From:                                         BCG Pension Risk Consultants <>

Sent:                                           Monday, August 27, 2018 2:17 PM

To:                                               Terry McCauley

Subject:                                     BCG Pension Insider July 2018


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.



July 2018 - Volume 81, Edition 1



Retirees Say Income Replacement Needed Not As High As Pre-Retirees Think

Lee Barney | PlanSponsor | June 25, 2018

Half of retirees say they spend less in retirement than they did in their working years.

Retirees are considerably less concerned than pre-retirees about their money lasting throughout retirement, according to a survey by Massachusetts Mutual Life Insurance Co.


Ninety-one percent of retirees are confident their savings will last throughout their lifetime, compared to only 56% of pre-retirees. While 28% of pre-retirees worry they will not have enough money to enjoy themselves in retirement, this is only true for 7% of retirees. In fact, retirees’ biggest concern, cited by 29%, is health care costs.


Seventy-eight percent of pre-retirees worry they will not have enough income in retirement, compared to 51% of retirees. Other concerns of pre-retirees compared to retirees: changes in Social Security benefits (81% versus 69%) and low interest rates hurting income (69% versus 57%).


Sixty percent of pre-retirees believe they will need at least two-thirds or more of their pre-retirement income to live comfortably in retirement, but only 44% of retirees say this is actually true. Thirty-three percent of pre-retirees think they will need 75% or more of pre-retirement income, but 33% of retirees say they need less than 50%.


“While many retirees can manage their expenses to lower income levels in retirement, the rising cost of care may steadily reduce their lifestyles as they age,” says Tom Foster, head of retirement plans practice management at MassMutual. “It’s far better to err on the side of having more rather than less income than you anticipate needing, especially as costs for care continue to escalate.” Click Here to continue reading



MetLife Accused of Failing to Pay Retirees Covered by Pension Risk Transfers

John Manganaro | PlanSponsor | June 25, 2018

The company is facing lawsuits by a retirement plan participant whose assets were transferred to MetLife as well as by Massachusetts Secretary of the Commonwealth William Galvin.

A would-be class representative whose benefit liability was transferred to MetLife in a pension risk transfer (PRT) deal has filed an expansive lawsuit, challenging the company’s practices across its PRT and group annuity contract services business.


Filed in the U.S. District Court for the Southern District of New York, the complaint names as defendants MetLife, Inc.; the Metropolitan Life Insurance Company; and Brighthouse Financial, Inc. Summarizing the complaint, the lead plaintiff says he is suing these companies “for conversion and unjust enrichment relating to the taking of retirement annuity benefits from retirees.” The plaintiff also seeks “an accounting from MetLife for the amounts taken, interest, and disgorgement of unlawful profits.”


According to the text of the complaint, this action “seeks to hold MetLife accountable for the company’s conversion of more than $500 million in retirement benefits, interest, and unlawful profits over the last 25 years - depriving retirees of important income in their golden years.” The complaint further suggests “MetLife’s systematic conversion of retirement annuity benefits betrayed thousands of annuitants and their beneficiaries.”


“MetLife systematically took ownership over the beneficiaries’ annuity assets, ultimately releasing more than $500 million in reserves that belonged to the beneficiaries, treating the funds as if they belonged to MetLife,” the complaint states. “The scope and scale of MetLife’s betrayal of trust is particularly egregious in light of its failure to pay death benefits in connection with the company’s life insurance business that resulted in the company paying $500 million in overdue death benefits - and being required to look for similar problems in its annuity business.”

Click Here to continue reading


Rising Costs

John Keefe | PlanSponsor | April/May 2018

PBGC premiums are high, but there are ways to control them.

Insurance: In theory, it is an arrangement that brings together large groups of people to share common risks, where each pays a charge that is small relative to the potential exposure. In practice, though, costs can get out of proportion - as they have in the case of the premiums charged to corporate defined benefit (DB) plans for Pension Benefit Guaranty Corporation (PBGC) insurance coverage to make good on pension plan defaults.


To be fair, PBGC’s fund covering single-employer plans built up a sizeable deficit after the financial crisis, and the increases in premiums, mandated by Congress, have gone a long way to shore it up. But some practitioners see the price of coverage getting out of hand: “There are 1,000 private single-employer plans whose premiums are going to be at least 1% of plan assets,” reports Brian Donohue, a partner at October Three Consulting in Chicago and author of a series of papers on the PBGC premium burden. “It’s a deadweight cost for plans that is just crippling, so sponsors’ efforts to control them are not surprising.”


“There is a fixed per-participant charge, and a variable charge on plan underfunding, and increases in both have been inexorable,” says Greg Meila, senior investment director at consulting firm Cambridge Associates in Boston. “There were three rounds of increases in just a few years, so the flat rate premium is 2.4 times what it was in 2007, and the variable premium is up 4.2 times.”

Another increase is coming in 2019, after which premiums will be hiked by the rate of inflation. Still, that is not much relief, says Peggy McDonald, senior vice president of pension and investment solutions at Prudential Financial, in Newark, New Jersey. “The variable premium will be 4.2% of unfunded liabilities next year, but, assuming five years of future inflation, that might rise to 5%. That’s a lot of money.” Click Here for full article







Austin Office

Patrick McLean, CPA

(800) 832-7742



 Boston Corporate Office

Michael E. Devlin, Principal

(855) 432-7658  ext. 403


Steve Keating

(203) 955-1566


David Geloran, CEBS®, MBA

(855) 432-7658 ext. 401



Chicago Office

David Rumas, FCA, EA, MAAA

(855) 432-7658 ext. 406


Karen Ambrose

(855) 432-7658 ext. 410


Karl K. Oman, ASA, EA

(855) 432-7658 ext. 408



Cincinnati Office

Debbie M. Sharp, CEBS®

(855) 432-7658 ext. 405



Boise/Los Angeles Offices

Sean O'Flaherty AIF®, CRPS®

(855) 432-7658 ext. 402



ANNUITY RATES Standard Pension Closeout/Terminal Funding Case Rates:

(No lump sums, no disability or unusual provisions)

Retirees - 2.93%

Term Vesteds - 2.98%

Actives - 3.08%

Annuity Purchase Rates as of July 9, 2018



BCG Pension Risk Consultants

We specialize in settling pension liabilities for terminating and ongoing pension plans.

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