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  #801  
Old 02-07-2019, 05:17 PM
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https://www.thinkadvisor.com/2019/02...&utm_term=tadv

Quote:
Insurers Are Competition for the PBGC: GAO Chief
Pension risk transfers are leaving the pension guarantor agency with fewer premium-paying customers.
Spoiler:
The private insurers in the group annuity market are taking paying pension guarantee customers away from the Pension Benefit Guaranty Corp. (PBGC)
Gene Dodaro, the comptroller general of the United States, talked, briefly, about the competition between the PBGC and the private “pension risk transfer” market Wednesday, at a hearing on financial security in retirement that was organized by the Senate Special Committee on Aging.

(Related: PBGC Multiemployer Pension Guarantees Are Lousy: Hearing Witness)
Dodaro was the only hearing witness who mentioned annuities in the written version of the testimonies posted on the committee website.

Dodaro — who serves as the head of the U.S. Government Accountability Office (GAO), an agency that helps Congress keep tabs on what’s happening at federal agencies and in federal programs — mentioned the private risk transfer market while discussing the challenges facing the PBGC.

The PBGC
The PBGC is an entity that’s supposed to use premiums from private employers with defined benefit pension plans, and the assets of failed plans, to back up pension plan benefits guarantees.

The PBGC has $110 billion in assets, but “its pension benefit guarantees are increasingly at risk due to its substantial liabilities,” Dodaro said, according to the written version of his remarks.

The PBGC reached Sept. 30, 2018 — the end of the federal government’s 2018 fiscal year — with a net accumulated financial deficit of about $51 billion, and about $185 billion in exposure to future losses on underfunded pension plans, Dodaro said.

Insurers and the PBGC’s Covered Lives
“The primary drivers of the government’s fiscal exposure related to PBGC’s deficit are the collective financial risk of the many underfunded pension plans insured by PBGC and the long-term decline in the number of participants covered by traditional [defined benefit] plans,” Dodaro said.

The number of plans insured has dropped by 78% since 1985, and the number of PBGC-insured pension plan participants who are still working has dropped by 13 million, Dodaro said.

“There has also been a recent trend of single-employer plan sponsors transferring the liability for some of their participants to insurance companies via group annuity ‘buy-outs,’” Dodaro said, referring to the arrangements also known as pension risk transfers.

Insurers may say that pension risk transfer deals reduce PBGC exposure to losses on underfunded pension plans as well as PBGC premium revenue.

But, from the perspective of the GAO, the arrangements do reduce the number of participants in PBGC-covered plans, Dodaro said.

“As a result of these trends, even though PBGC premium rates have increased significantly in recent years, PBGC’s premium base has been eroding over time as fewer sponsors are paying premiums for fewer participants,” Dodaro said.

Lump Sums
Dodaro also talked, briefly, about the fact that many participants in both defined benefit pension plans and defined contribution plans end up getting the accumulated value in the form of a lump sum, or big, one-time payment, rather than in the form of an annuity, or an arrangement to make a stream of income payments.

When pension plan participants get lump-sum payments, rather than lifetime income options or other methods for withdrawing funds in a systematic way, “the participant may face challenges similar to those with [defined contribution] accounts in terms of managing the spend down of their retirement savings,” Dodaro said.

Three Shaky Pillars
Dodaro described Social Security, employer-sponsored retirement plans and personal savings as the three pillars of the U.S. retirement system.

He said that, in addition to threats to their ability to draw on employer-sponsored retirement plans, American workers face many other threats to their post-retirement financial security, such as a low average savings rate, and the possibility that Social Security may end up paying only 77% of the scheduled benefits.

“Over the past 40 years, the nation has taken an incremental approach to addressing the U.S. retirement system; however, such an approach may not be able to effectively address the interrelated foundational nature of the challenges facing the system today,” Dodaro said. “Without a more comprehensive re-evaluation of the myriad challenges across all three pillars of the retirement system, identifying effective, enduring solutions may be difficult, and the consequences could be significant. Unless timely action is taken, many older Americans risk not having sufficient means for a secure and dignified retirement in the future.”

Resources
Links to hearing resources, including the written versions of the testimonies and a video recording, are available here.


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  #802  
Old 02-08-2019, 04:50 PM
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https://augustafreepress.com/senate-...ess-employees/

Quote:
Senate bill would facilitate retirement plans for small business employees
Spoiler:
U.S. Sens. Mark Warner (D-VA) and Susan Collins (R-ME) reintroduced legislation to reduce duplicative filing costs for small businesses seeking to make retirement plans available to their employees.

