Pension De-risking Strategies and Issues

Size: px
Start display at page:

Download "Pension De-risking Strategies and Issues"

Transcription

1 Pension De-risking Strategies and Issues May 1, Presenters: Craig A. Bitman John G. Ferreira Azeez Hayne

2 Pension De-risking Significant pension settlement and de-risking activities occurred in 2012 and more activity on tap for 2013 Asset-based strategies Liability-driven investment strategies Funding policy Insurance annuity buy-ins Liability-based strategies Freeze of participation and/or benefit accruals Lump-sum payments to participants Insurance annuity buy-outs Ultimate strategy of plan termination 2

3 What Is Driving Pension De-risking? A number of factors are driving pension de-risking activity Law and regulatory changes Pension Protection Act of 2006 Ultimately will force employers to fully fund pension plans Results in calculation of smaller lump-sum payments than prior rules Moving Ahead for Progress in the 21 st Century (MAP-21) granted interest rate relief for funding, but also included steep increases in PBGC premium amounts Changes in accounting rules (in particular, FASB Statement No. 158) accentuate financial/accounting volatility of pension plan exposure Market conditions and volatility Strong balance sheets and access to inexpensive capital 3

4 Examples of De-risking Date Company Funded Ratio Liability Assets Notes 4/27/2012 Ford Motor Company (Salaried Plan Only) 80.7% $48.8 billion $39.4 billion Offering lump sums to retirees and terminated vested participants in US Salaried Plan 6/1/2012 General Motors (Salaried Plan Only) 92% $35.9 billion $33 billion Offering to retirees lump sums. If lump sum not elected, will receive annuity payments from Prudential Lump sums offered to terminated vested participants. 8/1/2012 NCR Corp. 67.9% $4.027 billion $2.733 billion Expect 70% take-up Offering lump sums. If lump sum not elected, will receive 8/9/2012 Energy Future Holdings Corp. 72.3% $3.3 billion $2.4 billion annuity payments from an insurance company 9/14/2012 New York Times 73.7% $1.987 billion $1.464 billion Offering lump sums to former employees 9/14/2012 Sears Holdings Corp. 66.3% $6.1 billion $4.1 billion Offering lump sums 9/19/2012 Visteon Corp. 77.7% $1.48 billion $1.15 billion Lump sums offered to deferred vesteds 9/21/2012 Archer Daniels Midland Co. 72.3% $3.1 billion $2.24 billion Lump sums offered to deferred vesteds. Expected 50-75% take-up 9/25/2012 Thompson Reuters $1.5 billion 10/1/2012 Equifax Inc. 78.1% $746.1 million $583 million Lump sums/reduced annuity offered to deferred vesteds Offering lump sums to deferred vesteds whose lump sum 10/5/2012 A.H. Belo Corp. 65.3% $420.9 million $274.9 million value is less than $30k 10/9/2012 Yum! Brands Inc. 72.3% $1.381 billion $0.998 billion Offering lump sums to former employees 10/19/2012 Baxter International Inc. 74.3% $4.94 billion $3.67 billion Offering lump sums to former employees 10/24/2012 Kimberly-Clark Corp. 91.6% $3.8 billion $3.48 billion Offering lump sums to former employees Offering lump sums. If lump sum not elected, will receive 10/26/2012 Kaydon Corp. 76.8% $142.8 million $109.7 million annuity payments 10/29/2012 J.C. Penny 97.7% $5.297 billion $5.176 billion Lump sums offered to deferred vesteds 10/17/2012 Verizon Communications Inc. 78.8% $30.6 billion $24.1 billion Annuity purchase from Prudential 10/19/2012 AT&T 81.8% $56.1 billion $45.9 billion Announced $9.5 billion contribution in preferred company stock 4

5 Asset-Based Strategies to De-risking Asset-based strategies to de-risking include: Asset liability driven investments Moving to hedged investments Dynamic or static Funding policy approaches Borrow to fund Annuity buy-ins Purchase of bulk annuity as a plan asset Guaranteed hedge against funding fluctuations 5

6 Asset-Based Strategies to De-risking (cont d) Advantages to LDI Strategies Can help reduce funding volatility Avoid settlement accounting Can help maintain funded status Disadvantages to LDI Strategies Must continue to administer the plan PBGC premiums Underfunding is locked in 6

7 Liability-Based Strategies to De-risking Four primary liability-based strategies Freeze of participation and/or benefit accruals Offering lump-sum payments to participants Insurance annuity buy-outs Ultimate strategy of plan termination 7

8 Liability-Based Strategies (cont d) Freeze of participation and/or benefit accruals Soft freeze of plan participation to new participants Hard freeze of benefit accruals for existing participants Some plan sponsors have evolved from earlier soft to more recent hard freeze Strategies slow or stop future increases in liabilities, but do not manage or reduce existing liabilities 8

9 Liability-Based Strategies (cont d) Offer lump-sum distributions to plan participants To date, by far the most common liability-based de-risking strategy for dealing with existing liabilities With notable exception of Verizon annuity buy-out, most plan sponsors have opted for a lump-sum de-risking strategy As with any de-risking approach, a thorough advance evaluation of cost, funding, and accounting consequences is necessary prior to adoption E.g., impact on plan funding and cash flow, company contribution obligations, savings from reduced administrative costs and PBGC premiums, financial reporting and accounting consequences, etc. 9

10 Liability-Based Strategies (cont d) Until recently, conventional wisdom was that offering a lump sum to retirees ran afoul of Code Section 401(a)(9) required minimum distribution rules 2012 private letter rulings concluded that offer of lump sum to retirees constituted a plan amendment increasing plan benefits and fit within regulatory exception Lump-sum window is a voluntary offer and participants can t be required to take it; creates some uncertainty regarding consequences ( take-up rates can vary) Lump-sum window design considerations Temporary vs. permanent most typically offered as a temporary window rather than an ongoing plan feature 10

11 Liability-Based Strategies (cont d) Terminated vested vs. retirees most typically offered to terminated vested participants, but notable exceptions (Ford and GM) include offer to retirees in pay status Sometimes offered with cap (e.g., offered to terminated vested participants with benefits less than $25,000) may help manage financial consequences of offer Decisions to make about how to calculate lump sums Under Code Section 417(e), certain interest rate and mortality assumption minimums must be used, but flexibility may exist in identifying 417(e) assumptions used for these purposes (i.e., how look-back and stability periods are defined) Whether the value of early retirement subsidies or other incentives should be included in calculating lump sums 11

