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Retirement plan adequacy for participants

Retirement income, inflation, and retirement finance

The Consumer Price Index (CPI) has steadily risen throughout the year, with prices in September 2021 5.4% higher than the beginning of the year. This represents, fundamentally, a reduction in the buying power of a (nominal) dollar since the beginning of the year. How does this affect retirees and those saving for retirement? The effect…Read More

2021 Retirement policy legislative agenda

With the Democrats in control of both houses of Congress, they are now in a position to move legislation. In what follows we discuss, briefly, the procedural issues that may limit what legislation may be viable, and then consider a variety of proposals that indirectly or directly affect retirement policy that Democrats may consider giving priority.

Retirement savings finance at the end of 2020

Bottom line: interest rates have stabilized since mid-Summer (near all-time lows) while asset performance has improved dramatically, leaving DB plans on-net slightly better off than they were at the beginning of the year. DC participants – who are generally (on average) younger than DB participants, with longer durations, and thus more affected by 2020 interest rate declines – did (on average) less well, notwithstanding strong asset returns.

HEROES Act Includes Significant Relief Provisions for Multiemployer Pension Funds

On May 15, in a nearly party-line vote, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act). The bill now goes to the Senate. While Senate Majority Leader Mitch McConnell described the bill as “dead on arrival,” it likely gives direction on a potential bipartisan rescue of the…Read More

Interest rates 2019 – the effect of recent declines on DC plans

Medium- and long-term interest rates have declined 75-100 basis points since the beginning of the year. That decline, if it persists, will significantly increase the “cost of retirement,” not just for defined benefit plan sponsors (see our recent article Interest rates 2019 – DB funding strategy) but also for defined contribution plan participants.  In this article…Read More

Regulatory update — November 2018

In this regulatory update, we briefly review ERISA Advisory Council recommendations for rule changes to encourage the inclusion of lifetime income options in QDIAs, the effect of the new Society of Actuaries MP-2018 mortality improvement scale on liability valuations, and a recent IRS “Program Letter” identifying qualified plan distributions as a compliance target. ERISA Advisory…Read More

Current Retirement policy legislation

In this article we review several bipartisan retirement policy initiatives being considered by Congress. We start with three bills introduced in 2017, in the 115th Congress, addressing the issues of lifetime income disclosure, leakage and plans with closed groups. We then review two proposals that were introduced in 2016, at the end of the 114th…Read More

Repeal of Affordable Care Act: effect on retirement savings

One of the more controversial elements of the proposal to “repeal and replace” the Affordable Care Act (ACA), introduced by House Republicans March 6, 2017, is the repeal of the ACA 3.8% Medicare Net Investment Income (NII) tax. In this article we briefly discuss how that change, if enacted, would, for certain high-earners, reduce the…Read More

Current Outlook – October 2016

In this Current outlook we discuss three issues raised in the recent complaint filed against fiduciaries of the Northrop Grumman DC plan that are atypical of 401(k) fee litigation – reimbursement of sponsor direct expenses, use of a flat recordkeeping fee and Financial Engines payments. We then review the recent GAO report 401(K) PLANS: DOL…Read More