Splitting pension plans can reduce PBGC variable-rate premiums

In this article we consider a strategy for reducing PBGC variable-rate premiums – the split-up of a plan (which we’re going to call the ‘combined plan’) into a plan that covers participants subject to the variable-rate premium headcount cap (the ‘HCC plan’) and a plan that covers all other participants (the ‘non-HCC plan’). Such a… Read More

November 2017 Pension Finance Update

Stock markets brought more good news to pension sponsors in November, with a continuation of the remarkably steady bull market of 2017. Both model plans we track1 saw improvement in funded status last month: traditional Plan A improved 1% and is now up almost 5% for the year, while the more conservative Plan B improved… Read More

Current outlook – November 2017

In this Current outlook we briefly review the status of the Republican’s Tax Reform proposal and then discuss DOL’s finalization of an 18-month extension of its fiduciary rule transition relief. Tax Reform update On November 28, 2017, the Senate Tax Reform proposal was approved by the Senate Budget Committee on a party line vote. On… Read More

Latest SOA analysis shows year-over-year increase in mortality

On October 20, 2017, the Society of Actuaries released its MP-2017 mortality improvement scale (reflecting historical U.S. population mortality experience through 2015). According to the SOA: The age-adjusted mortality rates in the United States increased from 724.6 (per 100,000) in 2014 to 733.1 in 2015, an increase of 1.2%. This was the first year-over-year increase… Read More

October 2017 Pension Finance Update

The big story for pension sponsors in 2017 so far is the remarkably steady increases in stocks, which have gained ground every month this year, overcoming interest rates that continue to flirt with historic lows. October saw a continuation of this pattern, improving the funded status for both model plans we track1. Traditional Plan A… Read More

Current pension outlook – October 2017

In this current outlook we discuss (1) reports that House Republicans are considering “Rothification” of 401(k) contributions over $2,400, (2) the possibility of a solution to regulatory obstacles to Open MEPs based on President Trump’s Healthcare Executive Order, (3) legislation approved by the House Financial Services Committee repealing the Department of Labor’s fiduciary rule, (4)… Read More

IRS finalizes mortality table guidance for 2018

On October 5, 2017, the IRS published (1) final regulations/mortality tables for determining the present value of benefits under defined benefit plans for funding, Pension Benefit Guaranty Corporation premiums and lump sum valuations, (2) a revenue procedure for sponsor requests for the use of plan-specific substitute mortality tables and (3) a notice providing updated static… Read More

2018 Increases for Retirement Plans, Social Security

The Social Security Administration just announced benefit increases effective in 2018. Current retirees will receive a cost-of-living increase, beginning in January 2018, of 2.0%, reflecting the increase in CPI-W between the 3rd quarter of 2016 and the 3rd quarter of 2017. In addition, the maximum amount of earnings subject to Social Security tax will increase… Read More

Favorable ruling for Fidelity in self-directed brokerage, Financial Engines case

On September 22, 2017, the United States District Court for the District of Massachusetts found for defendant in Fleming v. Fidelity. The case involves two emerging issues in 401(k) plan litigation – the status under ERISA of self-directed brokerage (SDB) arrangements and of Financial Engines fee-sharing arrangements. In this article we briefly review the court’s… Read More

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