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| Corporate Pension Funding Weakened in 2014: The financial health of private pension plans weakened in 2014, with funded ratios falling to levels resembling post-recession lows. A year-end analysis from Towers Watson finds the aggregate pension funded status for Fortune 1000 companies fell to about 80% at the end of 2014, down 9% from a year earlier to give back much of the gains from 2013.Read more > | |
| How Pensions Impact Corporate Financial Distress: A new academic research paper reexamines how pension costs were related to defaults and bankruptcies at high-profile U.S. corporations in the airline, automotive and steel manufacturing industries. The paper, “Corporate Pensions and Financial Distress,” finds greater underfunding of corporate pension plans is not a significant determinant of the outcome of corporate financial distress.Read more > | |
| DB Plan Administration | |
| Mortality Table Updates | |
| On October 27, 2014, the Society of Actuaries (SOA) issued the final version of new mortality tables (RP-2014) for use by defined benefit (DB) pension plans. The tables were also accompanied by new mortality improvement scales (MP-2014), which project the rates at which future mortality is expected to decrease.Read more > | |
| Society of Actuaries Pledges Faster Mortality Scale Updates: More than a decade passed between the two most recent mortality table updates from the Society of Actuaries, but retirement plan fiduciaries should expect the next updated mortality improvement scales long before 2024. In a recent interview with PLANSPONSOR, Dale Hall, managing director of research for the Society of Actuaries (SOA), said one of the Society’s goals is to significantly increase the frequency of mortality data updates.Read more > | |
| Mercer Touts Use of Industry-Specific Mortality Assumptions: The recently released mortality tables from the Society of Actuaries (SOA) need not be used for defined benefit (DB) plan accounting and calculations, and Mercer contends there may be better assumptions for those plan sponsors to use. Jim Berberian, chief architect of the recently completed Mercer Industry Longevity Experience Study (MILES), noted in a recent webcast that auditors say the mortality assumptions a plan uses should be backed up by reliable, accurate data. Mercer believes longevity could vary significantly among industries, said Bruce Cadenhead, chief actuary at Mercer in New York City, during the webcast.Read more > | |
| For Pensions, Active Investing Pays Off: Financial research and benchmarking provider CEM Benchmarking says its most recent report contains enough data to prove active investing is worthwhile for pension funds, if executed efficiently and effectively.Read more > | |
| Regulatory Developments | |
| PBGC Announces 2015 Premium Rates | |
| The Pension Benefit Guaranty Corporation (PBGC) has updated its website with premium rates for 2015. The per-participant flat premium rate for plan years beginning in 2015 is $57 for single-employer plans (up from a 2014 rate of $49) and $13 for multiemployer plans (up from a 2014 rate of $12). For plan years beginning in 2015, the variable-rate premium (VRP) for single-employer plans is $24 per $1,000 of unfunded vested benefits (UVBs), up from a 2014 rate of $14.Read more > | |
| PBGC Announced Benefit Maximum Increase: The Pension Benefit Guaranty Corporation (PBGC) increased the annual maximum guaranteed benefit for a 65-year-old retiree in a single-employer plan to $60,136 for 2015. This is up slightly from the 2014 limit of $59,318, according to the PBGC.Read more > | |
| PBGC to Begin Requesting Pension Risk Transfer Information: The Pension Benefit Guaranty Corporation (PBGC) says it is revising the 2015 premium filing procedures and instructions to require after-the-fact reporting of certain defined benefit plan risk transfers through lump-sum windows and annuity purchases.Read more > | |
| EBSA Issues Final Regs on Annual DB Funding Notices: The Department of Labor’s Employee Benefits Security Administration (EBSA) is set to publish in the Federal Register a final rule to increase pension plan transparency by ensuring that workers receive annual notification of the funded status of their defined benefit pension plans.Read more > | |
| IRS Expands Approval for Changes in DB Plan Funding Method: An Internal Revenue Service announcement provides for automatic approval of a change in funding method with respect to a single-employer defined benefit plan under certain circumstances in which the change in method results from a change in the plan’s enrolled actuary.Read more > | |
| Global | |
| How Did Your Country’s Pensions Fare in 2014? | |
| Pension funds around the world saw asset growth stall in 2014, according to a global survey from consultancy Towers Watson. Measured in dollar terms, the average growth of pension assets in the 16 countries surveyed by Towers Watson was 1.5%, compared with 8.3% in 2013. Global pension assets grew 6.1% in 2014, totalling $36.1 trillion, of which 61% were US pension fund assets.Read more > | |
| U.S. Not as Proactive with Pensions as Other Countries: America’s pension system slipped two places and has fallen to 13th in the world in the Melbourne Mercer Global Pension Index (MMGPI). However, Emily Eaton, a senior consultant in Mercer’s International Consulting Group, in New York City, tells PLANSPONSOR the U.S. fell, in part, because five countries were added to the index this year, and two of those ranked above the U.S.Read more > | |
| Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy.Read more > | |
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com
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