From:                                         BCG Pension Risk Consultants <>

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

To:                                               Terry McCauley

Subject:                                     The Pension Insider October 2017


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.



October 2017- Volume 76, Edition 1




DOL to Increase DB Audits

By Nick Otto | Employee Benefit News | September 28 2017, 10:12pm EDT


While all eyes have been on the Senate in its push to repeal and replace the Affordable Care Act, the regulatory benefit landscape still has some changes on the horizon.

A hot topic coming out of the Department of Labor is the agency’s plan to audit DB pension plans to ensure plan sponsors are getting benefits paid out to terminated vested participants, says Norma Sharara, a principal in Mercer’s employment practices risk management group.

It’s something “completely new” that started as a pilot program out of the Philadelphia DOL office, Sharara noted Thursday on Mercer’s Washington Outlook webcast.


While it sounds beneficial to many, “the bad news is that plan sponsors aren’t happy because the DOL views not contacting people entitled to benefits as being a plan sponsor breach of fiduciary duty,” she warned.

In the DOL’s view, not contacting totally vested participants early and periodically to inform them they are not entitled to benefits is a breach of the plan sponsors duty to provide benefits, Sharara said.


For a scope on the initiatives effect, the Philadelphia office alone between October 2016 and August 2017 found $165 million in benefits that were paid out to eligible participants.

The agency announced at a recent ERISA Advisory Council meeting it would be releasing guidance at some point. In the meantime, Sharara suggested following some best practices EBSA acting director, Tim Hauser, mentioned at the meeting.

· Send participants a certified letter using their last known address - “certified” being the key word, Sharara added.

· Keep good records on how to reach plan participants and pass those records onto successors during a M&A.

· Contact coworkers and ask if they know how to get in touch with plan participants.

· Try using phone numbers and not just addresses, as people tend to keep their cell phone numbers even when they move, Sharara added. Click Here for full article


PBGC Proposes Changes to Form 5500 Reporting by DB Plans

By Rebecca Moore | PLANSPONSOR | September, 2017 

The agency is proposing two modifications for multiemployer plans and one modification for single-employer plans.

The Pension Benefit Guaranty Corporation (PBGC) intends to request that the Office of Management and Budget (OMB) extend for three years its approval of information collection on the annual Form 5500 filing required by defined benefit (DB) plan sponsors.

The collection of information has been approved by the OMB through August 31, 2020.

In its Notice of Intent, the PBGC is proposing two modifications to the 2017 Form 5500 Schedule MB (Multiemployer Defined Benefit Plan Actuarial Information) instructions and one modification to the schedule SB (Single Employer Defined Benefit Plan Actuarial Information) instructions.

With regard to the Schedule MB instructions, the agency is proposing to change the instructions to require new attachments in two situations:

·     If any of the contributions reported in Line 3 (Contributions Made to Plan) include amounts owed for withdrawal liability, PBGC is proposing to require plan administrators to report for each reported contribution (on an attachment to Line 3), the aggregate amount of withdrawal liability payments included in such contribution. The agency says separating withdrawal payments from contributions will assist in projections of future ongoing contributions and also will provide information regarding withdrawing employers.

·     For multiemployer plans for which Code C (Critical Status) or Code D (Critical and Declining Status) is entered on Line 4b), the current Schedule MB instructions require that plans report the year a troubled multiemployer plan is projected to become insolvent or emerge from troubled status on Line 4f. The PBGC is proposing that basic supporting documentation be included as an attachment to Line 4f. Such plans would be required to report in the attachment year-by-year cash flow projections for the period ending with whichever is applicable, the year the plan is projected to emerge from Critical or Critical and Declining Status or the year the plan is projected to become insolvent; and a summary of the assumptions underlying these projections. The agency says it is proposing the addition of this information to enable it to better project the impact on participants and PBGC’s insurance system.

With regard to the Schedule SB instructions, PBGC is proposing to change the instructions related to an attachment that is currently required of plans for which the Internal Revenue Service (IRS) has granted permission to use a substitute mortality table. The current instructions for Schedule SB, item 23, describe the information that is to be included in the attachment. Those instructions reflect the current IRS regulation on the use of substitute mortality tables, but the PBGC’s proposed changes to the Schedule SB are based on amendments to the IRS mortality table regulations that are proposed to become effective 1/1/2018. If the regulations are not effective on 1/1/2018, then the proposed changes to the Schedule SB will be deleted from the final Form 5500 instructions. The agency says the addition of information will allow it to reconstruct the substitute table for which the plan has sought IRS approval, which will enable it to better predict future funding requirements and the impact on participants and the insurance system. Click Here for full article



PBGC Premiums Driving DB Plan Sponsors to Fund, De-Risk By Rebecca Moore | PLANSPONSOR | September, 2017 

“Companies feel that the time is right to reduce or eliminate their pension funding shortfalls.” says Matt McDaniel, partner, Mercer. 

