2021 Increases for Retirement Plans, Social Security

The Social Security Administration just announced benefit increases effective in 2021. Current retirees will receive a cost-of-living increase, beginning in January 2021, of 1.3%, reflecting the increase in CPI-W between the 3rd quarter of 2019 and the 3rd quarter of 2020.

September 2020 Pension Finance Update

Lower stock prices hit pensions during September. Both model plans we track lost ground last month, with Plan A dropping 2% and Plan B slipping 1% during the month. For the year, Plan A is now down 5% and Plan B is down more than 1% through the first three quarters of 2020.

Measuring UVBs for variable-rate premiums – the alternative vs. standard method election

Defined benefit plan sponsors that (1) currently using the standard (spot-rate) method to determine unfunded vested benefits (UVBs) for purposes of calculating Pension Benefit Guaranty Corporation variable-rate premiums, and who (2) have the ability to elect to switch to the alternative (24-month average) method, may have an opportunity to reduce (in some cases significantly) 2020 variable-rate premiums by doing so.

Annuity Purchase Update: September 2020 Interest Rates

Executive Summary Year-to-Date annuity purchase prices have been volatile and are currently higher for both Annuity Plan 1 and Annuity Plan 2.* Annuity purchase prices relative to GAAP PBO liabilities have also been volatile but are currently in line with historical expectations. This past month annuity purchase prices dropped 1.16% for Annuity Plan 1 and… Read More

DOL proposes new rules on proxy voting

On August 31, 2020, the Department of Labor released a proposed regulation revising DOL’s rules for the voting (or not voting) of proxies by ERISA plan fiduciaries. The new rule requires that fiduciaries apply an economic cost-benefit analysis to decisions about whether or how to vote proxies and/or engage in shareholder activism that is explicitly stricter than current rules.

August 2020 Pension Finance Update

Pensions enjoyed their best month of the year in August, driven by higher stock prices and higher interest rates. Both model plans we track gained ground last month, with Plan A improving 6% and Plan B gaining 1% during August. For the year, Plan A is still down more than 3% and Plan B is down 1% through the first eight months of 2020.

DB contribution timing 2020

DB contribution timing is critical with respect to at least three issues – ERISA minimum funding, Internal Revenue Code tax deductions, and the calculation of unfunded vested benefits (UVBs) for purposes of determining Pension Benefit Guaranty Corporate variable-rate premiums.

Annuity Purchase Update: August 2020 Interest Rates

Executive Summary Through long established relationships with insurers in the PRT marketplace, October Three collects annuity purchase rates for Duration 7 years and Duration 15 years on a monthly basis. We have constructed two hypothetical annuity plans which have been valued using the latest mortality tables. Year-to-Date annuity purchase prices have been volatile and are… Read More

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