Products February 17, 2010

Principal Offers DB Funding Tutorial

February 17, 2010 (PLANSPONSOR.com) – The Principal Financial Group is offering defined benefit sponsors a tutorial explaining the steps employers can take to head off potential future funding problems.
Reported by

A Principal news release said required contributions could more than double this year and funding levels could drop enough to trigger benefit payment restrictions put in place by the Pension Protection Act (PPA).

DB sponsors face potential decreases in funded status for 2010 and 2011, an increase in the required contributions for both years, and possible automatic benefit restrictions at the end of their defined benefit plan’s first quarter of 2010, the news release said.

“The temporary pension relief from Congress and some market recovery in 2009 have led many plan sponsors to expect a better funded status and lower required contributions than they will actually experience in 2010,” said Barry Young, consulting actuary, in the news release. “The reality is, because interest rates have dropped, most plans will need higher contributions in 2010 and 2011. Retirement plan assets have not recovered enough to cover future liabilities.”

More information is atwww.principal.com.

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