12 Liability-Based Strategies (cont d) Lump-sum window compliance and implementation considerations are significant Compliance considerations include Code Section 436 benefit restriction rules that prevent plans below the 80% AFTAP funding level from offering full lump sums Possible nondiscrimination testing issues (particularly if lump sum is not offered to broad class of participants) Use of Code Section 417(e) assumptions Complex and detailed disclosure requirements including relative value disclosures, spousal consent requirements, etc. 12

13 Liability-Based Strategies (cont d) Implementation considerations include Data integrity issues a very significant consideration given the demands a lump-sum window will place on benefit calculation systems and processes Up-to-date participant information (death audits, missing participant considerations, locater searches, etc.) Communication process and strategy to address disclosure obligations and to ensure that plan participants have sufficient information to make informed decisions (important to manage fiduciary and legal risks as discussed below) Sufficient internal and external resources to manage project Collective bargaining considerations if union employees are involved 13

14 Liability-Based Strategies (cont d) An insurance annuity buy-out is another liability-based de-risking strategy Involves the transfer of assets and liabilities and all associated obligations and costs to a third-party insurance company The transaction is at the level of the plan and the insurance company and does not (directly) involve participants; no participant consent is required The Verizon buy-out is the most recent significant example transfer of $7.5B in pension liabilities to Prudential 14

15 Liability-Based Strategies (cont d) Although there are advantages to insurance buy-outs as a de-risking strategy (complete transition of liabilities, elimination of future costs like PBGC premiums, participant consent not necessary, etc.), there are potential draw-backs Costs (cash flow and insurance premium/profit margin) Accounting consequences settlement accounting Fiduciary issues and possible exposure relating to selection of insurance provider (discussed below) 15

16 Fiduciary Implementation of Pension De-risking Decision to undertake pension de-risking should be a settlor function, but implementation of the de-risking can raise fiduciary issues Participant communications Selection of annuity providers Investment strategy Fiduciaries should develop a strategy for communicating with participants Provide information relevant to participant decisions Information must not be misleading Purchase of annuities Selection of annuity providers is a fiduciary function DOL safe harbor for annuity selection (consider the extent to which it s really a safe harbor) Recent case law 16

17 Presenters Craig A. Bitman Partner, New York Azeez Hayne Partner, Philadelphia John G. Ferreira Partner, Pittsburgh

18 DISCLAIMER This material is provided as a general informational service to clients and friends of Morgan, Lewis & Bockius LLP. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. These materials may be considered Attorney Advertising in some states. Please note that the prior results discussed in the material do not guarantee similar outcomes. Links provided from outside sources are subject to expiration or change Morgan, Lewis & Bockius LLP. All Rights Reserved. IRS Circular 230 Disclosure To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein. For information about why we are required to include this legend, please see 18

19 international presence Almaty Beijing Boston Brussels Chicago Dallas Frankfurt Harrisburg Houston Irvine London Los Angeles Miami Moscow New York Palo Alto Paris Philadelphia Pittsburgh Princeton San Francisco Tokyo Washington 19 Wilmington

PLAN SPONSOR BASICS: CASH BALANCE PLANS. Presenters: John Ferreira and Jared Rogers March 31, 2015. 2015 Morgan, Lewis & Bockius LLP

PLAN SPONSOR BASICS: CASH BALANCE PLANS. Presenters: John Ferreira and Jared Rogers March 31, 2015. 2015 Morgan, Lewis & Bockius LLP PLAN SPONSOR BASICS: CASH BALANCE PLANS Presenters: John Ferreira and Jared Rogers March 31, 2015 2015 Morgan, Lewis & Bockius LLP Overview of Today s Training Introduction to Cash Balance Plans Brief

More information

De-risking Alternatives for Plan Sponsors Compliance Requirements. April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores

De-risking Alternatives for Plan Sponsors Compliance Requirements. April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores De-risking Alternatives for Plan Sponsors Compliance Requirements April 16, 2015 Presented by: Michael Falk, Erin Kartheiser, and Steve Flores Today s elunch Presenters Michael Falk Partner, Employee Benefits

More information

IRS Issues Final Regulations Governing Options Granted Under Employee Stock Purchase Plans. December 24, 2009

IRS Issues Final Regulations Governing Options Granted Under Employee Stock Purchase Plans. December 24, 2009 IRS Issues Final Regulations Governing Options Granted Under Employee Stock Purchase Plans December 24, 2009 On November 16, the Internal Revenue Service (IRS) issued final regulations with respect to

More information

Treasury and IRS Release Long-Awaited Guidance on Deferred Compensation Rules under Code Section 409A Certain Actions Necessary Before Year-End

Treasury and IRS Release Long-Awaited Guidance on Deferred Compensation Rules under Code Section 409A Certain Actions Necessary Before Year-End Treasury and IRS Release Long-Awaited Guidance on Deferred Compensation Rules under Code Section 409A Certain Actions Necessary Before Year-End October 5, 2005 On September 29, the Treasury Department

More information

Employer Group Health Plans Face Immediate Issues as Healthcare Reform Becomes Law. March 25, 2010

Employer Group Health Plans Face Immediate Issues as Healthcare Reform Becomes Law. March 25, 2010 Employer Group Health Plans Face Immediate Issues as Healthcare Reform Becomes Law March 25, 2010 The Patient Protection and Affordable Care Act (the Healthcare Reform Law) that President Obama signed

More information

Avoiding 409A Pitfalls in Severance Agreements

Avoiding 409A Pitfalls in Severance Agreements 409A Basics A Webinar Series Avoiding 409A Pitfalls in Severance Agreements Presenters: Mims Maynard Zabriskie David B. Zelikoff Vicki M. Nielsen www.morganlewis.com April 10, 2012 AGENDA How does Section

More information

Executive Summary. Introduction

Executive Summary. Introduction 2013 ERISA Advisory Council Private Sector Pension De-risking and Participant Protections Testimony of John G. Ferreira Partner, Morgan, Lewis & Bockius LLP 1 Executive Summary In my view, there is no

