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  #541  
Old 08-02-2017, 04:46 PM
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INTERNATIONAL PAPER

https://www.ai-cio.com/news/internat...-contribution/

Quote:
International Paper to Make $1.25 Billion Pension Contribution
The move is part of a long-term de-risking program at the company.

International Paper said it will make a $1.25 billion voluntary contribution to its US tax-qualified defined benefit pension plan by Sept. 15, and is taking additional steps in the second half of 2017 to reduce risk related to the plan.

“We see this as a really important step … a series of steps since 2004 to mitigate what has become a real risk factor in our enterprise,” said Guillermo Gutierrez, International Paper’s vice president, investor relations, in a conference call with analysts. “We feel more confident that we’ve enabled the company to operate in a lower-risk mode while also addressing our balance sheet.”

The move continues a trend among companies to proactively boost funding to their pensions fund. According to Goldman Sachs Asset Management, 2016 was the strongest year for contributions to US corporate defined benefit plans since 2013, and it expects contributions to increase another 10% this year.

The company said it would issue debt to help raise the majority of the pension contribution. According to an SEC filing, the company priced $1.0 billion of 4.350% senior unsecured notes due 2048. The filing indicates that the company will use this issuance toward the pension boost.

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  #542  
Old 08-03-2017, 02:05 PM
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PBGC PROJECTIONS

https://www.pbgc.gov/sites/default/f...ce=govdelivery

I excerpted the MEP-related stuff here:
http://www.actuarialoutpost.com/actu...&postcount=326

I will excerpt some single-employer stuff here.

Quote:
New results for PBGC’s single-employer program are consistent with findings of the prior year’s report – the financial status of the program is likely to improve and reach a surplus net position within the next decade. Low claim levels in FY 2016, combined with recent increases in interest rates, cause the program to potentially reach net surplus several years earlier than previously projected.

.....
SINGLE-EMPLOYER PLANS The single-employer simulations show that improvements in the program’s net position remain likely during the coming decade. This year’s report shows a mean projected present value surplus of $9.6 billion for 2026, an increase of $7.0 billion from the prior report. There is significant variation around this mean outcome. We also project an earlier median date for the program to emerge from a net position deficit. This accelerates the trend seen in the past several reports.

This report incorporates various improvements to the model, the most notable being use of updated mortality tables. The single-employer results are detailed beginning on Page 29.
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  #543  
Old 08-07-2017, 06:07 PM
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http://fortune.com/2017/08/04/retire...ns-tax-reform/

Quote:
Huge Companies Are Giving Billion-Dollar Bumps to Their Retirement Plans. Here’s Why

The grocery store chain Kroger recently made a quiet, unceremonious announcement—with a big dollar figure attached. The chain stated it would add up to $1 billion to secure its underfunded pension plan.
That may sound like an unusually generous, staff-friendly move. But it actually has relatively little to do with Kroger’s employees. Among the reasons Kroger cited for the contribution was “potential future changes to the U.S. tax code.” To translate, Kroger is making the payment in part due to fear of future changes from Trump administration-backed tax reform, which could reduce how much the company saves from deducting what it spends on its pension plan.

Kroger isn’t alone in this thinking. The grocery chain joined the likes of Verizon, Delta Air Lines and FedEx, all of which have funded contributions of $1 billion or more to their pension or defined benefit plans this year. And as tax reform discussions move forward following the death of the healthcare reform bill, you can expect to see more such moves from large companies.

These moves should comfort the dwindling number of Americans who still have a vested private pension, since the extra funding will ensure the plans are on a healthier footing. For those who haven’t vested yet, there’s no guarantee that payments won’t slow down in the future, or that the company won’t eventually end or reduce its defined benefit plan payout. DuPont, for example, ended its pension contributions for active employees last year. That’s why, for almost all private-sector employees, it’s best to also have an individual retirement account that you control.

While other businesses haven’t been as explicit as Kroger about the reasons for their boosted pension payments, experts believe what’s driving some of this pension contribution surge is definitely “the anticipation of some potential tax reform,” according to Ari Jacobs, a senior partner at Aon Hewitt.

Here’s why: Each pension plan is insured by the federally run Pension Benefit Guaranty Corporation (PBGC). For underfunded plans, the PBGC requires that each company pay a certain premium each year, based on the amount that it’s underfunded. And that premium varies, depending on where it's set by Congress.
Since 2013, the variable amount that companies must pay has increased 278%, from $9 per $1,000 of unfunded vested benefits to $34 per $1,000. This adds a tremendous cost to companies. And they’re required to pay at least this every year, along with a separate, fixed-rate premium.
However, under current tax laws, the contributions to the plan are deductible at a 35% rate, so companies see significant tax savings—often in the millions—as a consolation for the growing premiums they have to pay.

