Non-Public Pensions Watch 2014-whenever

[Arthur Kade]

Originally Posted by campbell

the accounting trickery is not going over well

http://mobile.nytimes.com/2014/07/13...ions.html?_r=1

Wow, that article SUCKED.

Why didn't they just say the following...

Both the House Ways and Means Committee and the Senate Finance Committee have separately approved legislation that would temporarily sustain the Highway Trust Fund by delaying the phase-out of the interest rate corridors established under MAP-21

[campbell]

UK

http://www.ai-cio.com/channel/RISK_M..._Deficits.html

Sainsbury’s, International Airlines Group, BAE Systems, Royal Sun Alliance, Royal Bank of Scotland and BT: Some of the UK’s biggest listed companies are being dwarfed by their own pension schemes.

The six companies’ pensions have been identified by JLT Employee Benefits as presenting “a material risk to the business” as liabilities exceed the market value of the firms themselves.

Sainsbury’s pension liabilities grew 13% faster than the supermarket giant’s share price in the first quarter of this year, according to JLT.

However, in a results statement covering the 12 months to March 15, 2014, Sainsbury’s said its pension fund deficit had narrowed since its 2009 valuation from £1.2 billion to £592 million, thanks in part to a £600 million property partnership and annual contributions from the company of £49 million.

The weight of these deficits was highlighted by JLT’s finding that 61 of the companies listed on the FTSE 100 index had made “significant deficit funding contributions” in their most recent report and accounts statements. Leading the way was HSBC with a contribution of roughly £500 million into its pension.

[campbell]

CATHOLIC HOSPITALS

http://religionclause.blogspot.com/2...-catholic.html

A Ruling And Another Suit On Catholic Hospital Pension Plans As "Church Plans"
As reported by BNA Daily Report for Executives [subscription required], another decision has been handed down in a series of cases filed over the last 18 months challenging the assertion by a number of Catholic health care companies that their pension plans qualify as "church plans," and are thus exempt from the funding and other requirements of ERISA. In Medina v. Catholic Health Initiatives, (D CO, July 9, 2014), a Colorado federal magistrate judge recommended entering a declaratory judgment finding that the plan is not a church plan. Refusing to defer to the position taken by the IRS in a 2002 Private Letter Ruling, the magistrate judge followed the lead of two out of three other courts that have ruled on the issue and held that to qualify as a church plan, the plan must be established by a church or association of churches, and not merely by a church-affiliated organization. (See prior related posting.)

Meanwhile one more similar challenge has been filed, bringing the total number of cases pending or decided to 8. The complaint (full text) in Lann v. Trinity Health Corp., (D MD, filed 7/11/2014), not only claims that the health care organization's plan does not qualify as a church plan, but argues that if it does, the exemption in ERISA for church plans violates the Establishment Clause.

[campbell]

http://online.barrons.com/news/artic...47332416065738

U.S. corporate pension funds are in the best shape they've been in since before the 2008 financial crisis as their shortfalls were cut nearly in half in 2013. Credit surely goes to the rising stock market, but last year's improvement in the funds' positions also owed much to the rise in bond yields.

Indeed, fully closing the gap between pension funds' assets and their future liabilities may depend more on higher interest rates than continued gains in the stock market.

Corporate pension plans among the Standard & Poor's 500 companies were last fully funded in 2007, before the financial near-meltdown of the following year. From 2009 to 2012, the plans' underfunding ranged between 16% and 23% -- with the worst shortfall in 2012, when S&P 500 index already had made a huge recovery from its recession lows.

.....
There was another, less obvious boost to corporate pension plans in 2013: higher bond yields. Given that the jump in yields, which took the benchmark 10-year Treasury to 3% from a low of about 1.65%, resulted in bond price declines and negative returns from investment-grade debt last year, that might seem counterintuitive.

But the higher yields lowered the present value of future pension fund liabilities. (A higher discount rate for a stream of future payments lowers that stream's discounted present value. At a higher interest rate, it's possible to set aside a smaller sum to meet a future savings goal, and vice versa.) The discount rate on pension funds' liabilities, which is based on the yield from investment-grade corporate bonds, rose in 2013 to 4.69% from 3.93% in 2012.

The impact on interest rates is apparent from the experience of the two preceding years. According to S&P, despite 2012's 13.4% equity return, pension underfunding among the S&P 500 companies actually increased over 27%, to an aggregate $451.7 billion from $354.7 billion, owing to the decline in interest rate and the resulting increase in the present value of future liabilities. And while the 29.6% gain in the S&P 500 index in 2013 helped reduce underfunding by over 50%, to $224.5 billion, the increase in the discount rate on future liabilities "assisted considerably," S&P observed.

While 2014 is only a bit more than half over, the trends are less positive than last year's. The S&P 500 is up 7.5%, setting another record Wednesday. But contrary to expectations of virtually every forecaster, bond yields have fallen markedly this year, to 2.47% on the Treasury 10-year note as of Wednesday, a hair above the 2014 low of 2.44%.

The gain in the S&P 500 and the fall in bond yields suggest a rerun of 2012's experience, when pension fund underfunding increased despite positive equity and debt market returns.

[campbell]

QUEBEC HORSEMEN

http://www.montrealgazette.com/busin...354/story.html

MONTREAL — What happens when a private pension plan slips into a deficit position from which it’s unlikely to ever recover?

The fairest thing may be to dissolve it.

That’s what the Quebec horsemen’s association decided to do with its pension plan for racehorse drivers, trainers and assistant trainers.