More information

Plan Sponsor Basics Webinar Series Issues for 401(k) Plan Sponsors with Employer Stock Investment Funds

Plan Sponsor Basics Webinar Series Issues for 401(k) Plan Sponsors with Employer Stock Investment Funds Plan Sponsor Basics Webinar Series Issues for 401(k) Plan Sponsors with Employer Stock Investment Funds Webinar 5 of 5 November 4, 2014 www.morganlewis.com Presenters: Lisa H. Barton Jeremy P. Blumenfeld

More information

Pension. Presented by Frank Minter & Al Duscher

Pension. Presented by Frank Minter & Al Duscher Pension Presented by Frank Minter & Al Duscher DRIVING INTO THE FUTURE AND LOOKING IN THE REARVIEW MIRROR HELPFUL TO UNDERSTAND THE HISTORY OF HOW WE GOT TO WHERE WE ARE NOW WHAT HAS CHANGED? WHY IS ALU

More information

Verizon Announces $7.5 Billion Pension Settlement

Verizon Announces $7.5 Billion Pension Settlement Consulting Retirement Pension Settlement Trend Accelerates with Verizon Annuity Purchase Insights Into the Evolving Pension Transfer Environment October 2012 Verizon Announces $7.5 Billion Pension Settlement

More information

Funding-Based Restrictions on Single- Employer Defined Benefit Plans

Funding-Based Restrictions on Single- Employer Defined Benefit Plans Plan Sponsor Basics Webinar 2 of 6 Funding-Based Restrictions on Single- Employer Defined Benefit Plans Presenters: March 21, 2012 Brian J. Dougherty Claudia L. Hinsch Susan D. Lastowski www.morganlewis.com

More information

Virtual Asset Management Roundtable Series: SEC Examination Trends for Investment Advisers

Virtual Asset Management Roundtable Series: SEC Examination Trends for Investment Advisers Virtual Asset Management Roundtable Series: SEC Examination Trends for Investment Advisers April 10, 2014 Jennifer L. Klass Daniel R. Kleinman Richard F. Morris Christine M. Lombardo www.morganlewis.com

More information

FSOC Proposes Rules for Board of Governors of the Federal Reserve s Supervision of Nonbank Financial Companies. October 20, 2011

FSOC Proposes Rules for Board of Governors of the Federal Reserve s Supervision of Nonbank Financial Companies. October 20, 2011 FSOC Proposes Rules for Board of Governors of the Federal Reserve s Supervision of Nonbank Financial Companies October 20, 2011 On October 11, the Financial Stability Oversight Council (the Council) released

More information

FinCEN and IRS Issue Guidance on FBAR Filing Requirements for Certain U.S. Persons. February 26, 2010

FinCEN and IRS Issue Guidance on FBAR Filing Requirements for Certain U.S. Persons. February 26, 2010 FinCEN and IRS Issue Guidance on FBAR Filing Requirements for Certain U.S. Persons February 26, 2010 The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department issued a Notice of

More information

$29 Billion of payments over 50 years $17 Billion of Liability (calculation of assets needed now to pay benefits) (to calculate: need investment

$29 Billion of payments over 50 years $17 Billion of Liability (calculation of assets needed now to pay benefits) (to calculate: need investment $29 Billion of payments over 50 years $17 Billion of Liability (calculation of assets needed now to pay benefits) (to calculate: need investment return and life expectancy WHAT HAS HAPPENED SINCE 2007?

More information

GM Pension Settlement Actions

GM Pension Settlement Actions Consulting Retirement GM Pension Settlement Actions And Considerations for Plan Sponsors June 2012 On June 1, 2012, General Motors Co. (GM) announced a program that will settle approximately $26 billion

More information

DOL Proposes Significant Changes to Investment Advice Fiduciary Status Definition. November 1, 2010

DOL Proposes Significant Changes to Investment Advice Fiduciary Status Definition. November 1, 2010 DOL Proposes Significant Changes to Investment Advice Fiduciary Status Definition November 1, 2010 In the October 22 edition of the Federal Register, the U.S. Department of Labor (DOL) published a proposed

More information

Pension Derisking: Distributing Annuity Contracts After Lee v. Verizon

Pension Derisking: Distributing Annuity Contracts After Lee v. Verizon Pension Derisking: Distributing Annuity Contracts After Lee v. Verizon ALI CLE Pension, Profit-Sharing, Welfare, and Other Compensation Plans San Francisco, CA April 3, 2014 Rosina B. Barker Ivins, Phillips

More information

Recent Trends In Pension Buyouts And Lump Sum Offers

Recent Trends In Pension Buyouts And Lump Sum Offers Portfolio Media. Inc. 860 Broadway, 6th Floor New York, NY 10003 www.law360.com Phone: +1 646 783 7100 Fax: +1 646 783 7161 customerservice@law360.com Recent Trends In Pension Buyouts And Lump Sum Offers

More information

Pensions and the Future of Retained Risk

Pensions and the Future of Retained Risk Institutional Investor Corporate Financial Executive Summit Pensions and the Future of Retained Risk June 19, 2013 Glenn O Brien Managing Director, Pension Risk Transfer Prudential Retirement 0246029-00001-00

More information

I. Introduction. II. Methods of Pension De-Risking

I. Introduction. II. Methods of Pension De-Risking TESTIMONY OF ROBERT S. NEWMAN Covington & Burling LLP ERISA Advisory Council United States Department of Labor Hearing on PRIVATE SECTOR PENSION DE-RISKING AND PARTICIPANT PROTECTIONS June 5, 2013 I. Introduction

More information

Pension De-Risking Strategies Latest Developments and Trends. June 30, 2015

Pension De-Risking Strategies Latest Developments and Trends. June 30, 2015 Pension De-Risking Strategies Latest Developments and Trends June 30, 2015 Speakers Contact Information Tonya Manning, FSA, EA, MAAA Chief Actuary, Wealth Practice tonya.manning@xerox.com Phil Parker,

More information

Hidden Employee Benefits Liabilities in Private Equity Portfolio Companies

Hidden Employee Benefits Liabilities in Private Equity Portfolio Companies Hidden Employee Benefits Liabilities in Private Equity Portfolio Companies August 8, 2013 www.morganlewis.com Presenters: Craig A. Bitman Brian J. Dougherty Amy Pocino Kelly Introduction and Overview For

