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[Official Guidance]

Exceptional Usefulness and Quality and Usefulness iconPBGC Issues Maximum Monthly Guarantee Amounts

As a result of the indexing rules provided by law, the guarantee limits for single-employer plans that fail in 2021 will be 3.81% higher than the limits that applied for 2020. The linked page includes a table showing the 2021 guarantee limits for various ages and payment forms. The guarantee limits for multiemployer plans are not indexed and therefore have not changed. Icon to read more

Pension Benefit Guaranty Corporation [PBGC]


New! Defined Benefit Proposal Software from

Defined Benefit Proposal helps you design and illustrate the best plan options using a few clicks. The compare features, customization options, ability to run complex calculations and create 1-5 separate proposals simultaneously all save you time! Learn moreLearn more

Sponsored by Wolters Kluwer

[Guidance Overview]

Exceptional Usefulness and Quality iconNo Signature, No Shoes, No Service

"[T]he tax-qualified status of the plan is contingent on properly executed plan documentation and could be revoked were the unsigned document revealed in an IRS audit. This was made clear in [IRS Chief Counsel Memorandum 2019-002] ... [Although] intended primarily for IRS internal use, ... employers are wise to heed its message: the 'pattern and practice' argument that succeeded in the Val Lanes case simply is not available to employers in the ordinary course of events. Rather, they must put in place, and consistently follow, procedures to ensure that plan documentation (including original plan documents, amendments and restatements) are timely signed and dated and must retain and be able to access electronic or other copies of the signed and dated originals. " Icon to read more

E is for ERISA

Helping Pension Plan Sponsors Manage Volatility

"Through periodic [Asset/Liability Management (ALM)] reviews, plan sponsors and their investment advisors can gain ... better insights about the plan's assets in relation to the plan's liabilities. The ALM review arms plan sponsors and their investment advisors with key information that can help them choose investments that are appropriate given the pension plan's liability characteristics." Icon to read more


Lump Sum De-Risking in the Context of Steeply Declining Interest Rates

"Significant declines in interest rates over the past two years have highlighted another cost savings -- for many plans, in the context of rapidly declining interest rates, the cost of lump sums is (significantly) lower than the book (and 'real') value of the related plan liability. The savings de-risking generates in this context will, for many plans, significantly outweigh PBGC-premium related savings. A 'backward looking' PBGC [variable-rate premium (VRP)] valuation rate cuts the other way, producing, e.g., VRP increases for plans not at the VRP headcount cap." Icon to read more

October Three Consulting

The Supreme Court Won't Review Sun Capital Partners -- What That Means for Private Equity

"Technically, the Sun Capital Partners appellate decisions are precedent only in the First Circuit ... Private equity funds may still argue that different standards should apply in other circuits. However, another court reviewing these same issues ... could follow the Sun Capital Partners analysis. It is also possible that the Supreme Court will decide to review the threshold 'trade or business' issue if there is a split among the circuits in subsequent decisions. But private equity funds can't count on that. What steps can private equity funds take to protect themselves?" [Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, Nos. 16-1376, 19-1002 (1st Cir. Nov. 22, 2019; cert. pet. denied Oct. 5, 2020)] Icon to read more

Cohen & Buckmann, P.C.

Lone In-Review MPRA Filing

"In late July the Building Material Drivers Local 436 Pension Fund out of Valley View, OH was the last multiemployer plan to file to cut benefits. According to the the MPRA website they are the only plan currently in review ... [T]hey may have another problem that could deplete more of their dwindling assets. [EFAST] shows that the plan's 5500 for 2019 has not been filed by the October 15, 2020 deadline opening up the possibility of recently increased penalties." Icon to read more


Our Public Pensions in Crisis

"At $1.24 trillion, the fifty-state pension funding gap -- the difference between a state retirement system's assets and its liabilities -- improved slightly in 2018 with strong investment performance. However, the Pew report estimates that the aggregate pension funding gap has since increased by an additional $500 billion through March 2020 based on market pandemic losses." Icon to read more