The bill was sponsored in the House by Reps. Linda Sánchez (D-CA), member of the House Committee on Ways and Means, and Phil Roe (R-TN), member of the House Committee on Education and Labor.

“Employer-provided retirement plans give workers stability and strengthen our economy in the long run, but the process of offering these plans can be expensive and complex for smaller employers,” said Sen. Warner. “This bill would remove an unnecessary impediment and reduce filing costs, thereby making it easier for employers to promote the retirement security that workers deserve.”

“Faced with an alarming $7.8 trillion shortfall in personal retirement savings, Americans simply aren’t saving enough to be able to afford a comfortable retirement,” said Sen. Collins. “When employers provide their employees with access to retirement plans, approximately 80 percent of them contribute. This bipartisan bill will help promote retirement security by making it easier and less expensive for small businesses to establish retirement plans, increasing their accessibility to employees and helping to ensure that those who worked hard for decades do not spend their retirement in poverty.”

“Too many Americans simply aren’t putting enough money away to be able to afford a secure retirement. It is no secret that women, especially women of color, are even farther behind in building adequate retirement savings due to continued pay inequality. By helping more small businesses provide workplace retirement plans we can give millions of hardworking families more financial peace of mind,” said Rep. Sánchez. “I’m proud to introduce this bipartisan, bicameral legislation to make it easier and less expensive for small businesses to establish retirement plans for their workers. This common sense legislation will help provide greater retirement security to more Americans.”

“It is imperative we do everything we can to encourage affordable and accessible retirement savings for all Americans,” said Rep. Roe. “This commonsense legislation will make it easier and less costly for small businesses to provide retirement plans for their workers by alleviating duplicative reporting requirements for plan administrators. I am proud to support this bill, which will promote a secure retirement for hardworking Americans.”

A 2016 report by the Pew Charitable Trusts showed that only 22 percent of workers at small companies have access to a workplace savings plan or pension, compared to 74 of workers at firms with 500 or more employees.

This legislation would allow employers and sole proprietors who participate in retirement plans to file a single aggregated Form 5500 – a required annual return that that provides compliance information to the Department of Labor (DOL) and the Treasury Department. Currently, employers are required to file separate forms to satisfy reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code. By eliminating the need to report these two forms separately, this bill will remove unnecessary red tape and reduce costs for small businesses who wish to provide workers with retirement security. Under this bill, retirement plans would need to have the same trustee, fiduciary, plan administrator, plan year and investment menu in order to be eligible to file an aggregated Form 5500.

According to a 2016 survey conducted by the Transamerica Center for Retirement Studies, in collaboration with Aegon Center for Longevity and Retirement, only one-third of self-employed respondents indicated that they make sure they are saving for retirement. These self-employed workers, along with sole proprietors and small business owners, are the most likely to benefit from this legislation, as they are the most likely to establish retirement plans that meet the requirements necessary to file an aggregated Form 5500.

To provide DOL and Treasury time to implement this change, this bill has an effective date of no later than January 1, 2023. A copy of the legislative text is available here.


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  #803  
Old 02-11-2019, 01:05 PM
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SEARS

https://www.ai-cio.com/news/pbgc-sea...cy-settlement/

Quote:
PBGC, Sears Reach Chapter 11 Bankruptcy Settlement
Deal cleared way for court to OK ESL Investment’s $5.2 billion takeover of the retailer.


Spoiler:
The Pension Benefit Guaranty Corp. (PBGC) has agreed to withdraw its objection to the proposed sale of Sears’ assets to hedge fund ESL Investments, which cleared the way for a US bankruptcy court judge to approve ESL founder and Sears Holdings Corp. Chairman Edward Lampert’s $5.2 billion takeover of the 126-year-old retailer.

The agreement allows the government-sponsored lifeboat for struggling pensions to assume responsibility for Sears’ two pension plans, which are covered under PBGC’s Single-Employer Insurance Program.

Last month, the PBGC said it would assume responsibility for Sears’ two defined benefit pension plans, which cover approximately 90,000 workers and retirees at Sears, Roebuck and Co. and Kmart Corp. Sears filed for Chapter 11 protection in October, and the PBGC stepped in to become responsible for the plans because it said that Sears’ continuation of the plans is no longer viable.

According to court documents, the PBGC estimates that the Sears pension plans are collectively underfunded by approximately $1.4 billion, and have a funded level of just 64%. In its complaint, it had argued that as a result of the sale or liquidation of the company, the plans would not have assets available to pay benefits when due.

