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  #701  
Old 04-25-2018, 04:41 PM
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ROYAL BANK OF SCOTLAND

https://www.ai-cio.com/news/royal-ba...contributions/

Quote:
Royal Bank of Scotland to Make $5 Billion in Pension Contributions | Chief Investment Officer

Spoiler:
CFO calls decision an ‘an important milestone.’
After realizing a profit for the first time in 10 years, the 738.1 billion ($1.05 trillion) Royal Bank of Scotland plans to contribute $5 billion to its pension fund over the coming years. The proposed payment is an attempt to address the “historical funding weakness.”
Under the memorandum, which the bank entered Tuesday, the payments will begin with a pre-tax contribution of 2 billion in the second half of 2018. To match dividends, additional contributions of up to 1.5 billion will continue from 2020 on. The money for both payments will come from the bank’s core capital reserves.
“With these proposed payments, together with the one-off contribution into the Fund in Q1 2016, we will have substantially addressed the historical funding weakness that existed in the Fund and brought clarity to future funding arrangements,” Ewen Stevenson, the bank’s CFO, said in a statement, calling the move an “important milestone.”
In February, the bank’s 2017 annual report revealed its first profit in a decade. The payments will settle the bank’s issue of not paying a dividend over that timeframe due its inability to produce gains.
Due to poor investment returns resulting in funding issues, 71% of the bank is currently owned by the state after 2008’s 50 billion government bailout.
In addition, a ring-fencing law will split RBS’s investment banking unit from its UK-focused retail banking business, resulting in the creation of two pension plans—one inside the ring-fence, the other out. Reuters reports that the outside scheme could be exposed to higher risks, as well as companies outside of the fence being unable to participate in the same defined benefit plans as fenced-in entities. *
Ring-fencing is a protection-based transfer of assets typically done via offshore accounting. The purpose of a ring fence is to protect assets from inclusion in an investor’s net worth or to lower tax repercussions.
Starting in 2019, Royal Bank of Scotland’s investment bank will be renamed NatWest Markets. From 2019 on, NatWest and the bank’s international business will no longer participate in the RBS’s main pension scheme. Instead, the two entities will be transferred to the outer ring plan. The same will apply for outer-ring entities of the bank’s main pension scheme in 2026.

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  #702  
Old 04-27-2018, 03:02 PM
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Not sure this fits this thread? I think so?

http://www.lehighvalleylive.com/beth...nding_dis.html

Quote:
Just Born's pension-funding dispute divides Peeps plant in Bethlehem

BY DAMIEN PALETTA
The Washington Post

On Sunday, hundreds of millions of marshmallow chicks and bunnies called Peeps will peer out from Easter baskets at American children.

They are a pastel symbol of Easter joy, but behind the wax-eyed candy is a company at war with its union workforce over rising pension costs -- an escalating legal tangle that could soon upend the retirement plans of 10 million Americans.

The fight has featured a strike, Twinkies related bankruptcy, irreparably broken friendships, obscene T-shirts and a locked-up Peepsmobile. Now all sides await a federal appeals court ruling.

The 95-year-old company that makes Peeps, Just Born Quality Confections, wants to block new employees from enrolling in the multi-employer pension it has offered workers for decades, a retirement plan it funds along with roughly 200 other companies.

While many other companies facing similar pressures have left pensions in recent years, Just Born, headquartered on Stefko Boulevard in Bethlehem, wants to bar new employees from the plan without paying a $60 million fee required under federal law, saying it must do so to remain competitive.

The fee exists to ensure future retirees' benefits are covered, and if Just Born succeeds in escaping it, union officials fear the unprecedented ruling would prompt thousands of other firms to do the same. This chain reaction could divert workers and money at a time when new employees are seen as crucial to ensure ample funding for the wave of retiring baby boomers -- putting payouts for millions of pensioners at risk.

It is a fight that has divided this town, pitting the company that concocts a 28-calorie yellow spongy baby chicken against the union workers it employs. It has splintered the workforce of mechanics and candy makers who make 2 billion Peeps every year.

The company has suggested that if these changes are not made, its future in Bethlehem could be in doubt.

"To remain a sustainable business we need to continue to contain or reduce our costs in order to invest in our infrastructure, our associates and our brands," said Matt Pye, a Just Born vice president. "Our goal is to keep producing iconic candy brands for generations to come."

To many of the workers who make Peeps, members of the Bakery, Confectionery, Tobacco Workers and Grain Millers union, it is a line that cannot be crossed.

"There comes a point in time when you have to take a position," said Alex Fattore, 55, who has worked at Just Born for 37 years, and walked out during the stunning 2016 strike that escalated the feud. "You have to make a stand."

The stand came on Sept. 7, 2016. It was supposed to be peak Peep time, when the company accelerates production to prepare for an Easter binge that locks in almost half the company's annual sales.

