independent directors are mindful of their obligations toward pension plan beneficiaries."

Tags: Fiduciary Duties  •  Funding of DB Plans

Annuity Purchase Update, August 2021
October Three Consulting Link to more items from this source
Aug. 24, 2021

"Some insurance companies are reaching capacity constraints and as their calendars are being filled with placements in the fourth quarter. It is imperative to act immediately for plan sponsors wishing to complete an annuity purchase this year.... PBGC premiums have increased in 2021. This raises plan maintenance costs and can make Pension Risk Transfer solutions even more appealing."

Tags: Funding of DB Plans

Editor's Pick A User's Guide to Implementing ARPA's DB Funding Relief
Mercer Link to more items from this source
[Guidance Overview]
Aug. 23, 2021

"Besides providing details on the relief elections, [IRS Notice 2021-48] gives sponsors abundant flexibility to manage credit balances and prior-year contributions. The notice also offers guidance on a few issues related to using ARPA interest rates for other purposes."

Tags: ARPA  •  Funding of DB Plans  •  Multiemployer Plans

Aggregate Funded Percentage for Multiemployer Plans at Its Highest Point Since 2007
Milliman Link to more items from this source
Aug. 18, 2021

"The aggregate funded percentage for multiemployer plans is estimated to be 92% as of June 30, 2021, up from 88% at the end of 2020. The market recovery continued into the first half of 2021, resulting in the highest aggregate funded percentage since 2007. The financial assistance provided by [ARPA] will have a significant impact on funded percentages of eligible plans in the coming years."

Tags: ARPA  •  Funding of DB Plans  •  Multiemployer Plans

Text of IRS Notice 2021-50: Weighted Average Interest Rates, Yield Curves, and Segment Rates for August 2021 (PDF)
Internal Revenue Service [IRS] Link to more items from this source
[Official Guidance]
Aug. 17, 2021

"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[.]"

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


<< Older News  |  September 23, 2021

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