More information

Evaluating Retiree Cash-out Windows

Evaluating Retiree Cash-out Windows Evaluating Retiree Cash-out Windows Recent IRS Private Letter Rulings confirm that qualified pension plans that are not terminating can offer participants who are currently receiving annuity payments a

More information

In recent years, plan sponsors have been focusing

In recent years, plan sponsors have been focusing November 2012 By Elizabeth Thomas Dold and David N. Levine A Look at Retiree Cashouts as the New De-Risking Strategy Elizabeth Thomas Dold and David N. Levine are Principals at Groom Law Group, Chartered

More information

Bulk Terminated Vested Lump Sum Offerings

Bulk Terminated Vested Lump Sum Offerings INSIGHTS Bulk Terminated Vested Lump Sum Offerings August 2015 203.621.1700 2015, Rocaton Investment Advisors, LLC EXECUTIVE SUMMARY * Bulk terminated vested lump sum offerings have become a hot topic

More information

2013 SEC and FINRA Year in Review for Broker Dealers and Investment Advisers

2013 SEC and FINRA Year in Review for Broker Dealers and Investment Advisers 2013 SEC and FINRA Year in Review for Broker Dealers and Investment Advisers March 27, 2014 Anne C. Flannery Jennifer L. Klass E. Andrew Southerling www.morganlewis.com Our Team Anne C. Flannery aflannery

More information

1. Why is GM making these changes to the Salaried Retirement Program (SRP)?

1. Why is GM making these changes to the Salaried Retirement Program (SRP)? GMRetiree.com 060112 1. Why is GM making these changes to the Salaried Retirement Program (SRP)? GM s announced changes to the Salaried Retirement Program (SRP) underscore the company s commitment to retirees

More information

UPDATE: Risk transfer options for defined benefit plan sponsors

UPDATE: Risk transfer options for defined benefit plan sponsors By: Justin Owens, FSA, EA, Asset Allocation and Risk Management Analyst JUNE 2013 UPDATE: Risk transfer options for defined benefit plan sponsors Issue: Defined benefit pension risk transfer is becoming

More information

SEC s Final Rules for Implementing Dodd-Frank Whistleblower Provisions: Important Implications for Covered Entities. May 25, 2011

SEC s Final Rules for Implementing Dodd-Frank Whistleblower Provisions: Important Implications for Covered Entities. May 25, 2011 SEC s Final Rules for Implementing Dodd-Frank Whistleblower Provisions: Important Implications for Covered Entities May 25, 2011 Today, the Securities and Exchange Commission (SEC or Commission) voted

More information

SEC s Proposed Rules for Implementing Dodd-Frank Whistleblower Provisions: Important Implications for Employers. November 12, 2010

SEC s Proposed Rules for Implementing Dodd-Frank Whistleblower Provisions: Important Implications for Employers. November 12, 2010 SEC s Proposed Rules for Implementing Dodd-Frank Whistleblower Provisions: Important Implications for Employers November 12, 2010 The Securities and Exchange Commission (SEC) has proposed rules to implement

More information

Healthcare Reform: Core Concepts for Employer Group Health Plans. December 17, 2009

Healthcare Reform: Core Concepts for Employer Group Health Plans. December 17, 2009 Healthcare Reform: Core Concepts for Employer Group Health Plans December 17, 2009 While it is still too early to tell whether the healthcare reform bills on Capitol Hill will ultimately become law or

More information

Will They Take the Money and Run?

Will They Take the Money and Run? Will They Take the Money and Run? A Perspective on Pension Lump Sum Cash-Outs November 2012 Lockton Retirement Services The tide is changing in favor of personal financial conservatism. Gone are the days

More information

Sweeping Changes Made to Labor and Employment Whistleblower Protections

Sweeping Changes Made to Labor and Employment Whistleblower Protections Sweeping Changes Made to Labor and Employment Whistleblower Protections Financial reform legislation, if signed, will among other changes allow employee whistleblowers to bypass Sarbanes-Oxley administrative

More information

AGGREGATING CAPITAL FOR IMPACT INVESTMENT: VENTURE CAPITAL IMPACT INVESTMENT FUNDS

AGGREGATING CAPITAL FOR IMPACT INVESTMENT: VENTURE CAPITAL IMPACT INVESTMENT FUNDS AGGREGATING CAPITAL FOR IMPACT INVESTMENT: VENTURE CAPITAL IMPACT INVESTMENT FUNDS Carl A. Valenstein, Morgan Lewis & Bockius LLP May 11, 2015 2015 Morgan, Lewis & Bockius LLP 1. GIIN s First ImpactBase

More information

Accounting for pension buy-in

Accounting for pension buy-in from People and Organization Accounting for pension buy-in arrangements March 29, 2016 In brief A pension buy-in arrangement is similar to a traditional non-participating annuity (a buy-out ), where a

More information

Written Testimony of Stephen A. Keating Co-Founder & Principal. Penbridge Advisors, LLC. ERISA Advisory Council. United States Department of Labor

Written Testimony of Stephen A. Keating Co-Founder & Principal. Penbridge Advisors, LLC. ERISA Advisory Council. United States Department of Labor Written Testimony of Stephen A. Keating Co-Founder & Principal Penbridge Advisors, LLC ERISA Advisory Council United States Department of Labor Hearing on Private Sector Pension De-Risking and Participant

More information

PRIVATE PENSIONS. Participants Need Better Information When Offered Lump Sums That Replace Their Lifetime Benefits

PRIVATE PENSIONS. Participants Need Better Information When Offered Lump Sums That Replace Their Lifetime Benefits United States Government Accountability Office Report to the Ranking Member, Committee on Ways and Means, House of Representatives January 2015 PRIVATE PENSIONS Participants Need Better Information When

More information

Choosing the Ideal Structure for your Business Entity and Venture Capital Investment in 2010

Choosing the Ideal Structure for your Business Entity and Venture Capital Investment in 2010 Choosing the Ideal Structure for your Business Entity and Venture Capital Investment in 2010 Columbia University Entrepreneurial Program April 2010 www.morganlewis.com Outline I. Overview II. Choosing

