Current Events

ERISA Advisory Council recommendations on lifetime participation

January 11, 2016

Last December, the ERISA Advisory Council has released a summary of its 2015 recommendations. One of the (two) issues the Department of Labor had asked the EAC to consider for 2015 was “lifetime plan participation.” In this article we discuss EAC’s lifetime plan participation recommendations and conclude with some remarks about their significance for plan sponsors. We begin with some background on the EAC. Read More

DOL regulation & releases Interpretive Bulletin authorizing state plans proposed

January 06, 2016

At the July 2015 White House Conference on Aging, President Obama instructed the Department of Labor to propose guidance “clarifying how states can move forward” with state retirement plan initiatives. On November 16, 2015, DOL released (1) a proposed regulation addressing issues raised by state auto-IRA initiatives and (2) an Interpretive Bulletin (IB) setting forth its view that “certain state laws designed to expand the retirement savings options available to private sector workers through ERISA-covered retirement plans” are not preempted by ERISA. In this article we review DOL’s guidance. Read More

How will the Fed interest rate increase affect pension plans?

December 22, 2015

On Wednesday, December 16, 2015, the Federal Reserve Federal Open Market Committee announced that it had “decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent.” This represents, roughly, a 25 basis point increase in short term rates. For most defined benefit plans, interest rates are the most significant variable in plan valuations. In this article we review how the Fed’s action may affect DB plan sponsors’ (1) financial statements, (2) funding and (3) de-risking decisions. Read More

Legal and Regulatory Update – December 2015

December 10, 2015

In this article, we discuss: the final IRS rules for hybrid plans not in compliance with the market rate of return standard – those rules also postpone the effective date of 2014 hybrid rules to 2017; the recent decision in Pfeil v. State Street, a stock drop case; ERISA Advisory Council recommendations with respect to pension risk transfers; and the possible inclusion in omnibus spending legislation of a provision de-funding the Department of Labor’s fiduciary proposal. Read More

Pension plan termination strategy – part 2

November 13, 2015

In our prior article, we discussed the basic factors in a standard plan termination analysis: taking as a baseline the plan’s PBO, we considered the key variables of the present value of future administrative costs (including PBGC premiums) and the annuity purchase premium. In this article we will consider a factor that is left out of that analysis – the equity risk premium. Read More

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