Carrie McCabe, in Forbes

Determining Your Asset Mix in Retirement

"One of the most important considerations in your retirement plan is how to invest your assets.... [S]ome of your assets, like Social Security and pensions, may not be as liquid as your accumulated savings or other of your more 'investible' assets, but they do have value; generally provide relatively low-risk payments for life; can be expected to provide income to meet some of your future spending liabilities; and therefore should logically be considered when deciding how much risk to assume in your more investible assets." Icon to read more

Ken Steiner, FSA Retired

What High-ish Equity Valuations Mean for Your Retirement Plan

"[L]ofty equity valuations make a good case for retirees starting out with a lower equity weighting. That's because sequencing risk is of most concern for new retirees. By starting out with more conservative portfolios, new retirees have a buffer of safe, nonequity assets that they can spend through as retirement progresses.... The big downside ... is that the return potential of the cash and bond sleeve is ultralow today -- possibly even negative over the next decade.... [O]ne of the best ways to gird your retirement portfolio against the risks of high equity valuations is to stay flexible on withdrawals." Icon to read more

Christine Benz, via Morningstar


Voya Financial Comment Letter to EBSA on Proposed ESG Rule

"[T]he Proposal is fundamentally flawed for two reasons. First, among the many qualitative factors an ERISA fiduciary may appropriately consider in making an investment decision, the Proposal singles out ESG factors and treats them with skepticism.... Second, in the context of participant-directed individual account plans, the Proposal fails to account for the positive effect on investor behavior that the availability of ESG-focused investment options can have, and fails to identify how and when changes to employee participation and / or saving rates can be validly considered by an ERISA fiduciary when selecting available plan investments." Icon to read more



Joint Organization Letter to EBSA, IRS and PBGC Recommending Extension of Due Date for Pension Contributions

"Because of the different accounting treatment attributable to making contributions due in 2021 as opposed to 2020, the technical change of moving the delayed contribution date to January 4 can impact the liquidity of a company and its rate of recovery from the pandemic [by] ... [1] affecting the ability to borrow and the rate of borrowing, [2] affecting outstanding loans by not triggering loan covenants, [3] affecting whether a business can honor commitments based on the anticipated end of the year financial statements, including business expansion and creating or retaining jobs, [4] affecting the ability of a company to help suppliers and buyers as those organizations in turn try to recover ... [5] triggering additional disclosures that are not necessary if the contributions are going to be made shortly and [6] triggering a slower recovery for investment." Icon to read more

American Benefits Council; Committee on Investment of Employee Benefit Assets; The ERISA Industry Committee [ERIC]; and U.S. Chamber of Commerce

Benefits in General

DOL Amicus Brief Addressing Burden of Proof in Determining Eligibility for Specific Benefits (PDF)

35 pages. "When a participant presents a prima facie case for coverage and the plan seeks to limit her benefits based on plan language, the plan should bear the burden of proving the limitation.... The district court erred by rejecting burden shifting, holding instead that an ERISA plan participant has the burden to prove how a limitation does not bar her from eligibility for benefits. If necessary to reach this burden question, this Court should correct the lower court's error by requiring the plan to prove benefit limitations, which more appropriately aligns with the common law for insurance and conforms with general principles governing the allocation of burdens." [Ovist v. UNUM Life Ins. Co. of N. Amer., No. 17-40113 (D. Mass Mar. 27, 2020; on appeal to 6th Cir. No. 20-1464)] Icon to read more

U.S. Department of Labor [DOL]

Data Breaches and HIPAA Enforcement Remain Endemic Amidst the COVID-19 Pandemic

"[E]nterprise-wide risk analyses should account not only for PHI, but also for other personally identifiable information (PII). Nearly every organization will possess PII, ... with each bearing privacy and security obligations under a variety of federal laws and regulations specifically addressing cybersecurity practices. Organizations must also be mindful of state and local requirements concerning cybersecurity[.]" Icon to read more

Health Law Advisor, Epstein Becker Green

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2020, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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