More information

Pension Settlements Through Terminated Vested Lump Sum Windows

Pension Settlements Through Terminated Vested Lump Sum Windows Pension Settlements Through Terminated Vested Lump Sum Windows Insights into Plan Sponsor Experience February 2013 Retirement port 2013 Aon plc Document Title Sub-Title of Report Document Date Summary

More information

Annuity Market Quarterly Update

Annuity Market Quarterly Update Annuity Market Quarterly Update November 2010 2010 Aon Corporation Brief Description: Despite the rebound in the third quarter, many pension plans remain underfunded. On top of that, annuity interest rates

More information

Using liability-driven investing to derisk corporate pension plans

Using liability-driven investing to derisk corporate pension plans EATON VANCE NOVEMBER 2015 TIMELY THINKING Using liability-driven investing to derisk corporate pension plans SUMMARY Defined benefit (DB) pension funding ratios remain near decade lows. Underfunded pension

More information

CASE STUDY: Six Sigma Legal Services for Mortgage Loans

CASE STUDY: Six Sigma Legal Services for Mortgage Loans CASE STUDY: Six Sigma Legal Services for Mortgage Loans Up to 25% Reduction in Time Charges Dramatically Enhanced Quality Richard J. Sabat Six Sigma Green Belt Morgan, Lewis & Bockius LLP rsabat@morganlewis.com

More information

Freezing Defined Benefit Plans

Freezing Defined Benefit Plans View the online version at http://us.practicallaw.com/6-502-3611 Freezing Defined Benefit Plans DAVID N. LEVINE AND LARS C. GOLUMBIC, GROOM LAW GROUP, CHARTERED This Practice Note provides a basic overview

More information

Acquisition Transaction Reinsurance: Key Concepts SEAN KEYVAN AND JEREMY WATSON, SIDLEY AUSTIN LLP

Acquisition Transaction Reinsurance: Key Concepts SEAN KEYVAN AND JEREMY WATSON, SIDLEY AUSTIN LLP Acquisition Transaction Reinsurance: Key Concepts SEAN KEYVAN AND JEREMY WATSON, SIDLEY AUSTIN LLP Agenda Introduction to Reinsurance Reinsurance in the context of an Acquisition Transaction Regulatory

More information

LEGISLATION ENACTED TO EXCLUDE EMPLOYEE STOCK OPTIONS FROM OVERTIME PAY. June 2000. www.morganlewis.com

LEGISLATION ENACTED TO EXCLUDE EMPLOYEE STOCK OPTIONS FROM OVERTIME PAY. June 2000. www.morganlewis.com LEGISLATION ENACTED TO EXCLUDE EMPLOYEE STOCK OPTIONS FROM OVERTIME PAY June 2000 www.morganlewis.com Brussels Frankfurt Harrisburg London Los Angeles Miami New York Philadelphia Northern Virginia Pittsburgh

More information

Global Benefits & Compensation

Global Benefits & Compensation ALBANY AMSTERDAM ATLANTA AUSTIN BOSTON CHICAGO DALLAS DELAWARE DENVER FORT LAUDERDALE HOUSTON LAS VEGAS LONDON* LOS ANGELES MIAMI NEW JERSEY NEW YORK ORANGE COUNTY ORLANDO PALM BEACH COUNTY PHILADELPHIA

More information

Pension Risk Transfer. Evaluating Impact and Barriers for De-Risking Strategies. Sponsored by the Society of Actuaries

Pension Risk Transfer. Evaluating Impact and Barriers for De-Risking Strategies. Sponsored by the Society of Actuaries Evaluating Impact and Barriers for De-Risking Strategies Sponsored by the Society of Actuaries Prepared by: Timothy J. Geddes Bradley B. Howard Anthony G. Conforti Allison R. Steinmetz Deloitte Consulting

More information

SOFTWARE DEVELOPMENT IN RUSSIA: KEY LEGAL ISSUES

SOFTWARE DEVELOPMENT IN RUSSIA: KEY LEGAL ISSUES SOFTWARE DEVELOPMENT IN RUSSIA: KEY LEGAL ISSUES presenters Brian Zimbler Anastasia Dergacheva May 31, 2016 2016 Morgan, Lewis & Bockius LLP Summary Commercial Background Employment Law Intellectual Property

More information

How will the new RP-2014 mortality tables affect my DB plan strategy?

How will the new RP-2014 mortality tables affect my DB plan strategy? PRACTICE NOTE How will the new RP-2014 mortality tables affect my DB plan strategy? Justin Owens, EA, FSA, Asset Allocation Strategist ISSUE: The Society of Actuaries (SOA) recently released new mortality

More information

MAP-21 SUPPLEMENT TO ANNUAL FUNDING NOTICE

MAP-21 SUPPLEMENT TO ANNUAL FUNDING NOTICE MAP-21 SUPPLEMENT TO ANNUAL FUNDING NOTICE OF THE ACADEMY OF NATURAL SCIENCES OF PHILADELPHIA PENSION PLAN FOR PLAN YEAR BEGINNING JANUARY 1, 2013 AND ENDING DECEMBER 31, 2013 ( Plan Year ) This is a temporary

More information

Preventing Disastrous DB Distributions Sunday, April 28, 2013

Preventing Disastrous DB Distributions Sunday, April 28, 2013 Preventing Disastrous DB Distributions Sunday, April 28, 2013 David B. Farber, ASA, COPA, EA, MSPA Defined Benefit Distributions Participant must elect form of benefit prior to payment from plan Types

More information

Hughes Hubbard & Reed LLP

Hughes Hubbard & Reed LLP Hughes Hubbard & Reed LLP EMPLOYEE BENEFITS ADVISORY May 2001 Required GUST Amendments for Qualified Retirement Plans The deadline for adopting GUST amendments to qualified retirement plans and submitting

More information

How Can the Automotive Industry Strengthen Its Regulatory Compliance Process and Reduce Its Compliance Risks?

