The Pension Insider

 

The Pension Insider is a monthly newsletter developed for individuals who work in the pension arena. The Pension Insider was created to share ideas, success stories, coming events and industry specific articles.

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April 2019 - Volume 90, Edition 1

 

 

Congratulations to the 2019 Annual EA Conference

BCG Drawing Winners

 

·     Arthur Teiler - Pension Art

·     Donald J. Segal, Enrolled Actuary

·     Ethel M. Harmon - Actuarial Data Inc.

·     Lisa M. Coates - CBIZ Savitz

 

Thank you for stopping by BCG's Booth!

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Cybersecurity Risks Increase

PLANSPONSOR |By Stephen Saxon and George Sepsakos

 

Providers introduce guarantees.

 

All too often there’s a new story describing a cybersecurity incident exposing the personal, identifiable information of millions of individuals to identity theft and fraud. As it is painfully obvious to those of us in the retirement industry, cyber threats provide an incredible danger to plan assets. Today, it is almost universal that plan sponsors and service providers store information electronically as opposed to on paper. While storing information electronically provides enormous benefits and cost savings for the industry, it creates a clear and immediate risk of losing plan assets through cyber breaches.

 

While cyber risks are ever increasing, there is no comprehensive legal framework for dealing with these issues, as no one federal law governs cybersecurity for plans or service providers.

 

Instead, there exists a patchwork of state and federal laws and regulations, including the Gramm-Leach-Bliley Act and the Employee Retirement Income Security Act (ERISA).

 

In 2016, the ERISA Advisory Council stated that there is no single approach to avoiding the risk related to cyber incidents. However, the council did note that sponsors and fiduciaries should understand, among other things, where plan data is held, how it is stored and secured, the length of the retention period, what persons have access to the data, and how the data is accessed and transmitted.

Click Here for full article

 

 

Employer Contributions Aid in DB Plan Funding Progress

PLANSPONSOR |By Rebecca Moore | April 29, 2019

 

An analysis from the Society of Actuaries suggests the majority of defined benefit (DB) plan sponsors are making sufficient contributions to help reduce unfunded liabilities.

 

An analysis from the Society of Actuaries suggests the majority of defined benefit (DB) plan sponsors are doing a good job of making contributions that help reduce unfunded liabilities.

 

The study compares employer contributions to single-employer DB plans to benchmarks for measuring whether pension plan contributions - absent other influences - reduced unfunded liabilities or met other benchmarks, such as regulatory requirements. The study considers five benchmarks that represent the contribution needed to:

 

·     Satisfy the minimum required contribution (MRC) as defined by Internal Revenue Code Section 430 after reflecting all allowable offsets;

 

·     Reduce the unfunded liability (normal cost plus interest on the unfunded liability) using smoothed discount rates allowed by current law; contributions must exceed this level to reduce the unfunded liability;



·     Eliminate the unfunded liability in seven years (normal cost plus seven-year amortization of the unfunded liability) using smoothed discount rates allowed by current law;

 

·     Reduce the unfunded liability using un-smoothed discount rates; and

 

·     Eliminate the unfunded liability in seven years using un-smoothed discount rates.

 

Click Here for full article

 

 

Pragmatic Strategies to Reduce PBGC Premiums This Year

PLANSPONSOR |By John Manganaro | April 25, 2019

 

Pension plan sponsors have taken various actions to reduce their PBGC premiums in the last year, resulting in a decline in premiums paid in 2018 of $1.2 billion.

 

October Three Consulting’s third annual PBGC Premium Burden Survey shows U.S. pension plan sponsors paid $1.2 billion less in insurance premiums to the Pension Benefit Guaranty Corporation (PBGC) in 2018 versus 2017.

 

This is despite the fact that PBGC premiums continue to increase. According to October Three’s survey report, the drop in premiums paid can be tied to record levels of voluntary contributions made for 2017, strong 2017 asset performance, continued headcount reduction via lump sum and annuity settlements, and increased adoption of best practices related to timing and recording of plan contributions.

 

However, the report also points to some $60 million in “unnecessary payments” doled out by plan sponsors to the PBGC last year.

 

“While many sponsors have taken big steps to reduce premiums, hundreds of plans continue to leave easy money on the table,” the report says. “Our analysis indicates close to $60 million in premiums could have been saved in 2017, and over $500 million between 2010 and 2017, by adopting very modest changes to contribution timing and recording.”

 

According to October Three’s analysis, when including large voluntary year-end contributions in the calculation, missed premium savings between 2010 and 2017 total $1.2 billion.

Click Here for full article

 

 

 

CONTACT US:

 

Austin Office

Patrick McLean

CPA

(800) 832-7742

pmclean@bcgpension.com

 

 

 Boston Corporate Office

Michael E. Devlin, Principal

(855) 432-7658  ext. 403

mdevlin@bcgpension.com

 

Steve Keating

(203) 955-1566

skeating@bcgpension.com

 

David Geloran

CEBS®

(855) 432-7658 ext. 401

dgeloran@bcgpension.com

 

 

Chicago Office

David Rumas

FCA, EA, MAAA

(855) 432-7658 ext. 406

drumas@bcgpension.com

 

Karen Ambrose

(855) 432-7658 ext. 410

kambrose@bcgpension.com

 

Karl K. Oman

ASA, EA, MAAA

(312) 550-3844

koman@bcgpension.com

 

 

Cincinnati Office

Debbie M. Sharp

CEBS®

(855) 432-7658 ext. 405

dsharp@bcgpension.com

 

 

Boise/Los Angeles Offices

Sean O'Flaherty

AIF®, CRPS®

(855) 432-7658 ext. 402

sean@bcgpension.com

 

 

ANNUITY RATES Standard Pension Closeout/Terminal Funding Case Rates:

(No lump sums, no disability or unusual provisions)

Retirees - 3.08%

Term Vesteds - 3.13%

Actives - 3.20%

Annuity Purchase Rates as of April 29, 2019

 

 

BCG Pension Risk Consultants

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