Five days earlier, at a union building in nearby Allentown, 272 Just Born employees met and voted against the company's latest contract proposal. That offer would have directed all new employees into a 401(k) savings plan -- which does not ensure benefits after retirement -- and blocked them from participating in the pension.

The workers voted unanimously to strike.

The following Wednesday, Fattore and more than 100 others walked out of the sprawling candy factory that also makes the candies Mike & Ike and Hot Tamales.

They marched up and down the sidewalk, screaming "No Justice! No Peeps!" again and again. The strike went around the clock.

Belt One, the first-floor marshmallow-moving sidewalk that produces most of the company's 5.5 million Peeps per day, stood idle.

Striking workers noticed the Peepsmobile, a yellow Volkswagen Beetle adorned with a giant look-alike chick head, had disappeared from the front of the factory, to be found later locked up in a cage where it could not be damaged.

Many in Bethlehem and the surrounding area were stunned. Just Born and the union had coexisted since the 1970s without a strike. The company's revenue was reportedly growing. In an area where steel jobs had mostly disappeared, candy jobs had endured.

Peeps are an iconic brand for Bethlehem and central to its identity. On New Year's Eve, they do not drop a crystal ball. They drop a giant yellow Peep. The union workforce volunteers at soup kitchens and local churches.

"It's not exactly like 'us versus them,' " said Thomas Hyclak, an economics professor at nearby Lehigh University. "It's not like management was trying to take jobs and move them to South Carolina. This is a good company. But the workers are our friends and neighbors too. It's hard for people to take sides."

The strike went on for several weeks. Candy production plummeted, workers said, but the company refused to budge. The same family has owned Just Born for three generations, and they had complained that personnel-related costs were rising too fast. They needed to contain these costs to keep the firm competitive with others that have moved overseas.

"Many companies are moving part or all of their operations outside of the U.S. to take advantage of lower sugar prices available outside the U.S. and lower labor costs," Pye said in a statement to The Washington Post. "Just Born has, so far, been able to retain all of its manufacturing in the U.S. which puts us at a competitive disadvantage."

Union workers were skeptical. Candy Industry magazine had projected Just Born's net sales climbing to $231 million in 2016, up from $222 million in 2014. (The company would not comment on the candy magazine's estimates.)

The union tried to hold ranks, but people started slipping away. Twenty workers crossed the picket line and went back to work. They warned striking friends they would lose their jobs if they did not return immediately. The company even held a job fair, and more than 150 people showed up, enticed by the attractive pay people could earn without a college degree.

People panicked. Union officials said Just Born hired 100 new workers, while more striking workers ran back to their old jobs, fearful of losing their careers. Longtime friends hurled verbal, vulgar threats as they ducked away.

The union's worst nightmare was coming true -- its members were splintering.

"If they break the union, do these people realize they could lose everything?" said Gordon Grow, a mechanic who spent 41 years at Just Born but retired after the strike because he refused to work with people he said crossed the picket line.

The striking workers, half of whom were older than 50, were losing money and knew their health benefits would run out in October. The strike had begun with unity but now they were wondering about the endgame. Jobs in Lehigh Valley that pay between $15 and $25 an hour for people without college degrees are hard to find.

So the union agreed to end the strike after four weeks. The damage between the company and its workforce was done. Many people staffing Belt One would not look each other in the eye.

It only got worse.

Union officials put a list of all the people who crossed the picket line on their bulletin board with the word "scab"-- a labor epithet for someone breaking solidarity -- written across it. It was ripped down less than two hours later.

Fattore wore a T-shirt of Calvin, a comic strip character, urinating on the word "scab." He was reprimanded by management.

The Calvin image remains on the window of a union member's truck, a daily reminder that the animus from the strike still festers -- and that the issues that originally drove it remain unresolved.

Further complicating matters: If one of the companies paying into the multi-employer plan falters, the other firms are left on the hook to pay even more to stabilize the fund.

Just Born's union employees participate in the Bakery and Confectionery Union and Industrial International Pension Fund, which was flush with cash several years ago, even after the financial crisis. At one point, it had so much money that it paid pensioners 13 monthly checks each year.

The company and the pension seemed healthy, but when disaster struck it seemed far outside their control.

Hostess Brands, maker of Twinkies and Ding Dongs, accounted for 24 percent of all those contributions to the multi-employer pension. It stopped making contributions in 2011 and then filed for bankruptcy in 2012, weighed down by weakened demand, rising competition, and large levels of debt. Federal courts allowed it to escape without paying the pension fund $1 billion in obligations.

The pension fund immediately went from being one of the healthiest in the country to one of the most at risk.

The pension was now in a category known as the "red zone," which means if changes are not made it will likely become insolvent, and beneficiaries might just get pennies on the dollar when they retire. Some other pensions are even in worse shape.

"The crisis is looming on the horizon," said Kenneth Feinberg, who worked at the Treasury Department until last year and was tasked with scrutinizing rescue proposals from multi-employer plans.