Eighty percent of defined benefit (DB) plan sponsors have accelerated funding, largely due to increasing Pension Benefit Guarantee Corporation (PBGC) fees and the prospect of lower corporate taxes, according to results of the Mercer/ CFO Research 2017 Risk Survey, “Adventures in Pension Risk Management.”

“Two years ago, mortality assumptions dominated as the main influencing factor. Today, PBGC premiums and market conditions have emerged as most cited reasons. Companies feel that the time is right to reduce or eliminate their pension funding shortfalls.” says Matt McDaniel, partner, Mercer. “Continuing the trend we found in our 2015 survey, the migration toward pension risk transfer and de-risking carries on at an accelerated pace.”

Specifically, respondents say they are now contributing more than the minimum level of funding to their DB plans either because they want to reach specific thresholds or because they aim to fully fund the plan over a shorter period of time than regulations require. PBGC premiums tripled between 2011 and 2016 and are expected to quadruple by 2019 - which has had a notable effect on plan sponsors.

When asked about reasons why they either have increased funding or would consider doing so, 40% of respondents decided to increase funding to reduce the cost of future PBGC premiums, and nearly 33% are also considering funding for that same reason. According to Mercer, that combined total of nearly 73% is a notable increase from the 2015 survey results, which found only about 60% citing PBGC premiums as a deciding factor to fund above requirement.

Nearly 60% of survey respondents intend to terminate their plans within the next ten years. Most have a funding deficit they must overcome first. “Sponsors who want to develop a successful pension exit strategy have to make sure they create a process that evaluates and changes the asset allocation, lowering pension risk as frozen plans move closer to termination.” says McDaniel. “DB plan sponsors should weigh considerations such as the plan’s objective, their time horizon, the magnitude of their obligations and the state of the economy.”

De-Risking Accelerates

More than eight in ten respondents say they either have a “dynamic de-risking strategy in place” (42%) or “are currently considering one” (40%), citing a desire to avoid volatility in their financial statements as a main reason. More than half of respondents (55%), however, say they struggle with finding enough internal resources to manage their pension plan. As such, 52% of those surveyed delegate some or all investment execution to a third party through an outsourced chief investment officer (OCIO) model.

Nearly 75% of Mercer’s survey respondents say they have already offered lump-sum payments to certain participants since 2012 - up from 59% from the 2015 Mercer CFO survey findings. About 50% of all respondents consider it likely that their companies will take some form of lump-sum, risk-transfer action in the next couple of years - for many of these sponsors, this will be a second or third lump-sum offer.

A significant number of sponsors have implemented an annuity buyout for some pension participants, where an insurer assumes responsibility for the sponsor’s retirement liabilities. Among survey respondents, more than half (55%) have either completed such an annuity buyout or are considering it.

Many companies are held back by the misconception that such annuities are either “expensive” (37%) or “very expensive” (25%). Specifically, these respondents estimate that the cost of an annuity would require their pensions to post a projected benefit obligation (PBO) of more than 110%. However, Mercer’s experience shows the majority of transactions occur between 100% and 110% of PBO. Click Here  for full article

Request a Quote

 Click Here





DOL to Increase DB Audits



PBGC Proposes Changes to Form 5500 Reporting by DB Plans




PBGC Premiums Driving DB Plan Sponsors to Fund, De-Risk










Austin Office

Patrick McLean, CPA





 Boston Corporate Office

Michael E. Devlin

(855) 432-7658  ext. 403



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




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 - 2.43%

Term Vesteds - 2.63%

Actives - 2.73%



BCG Pension Risk Consultants

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

Today’s Solutions for Tomorrow’s Needs. 




BCG Pension Risk Consultants | 100 Grandview Road , Suite 303, Braintree, MA 02184

Unsubscribe {recipient's email}

Update Profile | About our service provider

Sent by in collaboration with



This email was sent by the author for the sole purpose of testing a draft message. If you believe you have received the message in error, please contact the author by replying to this message. Constant Contact takes reports of abuse very seriously. If you wish to report abuse, please forward this message to