From:                                         BCG Pension Risk Consultants <>

Sent:                                           Monday, August 27, 2018 2:19 PM

To:                                               Terry McCauley

Subject:                                     The Pension Insider August 2016



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.



August, 2016 - Volume 66, Edition 1



Group Pension Buyouts Break $1 Billion Threshold Again

For the fifth consecutive quarter, group pension buy-outs have surpassed the $1 billion mark, reports the LIMRA Secure Retirement Institute. By Javier Simon | August 22, 2016

Group pension buyout sales exceeded $1 billion for the second quarter of 2016, according to the LIMRA Secure Retirement Institute.

“Pension buyout activity for the first six months of this year is higher than it has been in the last five years,” says Michael Ericson, analyst for LIMRA. “More companies of all sizes are looking to transfer their pension risk, which has increased sales activity in the first half of the year.”

Traditionally, buyout sales have had a strong seasonality with most sales occurring in the fourth quarter.  Activity in the first six months of 2016 is up 22% compared with the first half of 2015.  Through the second quarter of this year, 131 plan sponsors have converted their defined benefit (DB) pension plans to group annuity contracts, surpassing the previous high-water mark of 107 contracts sold in the first six months of 2015.

The second quarter results of $1.03 billion are less than the $3.8 billion in sales for second quarter 2015 primarily because of one “jumbo” deal. Last year, Kimberly-Clark transferred it's pension into group annuity contracts with two insurance companies.

Several years of low interest rates and a volatile market have made it difficult for plan sponsors to keep their DB plans properly funded, LIMRA argues. In addition, the Pension Benefit Guarantee Corporation (PBGC) has significantly increased its premiums and is using new mortality tables, which are less favorable to plan sponsors.

“All of these factors have made DB plans more expensive and burdensome,” says Ericson. “That’s why an increasing number of companies are transferring their pension risk to an insurer by purchasing a group annuity.” Click Here to continue reading article

Plan Sponsor Magazine


DB Plan Funded Status


The PPA had good intentions to get pension plans fully funded  By Rebecca Moore | August 2016

The Pension Protection Act of 2006 (PPA) laid out specifically how defined benefit (DB) plans should measure funded status: by using high-quality corporate bond interest rates and a specific mortality table, explains Matt McDaniel, U.S. head of DB risk at Mercer in Philadelphia.
It also prescribed a calculation for minimum required contributions each year, and plan sponsors had seven years to get their plans fully funded.
However, since the act’s passage, the rules have been revised several times. “These tweaks probably wouldn’t have been needed if we hadn’t gone into a recession. The PPA was reasonable at the time,” McDaniel says. Click Here to continue reading article

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ANNUITY RATES Standard Pension Closeout/Terminal Funding Case Rates:

(No lump sums, no disability or unusual provisions)

Immediates - 2.08%

Deferreds - 2.43%

50/50 Split of Immediates and Deferreds - 2.26%



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