The final cheques started going out this month to more than 500 men and women who used to ply their trade at racetracks in Montreal, Trois-Rivières, Quebec City and Aylmer.

They’ll be sharing about $3 million, with individual cheques determined by actuaries and based on which tracks the horsemen raced at, how often and for how many years.

“It was the fair thing to do, so that everybody eligible got something, not just the older ones,” said Gilles Fortier, secretary-general and only remaining employee (part-time) of L’Association Trot et Amble du Québec (ATAQ).

The association once had over 3,000 members. Now, with a single racetrack operating in the province (Hippodrome 3R in Trois-Rivières), it’s down to less than 700.

ATAQ’s pension fund for horsemen began about 40 years ago.

......
In 2009, the entire industry collapsed with the bankruptcy of Attractions Hippiques, a private company the Quebec government had selected to operate the province’s four tracks. It had stopped paying into the pension fund and owed it $500,000 when it went under, Fortier said.

ATAQ had seen the writing on the wall, freezing pension credits for its members at 2006 levels and reducing pension payouts to recipients by half in 2008. (The maximum then was $750 a month).

The pension plan recorded a deficit of $300,000 in 2007 and prospects of ever reversing that were virtually nil with no new money coming in. The Quebec Jockey Club, which brought back racing to the province on a limited scale in 2010, did not have the means to provide any pension funding.

That’s why ATAQ’s pension committee, lawyers and pension-plan manager finally decided to wrap it up, Fortier said. The last of the regular cheques went out in June.

[campbell]

PBGC

http://www.benefitspro.com/2014/07/2...ans-assumed-by

The Pension Benefit Guarantee Corporation will assume responsibility for the retirement benefits of 2,101 employees who worked for the late corporate raider Victor Posner.

The APL/NVF Consolidated Pension Plan covered employees of Posner’s estate, which held mostly real estate interests in Florida, Pennsylvania and Maryland, and was liquidated by a Florida Probate Court.
......
Employees and retirees of nine pensions were merged into the APL/NVF Consolidated Pension Plan. PBGC estimates show the plan to be 39 percent funded, with $25 million in assets and $63.9 million in liabilities.

The PBGC said it is expected to cover the entire shortfall, covering all the benefits earned up to the legal limit of about $59,320 a year for a retiring 65-year-old.

Posner died in 2002. He signed a re-written will hours before passing from pneumonia, naming a girlfriend as the main beneficiary, and leaving three of his four children and all of his grandchildren nothing.

Claims against the estate began just hours after Posner’s death, including one by his son, Steven, who was killed in a Florida boating accident in 2010.

Victor and Steven Posner were among the early corporate raiders, sued by the Securities and Exchange Commission in a case that included Michael Milken and Drexel Burnham Lambert.

The Posners were ultimately barred by the SEC from serving as officers or directors of a public company.

[campbell]

....I suppose this isn't a public pension -- how much direct govt support does CofE get?

CHURCH OF ENGLAND

http://www.pensionsage.com/pa/Church...tment-pool.php

The Church of England Pensions Board’s ‘return seeking’ investment pool for its pension funds generated an 18.6 per cent return on its investments over 2013, outperforming its benchmark of 17.6 per cent.

According to its latest annual report for 2013, the ‘return seeking’ pool has outperformed its benchmark for the past one, three and five years.

The Board’s ‘liability matching’ pool also outperformed its benchmark with a 0.6 per cent return and has also been ahead of the benchmark over the past five and 10 years.

Global equities accounted for 65 per cent of the return seeking pool’s asset allocation and index linked government bonds made up 77 per cent of the total allocation within the liability matching pool.

The Board said it had also concluded the 2012 valuation of its largest pension scheme, the Church of England Funded Pension Scheme, and found the deficit within the scheme had risen only slightly to £293m. The Board is on track to eliminate the deficit over the next decade.

[campbell]

http://www.thefiscaltimes.com/Articl...ffers-Are-Rise

If you work for a company with a pension plan, don’t be surprised if you get an offer soon for a lump sum buyout - a deal where you accept a pile of cash in exchange for the promise of lifetime income when you retire.

The price tag for these offers is especially attractive right now, from the plan sponsor’s perspective. But workers might do better by holding out for a better deal, or by rejecting the buyout altogether.

A growing number of plan sponsors are trying to get out of the pension business, or lighten their obligations, by buying out workers. The number of buyout offers has accelerated in recent years, in part because of interest rate changes mandated by Congress that reduce their cost to plan sponsors.

Now, revised projections for average American longevity are giving plan sponsors new reasons to accelerate buyout offers. New Internal Revenue Service actuarial tables that take effect in 2016 show average lifespans up by about four years each for men, to an average of 86.6 years, and women, to 88.8 years.

The new mortality tables will make lump sum offers 3 percent to 8 percent more expensive for sponsors, according to a recent analysis by Wilshire Consulting, which advises pension plan sponsors. Another implicit message here is that lump sum offers should be more valuable to workers who take them after the new mortality tables take effect.

Unfortunately, it’s not that simple. “We’re definitely seeing an increase in lump sum offers from plan sponsors,” says Jeff Leonard, managing director at Wilshire Consulting, and one of the experts who prepared the analysis. “But if it was one of my parents, I’m not sure if I’d encourage them to take the offer now or wait."

- See more at: http://www.thefiscaltimes.com/Articl....3QVYvdxV.dpuf

[wooHoo]

I see some public pensions in here. Wrong thread...

[campbell]

aw crap, thanks