In this article we review issues that record low interest rates present for defined benefit plan sponsors and strategies sponsors can adopt to deal with them. Our focus is primarily on reducing Pension Benefit Guaranty Corporation variable-rate premiums, with respect to which many sponsors will have options. Current and projected interest rates The following chart…Read More
In 2014 there were several major DB policy developments, including a significant extension of MAP-21 funding relief, new mortality tables and the finalization of the hybrid plan regulations on ‘market rate of return.’ In addition, the year-end federal spending deal included ERISA section 4062(e) legislation. In this article we review these developments, beginning with the…Read More
Lawmakers in Washington have a budget problem, and a small part of the solution being considered is, as we understand it, an extension of interest rate stabilization relief under 2012’s “Moving Ahead for Progress in the 21st Century Act” (MAP-21). The proposal is to extend the MAP-21 25-year average floor at the 90% level through…Read More
We have been posting articles regularly on the effect of the “Moving Ahead for Progress in the 21st Century Act” (MAP-21) interest rate floor on defined benefit plan funding. IRS recently published MAP-21 rates for 2014. This article briefly reviews the new rates and their implications for plan funding. Background — valuations interest rates under…Read More
Last year we reviewed the effect of newly adopted rules under the “Moving Ahead for Progress in the 21st Century Act” (MAP-21) in our article Implications of MAP-21 for DB plan finance. At that time, we concluded that if interest rates stayed flat (as of the summer of 2012), typical DB plan sponsors would have…Read More
IRS has released Notice 2012-61, providing guidance on the application of new MAP-21 funding/valuation interest rate rules. In this article we highlight significant elements of the guidance. (For a detailed discussion of MAP-21 please see our article Pension Funding Relief / PBGC Premium Increases.) 1. Treatment of lump sum valuations. There had been concern that…Read More
In this article we project MAP-21interest rates to the end of the decade. We then consider the implications of MAP-21 relief for plan funding and sponsor decisions about the management of plan finance. (For detail on how MAP-21 works, see our article Pension Funding Relief / PBGC Premium Increases.) Cash only MAP-21 affects minimum funding…Read More
On August 16, 2012, IRS issued Notice 2012-55, providing new valuation interest rates for 2012, reflecting changes made by the “Moving Ahead for Progress in the 21st Century Act” (MAP-21). We discuss MAP-21 in our article Pension Funding Relief / PBGC Premium Increases, and we refer you to that article for more detail on how…Read More