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Our Perspective

2021 Retirement policy legislative agenda

With the Democrats in control of both houses of Congress, they are now in a position to move legislation. In what follows we discuss, briefly, the procedural issues that may limit what legislation may be viable, and then consider a variety of proposals that indirectly or directly affect retirement policy that Democrats may consider giving priority.

New Administration, new Congress

With the focus currently on how President-Elect Biden will staff his new Administration and on the change in control of the Senate, we provide a brief review of the key Administration jobs that President Biden will have to fill, and the key Congressional leadership, that directly affect retirement savings policy, and some of the issues they will be considering.

December 2020 Pension Finance Update

December gave us one more turn of the screw from extraordinary 2020 stock markets, pushing pension sponsors into the black for the year.

2020 lessons learned – annuity settlements for small benefits

Even for plans not at the VRP headcount cap, with respect to (relatively) smaller benefits, annuity settlement may be an efficient strategy. For almost all pension plans, there exists a threshold, greater than zero, below which these settlements make sense.

DOL releases final fiduciary advice Prohibited Transaction Exemption

On December 16, 2020, the Department of Labor released a final class Prohibited Transaction Exemption (PTE) allowing “investment advice fiduciaries … to receive compensation, including as a result of advice to roll over assets from a Plan to an IRA, … that would otherwise violate the prohibited transaction provisions of [ERISA] and the Code.”

Annuity Purchase Update: December 2020 Interest Rates

Pensions experienced their strongest month of the year in November. The average duration 7 annuity purchase interest rates increased 4 basis points and average duration 15 rates increased 1 basis point since last month as seen in the below graph titled Annuity Purchase Interest Rates.

DOL finalizes new rules on proxy voting

On December 11, 2020, the Department of Labor released a final regulation revising DOL’s rules for the voting (or not voting) of proxies by ERISA plan fiduciaries.

November 2020 Pension Finance Update

Stocks enjoyed their strongest month of the year in November, propelling pensions toward positive territory for the year. Both model plans we track gained ground last month, with Plan A adding close to 5% and Plan B close to 2% during the month. For the year, Plan A is down less than 1% and Plan B is even through the first eleven months of 2020.

Annuity Purchase Update: November 2020 Interest Rates

Pension plans have experienced unprecedented volatility in 2020. While the market volatility has caused the treasury rates to drop dramatically, the spread between treasury bonds and the bonds insurance companies invest in have widened. The widening of this spread typically tells us that now would be a good time for pension plans to purchase annuities.