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.


September 2019 - Volume 95, Edition 1



LIMRA Finds Growing Interest in PRTs and MEPs

By Amanda Umpierrez | PLANSPONSOR


Even though pension risk transfer is better understood by plan sponsors, LIMRA hopes pending legislation that would open multiple employer plans to more employers will create an opportunity for greater plan access.


Emerging data from a new LIMRA report studies awareness and interest in Pension Risk Transfer (PRT) transactions and multiple employer plans (MEPs), given the growing challenge among plan sponsors in funding retirement plans.


The LIMRA Secure Retirement Institute (SRI) study reports eight in 10 private-sector defined benefit (DB) plan sponsors—that are also offering a defined contribution (DC) plan—have at least minimal interest in PRT. Four in 10, however, are saying they have a high interest in the feature. This attention towards PRT has gone up considerably since 2014, from 32% of employers reporting an interest up to 44% in 2019. According to the study, half of all employers with frozen DB plans would like to offer PRT products, while 39% of those with active DB plans are curious about them.


While PRT transactions continue to gain momentum, MEPs are just growing traction in the plan sponsor community, largely due to the recent attention towards the Setting Up Every Community for Retirement Enhancement (SECURE) Act of 2019. Just 36% of all employers are somewhat or very familiar about MEPs, and only 29% of small employers with fewer than 50 workers understand the term, according to Dave Levenson, president and CEO of LIMRA. However, given recent participant reaction towards MEPs and new legislation from the SECURE Act, Levenson is hopeful employer awareness will swing upwards.

Click Here for full article.



DB Plan Funding Takes a Hit From Record-Setting Low Interest Rates in August

By Rebecca Moore | 9/9/19 | PLANSPONSOR


Pension plans that have invested in long bonds would have benefited, according to Northern Trust Asset Management, and Legal and General Investment Management America suggests market volatility can be risk-managed and controlled to a specific target with the use of an overlay.


The estimated aggregate funding level of defined benefit (DB) pension plans sponsored by S&P 1500 companies decreased by 4% in August 2019 to 82%, as a result of a decrease in discount rates and equity markets, according to Mercer.


As of August 31, the estimated aggregate deficit of $451 billion increased by $129 billion as compared to $322 billion measured at the end of July.


The S&P 500 index decreased 1.81% and the MSCI EAFE index decreased 2.88% in August. Typical discount rates for pension plans as measured by the Mercer Yield Curve decreased from 3.38% to 2.95%.


“Funded status dropped sharply in August with interest rates now at their lowest point in modern history,” says Matt McDaniel, a partner in Mercer’s Wealth business. “Interest rates decreased dramatically during August with the 30-Year Treasury falling to an all-time low at under 2%. The yield curve inverted, which has historically signaled an impending recession, and equity returns for August were negative as well.”

Click Here for full article.


Greater Longevity Will Require Plan Design Changes

By Amanda Umpierrez | PLANSPONSOR


As developed countries around the world, including the U.S., see the average age of their population increase, employers must prepare for an imbalanced workforce.


A 2018 Natixis report on the aging global workforce points to Japan as a bellwether for what other developed economies can expect. In that country, 27% of people are currently over the age of 65, and, by 2050, there will be 70 retirees for every 100 workers.


Ed Farrington, head of retirement at Natixis, says the world should celebrate medical advances and broad-based lifestyle changes allowing more people to reach older ages and remain healthy. But, he says, when it comes to the topic of retirement planning in an aging world, greater longevity is a serious issue to confront.


“We’re talking about retirement systems that were built on the expectation of having somewhere between 15 and 20 people living in retirement for every 100 workers. Seventy retirees per 100 workers simply becomes unsustainable.”

Click Here for full article.





Austin Office

Patrick McLean


(512) 480-8309



 Boston Corporate Office

Michael E. Devlin,


(855) 432-7658  ext. 403


Steve Keating

(203) 955-1566


David Geloran


(855) 432-7658 ext. 401



Chicago Office

David Rumas


(219) 381-9545


Karen Ambrose

(855) 432-7658 ext. 410


Karl K. Oman


(312) 550-3844



Cincinnati Office

Debbie M. Sharp


(855) 432-7658 ext. 405



Boise/Los Angeles Offices

Sean O'Flaherty


(855) 432-7658 ext. 402




Standard Pension Closeout/Terminal Funding Case Rates:

(No lump sums, disability or unusual provisions)

Retirees - 2.38%

Term Vesteds - 2.43%

Actives - 2.50%

Annuity Purchase Rates as of September 9, 2019



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

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