In February, as part of a new budget law, Congress created a commission to try to stabilize struggling pension funds. In the meantime, many existing companies like Just Born are on the hook to pay higher premiums. The Peeps-making company says, without providing hard numbers, that it pays 39 percent more in pension contributions than what it negotiated under its last union contract.

These are the contributions it tried to scale back when it tried to unilaterally make the change to divert new employees into a 401(k) plan. A federal judge last year said the company could not do this, but it appealed that decision. The company and its union -- as well as many other firms -- are waiting for the appellate court decision.

The pension, which is administered by a group of labor officials and corporate executives from the 200 participating companies, has sued the company, alleging it improperly tried to stop enrolling new employees in the pension without paying the withdrawal fee. The company has sued the union, demanding "monetary damages" and alleging the strike was illegal.

Companies, labor leaders and retirees are watching closely, because the multi-employer pension that Peeps workers depend on is one of close to 1,300 around the country.

In total, 10 million current and retired workers participate in multi-employer pensions, according to the Pension Benefit Guaranty Corporation. These pensions allow employees to move from one job to another within the same pension and carry their retirement benefits with them.

Many of these multi-employer pensions are on track to run out of money. If the pension runs out of money, retired workers might only get a small percent of the money they thought they had earned through decades of work.

"We like to say that Just Born is the sweetest place in our community," Ross Born, co-chief executive of the company and a grandson of its founder, said in a 2016 "year in review" video. "We use more sweeteners than anyplace around, and we have the sweetest people, who really care about our iconic brands."

The sugary praise masked how strained relations had become with Just Born's union workforce. The pension had already sued Just Born, and now the company, the pension, and the union are all tangled up in lawsuits. All sides are frozen as a federal appeals court decides whether Just Born can block new employees from the pension while avoiding the $60 million fee.

"You've gotten rid of the fund in a circular way that I don't think anybody has ever done," U.S. Circuit Court Judge James A. Wynn Jr. told Just Born's lawyer in January, without saying whether he would allow it.

Since the strike, the company and its workforce have contracted. The union says there are only 326 workers on the production floors at Just Born now, down from 400 at the time of the strike. And just 250 are in the union.

Just Born's Pye said the firm has no plans to sell itself or move overseas. The company is just trying to manage costs for the future. Union officials said they believe the company and its workforce have been changed forever.

"Will everybody look at things like they did before?" said Hank McKay, president of the union's chapter "Local 6," which includes the Bethlehem workforce. "I don't think so."
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  #703  
Old 04-27-2018, 05:09 PM
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I have all the Peeps stuff in the MEP thread - most recent post here:
http://www.actuarialoutpost.com/actu...93#post9303693
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  #704  
Old 05-11-2018, 10:57 AM
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ROLLS-ROYCE

https://www.ai-cio.com/news/rolls-ro...n-deal-unions/

Quote:
Rolls-Royce Reaches Pension Deal with Unions
DB plan to stay open until 2024 as contributions increased for DC plan members.
Spoiler:
UK automobile and aircraft engineer manufacturer Rolls-Royce has reached a new pension deal with unions that will keep its defined benefit plan open to existing members until 2024, and increase benefits to younger workers beginning in 2021. The move is expected to save the save the company 145 million ($196.1 million) over the next three years, according to The Financial Times.

As part of the deal, the company is reducing contributions to its defined benefit pension over the next three years in exchange for agreeing to allow benefits to accrue for the defined benefit plan’s 12,500 existing members until the beginning of 2024.

“It helps us to keep our defined benefit scheme going, at a time when more and more companies are fully closing theirs,” Joel Griffin, head of global pensions and benefits at Rolls-Royce told the FT. “It will also meaningfully improve retirement prospects for younger Rolls-Royce employees, helping them to be better prepared for the future.”

The company is also making changes to its defined contribution plan, which includes increasing its contributions to approximately 10,000 employees beginning in 2021. Under its previous plan, Rolls-Royce’s contribution levels were based on an employee’s age, with the base contribution set at 6% for a younger employee contributing 3% for a total contribution of 9%. However, under the new plan this could potentially double with a base contribution as high as 12%, with employees kicking in 6%, for a combined total of 18%.

Rolls-Royce estimates that this could translate to a 20% boost to a young worker’s final pension total, depending on the returns produced by the investments chosen by the employee.

However, this still leaves Rolls-Royce with a two tier system with defined benefit members still likely to end up with larger pensions than those in defined contribution plans.

“The current DC maximum contribution of just 6% is stingy for a blue-chip company, especially when the annual benefit to employees in the DB scheme is 30% of salary,” John Ralfe, an independent pensions consultant, told the FT. “Doubling the maximum contribution to 12% from 2020 is obviously an improvement but is not at the top end, and new joiners will get less.”

