In this update we briefly review two issues presented by the layoff or furlough of employees in the current Coronavirus crisis – treatment of outstanding plan loans and possible partial termination – and IRS’s extension to July 15, 2020 of certain filing deadlines. Layoffs/furloughs – plan loans and partial termination rules Generally, we use “layoff”… Read More
April 2020 Duration: 7 Years 15 Years 7 Years 15 Years Range Rate: 1.25% – 2.41% 1.92% – 2.90% Average Rate: 1.95% 2.49% As mentioned in our March 2020 Pension Finance Update, pension plans lost ground last month. COVID-19 has had a profound impact on the world, and as a result of the pandemic,… Read More
Most of the focus on the new CARES Act 2020 retirement plan liquidity provisions – liberalized withdrawal rules, waiver of the 10% early withdrawal tax, and 3-year income tax recognition/rollover – has been on 401(k) plans. But the temporary relief also applies to defined benefit plans, and DB plans may serve as an indispensable resource… Read More
Tumbling stock markets dealt another blow to pension sponsors in March. Both model plans we track[1] lost ground: Plan A lost 3% in March, ending the quarter 13% lower than at the end of 2019, while Plan B slipped more than 1% and is now down more than 4% for the year: Assets Falling stock markets… Read More
With equity markets down roughly 30% year-to-date (although that seems to change many times per day) and prevailing bond yields showing as much volatility as at any time since the passage of ERISA, employers that contribute to one or more multiemployer plans have to be wondering – should we be worried? Should we panic? Is… Read More
The Senate has passed a bill providing a $2 trillion stimulus package in response to the coronavirus pandemic and the economic crisis it has generated. The bill will now go to the House. In this article we briefly review the provisions of the bill addressing retirement plan issues and conclude with a brief discussion of… Read More
Many plan sponsors’ funding policy – and the response to current interest rate and asset declines – is likely to be framed with a view to reducing so far as possible PBGC variable-rate premiums.
For most plans, 2021 PBGC variable-rate premiums are going up significantly – for a $100 million plan, next year’s premium could jump around $500,000.
As we discussed in our introduction to these issues, the current situation is (to state the obvious) very volatile. Since our last article (posted March 16, 2020), corporate bond yields gyrated wildly, increasing by more than 100 basis points before pulling back yesterday, to levels above those at December 2019. Assets, on the other hand, remain dramatically lower… Read More
March 2020 Duration: 7 Years 15 Years 7 Years 15 Years Range Rate: 1.41% – 1.82% 1.66% – 2.12% Average Rate: 1.65% 1.87% As mentioned in our February 2020 Pension Finance Update, pension plans lost ground last month. The strong equity market returns of 2019 were set back by poor performance in both January… Read More
We are beginning a series of articles on the effect of the current crisis on retirement plan finance. As we discussed in our introduction to these issues, the current situation is (to state the obvious) very volatile. For most plans (on a calendar year), 2020 funding requirements will depend on year-end interest rate and asset data,… Read More
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