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Our Perspective

Annuity Purchase Update: April 2019 Interest Rates

April 2019 Duration: 7 Years 15 Years   7 Years 15 Years Range Rate: 2.65% – 3.20% 3.02% – 3.25% Average Rate: 2.91% 3.13% The first quarter of 2019 shows a noticeable drop in annuity purchase interest rates. However, our experiences during the first quarter have shown that insurers are pricing annuity purchases aggressively. Annuity…Read More

Trump Executive Order instructs DOL to reexamine fiduciary proxy guidance

On April 10, 2019, President Trump issued an “Executive Order on Promoting Energy Infrastructure and Economic Growth” (the “EO”) that included a separate section on “Environment, Social, and Governance Issues; Proxy Firms; and Financing Energy Projects Through the United States Capital Markets,” instructing the Department of Labor to review current ERISA guidance with respect to…Read More

Legislative Update – April 2019

Major bipartisan retirement policy legislation introduced in the Senate and the House In the last two weeks, major bipartisan retirement policy legislation has been introduced in both houses of Congress. In the Senate, Senators Grassley (R-IA) and Wyden (D-OR), the Chairman and Ranking Member (respectively) of the Senate Finance Committee introduced the Retirement Enhancement and Savings…Read More

Pay to play lawsuits — issues for plan sponsors

Recently, in two separate lawsuits, plaintiffs sued Fidelity, alleging ERISA fiduciary violations in connection with an “infrastructure fee” it charges certain funds that participate in its FundsNetwork mutual fund “supermarket.” In a series of lawsuits going back at least to 2016, plaintiffs have also sued recordkeepers (including Fidelity, Aon Hewitt, and Voya) over fees they…Read More

March 2019 Pension Finance Update

Pension finances slipped in March due to falling interest rates. Both model plans we track[1] lost ground last month: Plan A dropped more than 2% but remains up 2% for the year, while Plan B lost close to 1% but remains ahead 1% through the first three months of 2019: Assets Stocks were mixed in…Read More

Ninth Circuit affirms dismissal of Disney prudence complaint, applying Dudenhoeffer standard

On March 1, 2019, the Ninth Circuit handed down its decision in Wilson v. Fidelity Management Trust Company, et al. (aka In re Disney ERISA Litigation), dismissing plaintiffs’ claims. The case is interesting for its consideration of DC investment prudence generally, its application of the Supreme Court’s Fifth Third Bancorp et al. v. Dudenhoeffer market price = prudence…Read More

Five things to think about before paying a retiree lump sum

IRS recently released Notice 2019-18, stating that it no longer intends to amend current required minimum distribution (RMD) regulations to prohibit the payment, as part of a “lump-sum window program,” of a lump-sum to a retiree currently receiving an annuity. The new Notice appears to authorize offering a lump-sum option to retirees in de-risking transactions…Read More

De-risking in 2019

In this article we discuss how changes in interest rates, Pension Benefit Guaranty Corporation premiums and mortality assumptions may affect sponsor decisions to de-risk (or not de-risk) defined benefit plan liabilities in 2019. For purposes of this article, by de-risking we mean paying out a participant’s benefit as a lump sum and thereby eliminating the…Read More

Annuity Purchase Update: March 2019 Interest Rates

March 2019 Duration: 7 Years 15 Years 7 Years 15 Years Range Rate: 2.81% – 3.5% 3.22% – 3.48% Average Rate: 3.17% 3.37% During 2018, the market experienced a favorable upward trend of rising interest rates which generally increased US defined benefit plan funding ratios. As interest rates climbed in 2018, plan liabilities dropped which…Read More