How Can the Automotive Industry Strengthen Its Regulatory Compliance Process and Reduce Its Compliance Risks? September 29, 2015 Practice Groups: Regulatory Compliance Internal Investigations Government Investigations White Collar Crime/Criminal Defense Public Policy and Law Environmental, Land and Natural Resources

More information

Variable Annuity Pension Plans: A Balanced Approach to Retirement Risk

Variable Annuity Pension Plans: A Balanced Approach to Retirement Risk Variable Annuity Pension Plans: A Balanced Approach to Retirement Kelly Coffing, EA, FSA, MAAA Principal and Consulting Actuary Milliman, Seattle, Washington Grant Camp, EA, FSA, MAAA, Consulting Actuary

More information

Overview of Recently Issued FCPA Guidance by DOJ and the SEC

Overview of Recently Issued FCPA Guidance by DOJ and the SEC Overview of Recently Issued FCPA Guidance by DOJ and the SEC George J. Terwilliger III Daniel Levin Alison Tanchyk www.morganlewis.com December 13, 2012 Presenters George J. Terwilliger III Washington,

More information

CONSIDERING GETTING OUT OF THE PENSION BUSINESS?

CONSIDERING GETTING OUT OF THE PENSION BUSINESS? CONSIDERING GETTING OUT OF THE PENSION BUSINESS? Annuities? Lump Sums? Terminations? Questions you need to ask and answer before you pull the trigger November 1, 2012 David Oaten, CEO, Pacific Global Advisors

More information

Fiduciary Responsibility and 401(k) Plans

Fiduciary Responsibility and 401(k) Plans Plan Sponsor Basics Webinar 6 of 6 Fiduciary Responsibility and 401(k) Plans Presenters: September 19, 2012 www.morganlewis.com Gregory L. Needles Julie K. Stapel Stuart P. Kasiske Today s Topics Statutory

More information

Presented by Bruce Johnston, Grigory Marinichev, Margaret Gatti and Charles Horn

Presented by Bruce Johnston, Grigory Marinichev, Margaret Gatti and Charles Horn New EU sanctions MOSCOW KYIV www.morganlewis.com CRIMEA Presented by Bruce Johnston, Grigory Marinichev, Margaret Gatti and Charles Horn 1 August 2014 EU Regulations 825/2014 and 826/2014 30 July 2014

More information

Lump Sum Payments for Terminated Vested Participants. 2012 Retirement Webinar Series March 8, 2012

Lump Sum Payments for Terminated Vested Participants. 2012 Retirement Webinar Series March 8, 2012 Lump Sum Payments for Terminated Vested Participants 2012 Retirement Webinar Series March 8, 2012 Lump Sum Payments for Terminated Vested Participants Today s Participants Joe McDonald Aon Hewitt Byron

More information

Selecting an Annuity Provider

Selecting an Annuity Provider Selecting an Annuity Provider In conformance with Department of Labor Interpretive Bulletin 95- As of December 3, 204 4/5 2606-5B For institutional plan sponsor/financial consultant use only. Not for use

More information

Compensation, Benefits and Employment Law Focus

Compensation, Benefits and Employment Law Focus August 2003 New IRS Proposed Regulations Would Simplify Elimination of Optional Benefit Forms Under Defined Contribution Plans.....1 IRS Introduces Simplified Voluntary Correction Program... 3 Compensation,

More information

Managing Financial Risk in Retirement and Benefits Programs

Managing Financial Risk in Retirement and Benefits Programs 2014 Managing Financial Risk in Retirement and Benefits Programs Translating Awareness into Action A report prepared by CFO Research in collaboration with Prudential Financial, Inc. Contents Research Sponsor

More information

For a complete list of EBSA publications, call toll-free: 1-866-444-EBSA (3272) This material will be made available in alternate format upon request:

For a complete list of EBSA publications, call toll-free: 1-866-444-EBSA (3272) This material will be made available in alternate format upon request: This publication has been developed by the U.S. Department of Labor, Employee Benefits Security Administration. It is available on the Internet at: www.dol.gov/ebsa For a complete list of EBSA publications,

More information

Immediate Healthcare Reform Law Issues for Group Health Plans Come Into Sharper Focus. April 14, 2010

Immediate Healthcare Reform Law Issues for Group Health Plans Come Into Sharper Focus. April 14, 2010 Immediate Healthcare Reform Law Issues for Group Health Plans Come Into Sharper Focus April 14, 2010 The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation

More information

SOA 2011 Annual Meeting & Exhibit Oct. 16-19, 2011. Session 118 OF, Plan Termination Seminar: Session 4 Getting It Done

SOA 2011 Annual Meeting & Exhibit Oct. 16-19, 2011. Session 118 OF, Plan Termination Seminar: Session 4 Getting It Done SOA 2011 Annual Meeting & Exhibit Oct. 16-19, 2011 Session 118 OF, Plan Termination Seminar: Session 4 Getting It Done Moderator: Brian C. Donohue, FSA, EA, FCA, MAAA Presenters: Karen Ambrose Monica L.

More information

Terminated Vested Cashouts Overcoming Common

Terminated Vested Cashouts Overcoming Common Terminated Vested Cashouts Overcoming Common Misconceptions Terminated Vested Cashouts Overcoming Common Misconceptions In the past few years, a growing number of defined benefit pension plans have been

More information

Pension Protection Act of 2006 Makes Significant Changes to Single Employer Defined Benefit Plans

Pension Protection Act of 2006 Makes Significant Changes to Single Employer Defined Benefit Plans Important Information Legislation November 2006 Pension Protection Act of 2006 Makes Significant Changes to Single Employer Defined Benefit Plans This is one of a series of Pension Analyst publications

More information

Retirement Plan Leakage Cause For Concern And Action

Retirement Plan Leakage Cause For Concern And Action Retirement Plan Leakage Cause For Concern And Action Prepared by Consulting Retirement Presentation to ERIC State of Retirement: Many Employees are on a Rocky Road Full-Career Contributors at age 65 15.9

More information

Benefits and Compensation Alert

Benefits and Compensation Alert April 2, 2010 Authors: Mary Turk-Meena mary.turk-meena@klgates.com +1.704.331.7590 Lynne S. Wakefield lynne.wakefield@klgates.com +1.704.331.7578 Emily D. Zimmer emily.zimmer@klgates.com +1.704.331.7405

More information

Navigating the Maze of Paid Sick Leaves

Navigating the Maze of Paid Sick Leaves Navigating the Maze of Paid Sick Leaves February 20, 2014 Andy Anderson Partner, Employee Benefits Chicago Corrie Fischel Conway Of Counsel, Labor and Employment Washington Jim Walsh Partner, Labor and

More information

Pension Plan De-Risking : Strengthening Fiduciary Duties to Protect Retirees Executive Summary

