Financial markets continued to roil in May, but the net impact on pension finance was modest. Both model plans1 we track were close to even on the month. Through the first five months of 2022, Plan A remains up 4%-5% while the more conservative Plan B is holding at even on the year: Assets Stocks… Read More
On April 28, 2022, the IRS published proposed regulations/mortality tables for determining the present value of benefits under defined benefit plans for purposes of determining the plan’s ERISA minimum funding requirements, Pension Benefit Guaranty Corporation variable-rate premiums, and lump-sum valuations.
May marks the second straight month of Annuity Purchase interest rates hitting record levels as rates increased over 120 basis points these last two months
On May 13, 2022, IRS issued Notice 2022-27, further extending Covid-related temporary relief from the requirement that a spousal consent to a plan distribution be witnessed in the “physical presence” of a notary or plan representative. In what follows, we briefly review the Notice, what the temporary rules are, and the possibility that they might… Read More
On May 5, 2022, Senator Tuberville (R-AL) introduced the “Financial Freedom Act of 2022.” The bill would push back on recent positions the Department of Labor has taken with respect to, e.g., “climate related financial risk,” private equity, and cryptocurrency investments, particularly in participant directed defined contribution plans.
Stock markets tumbled in April, but sharply higher interest rates offset most or all of the impact for pension sponsors. Our two model plans1 saw mixed experience on the month, with Plan A treading water, remaining up almost 5% for the year, while the more conservative Plan B lost 1% last month and is now even through the first four months of 2022:
On January 24, 2022, in a unanimous decision, the Supreme Court vacated the Seventh Circuit’s decision in Hughes v. Northwestern – an ERISA prudence case implicating a number of issues that have been raised in 401(k) fee litigation. The Court rejected the Seventh Circuit’s reliance on the availability of lower cost alternatives as a defense to claims that the cost of certain funds and of plan recordkeeping was unreasonably high, remanding the case for consideration under the rule in Tibble v. Edison, that a fiduciary has an obligation to remove imprudent investments.
Until 2021, the main drivers of retirement finance/retirement income were interest rates and asset performance. The other variable affecting nominal performance, mortality, has been (and is expected to continue to be) relatively stable.
We are (concurrently) publishing an update to our article analyzing the effect of inflation on retirement income to include data through the first quarter 2022. This is an update to our more technical article, discussing, generally and theoretically, the issues of increased inflation/inflation risk present for both DB and DC plans.
Annuity Purchase interest rates jump 60 basis points – the largest month-to-month increase we have ever observed.
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