UK Union Unite and other unions representing Rolls-Royce’s 22,000 UK workers voted last week to accept the plan.
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  #705  
Old 05-20-2018, 05:51 PM
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https://www.thinkadvisor.com/2018/05...ifeHealthDaily

Quote:
Retirement Industry Officials Back Bipartisan Bills to Update ERISA
The bills would boost e-delivery and the use of annuities in retirement plans.
Spoiler:
Retirement planning officials threw their support Wednesday behind a bipartisan package of bills designed to update the Employee Retirement Income Security Act by opening the door to annuities in retirement plans, electronic delivery of participant documents, relief for multi-employer plans and easing of small businesses retirement plan costs.

“Many ERISA provisions related to retirement plan administration are in desperate need of updating, with some having last been revised over two decades ago,” Rep. Tim Walberg, R-Mich., chairman of the Subcommittee on Health, Employment, Labor and Pensions, said during the hearing, called “Enhancing Retirement Security: Examining Proposals to Simplify and Modernize Retirement Plan Administration.”

The four proposals, which the committee is looking to vote on soon, are:

H.R. 4604, the Increasing Access to a Secure Retirement Act of 2017;
H.R. 4158, the Retirement Plan Modernization Act;
H.R. 854, the Retirement Security for American Workers Act; and
H.R. 4610, the Receiving Electronic Statements to Improve Retiree Earnings Act.
The Insured Retirement Institute, an annuity trade group, told the committee that it backs H.R. 4604 because it establishes “clear guidelines” for employers who want to include annuities in their retirement plan menus.

The current Labor Department rule “is a barrier to most employers offering lifetime income products because they don’t have the technical or financial resources to meet the unclear requirements of the rule,” IRI said. The Increasing Access to a Secure Retirement Act bill provides “a workable and appropriate path for employers to meet their obligations when choosing an annuity provider.”

Krista D’Aloia, a vice president and associate general counsel at Fidelity Investments, who testified on behalf of the American Benefits Council, stated that the “cash-out threshold is one of the few dollar figures applicable to retirement plans, which is not currently indexed for inflation.”
To address this, the Council supports the Retirement Plan Modernization Act, which would “build in an inflation index to the cash-out limit, which is the value of benefit that a plan would be able to distribute to a participant if the participant terminates employment before retirement age.”

The proposal, ABC said, “would also update (for the first time since 1997) the current $5,000 cash-out limit to $7,600.”

Said D’Aloha: “Updating the cash-out limit will increase efficiency in plan administration, lower costs, as well as reduce the potential for individuals losing track of their benefit.”

The RETIRE Act (H.R. 4610) makes it “more feasible for employee benefit plan sponsors and their service providers to use electronic communications instead of paper,” said IRI’s senior vice president and general counsel, Lee Covington.

“It is estimated the bill will reduce the communications costs for sponsoring a plan by 38%,” Covington said.

At the same time, Convington continued, the bill “continues to provide and maintains important safeguards to ensure participants who still want to receive required communications in paper format can do so.”

J. Mark Iwry, nonresident senior fellow in economic studies at the Brookings Institution and a former Treasury official, said that while the electronic communication proposals has a “great deal of merit,” he questioned whether the bill contains the “consumer protections we need to get that ready” to mark up.

“I don’t think we’re ready yet,” he said, adding that there’s a path to including “not too burdensome protections to get there and move electronic communications forward.”

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  #706  
Old 05-20-2018, 05:53 PM
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GENERAL ELECTRIC

http://wnyt.com/news/ge-pension-sche...356/?cat=10114

Quote:
GE retirees rally for pension benefits

Spoiler:
Angelo Santabarbara Sr. worked for GE for more than 30 years. Now retired, he says hits to his pension are taking their toll.

"They cut the insurance off. Now, my wife, she's a little younger than me, when she turns 65 they're gonna cut her insurance," he said. "We want to travel, we want to go to Florida and we cannot do that anymore."

He and dozens of others are demanding action at a rally outside of the main gate at GE Headquarters in Schenectady. They say the company continues to make money but is taking away benefits from the people who helped earn it.

"These people made the company so wealthy. All this money in the pension fund, we put it in and look what happened," said Santabarbara Sr.

"It comes down to nothing more than corporate greed. We are still seeing profits from the company. They're still paying shareholders and they're taking money away, benefits away, from retirees," said Santabarbara's son, Assemblyman Angelo Santabarbara from Rotterdam.

Retirees say their biggest concern are changes to their healthcare plan, saying they contribute more out-of-pocket than promised. In a statement released Thursday GE said:

"The changes made to our program in 2015 and 2016 allowed GE to offer greater choice in coverage while striking a balance among our obligations to employees, retirees, and shareowners."

Bruce Duxbury just retired from GE last year after having been employed there for 36 years. For now, he says he's okay -- but worries with the increasing cost of living and cuts in company healthcare contributions, that could change.

"If I'm fortunate enough to last 20 years or whatever, my pension is slowly going to shrink and get smaller and smaller as time goes on," said Duxbury.

"They want to make you suffer when you retire so you might as well keep on working until you die," said Santabarbara Sr.

