November 2012 Archive

Should I borrow money to fund up my pension plan?

November 28, 2012

In 2015, the Pension Benefit Guaranty Corporation variable rate premium will increase to $18 per $1,000 of unfunded vested liability. In effect, the variable premium will be a 1.8% per year charge for "underfunding." A sponsor can avoid that charge by, e.g., borrowing an amount sufficient to fund the defined benefit plan's unfunded vested benefits (UVB). What is the tradeoff -- at what interest rate (and rate of return and other variables) does it become financially ‘worth it’ to borrow and fund rather than continue to pay the PBGC variable premium? In this article we address that question. Read More

The ‘fiscal cliff’ and retirement plan participants

November 19, 2012

Policymakers are, post-election, almost entirely focused on the issue of the ‘fiscal cliff’- a combination of tax increases and spending cuts due to take effect automatically at the end of 2012. The two most significant elements of the fiscal cliff for retirement plan participants are a possible increase in federal income tax rates and a possible reduction in the limits on contributions to tax-qualified plans. Read More

Law Firm Defined Benefit Plan Structures

November 14, 2012

During the past 15 years, virtually every law firm in the Am Law 100 has adopted a defined benefit plan to provide their Partners with enhanced retirement benefits. While each Firm may have different objectives for what they wish to accomplish, certain general themes are shared when it comes to key design considerations. Read More

October 2012 Pension Finance Update

November 01, 2012

October was a down month for stocks and a mixed month for interest rates, with Treasury yields edging higher while corporate yields moved down. The combination produced a bout of pain for pension sponsors, who saw funded status decline 1%-3% during the month and are now down 2%-4% so far in 2012. Download

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