Sears lawyer Ray Schrock reportedly told bankruptcy judge Robert Drain that the PBGC will receive an unsecured $800 million from the Sears bankruptcy estate. He also said the agency would get up to $80 million in proceeds from potential claims against ESL Investments Inc. surrounding its dealings with Sears.

The Wall Street Journal reported that as part of its settlement with Sears, the PBGC agreed not to challenge Lampert’s right to bid using $1.3 billion in debt instead of cash. It also said that a group of unsecured creditors argued that Lampert shouldn’t be able to rely on loans he previously extended to Sears when he used stock buybacks, spinoffs, and dividends to make money while stripping Sears of its assets.

The PBGC said that it expects its guarantees will cover the vast majority of pension benefits earned under the plans, and added that it will not have a significant effect on its financial statements because the claim has already been included in the agency’s fiscal year 2017 and 2018 financial statements.


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  #804  
Old 02-11-2019, 08:08 PM
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3M

https://www.pionline.com/article/201...j0cHxEZdpvU4tE

Quote:
3M to stick up to $200 million into pension plans in 2019
Spoiler:


BLOOMBERG
3M Co., St. Paul, Minn., expects to contribute between $100 million and $200 million to its global defined benefit plans in 2019, the company disclosed in a 10-K filing with the SEC on Friday.

In 2018, 3M contributed $254 million to its U.S. pension plans and $112 million to its non-U.S. pension plans.

3M did not break the expected 2019 contributions down by region. It said in the filing that it "does not have a required minimum cash pension contribution obligation for its U.S. plans in 2019" and that "future contributions will depend on market conditions, interest rates and other factors."

RELATED COVERAGE
CMS Energy reports $240 million pension plan contribution General Motors to steer $670 million in contributions to pension plans in 2019Intel computes $480 million pension plan contribution in 2018
3M has more than 70 defined benefit plans in 26 countries, the company noted in the filing.

COMPARE EXPECTED U.S. COMPANY PENSION CONTRIBUTIONS WITH P&I'S CORPORATE PENSION CONTRIBUTION TRACKER
As of Dec. 31, U.S. pension plan assets totaled $14.8 billion, while projected benefit obligations totaled $15.95 billion, for a funding ratio of 92.8%, up from 90.4% the year before. As of that same date, non-U.S. pension plan assets totaled $6.17 billion, while projected benefit obligations totaled $6.965 billion, for a funding ratio of 88.6%, down from 89.8% the year before.

The discount rate for the U.S. pension plans as of Dec. 31 was 4.36%, up from 3.68% the prior year, and the non-U.S. plans' discount rate was 2.5%, up from 2.41%.

As of Dec. 31, the actual allocation of the U.S. pension plans was 41.5% fixed income, 19.8% equities, 16.2% absolute return, 14% private equity, and 8.5% cash and cash equivalents. As of that same date, the actual allocation for the non-U.S. pension plans was 51.1% fixed income, 32.4% equities, 11.6% absolute return, 3.4% private equity, and 1.5% cash and cash equivalents.



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  #805  
Old 02-14-2019, 04:39 AM
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ST. CLARE'S HOSPITAL

https://www.wamc.org/post/state-lawm...pension-crisis
Quote:
State Lawmakers Meet With Bishop To Address Schenectady Hospital Pension Crisis

Spoiler:
Lawmakers met with Bishop Ed Scharfenberger of the Roman Catholic Diocese of Albany at the capitol Friday in an effort to address the pension collapse involving the former St. Clare's Hospital.

St. Clare's, in Schenectady, was shuttered in 2008 as part of a state-ordered consolidation. Retirees recently saw their monthly pension payments cut or eliminated after the hospital board said the pension fund was nearly bankrupt. State Assemblyman Angelo Santabarbara says a budget request has been made for $42 million and hopes additional funding could come from the Mother Cabrini Health Foundation.

"Leaving this meeting the Bishop had agreed that he would go forward, contact Prudential, contact the attorney, the board at the Cabrini Foundation to arrange a similar meeting where we could have a continued discussion on this on what our plan is and what we would need from all parties to make this a viable plan. So everybody has some homework I guess," said Santabarbara.

Santabarbara, state Senator Jim Tedisco and Bishop Scharfenberger met with a committee of St. Clare’s pensioners behind closed doors. Mary Hartshorne is one of them. "It's important for people to know that we worked so hard for this for years and years and we deserve it. However, with the limitations with each area has limitations that we've decided that wee could agree on something and we're all gonna work together toward it. I can't tell you how much all of this means to us."