Pension Plan De-Risking : Strengthening Fiduciary Duties to Protect Retirees Executive Summary Pension Plan De-Risking : Strengthening Fiduciary Duties to Protect Retirees Executive Summary The steady decline in traditional defined-benefit pension plan sponsorship by corporate America took another

More information

Pension Protection Act of 2006 Changes Affect Single-Employer Defined Benefit Plans in 2008

Pension Protection Act of 2006 Changes Affect Single-Employer Defined Benefit Plans in 2008 Important Information Legislation June 2007 Pension Protection Act of 2006 Changes Affect Single-Employer Defined Benefit Plans in 2008 This is one of a series of Pension Analyst publications providing

More information

Vested Termination Lump Sum Window Right for your company? September 25, 2014

Vested Termination Lump Sum Window Right for your company? September 25, 2014 Vested Termination Lump Sum Window Right for your company? September 25, 2014 Agenda Background Considerations Administration Communications Wrap Up Q&A 2 Speakers Dean Aloise, ASA, FCA, EA, MAAA Managing

More information

IRS Issues Cash-Out and Consent Rules For Defined Benefit Plans

IRS Issues Cash-Out and Consent Rules For Defined Benefit Plans Important Information Distributions and Withdrawals March 1999* IRS Issues Cash-Out and Consent Rules For Defined Benefit Plans WHO'S AFFECTED These rules apply to qualified defined benefit plans. They

More information

ANNUAL FUNDING NOTICE For THE UNIVERSITY OF CHICAGO PENSION PLAN FOR STAFF EMPLOYEES. Introduction

ANNUAL FUNDING NOTICE For THE UNIVERSITY OF CHICAGO PENSION PLAN FOR STAFF EMPLOYEES. Introduction ANNUAL FUNDING NOTICE For THE UNIVERSITY OF CHICAGO PENSION PLAN FOR STAFF EMPLOYEES Introduction This notice includes important information about the funding status of your single employer pension plan

More information

PRESENT LAW AND BACKGROUND RELATING TO EMPLOYER-SPONSORED DEFINED BENEFIT PENSION PLANS AND THE PENSION BENEFIT GUARANTY CORPORATION ( PBGC )

PRESENT LAW AND BACKGROUND RELATING TO EMPLOYER-SPONSORED DEFINED BENEFIT PENSION PLANS AND THE PENSION BENEFIT GUARANTY CORPORATION ( PBGC ) PRESENT LAW AND BACKGROUND RELATING TO EMPLOYER-SPONSORED DEFINED BENEFIT PENSION PLANS AND THE PENSION BENEFIT GUARANTY CORPORATION ( PBGC ) Scheduled for a Public Hearing Before the SENATE COMMITTEE

More information

CONGRESS What Do They Have In Store For Our 401(k) And 403(b) Plans? Richard S. Sych, F.S.A. President and Consulting Actuary April 2013

CONGRESS What Do They Have In Store For Our 401(k) And 403(b) Plans? Richard S. Sych, F.S.A. President and Consulting Actuary April 2013 CONGRESS What Do They Have In Store For Our 401(k) And 403(b) Plans? Richard S. Sych, F.S.A. President and Consulting Actuary April 2013 Agenda Why All The Fuss? What s On The Table? What s Next? What

More information

RETIREMENT PLAN STRATEGIES

RETIREMENT PLAN STRATEGIES 0213702 For Plan Sponsor and Advisor Use - Public Use Permitted. RETIREMENT PLAN STRATEGIES De-risking pensions emerging opportunity through lump sum cash-outs under the Pension Protection Act of 2006

More information

SEC Staff Addresses Third-Party Endorsements of Investment Advisers on Social Media Websites

SEC Staff Addresses Third-Party Endorsements of Investment Advisers on Social Media Websites April 2014 Practice Groups: Investment Management, Hedge Funds and Alternative Investments Private Equity SEC Staff Addresses Third-Party Endorsements of By Michael W. McGrath and Sonia R. Gioseffi On

More information

5 Steps to Take Now: Preparing for the Affordable Care Act Shared Responsibility Excise Tax

5 Steps to Take Now: Preparing for the Affordable Care Act Shared Responsibility Excise Tax 5 Steps to Take Now: Preparing for the Affordable Care Act Shared Responsibility Excise Tax By Gregory L. Needles, Morgan, Lewis & Bockius LLP gneedles@morganlewis.com 202-739-5448 This article is a companion

More information

The Affordable Care Act s Employer Mandate: Guidance for Educational Organizations

The Affordable Care Act s Employer Mandate: Guidance for Educational Organizations March 4, 2014 Practice Group(s): Employee Benefits Benefits, ESOPs, and Executive Compensation The Affordable Care Act s Employer Mandate: Guidance for Educational By Lynne Shore Wakefield and Emily D.

More information

Alert. Client PROSKAUER ROSE SM. Employee Benefits Provisions Under the Economic Growth And Tax Relief Reconciliation Act of 2001

Alert. Client PROSKAUER ROSE SM. Employee Benefits Provisions Under the Economic Growth And Tax Relief Reconciliation Act of 2001 PROSKAUER ROSE SM Client Alert Employee Benefits Provisions Under the Economic Growth And Tax Relief Reconciliation Act of 2001 On June 7, 2001, President Bush signed into law The Economic Growth and Tax

More information

The following questions were about a general understanding of FTAP and why it is important.