GE said changes made to pensions in 2015 increased pension amounts to more than 100,000 pensioners and their surviving spouses.

GE has reported a more than $31 billion deficit in its pension plan.

https://blog.timesunion.com/santabar...benefits/2257/

Quote:
General Electric must restore Retiree Pension Benefits
Spoiler:
This week I joined hundreds of IUE-CWA Local 301 union members and hundreds of General Electric retirees at the company’s main gate in Schenectady to demand the pension benefits they were promised at retirement.

On January 1st of this year thousands of retirees from the company, employees and their eligible dependents can no longer use their post-65 retiree health plans from the company that they were initially promised. GE justified the change by saying it was on trend with what other large corporations have in place and it will also save the company $3.3 billion.

This is simply unacceptable! The hardworking men and women who dedicated decades of their lives to this company deserve nothing less than the full restoration of the pension benefits they are entitled to. General Electric made not only a commitment, but a promise to retirees, a promise that many have planned their futures around.

The unfair change is having a devastating impact for far too many. It has put a heavy burden on retirees, who are facing higher health care premiums and prescription costs.

It is wrong and unfair for General Electric to promise one thing and then do another. The company continues to show profits and pay share holders. To justify their actions by saying it’s consistent with what other companies are doing adds insult to injury. GE may be an industry leader in many aspects – except when it comes to benefits for their hardworking retirees. And there are employees that still work for the company that will be also retired someday knowing that General Electric can do this again to future retirees.


The thousands of retirees, including my father who retired after working 30 years for the company, have put in years of hard work and shown immense dedication to the company and General Electric should show that same dedication to retirees when they need it the most.

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Old 05-20-2018, 05:53 PM
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https://www.bloomberg.com/news/artic...rudential-says

Quote:
Don’t Rely on Markets to Plug Pension Shortfall, Prudential Says


Spoiler:
Prudential Financial Inc. has a warning for the more than half of S&P 500 companies that have underfunded pensions: Waiting for the market to ease the pain of that shortfall won’t help.

A typical pension-plan sponsor has “virtually no chance of earning its way to fully funded status,” meaning the company will have to put more money into the retirement plan, according to a report from the life insurer. Taking an average plan that is 84 percent funded and building in various assumptions about asset allocation and returns, Prudential found there’s less than a 1 percent chance the employer will get to 100 percent in four years without making any contributions.

Prudential’s analysis underscores the challenges that companies face as low interest rates, which increase pension liabilities, and substantial payouts to retirees temper the benefits generated by rising equity markets. Employers might want to shove more money into plans now and take advantage of the ability to deduct contributions under the old tax rate until Sept. 15, the insurer said.

Prudential has been winning deals to take on pension obligations from employers such as General Motors Co. and Verizon Communications Inc., getting more assets to oversee and invest.

“Relying on capital markets alone to close these funding deficits is unrealistic,” the company said in the report. “It will take contributions to close this gap, and now is the time to fund.”

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Old 05-21-2018, 07:20 AM
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MICHIGAN
NONPROFITS

http://www.crainsdetroit.com/article...ension-squeeze

Quote:
Charities look to buy their way out of pension squeeze
Southeast Michigan human service and mentoring agencies strapped with pension liabilities moving to terminate plans
Rising and unpredictable liability leads to service cuts
Some looking at taking on debt, others eyeing endowment funds to terminate plans

Spoiler:
Southeast Michigan human service and mentoring agencies strapped with pension liabilities are moving to
terminate their plans in the face of uncertain and rising liability and fees.
Some are considering taking on millions of dollars of new debt or eyeing their endowments to buy their
way out of the liability.
As things stand, agency officials say they cannot project costs from year to year because of:
Market swings affecting the value of plan assets
Rising liabilities due to pensioners living longer
Increases in premiums to the Pension Benefit Guaranty Corp., a federal agency charged with
providing pension benefits in private-sector-defined benefit plans that end without sufficient money
to pay all benefits.
Most private-sector pension plans, including those offered by nonprofits, are covered by the PBGC and are
required to pay annual premiums, said Carol Meyers, senior pension analyst at Watkins Ross in Grand
Rapids. An additional risk premium is due if the plan is considered underfunded.


For-profit businesses have wrestled with similar issues for years. However, for nonprofits trying to fulfill a
mission, pension liability issues result in them helping fewer people.
Big Brothers Big Sisters of Metropolitan
Detroit has posted pension liabilityrelated
losses in recent years.
While many large employers have been
relieved of their pension liability, "the
PBGC won't take a look at us because
they think BBBS can continue to pay the
obligation," said Jeannine Gant,
president and CEO of Big Brothers Big
Sisters of Metropolitan Detroit.
There are several options for plan
sponsors to reduce their risk. Meyers
said they can buy annuities to cover
current plan beneficiaries without
terminating the plan. They can allow
retiring participants to choose to
receive a lump sum to buy out the
future liability, or employers can borrow
money to terminate their plan.
"Though the cost of terminating a plan
may be expensive, the plan sponsor
may want to consider financing the cost
of the plan termination if interest costs
are favorable," Meyers said.

