Comments to Senate on Multiemployer Pension Plans Submitted
Senior Pension Fellow Ted Goldman (See story under “People” below for the announcement of Goldman’s appointment) submitted comments to the Senate Finance Committee in March for its hearing, “The Multiemployer Pension Plan System: Recent Reforms and Current Challenges.”
Decisions will likely be made in the coming months that address the Multiemployer Pension Reform Act’s (MPRA) suspension of benefits provisions, long-term sustainability of some multiemployer pension plans, partitions with the Pension Benefit Guaranty Corporation, and future multiemployer plan designs and structures, such as the “composite” plan design, Goldman wrote. He added that the Academy’s Multiemployer Plans Subcommittee is available to provide objective analysis and education to the Senate Finance Committee on this topic, specifically to explain how underlying actuarial assumptions and methods are selected in the MPRA application process, the relative impact of each assumption, and the related sensitivities, and to offer feedback on the viability of specific actions and strategies.
Subcommittee Comments to GASB on Pension Issues Exposure Draft
The Public Plans Subcommittee submitted comments in February to the Governmental Accounting Standards Board (GASB) on the exposure draft, Pension Issues—an amendment of GASB Statements No. 67, No. 68, and No. 73. While GASB may need to provide more guidance for some plan-specific situations, the subcommittee wrote that GASB should provide more clarity on one area—the Deferred Retirement Option Program design.
The letter notes that plans have reported issues collecting data for total payroll as currently defined and that pensionable payroll is more readily available, and therefore the subcommittee supports the change to use pensionable payroll in Required Supplementary Information. The subcommittee also supports the concept that use of the “deviation” clause in the actuarial standards of practice (ASOPs) when selecting assumptions used to determine the total pension liability would generally not conform with the requirements of the GASB statements.
Pension Committee Exposes Variable Annuity Plans Practice Note
The Pension Committee released in December the Variable Annuity Plans Practice Note exposure draft on measuring obligations of defined benefit pension plans that include variable annuity benefits.
The draft covers mathematical consequence, guidance from ASOPs, traditional liability measurement of pure variable benefits, potential liability measurement of pure variable benefits under regulatory requirements, and financial accounting in the public and private sectors. Cash balance plans that credit market rates of return are closely related to variable annuity plans, but are not addressed in the practice note.
ALERTS
Public Pensions Bill Introduced in U.S. House
The Academy issued an alert in March after the Public Employee Pension Transparency Act (PEPTA) was reintroduced in the U.S. House of Representatives by Rep. Devin Nunes, R-Calif. The legislation, which had been introduced three times before, addresses public pension plans’ unfunded liability by requiring certain measurement and reporting of public plans’ financial status, including a statement of actuarial assumptions.
IRS Issues Rule on Nondiscrimination Relief for Closed DB Plans
The Academy issued an alert in January after the Internal Revenue Service released proposed regulations that modify the nondiscrimination relief for closed defined benefit plans. The proposed regulations also include additional changes to retirement plan nondiscrimination requirements for all qualified DB plans.
PROFESSIONALISM
Comments Submitted on ASOP 21 Revision
The Pension Accounting Committee submitted comments to the ASB on a proposed revision to ASOP No. 21, Responding to or Assisting Auditors or Examiners in Connection with Financial Statements for All Practice Areas. The comments focus on clarifying issues surrounding confidentiality, information request communications, and informing responding actuaries.
PEOPLE
Academy Names Goldman Senior Pension Fellow
The Academy in January named Ted Goldman, an actuary with more than 35 years of retirement consulting experience, as its new senior pension fellow. Goldman will help shape and communicate the Academy’s work on pension, Social Security, and other retirement security issues to the public, policymakers, and the news media.
Goldman was most recently the leader of the U.S. retirement team with Buck Consultants in Washington, where he was an innovator and champion of retirement readiness and financial wellness and created an award-winning concept using automation and behavioral science features within a defined contribution plan. He has spent the majority of his career with Towers Perrin and Mercer.
In addition:
Sue Breen-Held has joined the Pension Committee.
Michael Economos has joined the Pension Finance Task Force.
Ron Gebhardtsbauer and Les Lohmann have joined the Social Security Committee.
Tim Geddes has joined the Pension Practice Council.
Scott Kropf has joined the Pension Accounting Committee.
IN THE NEWS
Academy Pension Committee Chairperson Ellen Kleinstuber commented on the risks and complexities facing pension plan participants who are offered a lump sum in a New York Times personal finance column. The column also noted: “The American Academy of Actuaries can arrange up to four hours of free pension help for people with questions. Its Pension Assistance List is available on its website.”
A story in IdahoWatchdog.org referenced the Academy’s issue brief, The 80% Pension Funding Standard Myth, in examining the funding challenges facing Idaho’s judicial pension fund, which has a funded ratio of 78 percent. The piece is one of many since the brief’s 2012 release to cite its call for pension plans to prioritize full funding.
The Academy’s discussion paper, Risky Business: Living Longer Without Income for Life, was cited in a blog post by TheMilitaryWallet.com explaining thrift savings plans for military or federal government personnel.
The Academy’s new Social Security Game was highlighted as part of the weekly “Huffpost Hill” roundup of the Huffington Post blog and in a commentary piece in the Sanger Herald (Calif.).
COMING EVENTS
Enrolled Actuaries Meeting
Registration is now open for the Enrolled Actuaries Meeting on April 10-13, 2016, at the Marriott Wardman Park Hotel in Washington. The meeting will hold sessions in several formats, covering a wide range of topics and issues relevant to Enrolled Actuaries and other pension professionals. Register today or get more information here.
If you have any questions, suggestions, or comments about Retirement Account, please contact Matthew Mulling, the Academy’s pension policy analyst, at Mulling@actuary.org .
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