Tedisco says Scharfenberger, who did not speak at Friday’s press conference, expressed his concerns. But there's a roadblock: the pension company won't disclose how many people are affected by the pension collapse. "Now there's some discussion about the fact that we're gonna set precedent if we get state money. Well this is a little bit different case than bailing out pensioners from a pension system. The state of New York was involved. They were right-sizing their health-care system. They had a Berger Commission. They said St. Clare's hospital, who provided for the sickest and the lowest income individuals time and time again, who did not receive payments in many instances but kept caring for those people, they were the one hospital, maybe in this entire Capital District area, certainly in Schenectady County in that region, who were taking care of patients who probably couldn't afford to pay or could afford to pay a limited amount. And now you've got 1,100 or more citizens who are either being reduced drastically with their pension that they were promised, or a good portion of them not receiving any of their pension. That's totally unacceptable."

Tedisco said given the state is offering $3 billion in tax breaks to Amazon, he'd rather give them 2-point-nine-nine-five and put the rest toward the pension.

Santabarbara says the $42 million number needs to be confirmed and expects additional meetings will be held between now and April 1st when the budget is due.
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  #806  
Old 02-19-2019, 06:15 AM
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https://www.latimes.com/local/lanow/...216-story.html

Quote:
Federal agency sues former Orange County Register owners over handling of pension program

Spoiler:
A federal agency is suing former Orange County Register owners Aaron Kushner and Eric Spitz over their handling of Freedom Communication’s pension program, alleging the executives made “ill-advised, speculative investments” that resulted in the loss of tens of millions of dollars.

Pension Benefit Guaranty Corporation, a U.S. government agency that insures pension plans, filed a lawsuit Feb. 14 in U.S. District Court’s California Central District, Southern Division, alleging breach of fiduciary duties, engaging in prohibited transactions, and knowing participation in breach of fiduciary duties in violation of the Employee Retirement Income Security Act.

The lawsuit alleges Kushner and Spitz “failed to act prudently” in four investments, including one in which the pair “lost millions of dollars of pension plan assets by causing the pension plan to buy stock in Freedom when they knew that the company was in financial distress.”

Kushner and Spitz both declined to comment on the lawsuit.

Kushner and Spitz formerly co-owned Freedom Communications and its collection of newspapers, which included the Register. Freedom filed for bankruptcy protection in 2015.


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  #807  
Old 02-25-2019, 04:24 PM
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ST. CLARE'S HOSPITAL

https://cbs6albany.com/news/local/st...poli-cant-help

Quote:
New York comptroller can't help St. Clare's retirees in pension battle

Spoiler:
ALBANY, N.Y. (WRGB) - "There’s nothing I can do."

That was the message from the state comptroller to Sen. Jim Tedisco.

Tedisco had asked Tom DiNapoli to figure out why the St. Clare’s pension fund went bankrupt.

The comptroller says he has no authority to audit a private pension fund.

Tedisco had written DiNapoli back in December asking him to investigate what had happened to the $50 million the state paid to St. Clare's ten years ago when the hospital was shut down by the state.

Twenty-eight million of that was intended to cover the anticipated needs of the pension fund. Tedisco wanted DiNapoli to determine who should be held accountable for the current shortfall and how much would be needed to restore the fund to solvency.

Some 1,100 former employees stand to either lose their pensions or have them greatly reduced.

A counsel for the comptroller writes that DiNapoli will continue to closely monitor any effort by the state to resolve the hospital's pension fund crisis, but he has no authority over a private fund.

Tedisco said he was disappointed with the comptroller's response for two reasons. He felt the state should investigate since it was responsible for closing the hospital. He also wanted to make sure a situation like this did not happen again.


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  #808  
Old 02-26-2019, 02:42 PM
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Church- based pension: the wild west.
So not covered by ERISA? No 5500, no audit requirements?

And they are not the only ones.

Who will pay the lawyers to do the discovery and complete the litigation?
Pension Rights Center?
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  #809  
Old 03-08-2019, 08:55 AM
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https://www.forbes.com/sites/ashleae.../#362fb5b168ed

Quote:
Trump Treasury Backtracks On Lump-Sum Pension Rules Meant To Protect Retirees

Spoiler:
The Treasury Department told off employers back in 2015: Lump-sum pension buyouts for retirees already in payout status are a no-no. In practice, employers stopped offering them, per Notice 2015-49, despite the fact that proposed and temporary rules never came out. Now, in a Trump-era twist, the Treasury Department has backtracked with Notice 2019-18, a retraction of intent to propose regulations on the topic: “Offering a Lump-Sum Payment Option to Retirees Currently Receiving Annuity Payments under a Defined Benefit Plan.”