Big Brothers Big Sisters, one of the state's oldest and largest mentoring agencies, was among the
nonprofits that pulled out of the pension plan United Way for Southeastern Michigan operated between
2005 and 2009.
Established in 1945 by United Community Services, which merged with United Way in 1995, the United
Way pension plan was intended to reduce administrative costs and improve benefit coverage for smaller
nonprofits. The plan was adequately funded until 2004, but poor market returns, declines in interest rates
and alleged mismanagement increased agency liabilities.
United Way froze the plan in March 2005, preventing nonprofits from adding new employees to it. Seven
years later, the PBGC agreed to take control of the plan, with 18 of the original 55 nonprofit employers and
their employees still participating.

BBBS le�� the United Way pension plan before then, in 2007. But increasing pension contributions coupled
with reduced federal funding began to take their toll.
Despite reducing the number of children the organization serves by a third, to 850 in 2017 from 1,279 in
2012, and cutting a handful of staff members, BBBS operated at a loss for three of the past four years.
Gant said the pension liability is to blame. "We have worked hard over the years to increase our
unrestricted fundraising while reducing our dependency on the fluidity of federal funds, but the pension
obligation remains as the primary looming presence to our bottom line," she said.
"When we have to make pension contributions that total more than 10 percent of our operating budget, it
limits our ability to hire the staff needed to build sustainability and serve more youth."
According to a dra�� of its audited financial report, last year BBBS had total revenue of $1.12 million and a
net loss of $16,228. It was technically insolvent with negative $215,065 in net assets/fund balances at
year's end. The agency also paid $160,000 in pension contributions and just less than $25,000 in premiums
and fees.
BBBS, which is operating on a $1.4 million budget this year, had a pension liability of just less than
$427,000 as of Feb. 22.
This year's audit isn't complete, but according to BBBS's 2016 federal 990 tax form, grants and
contributions fell to about $685,000 that year from slightly more than $1 million the year before.
While some grantmakers are still willing to take a chance, others are not, Gant said. "I've had funders say,
'We'd love to fund you, but we're really concerned about this.'"
The pension liability also stood in the way of BBBS's March proposal to its Washtenaw affiliate that they
merge not only to save money but also to expand programming to areas such as St. Clair and Monroe
counties where lack of funding caused other affiliates to close.
"Jeannine and I had an informal conversation because our national (organization) is always having that
conversation," said Jennifer Spitler, executive director, Big Brothers Big Sisters of Washtenaw County.
"I took it to our executive committee and threw it out there informally," she said. "The pension liability, in
general, was a non-starter from a financial standpoint."
Widespread issues
Lutheran Child and Family Services of Michigan, part of Wellspring Lutheran Services, operates on a much
larger budget of $19 million, but it's facing the same issues.
"Frankly, when we start seeing $250,000-ayear
premiums, we start thinking, 'Should
we just go get debt and get out of this
thing?'" said President and CEO Dave
Gehm. "At least debt service is a decreasing
number over time, whereas premiums are
just going to go up. And we don't control
the liability either way."

The Flint-based provider of foster care,
adoption and home-based crisis services
merged with Boys and Girls Republic,
another agency that disaffiliated from the
United Way plan, in 2008. With 444 total
pensioners in its two frozen plans, it's now
considering taking on an estimated $6
million to $6.5 million in debt. The debt
would allow the nonprofit to buy out
pensioners where it can and to put
remaining pensioners into annuities so they
receive their full retirement benefits and so
it can terminate the plan.
The liability prevented Lutheran Child and
Family from entering a full merger with
Lutheran Homes of Michigan in 2011, Gehm
said. Instead, they formed a joint-operating
agreement.
"Frankly, the merger was waved off largely
because of the pension liabilities and the
challenge they presented to the balance
sheet, not to mention cash flow in the long
run," he said.
By combining central offices, the two were
able to carve out a fair amount of overhead.
But "we're trying to figure out how to solve
the (pension) problem so (we) can do a full
merger," Gehm said.
Lutheran Child and Family has trimmed
programs, cut about 20 employees over five years and sold buildings to get as lean as it can, he said.
Thanks to the cuts, it ended 2017 in the black. But the cuts that have kept it afloat also prevented it from
being distressed enough for the PBGC to take on its plans in 2012-13, he said.
"We've employed a strategy of trying to continue to fund the plan as best we can. That makes the plan
healthier and more accessible to pensioners and helps us move liability off the books when people retire
and take lump sums," Gehm said.
But with the age of pensioners and projections on their life expectancy increasing, Lutheran Child and
Family is seeing a significant run-up in recommended payments over the next several years.
This year alone, the nonprofit is looking at potentially $1 million or more in contributions to keep it at the
80 percent funding level that enables it to buy employees out of the plan as they retire and to reduce the
premiums it must pay to the PBGC.
Those premiums have gone up.