The following questions were about a general understanding of FTAP and why it is important. Employee meetings were held on May 17, 2012 and May 21, 2012 to discuss employee questions relating to the Retirement Plan of Marathon Oil Company ( Retirement Plan ) Funding Target Attainment Percentage

More information

ERISA Retirement Plans: Fiduciary Compliance and Risk Management for Investment Fund Selection and Fee Disclosures

ERISA Retirement Plans: Fiduciary Compliance and Risk Management for Investment Fund Selection and Fee Disclosures Presenting a live 90-minute webinar with interactive Q&A ERISA Retirement Plans: Fiduciary Compliance and Risk Management for Investment Fund Selection and Fee Disclosures Discharging Fiduciary Duties

More information

Lump Sums under the Pension Protection Act of 2006

Lump Sums under the Pension Protection Act of 2006 Lump Sums under the Pension Protection Act of 2006 November 15, 2006 An article in the October 25th Wall Street Journal article entitled Changes in Defined-Benefit Plans Affect Many Highly-Paid Workers;

More information

Australian National Electricity Rules Adopt a More 'Cost Reflective' Approach to Network Pricing

Australian National Electricity Rules Adopt a More 'Cost Reflective' Approach to Network Pricing 23 December 2014 Practice Group(s): Energy, Infrastructure and Resources Renewable Energy Climate Change and Sustainability Australian National Electricity Rules Adopt a More 'Cost Reflective' Australia

More information

Nigel Nunoo, CFA, FSA, MAAA

Nigel Nunoo, CFA, FSA, MAAA PENSION RISK TRANSFER Nigel Nunoo, CFA, FSA, MAAA Agenda Pension Risk Transfer (PRT) Business Opportunity Background & Context Market Opportunity UK versus US PRT Products Pension Risk Reduction Path &

More information

COMPENSATION & EMPLOYEE BENEFITS LAW BULLETIN A BIRDSEYE VIEW OF THE PENSION PROTECTION ACT OF 2006

COMPENSATION & EMPLOYEE BENEFITS LAW BULLETIN A BIRDSEYE VIEW OF THE PENSION PROTECTION ACT OF 2006 COMPENSATION & EMPLOYEE BENEFITS LAW BULLETIN A BIRDSEYE VIEW OF THE PENSION PROTECTION ACT OF 2006 The Pension Protection Act of 2006 (the Act ) is arguably the most comprehensive pension reform legislation

More information

DOL Issues Automatic Rollover Rules for Small Cash-Outs

DOL Issues Automatic Rollover Rules for Small Cash-Outs Important Information Distributions and Withdrawals October 2004 DOL Issues Automatic Rollover Rules for Small Cash-Outs WHO'S AFFECTED These rules affect qualified defined benefit plans and defined contribution

More information

Annual Funding Notice for Retirement Plan for Staff Employees

Annual Funding Notice for Retirement Plan for Staff Employees Annual Funding Notice for Retirement Plan for Staff Employees Introduction This notice includes important funding information about your pension plan ( the Plan ). This notice also provides a summary of

More information

SUPPLEMENT TO ANNUAL FUNDING NOTICE OF MAYO PENSION PLAN FOR PLAN YEAR BEGINNING JANUARY 1, 2015 AND ENDING DECEMBER 31, 2015 ( Plan Year )

SUPPLEMENT TO ANNUAL FUNDING NOTICE OF MAYO PENSION PLAN FOR PLAN YEAR BEGINNING JANUARY 1, 2015 AND ENDING DECEMBER 31, 2015 ( Plan Year ) SUPPLEMENT TO ANNUAL FUNDING NOTICE OF MAYO PENSION PLAN FOR PLAN YEAR BEGINNING JANUARY 1, 2015 AND ENDING DECEMBER 31, 2015 ( Plan Year ) This is a temporary supplement to your annual funding notice.

More information

IRS Issues Cash-Out and Consent Rules For Defined Contribution Plans

IRS Issues Cash-Out and Consent Rules For Defined Contribution Plans Important Information Distributions and Withdrawals March 1999* IRS Issues Cash-Out and Consent Rules For Defined Contribution Plans WHO'S AFFECTED These rules apply to all qualified defined contribution

More information

REGULATION OF ADVISERS (PART II):

REGULATION OF ADVISERS (PART II): PLI s Fundamentals of Investment Adviser Regulation 2015 July 15, 2015 REGULATION OF ADVISERS (PART II): BROKERAGE AND TRADING PRACTICES Steven W. Stone Partner Morgan, Lewis & Bockius LLP 2015 Morgan,

More information

ADVISORY EMPLOYEE BENEFITS February 9, 2012

ADVISORY EMPLOYEE BENEFITS February 9, 2012 ADVISORY EMPLOYEE BENEFITS February 9, 2012 NEW GUIDANCE ON LIFETIME INCOME PAYMENT OPTIONS On February 2, 2012, the Treasury Department and IRS released a package of guidance on lifetime income payment

More information

STATE OF NEW JERSEY SUPPLEMENTAL ANNUITY COLLECTIVE TRUST. Financial Statements. June 30, 2014 and 2013. (With Independent Auditors Report Thereon)

STATE OF NEW JERSEY SUPPLEMENTAL ANNUITY COLLECTIVE TRUST. Financial Statements. June 30, 2014 and 2013. (With Independent Auditors Report Thereon) Financial Statements (With Independent Auditors Report Thereon) Financial Statements Table of Contents Independent Auditors Report 1 Management s Discussion and Analysis (Unaudited) 3 Basic Financial Statements:

More information

An annuity buy-in transfers all the risks for a group of members from the plan sponsor s balance sheet to

An annuity buy-in transfers all the risks for a group of members from the plan sponsor s balance sheet to DB Solutions Risk less Annuity buy-in (Pensurance ) Risk transfer for underfunded plans An annuity buy-in transfers all the risks for a group of members from the plan sponsor s balance sheet to Sun Life

More information

IRS Issues Proposed Regulations and New Guidance Regarding Lifetime Income Payments Under Retirement Plans

IRS Issues Proposed Regulations and New Guidance Regarding Lifetime Income Payments Under Retirement Plans IRS Issues Proposed Regulations and New Guidance Regarding Lifetime Income Payments Under Retirement Plans The Treasury and IRS released proposed regulations and guidance that would make it easier for

More information

Launch of Mutual Recognition of Funds Between Mainland China and Hong Kong

Launch of Mutual Recognition of Funds Between Mainland China and Hong Kong June 2015 Practice Group: Investment Management, Hedge Funds and Alternative Investments Launch of Mutual Recognition of Funds Between Mainland China and Hong Kong By Choo Lye Tan On 22 May 2015, the Securities

More information

Environment, Health And Safety. Ensuring Your Company s European Operations are Compliant with New EU Regulations and Enforcement Measures

Environment, Health And Safety. Ensuring Your Company s European Operations are Compliant with New EU Regulations and Enforcement Measures Environment, Health And Safety Ensuring Your Company s European Operations are Compliant with New EU Regulations and Enforcement Measures WHAT IS THE THREAT TO YOUR COMPANY S COMPLIANCE RECORD AND GOOD

More information