Market volatility doesn’t deter Plan Sponsors from derisking as the PRT market remains very active.
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.
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.
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.
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
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.
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
January was a mixed month for pensions, as higher interest rates and lower stock markets pushed pension assets and liabilities down last month.
In this article, we briefly consider the 2022 retirement policy legislative, regulatory, and litigation agenda. Most of these issues are carryovers from 2021, and we have discussed them at length elsewhere. We are, therefore, going to keep our preview of 2022 brief, focusing on the “highlights,” and providing links to our prior, more comprehensive treatment.
On January 8, 2022, the United States District Court for the Northern District of California granted defendant plan fiduciaries’ motion to dismiss in Anderson v. Intel, a case involving a challenge to Intel’s inclusion of non-traditional assets (including hedge funds, private equity, and commodities) in Intel’s 401(k) plan default target date fund (TDF). Plaintiffs argued…Read More