But plans for reforming the tax code floated by President Trump and Republican leaders include shrinking the deductions corporations can take. If such deductions were cut from a 35% rate to 20%, for example, then it would be more profitable to capture the deduction today rather than wait. And companies know what the rate is today, while “2018 and beyond may be taxable under a different regime,” says Jacobs.
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  #544  
Old 08-07-2017, 06:09 PM
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GENERAL MOTORS

http://www.barrons.com/articles/gm-s...lem-1501704653

Quote:
GM Selling $3B in Bonds Related to Pension Problem
GM is issuing the new debt because it had to draw down its revolving loan to make a pension-related payment to PSA Groupe as part of their deal.

General Motors (GM) is issuing $3 billion in corporate debt Wednesday to address a pension-related problem.

When it sold its European subsidiary to PSA Groupe, a deal that closed Tuesday, it had to draw down its revolving credit line by $3.2 billion to make an extra payment that covered unfunded pensions.

It is a slight twist on the emerging trend of companies issuing debt to cover unfunded pensions, which Barron's covered recently (See, "Tackling a Pension Shortfall by Taking on Debt").

According to S&P's LCD News, the new issues are likely to trade with yields near 4.21% for the 2027 issue, 5.15% for the 2038 bonds, and 5.4% for the 2048 bonds.

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  #545  
Old 08-08-2017, 10:49 AM
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http://www.plansponsor.com/Equity-Re...Boost-in-July/

Quote:
Equity Returns Gave Pension Funding a Boost in July
Providers that track pension funding status note that interest rates could affect funding levels for the rest of this year.

The aggregate funded ratio for U.S. corporate pension plans increased by one percentage point to end the month of July at 84.3%, up 8.3 percentage points over the trailing twelve months, according to Wilshire Consulting.

Wilshire attributes this to a 1.3% increase in asset values, which was partially offset by a 0.3% increase in liability values. Year-to-date, the aggregate funded ratio is up 2.4 percentage points.

“July’s increase was driven by the increase in asset values resulting from positive returns for most asset classes as equity indices notched multiple record closes throughout the month,” says Ned McGuire, vice president and a member of the Pension Risk Solutions Group of Wilshire Consulting.

The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies also increased by 1% to 83% in July, as positive equity markets were offset by a decrease in discount rates, according to Mercer, a wholly owned subsidiary of Marsh & McLennan Companies. As of July 31, the estimated aggregate deficit of $404 billion represents a decrease of $12 billion as compared to the deficit measured at the end of June. The aggregate deficit is down $4 billion from the $408 billion measured at the end of 2016.

“Interest rates finally stopped their fall, allowing equity gains to drive a modest improvement in funded status,” says Matt McDaniel, a partner in Mercer’s Wealth business. “But rates remain depressed, and are still only 40 basis points above their 2016 lows. Rising rates would help funded status, plan sponsors will need a plan to capture these gains, or else they will continue to face significant risk.”

Legal & General Investment Management America (LGIMA) estimates that pension funding ratios increased 1.1% over the month of July, from 82.8% to 83.9%, with gains driven mainly by a strong month in the global equity markets and minimal changes to pension discount rates. LGIMA estimates Treasury rates increased 4 basis points while credit spreads tightened 6 basis points, resulting in the discount rate falling 2 basis points. Overall, liabilities for the average plan were up 0.6%, while plan assets with a traditional “60/40” asset allocation increased by 1.9%.
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  #546  
Old 08-08-2017, 10:51 AM
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MORTALITY

https://www.bloomberg.com/news/artic...tions-billions
Quote:
Americans Are Dying Younger, Saving Corporations Billions
Life expectancy gains have stalled. The grim silver lining? Lower pension costs

Steady improvements in American life expectancy have stalled, and more Americans are dying at younger ages. But for companies straining under the burden of their pension obligations, the distressing trend could have a grim upside: If people don’t end up living as long as they were projected to just a few years ago, their employers ultimately won’t have to pay them as much in pension and other lifelong retirement benefits.

In 2015, the American death rate—the age-adjusted share of Americans dying—rose slightly for the first time since 1999. And over the last two years, at least 12 large companies, from Verizon to General Motors, have said recent slips in mortality improvement have led them to reduce their estimates for how much they could owe retirees by upward of a combined $9.7 billion, according to a Bloomberg analysis of company filings. “Revised assumptions indicating a shortened longevity,” for instance, led Lockheed Martin to adjust its estimated retirement obligations downward by a total of about $1.6 billion for 2015 and 2016, it said in its most recent annual report.

Mortality trends are only a small piece of the calculation companies make when estimating what they’ll owe retirees, and indeed, other factors actually led Lockheed’s pension obligations to rise last year. Variables such as asset returns, salary levels, and health care costs can cause big swings in what companies expect to pay retirees. The fact that people are dying slightly younger won't cure corporate America’s pension woes—but the fact that companies are taking it into account shows just how serious the shift in America’s mortality trends is.


