On April 23, 2019, the Ninth Circuit Court of Appeals upheld a lower court ruling in Acosta v. City National that defendant employer-plan sponsor had violated the ERISA prohibition on fiduciary self-dealing “by setting and approving its own fees from Plan assets for serving as its own recordkeeper.” The case raises the issue of when and how an… Read More
In this legislative update we review House of Representatives passage, on May 23, 2019, of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 (H.R. 1994) by a 417-3 vote. We then briefly review other legislative developments, including the re-introduction of Portman-Cardin legislation, considered part of the next round of bipartisan retirement policy… Read More
May 2019 Duration: 7 Years 15 Years 7 Years 15 Years Range Rate: 2.67% – 3.65% 3.02% – 3.60% Average Rate: 3.00% 3.20% The first quarter of 2019 shows a noticeable drop in annuity purchase interest rates. The second quarter may show a different trend as rates rose in May. Our experiences during the… Read More
It looks like many sponsors that are currently taking advantage of defined benefit plan minimum funding relief will, beginning in the next five years (or so), have to start paying down plan underfunding. In the interim, the primary incentive for plan funding is Pension Benefit Guaranty Corporation variable-rate premiums. In this article we review, first,… Read More
As we have discussed, when a sponsor terminates a defined benefit plan, the cost of the plan termination will typically exceed the book value of plan liabilities by 15%-35% for non-retirees and 5%-10% for retirees. This write-up of liabilities reflects the cost of buying annuities, attributable to annuity carrier regulatory (and business) overhead and profit margin,… Read More
Pension finances bounced back in April due to higher stock prices and higher interest rates. Both model plans we track gained ground last month: Plan A added more than 2% and is now up almost 5% for the year, while Plan B gained close to 1% and is now up 2% through the first four… Read More
There is a growing interest in including funds that emphasize environmental, social, and governance (ESG) factors in 401(k) plan investment menus, in response (in part at least) to participant interest in these funds and the increased participant engagement they generate. What issues does inclusion of an ESG fund in the plan’s fund menu raise for plan fiduciaries?… Read More
Pension Benefit Guaranty Corporation (PBGC) premiums have risen dramatically in the past decade, becoming the most significant source of plan overhead cost for thousands of Defined Benefit (DB) plans. While many plan sponsors have taken steps to reduce premiums, hundreds of DB plans continue to leave easy money on the table. The burden of PBGC… Read More
April 2019 Duration: 7 Years 15 Years 7 Years 15 Years Range Rate: 2.65% – 3.20% 3.02% – 3.25% Average Rate: 2.91% 3.13% The first quarter of 2019 shows a noticeable drop in annuity purchase interest rates. However, our experiences during the first quarter have shown that insurers are pricing annuity purchases aggressively. Annuity… Read More
On April 10, 2019, President Trump issued an “Executive Order on Promoting Energy Infrastructure and Economic Growth” (the “EO”) that included a separate section on “Environment, Social, and Governance Issues; Proxy Firms; and Financing Energy Projects Through the United States Capital Markets,” instructing the Department of Labor to review current ERISA guidance with respect to… Read More
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