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November 16, 2012
Comments on Regulatory and Reporting Proposals
In an Oct. 2 letter to Moody’s Investors Services, the Pension Practice Council commented on Moody’s proposal to adjust the pension liability and cost information reported by state and local governments and their pension plans. “The appropriate measures of pension obligations depend on the purpose of the measurement,” the council wrote. “The reported actuarial results under GASB’s standards are not necessarily appropriate as a basis for other purposes, such as Moody’s comparing pensions and other incurred debt.”
In comments submitted on Oct. 1 to the Financial Accounting Standards Board, the Pension Accounting Committee expressed concern about the inclusion of obligations for pension and other postretirement and postemployment benefit plans within the proposed accounting standards update, Financial Instruments (Topic 825) — Disclosures about Liquidity Risk and Interest Rate Risk. The substantive differences between employee benefit plans and other financial instruments make it inappropriate to include both within a single disclosure standard, the committee wrote.
The Pension Committee commented on proposed regulations concerning the prohibited payment option under single-employer defined benefit plans when a plan sponsor is in bankruptcy in an Aug. 20 letter to the Internal Revenue Service (IRS).
Academy Reps Meet with Treasury
Senior Pension Fellow Don Fuerst and members of the Pension Committee met with Treasury Department officials on July 23 to provide actuarial insight on regulatory issues related to the pension funding provisions in the Moving Ahead for Progress in the 21st Century Act (MAP-21) legislation, which was enacted on July 6. The Pension Committee followed up the meeting with a letter on Aug. 2 urging the Treasury to implement the MAP-21 pension provisions quickly.
Map-21 Guidance and Rates Released
The IRS issued a notice on Aug. 16 announcing new 25-year average segment rates and adjusted 24-month average segment rates used for pension funding. Notice 2012-55 provides guidance on the new rate structures used to compute the funding target and other items under Section 430 of the tax code and Section 303 of ERISA. The guidance reflects the changes made to the tax code and ERISA by MAP-21. The IRS on Sept. 11 released guidance on the special rules relating these provisions.
Gain an Actuarial Perspective on Social Security
Members of the Academy’s Social Security Committeewill present a webinar on the 2012 Social Security Trustees Report at noon on Nov. 27. During the 90-minute webinar, presenters Eric Klieber and Timothy Marnell and moderator Mark Shemtob will discuss:
Social Security’s demographic and economic assumptions;
2012 Social Security Trustees Report assumptions;
2012 Social Security Trustees Report actuarial status, short- and long-range results.
Social Security Administration Chief Actuary Steve Goss also will be on hand to provide additional comments and answer questions.
Social Security: Actuarial Status and Assumptions Webinar
Nov. 27, 2012
Noon–1:30 p.m. EST
The Social Security Committee soon will release an updated means testing issue brief. The reduction of benefits for wealthy and/or high-income participants and beneficiaries is one of the proposed reforms to ensure Social Security’s long-term solvency. The issue brief explores several different means-testing approaches and examines the effect that specific proposals would have on Social Security should they become law.
The Academy’s May 2001 practice note, Selecting and Documenting Investment Return Assumptions, was withdrawn by the Pension Practice Council in September. The practice note described some approaches for selecting and documenting the investment return assumption that could be employed to comply with Actuarial Standard of Practice Actuarial Standard of Practice (ASOP) No. 27, Selection of Economic Assumptions for Measuring Pension Obligations. The ASB currently is updating ASOP No. 27.
If you have any questions, suggestions, or comments about Retirement Account, please contact David Goldfarb, the Academy’s senior pension policy analyst, at Goldfarb@actuary.org, or Olivia Marshall, the Academy’s managing editor for member publications, at Marshall@actuary.org.
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