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Our Perspective

SECURE 2.0 Approved by House in 414-5 vote

On March 29, 2022, the House of Representatives, by a nearly unanimous (414-5) vote, approved the Securing a Strong Retirement Act of 2022 (SECURE 2.0). The bill represents a synthesis of the Ways and Means Committee’s Securing a Strong Retirement Act of 2021 and the Education and Labor Committee’s RISE Act.

Democrats introduce mandatory 401(k) plan reenrollment legislation

On February 18, 2022, Senator Kaine (D-VA) (in the Senate) and Representative Manning (D-NC) (in the House) introduced the Auto Reenroll Act of 2022, a bill that would require 401(k) plans taking effect in 2025 or after to provide for a 3-year reenrollment of non-contributing participants in order to take advantage of the automatic enrollment testing safe harbor, allow certain “permissible withdrawals,” or assert state preemption for default contributions.

DOL issues RFI on disclosure and fiduciary issues with respect to “climate-related financial risks”

On February 14, 2022, the Department of Labor published a “Request for Information on Possible Agency Actions to Protect Life Savings and Pensions from Threats of Climate-Related Financial Risk.” Among other things, the RFI solicits comments on whether DOL should collect data on climate-related financial risk (CRFR) for retirement plans, whether certain guaranteed lifetime investment products (e.g., annuities) may mitigate/hedge CRFR and whether DOL should facilitate their inclusion in DC plans, and whether there is a need to educate participants (e.g., in participant directed DC plans) about CRFR.

De-risking in 2022 – Part 2 – the de-risking decision in the context of rising interest rates

many plans will use a 2021 August, September, October, November, or December lookback month to determine the interest rate to be used to value 2022 lump sums. For these plans, the increase in interest rates in 2022 will mean that 2022 lump sums will be valued at an interest rate that is lower than current market rates, generating a lump sum that is greater than the current market value of the associated liability.

Annuity Purchases for Retirees with Small Benefits – Guaranteed Savings 2022

Executive Summary The cost to maintain a defined benefit pension plan has skyrocketed.   The primary reason is the premiums paid to the Pension Benefit Guaranty Corporation (PBGC).  Most plan sponsors have reduced their headcounts in recent years to effectively manage these premium overhead costs.  The first wave focused on lump-sum windows for terminated vested participants….Read More

De-risking in 2022 – Part 1

In this article, we provide our standard analysis of de-risking: how changes in interest rates and Pension Benefit Guaranty Corporation premiums may affect sponsor decisions to de-risk (or not de-risk) defined benefit plan liabilities in 2022. For purposes of this article, we focus solely on de-risking by paying out a deferred vested participant’s benefit as a lump sum and thereby eliminating the related liability.

The 2021 PBGC Premium Burden Report

plan sponsors are paying PBGC Variable Rate Premiums and of those that still are, fewer sponsors are leaving money on the table than at any previous year since we began publishing the PBGC premium report