The combination of lower discount rates and new mortality tables will dramatically increase pension plan liabilities and decrease DB plans’ funded status for December 31, 2014 financial reporting. Using the November 2014 Citigroup Pension Liability Index (CPLI) and Citigroup Pension Discount Curve (CPDC) as proxies, pension accounting discount rates are down by almost 90 basis […]Read More… from DB Plan Sponsors Should Prepare Now for Higher Year-End Liabilities
Category: Investments
Public Pension Plan Funding Policy – The Time is Here
“Every state and local government that offers defined-benefit pensions [should] formally adopt a funding policy…,” according to the Government Finance Officers Association (GFOA) best practice recommendations. Guidelines for Funding Defined Benefit Pensions (2013) (CORBA) SOA and GASB Provide Guidance Blue Ribbon Panel. Last month, a blue ribbon panel formed by the Society of Actuaries went […]Read More… from Public Pension Plan Funding Policy – The Time is Here
OPEB Investments – The Danger of Playing It Safe
Under GASB 43 and 45, public sector employers are required to account for retiree medical benefits under special rules for Other Post-Employment Benefits (OPEB). Many have chosen to pre-fund these liabilities in a trust similar to a retirement plan trust. At the recent Minnesota School Board Association convention, Van Iwaarden Associates teamed up with an […]Read More… from OPEB Investments – The Danger of Playing It Safe
Expect Lower Discount Rates (and Higher Liabilities) for 2012 Pension Disclosures
Pension discount rates continued to drop during 2012 and plan sponsors should prepare for yet another potential upward spike in balance sheet liabilities for the fiscal year ended December 31, 2012. Using the Citigroup Pension Liability Index (CPLI) and Citigroup Pension Discount Curve (CPDC) as proxies, pension accounting discount rates may decrease by roughly 35 […]Read More… from Expect Lower Discount Rates (and Higher Liabilities) for 2012 Pension Disclosures
Low Pension Discount Rates = Big Accounting Liabilities for FY2011
Pension discount rates have plummeted over the past few months and plan sponsors should prepare for a potential upward spike in balance sheet liabilities for the fiscal year ended December 31, 2011. Using the Citigroup Pension Discount Curve (CPDC) as a proxy, pension accounting discount rates could decrease by 100 basis points (or more). This […]Read More… from Low Pension Discount Rates = Big Accounting Liabilities for FY2011
The Value of Tax Deferral
We often hear the question “why should I contribute to a qualified retirement plan if tax rates might go up”? Good question; here’s why: you’ll probably end up with more money after tax. That’s true even if tax rates go up in the future. How much more you’ll end up with depends on your investment […]Read More… from The Value of Tax Deferral
Fed’s “Operation Twist” Another Reason For Pension Plan LDI
The Federal Reserve’s “Operation Twist” is intended to boost consumer spending, but it could cause lots of problems for defined benefit pension plans who haven’t adopted a liability-driven investment (LDI) strategy. Here’s what plan sponsors need to consider: 1. If long-term interest rates drop due to “Operation Twist”, then pension liabilities will likely increase and […]Read More… from Fed’s “Operation Twist” Another Reason For Pension Plan LDI
Pension Plan Termination Investment Strategies
During the plan termination process, one issue often overlooked is the consequences of investment risk prior to paying out benefits. This can lead to disastrous results. Benefits may be fully-funded when the termination decision is made, but significant contributions will be required if assets are not invested conservatively and a market downturn occurs prior to […]Read More… from Pension Plan Termination Investment Strategies
Extension of Retirement Plan Fee Disclosure Deadline
The DOL recently announced an extension of the deadline for service providers to comply with Section 408(b)(2) regulations. These rules govern the disclosure of fees charged to qualified retirement plans (e.g., 401(k) and defined benefit pension plans). Disclosures were originally required by July 16, 2011, which has now been extended to January 1, 2012. The […]Read More… from Extension of Retirement Plan Fee Disclosure Deadline
2011 Could Have Pension Contribution Surprises
Over the past couple of weeks we’ve been previewing some issues that pension plan sponsors may encounter during 2011 (e.g., increases in Annual Funding Notice liabilities and PBGC variable rate premium increases). This post highlights several items that plan sponsors should be aware of as they gear up for their 2011 pension funding valuations. These […]Read More… from 2011 Could Have Pension Contribution Surprises