According to a report from the National Institute of Retirement Security, “Retirees with DB pensions know they are receiving a steady check despite economic conditions. In contrast, retirees may be reluctant to spend out of their 401(k)-type accounts if their savings are negatively impacted by market downturns.”
Consultants say market losses for U.S. pension plans in December were the worst in a decade.
While the pension deficit for the Fortune 1000 plans Willis Towers Watson tracks is projected to be only slightly lower than the deficit at the end of 2017, pension plan assets declined sharply at the end of 2018.
Mercer recommends 10 areas of focus for defined benefit plans in 2019.
Cases have been filed against MetLife, Pepsi and American Airlines saying the use of outdated mortality tables in determining annuity payments causes retirees to lose part of their vested retirement benefits.
The new instructions include an expanded list of common filing errors.
A new table will be used for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2019.
A newly filed complaint takes issue with the way MetLife calculates the actuarial equivalence of different types of annuity benefit options available in the firm’s pension plan.
Firms that monitor defined benefit (DB) plan funded status reported slight gains for the month.
Willis Towers Watson offers 10 investment actions for DB plans in 2019.
ASOP 51 requires actuaries performing valuations for defined benefit plans to identify risks that, in the actuary’s professional judgment, may reasonably be anticipated to significantly affect the plan’s future financial condition, and Eric Keener, with Aon, says this may help plan sponsors avoid adverse actions.
Entities that monitor defined benefit (DB) plan funded status noted that the decline could have been worse had interest rates not increased and pushed down plans’ liabilities.
An article by Brian Donohue, partner at October Three Consulting, discusses how a funding surplus can pose a challenge to DB plan sponsors’ risk transfer or plan termination actions and what they can do to mitigate this problem.
Some disclosure requirements are removed from Subtopic 715-20, Compensation—Retirement Benefits—Defined Benefit Plans—General, and some requirements are added.
The PBGC is proposing in a renewal request that all reportable events filings include controlled group information, company financial statements, and the plan’s actuarial valuation report.
If interest rates continue to rise, this may have a negative impact on equity valuations; consequently, according to Goldman Sachs research, the present period may represent a limited window for optimal pension risk transfer actions.
A table on the PBGC’s website shows that the flat-rate premium for single-employer plans has grown from $31 in 2007 to $80 in 2019, and the variable-rate premium has grown from $9 to $43.
Some firms that track pension funded status point out that plan sponsors should prepare for changes in the future as a market correction is expected and funding relief fades and higher plan sponsor contributions will be required.