In 2012, Lutheran Child and Family's premium was less than $30,000, Gehm said. In 2015, it rose to
$99,000. In 2017, it was $183,000. For 2018-19, he projected the premium alone will be somewhere around
$220,000.
Because of the pressure on the PBGC, premiums are going through the roof, Gehm said. "When you start
seeing premiums skyrocket the way they are, it really does force the conversation about taking on debt.
"But when's the right moment to pull that trigger, and can we get a bank to help us with that under the
circumstances?" he said. "We don't have a lot of collateral."
Ditching uncertainty
Other agencies that disaffiliated from the United Way plan are in slightly better shape.
Girls Scouts of Southeastern Michigan, created from the 2009 merger of four councils — including two that
disaffiliated from the United Way pension plan — terminated its plan four years ago and not a moment too
soon, said CEO Denise Dalrymple.
The nonprofit sold one of its camps to do it
but was able to exit before experiencing the
increases the PBGC passed on to employers
with underfunded plans in recent years.
Girls Scouts terminated one pension plan
just a��er the merger and paid $2 million to
terminate the other, Dalrymple said.
"We couldn't project before. We got a
surprise hit one year (and) ended up having
to pay $600,000 ... to keep our balance up to
80 percent because of market fluctuations.
The next year we had to pay nothing…. It
was really worth our while to get rid of that
uncertainty," she said.
Neighborhood Services Organization and
Goodwill Industries of Greater Detroit have
paid down their pension liabilities in recent
years but can't move fast enough to
terminate their plans.
NSO, which reported pension liabilities of
$2.58 million in 2016, needs $1.1 million
more to fund its pension at 110 percent. At
that level, the agency would be able to
completely terminate its plan, said
President and CEO Sheilah Clay. The
organization expects to be able to
terminate the plan in 2019 or 2020.


"As we get closer, if we determine we need
to take out debt, we will … but it won't be a
large amount," she said.
Goodwill, which is operating on a $39
million budget, reported $1.3 million in
pension liability on its 2016 federal tax
form. It contributed $1 million to its
pension fund last year, CEO Dan Varner
said, adding they expect to be able to pay
the remaining money needed from its
current reserves.
"We've tentatively circled December 2019
as our date by which we'd like to liquidate
the plan," he said.
The Judson Center has unfunded liability of
roughly $3 million, President and CEO
Lenora Hardy-Foster said. It established a
board-designated endowment that today is
about $10 million to help weather swings in
liability. The agency's board hasn't yet
discussed terminating the plan, but the
endowment would cover any costs if it
chose to do so, she said.
"We're always struggling from year to year
(to see) what that unfunded liability is
going to be," Hardy-Foster said. "That
liability impacts our ability to provide more
services."
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Old 05-22-2018, 02:11 PM
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BRAZIL
PREVI

https://www.bloomberg.com/news/artic...llion-activist

Quote:
Brazil’s Biggest Pension Fund Turns Into a $50 Billion Activist

Spoiler:
When BRF SA, the Brazilian food giant that produces everything from chicken to chocolate pies, reported a record annual loss for 2017, it took less than 48 hours for its second-largest shareholder to act.

Previ, Brazil’s biggest pension fund, sent a letter in February demanding BRF Chairman Abilio Diniz convene a shareholder meeting to remove the entire board, including himself. After a two-month fight, Previ got its way: Investors voted in five new directors and replaced Diniz with Pedro Parente, who’s credited with turning around the country’s state-owned oil company, Petroleo Brasileiro SA.

That success is just the latest example of how the pension fund, which counts more than 200,000 current and former employees of Banco do Brasil SA as participants, is using its 180 billion reais ($50 billion) in assets under management as ammunition in a minority-shareholder rights war.

“BRF kept showing successive results that were a concern for us as shareholders,” Gueitiro Matsuo Genso, Previ’s chief executive officer, said in an interview in Sao Paulo. “We decided to work together with other dissatisfied investors to intervene, but within what we believe was the best way -- through the company’s governance; in this case, the board.”

As part of its new activism, Previ will stop participating in groups with controlling interests in a company, which limit the pension fund’s ability to exit investments whenever it wants. It’s seeking out companies that prioritize transparency, good governance and respect for minority shareholders’ rights.

Previ's Pickings
Pension fund's biggest equity holdings, as a percentage of total portfolio


Source: Previ

Holdings are for Previ's Plano 1 only; Vale shares are owned through LITEL Participacoes. Data as of March.

Previ created a governance rating that Genso said is the only one of its kind in Latin America. The rating considers such factors as a company’s risk-management and compliance policies, transparency, conflicts of interest and involvement of management or shareholders in corrupt practices. The existence of independent internal auditing committees and other formal mechanisms for evaluating management and the board also are taken into account, Genso said.

