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| Editor’s Note |
| PLANSPONSOR
is pleased to bring you a special edition of NewsDash, sponsored by MetLife,
focused on defined benefit plans. |
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| Pension De-Risking |
| Pension Pulse |
| Nearly
one-third (29%) of defined benefit (DB) plan sponsors are likely to consider a
pension risk transfer option for their plans in the next two years, according
to a MetLife Pension Risk Transfer Poll of 228 DB plan sponsors. Of those considering a pension transfer
option, 73% would opt for a buy-out while 15% would select a buy-in.Read more > |
| New Mortality Tables Lower
Pension Buyout Cost:
The Mercer U.S. Pension Buyout Index shows the average pension buyout cost
decreased significantly during December. In December 2014, the average cost of
purchasing annuities from an insurer to cover pension liabilities decreased
from 109.0% to 105.3% of the accounting liability. The buyout index reflects
that many plan sponsors are using a new mortality assumption to measure the
balance sheet value of their pension obligations, in response to the Society of
Actuaries’ publication of the RP-2014 mortality table and MP-2014 mortality
improvement scale last October.Read more > |
| Sponsors Active on Pension
Risk and DC Cost Cutting: A new Aon Hewitt survey shows there are many reasons pension plan
sponsors look to address risk in their pension plan offerings, but reducing
Pension Benefit Guaranty Corporation (PBGC) premiums stands out as a common
target. Nearly one in five pension plan sponsors (19%) polled by Aon Hewitt
plans to increase cash contributions this year to reduce future PBGC premiums
assessed against unfunded liabilities.Read more > |
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| Pension Funding |
| Updated Mortality Tables Increased Pension Liabilities by $100B |
| For
year-end 2014, Moody’s estimates that pension funding levels for its rated U.S.
corporates decreased, by 8 percentage points, to 78% of pension obligations,
versus a year earlier. According to Moody’s recent Credit Outlook, in dollar
terms, this equates to $201 billion of increased underfunding. The ratings
agency says two forces drove this large plunge in 2014: lower discount rates
and increased longevity.Read more > |