It’s a backtrack in a big way, and it may reopen the door to the problematic lump-sum offers. “After all our efforts until 2017 to encourage lifetime income and help restore pensions to the private pension system, here is another step backward by the Trump Treasury,” says J. Mark Iwry, who was in charge of retirement policy at Treasury when the 2015 Notice came out.

The 2015 notice made clear that the government’s position was that offering lump sums to retirees in pay status was not intended to be permitted. “We were trying to protect older people from company efforts to get them to sell back their no-cost defined benefit pensions for the company’s financial reasons,” Iwry says.


The idea of an employer-sponsored defined benefit pension plan is that you (and your spouse) get guaranteed payouts for life. As the plans became a drag on corporate balance sheets, companies started shedding pension liabilities by offering participants the option of taking a lump-sum buyout (cash) or transferring their pension to an insurer who would continue the lifetime payments. For retirees who say yes to the lump-sum offers, it wipes out federal protections of ERISA and turns lifetime retirement income into a one-time chunk that can easily be outlived. Ford and GM were the first to offer lump-sum buyouts to retirees in payout status in 2012, with the blessing of IRS private letter rulings.

While the lump sum may seem like a windfall, it often shortchanges the retiree. That’s a problem because of complicated formulas including interest rates and mortality tables. Norman Stein, a professor at Drexel University, calculates that people lose 15% to 20% on average when taking the lump sum. Another problem is that a lot of the people getting lump-sum offers are elderly, who might be influenced by financial advisors eager to get advisory fees or by children in financial trouble who want access to mom or dad’s money. “Both of those are alarming!” Stein says.

YOU MAY ALSO LIKE
“This is really an awful move on the part of Treasury and the IRS,” says Karen Friedman, policy director of the Pension Rights Center. “We’re talking about retirees who are the most vulnerable.” Survivor benefits disappear along with the pension, hurting women disproportionately, she notes.

After the 2015 Notice, these lump-sum offers to retirees in payout mode stopped. Employers weren’t happy, as they hoped to continue the offers, and that’s what’s behind the new 2019 Notice. But their lobbyists didn’t get 100% of what they wanted, says Iwry. The Notice says the IRS will continue to study the issue of lump-sum windows. Companies would be well-advised to hold off and consider the risks.


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  #810  
Old 03-08-2019, 02:21 PM
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https://www.bloomberg.com/news/artic...ension-payouts

Quote:
U.S. Companies Get Green Light on Controversial Pension Payouts
By Lynnley Browning
March 7, 2019, 5:37 PM EST
Treasury blesses one-time lump sum payments to retirees
Relief for companies with underfunded defined benefit plans

Spoiler:
Companies are free to tackle their hefty pension obligations through a controversial method involving one-time, lump-sum payouts to retirees and beneficiaries, the Treasury Department says.

That could help companies like General Electric Co., now struggling with a nearly $30 billion shortfall in its defined-benefit pension plan.

The notice issued Wednesday says that the agency doesn’t plan to follow through on a 2015 pledge, made during the Obama administration, to formally outlaw the method. In the wake of that pledge, many companies had stopped offering retirees a one-time lump sum payment, and stuck instead to traditional monthly “annuity” payments.

The Treasury notice was largely a surprise, said Kevin O’Brien, a benefits and compensation lawyer at Ivins, Phillips & Barker. “Without question, yes, companies will do lump sum payments.” He called the notice “a very big deal.”

One-time payouts can reduce the “drag” that pension obligations have on a company’s balance sheet, as well as get rid of the extra premiums companies must pay to the government’s Pension Benefit Guaranty Corporation if they’re underfunded -- meaning that they don’t have enough money to pay current and future retirees.

Data compiled by Bloomberg found that in 2017, 186 of the 200 biggest defined-benefit plans in the S&P 500 based on assets weren’t fully funded to the tune of $382 billion.

The Obama administration opposed lump sum payments over concerns that some retirees might immediately spend their sudden windfall and have nothing left for the future. Still, it had allowed lump sum payouts to workers who were eligible for payouts but hadn’t yet reached a company’s set retirement age, and many companies took advantage of that, O’Brien said.

Because defined benefit plans are generally more expensive to operate, companies have sought to scale them back in favor of defined contribution plans like 401(k)s.

“It was a policy decision,” O’Brien said of the Obama-era restriction, adding that “the Trump administration has undone that.” He said that the Treasury notice will allow companies to tend to “the care of their dying pension plans.”


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