As part of the strategy shift, Previ participated in the initial public equity offering of Petrobras’s fuel unit in December, buying 10 percent of the roughly 5 billion reais raised. It was the second-biggest investor, partly because the company agreed to be listed on Brazil’s “New Market,” which demands a stricter set of governance rules, including a minimum free-float to help boost liquidity.

“It had been a long time since we participated in an IPO, but that was a good opportunity we couldn’t miss,” said Marcus Moreira de Almeida, Previ’s chief investment officer. Since the IPO, Petrobras Distribuidora SA’s shares have surged more than 30 percent.

Neoenergia SA, the power company in which Previ has a roughly 38 percent stake, is planning to go public on the New Market under the same corporate-governance rules as the Petrobras unit. That IPO was planned for the end of last year but was postponed until market conditions improve.

“We like to get companies ready, so we can sell when you think it’s best,” Genso said. “If there’s a good opportunity, all our investments are for sale; we don’t love any assets.”

High Liquidity
With about 12 billion reais in annual disbursements to retirees, Previ needs to focus its investments in companies with high liquidity.

“With our size, we need a robust free float -- considerable market cap -- in order to manage a smooth way out when we decide to without having an impact on prices,” Genso said. As a result, Previ won’t participate in IPOs smaller than 3 billion reais.

Another example of Previ’s influence came with its participation on the voluntary conversion of iron-ore producer Vale SA’s non-voting shares into voting ones and the gradual unwinding of a controlling shareholders’ agreement, Genso said. Investors owning more than 84 percent of the affected shares agreed to the conversion last year, well above the roughly 54 percent needed.





Previ plans gradually to sell its stake in Vale to raise cash. But there’s no rush, according to Almeida. “Vale will be a great dividend payer this year, and that’s perfect for a pension fund,” he said.

After divestitures totaling 9 billion reais last year, Previ has a goal of reducing equity investments in its main fund to 30 percent in seven years from about 48 percent now, while increasing fixed-income holdings to 59 percent from 42 percent -- another strategy aimed at boosting liquidity.

“Given our size and impact, we can help change Brazilian markets for the better,” Genso said. “If big investors like us start to show they really demand good governance, management will be forced to deliver it.”

— With assistance by Daniel Cancel, and Julia Leite
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Old 05-23-2018, 04:31 PM
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CONGRESSIONAL COMMISSION

https://401kspecialistmag.com/senato.../#.WwXOHUgvyUk

Quote:
Senators Want Federal Commission To Review Private Retirement Programs
It would include the country's top appointed officials
Spoiler:
While not quite calling it a “crisis,” two young Senate guns says America’s private retirement system nonetheless faces major challenges in the modern economy, and they want to do something about it.

Citing research from the Employee Benefit Research Institute, they claim that over 40 percent of Gen X-ers will run short of money in retirement, and just under half of all private-sector workers aren’t participating in a retirement savings plan through their employer.

Therefore, Senators Todd Young, R-Indiana, and Cory Booker, D-New Jersey, recently announced new legislation to establish a federal commission charged with reviewing private retirement benefit programs. It will then submit a report to Congress on how to improve private retirement security in the United States.

This legislation follows a report last year by the Government Accountability Office that recommended the creation of an independent panel of experts to assess our current system and make recommendations to improve the nation’s collective retirement security. It has been nearly 40 years since a federal commission has conducted a survey of this scope.

The commission would include the Secretary of Labor, Treasury, Commerce, two presidential appointees, six U.S. Senate appointees, and six U.S. House of Representatives appointees.

It will be charged with:

A comprehensive review of private benefit programs existing in the United States, with a particular focus on moving from defined benefit to defined contribution models.
A comprehensive review of private retirement coverage, individual and household accounts balances, investment trends, costs and net returns, and retention and distribution during retirement.
A comprehensive review of societal trends, including wage growth, economic growth, unique small business challenges, serial employment, gig economy, health care costs, life expectancy and shrinking household size, that could lead future generations to be less financially secure in retirement compared to previous generations.
A comprehensive review of other countries’ retirement programs.
Submitting to Congress recommendations on how to improve or replace existing private retirement programs upon the affirmative vote of at least three-quarters of the members of the Commission.
The commission would not review the Social Security program, however, as it is outside of its scope.

“Private retirement systems have undergone significant changes over the past 40 years as traditional pensions have become less common,” the Senators said in a statement. “Individuals must now prudently plan for their own retirement security through retirement savings accounts like 401k plans.”

Further, they add, the economy is undergoing another shift, as workers are more likely to work in the “gig economy,” defined by serial employment or the contingent workforce. For these workers, it’s “particularly difficult to save for their own retirement.”

“The most important thing we can do to ensure Americans’ retirement security is to protect and strengthen Social Security,” said Senator Booker. “Beyond that, we must work to address the shortcomings that have resulted from the shift from defined benefit pensions to defined contribution plans like 401ks. This bill will advance the conversation on individual retirement savings at a time when far too many have been left without the retirement they’ve planned for.”


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