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Pension Plan Funding

2020 lessons learned – lump sum de-risking in the context of steeply declining interest rates

Defined benefit plan valuation interest rates have declined nearly 200 basis points since late 2018. Interest rate stabilization has significantly mitigated the effect of this decline on plan funding. GAAP accounting (e.g., balance sheet disclosure) is, however, indexed to current rates, and the steep declines in interest rates have presented a number of challenges and opportunities for defined benefit plan sponsors.

September 2020 Pension Finance Update

Lower stock prices hit pensions during September. Both model plans we track lost ground last month, with Plan A dropping 2% and Plan B slipping 1% during the month. For the year, Plan A is now down 5% and Plan B is down more than 1% through the first three quarters of 2020.

August 2020 Pension Finance Update

Pensions enjoyed their best month of the year in August, driven by higher stock prices and higher interest rates. Both model plans we track gained ground last month, with Plan A improving 6% and Plan B gaining 1% during August. For the year, Plan A is still down more than 3% and Plan B is down 1% through the first eight months of 2020.

DB contribution timing 2020

DB contribution timing is critical with respect to at least three issues – ERISA minimum funding, Internal Revenue Code tax deductions, and the calculation of unfunded vested benefits (UVBs) for purposes of determining Pension Benefit Guaranty Corporate variable-rate premiums.

July 2020 Pension Finance Update

July was a mixed month for pension finance, with strong stock markets offsetting the impact of new all-time low interest rates. Both model plans we track[1] were close to even last month, with Plan A slipping 1% and Plan B treading water during July. For the year, Plan A is down 9% and Plan B is…Read More

The PBGC Premium Burden Report – 2020

We are proud to present our fourth annual report on the PBGC Premium Burden, a comprehensive analysis of the experience of roughly 5,000 US pension plans.

June 2020 Pension Finance Update

June was another positive month for pension finance, rounding out a solid quarter during which plans clawed back about one-third of the ‘hole’ created in the first quarter.