Contributor: David G. Murad, CFA, ASA, CERA
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Time to Amend Your Plan’s Lump Sum Provisions?
Prompted by recent funded status shock experienced by some pension plans that offer lump sums, as well as new IRS regulations regarding plan provision changes, we look at modifications that could better align reality with expectation.
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Multiemployer Magic — Using Tomorrow’s SFA Funding Today
For multi-employer plans yet to receive Special Financial Assistance, it is possible to use the assets you will have tomorrow with the assets you have today.
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Exceeding Solvency Expectations for Multiemployer Pension Plans
A new analysis of the Final SFA Rule shows that plans receiving ARPA relief could surpass goals. When the Special Financial Assistance (SFA) provisions were originally published in 2021 by the PBGC as Interim Final Rules, it seemed unlikely eligible multiemployer plans would achieve the intended goal of maintaining solvency through 2051. However, with the…
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Look Beyond the Obvious Impact of Rising Interest Rates
As most plan sponsors are well aware, the rapid increase in interest rates year-to-date has significantly reduced the size of their defined benefit pension liability. The discount rate for an illustrative liability with a duration of 12 years increased from 2.71% (12/31/21) to 5.61% (10/31/22), resulting in a 28% reduction in the size of the…
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A Surprisingly Dull Update to Mortality Assumptions
The Update In October, the Society of Actuaries (SOA) released mortality Scale MP-2021, giving us another opportunity to quickly reflect on the impact of mortality assumptions on pension valuation and management. For all points on this chart, we have modified our own input assumptions since our last SOA mortality scale update post to assume a…
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LDI Takes Center Stage for Some Multiemployer Plans
Executive Summary On Friday, July 9th, the PBGC released the interim final rules regarding the multiemployer Special Financial Assistance (SFA) program pursuant to the American Rescue Plan Act of 2021. As mentioned in a previous publication, the program provides much needed relief to multiemployer plans and provides greater benefit certainty for plan participants for years…