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  #547  
Old 08-09-2017, 02:49 PM
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VALVOLINE

https://www.ai-cio.com/news/valvolin...-contribution/

Quote:
Valvoline to Make $400 Million Pension Contribution

Valvoline, a producer of automotive, commercial, and industrial lubricants, said it will make a voluntary $400 million contribution to its US qualified pension, which it plans to fund through a senior notes offering.

“Valvoline is taking action to reduce risk and long-term volatility of its underfunded pension obligations,” said the company in its 8-K SEC filing reporting its Q3 results.

“A contribution at this time is a strategic opportunity based on the current interest rate environment, scheduled Pension Benefit Guaranty Corporation (PBGC) premium rate increases, and potential future changes to the US tax code,” said the company.

It also said that the savings related to lower PBGC premiums makes the pension contribution “net-present value positive.”

In order to raise the money to fund its pension, Valvoline launched an offering of $400 million aggregate principal amount of 4.375% senior notes due 2025. The offering is expected to close Aug. 8.

“Overall, the amount of balance sheet obligations will not change,” said the company regarding its raising of debt for the pensions contribution.

Valvoline joins a growing list of companies that have made large voluntary contributions to their pensions plans in 2017, including Verizon, Delta Air Lines, FedEx, International Paper, DuPont, Sears, and Kroger.


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  #548  
Old 08-17-2017, 04:10 PM
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ROYAL MAIL
UNITED KINGDOM

https://www.professionalpensions.com...-strike-ballot

Quote:
Ticking bomb for Royal Mail as CWU sets deadline before holding strike ballot

The Communication Workers Union (CWU) has told Royal Mail it must make significant progress in resolving its pensions dispute by 6 September to avoid industrial action.
The "pragmatic" deadline, which has been extended from 15 August, has been imposed to enable the union and Royal Mail to have more time to discuss and reach an agreement on future pension provision.

The postal firm is battling with members to close its defined benefit (DB) scheme to future accrual next April and replace it with a "cash balance" scheme. The arrangement would see members receive a guaranteed lump-sum payment at retirement, based on total contributions of 19.6%, which would also increase depending on investment performance.

Royal Mail said the move is needed as it estimates the current 3.8bn surplus will be swallowed up by increased running costs, leading to contributions surging from 17% of pensionable pay to 50%.

.....
The company's proposal is in response to a risk-sharing scheme suggested by the CWU, where the DB and defined contribution (DC) schemes would be merged, with all 132,000 members receiving a guaranteed wage in retirement. This could then be uplifted in line with inflation depending on investment performance.

A Royal Mail spokesperson said it was "committed" to finding a resolution with the CWU but there are "no grounds" for industrial action.

"Any potential ballot in the future does not mean there will be industrial action. Industrial action - or the threat of it - undermines the trust of our customers," they said. "We are committed to providing our customers with the high quality service they expect from Royal Mail.

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  #549  
Old Yesterday, 10:37 AM
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ST. JOSEPH HEALTH SERVICES

https://img.yle.fi/uutiset/osasto/ne...pensions01.png

Quote:
Receiver: St. Joseph Pension Bankruptcy Will Impact As Many as 3,800, 40% Cuts to Benefits

The bankruptcy of St. Joseph Health Services pension fund will hit between 3,600 and 3,800 existing or future pensioners — and the loss of pension payments may be 40 percent, according to the court appointed receiver Steven Del Sesto, a partner at Donoghue Barrett & Singal. But, DelSesto said the plan for winding down the pension fund is only in the preliminary phase.
The loss of benefits and the total number of beneficiaries impacted may both be records for Rhode Island. The now pending plan before the court, the draft documents would treat all existing and future retirees the same and both classes would take a 40 percent cut to their existing and future benefits, according to court documents. That plan is not final said DelSesto in an interview with GoLocal on Friday afternoon.

Del Sesto was appointed by the court late Thursday afternoon and is yet to talk to many of the players in the collapse. He is scheduled to talk to the Attorney General’s office on Monday.

Questions Emerging About Attorney General's Review

Serious questions are emerging about how complete and vigorous was Attorney General Peter Kilmartin’s review of the sale during the Hospital Conversion Act review of the sale of St. Joseph Health Services to CharterCARE in 2014.

As part of the review of that deal, Kilmartin, as Attorney General, had the responsibility to review and approve the financial viability of the transaction. The Hospital Conversion law is very specific to the responsibilities of Kilmartin and his office, “the department of attorney general [is] to preserve and protect public and charitable assets in reviewing both hospital conversions which involve for-profit corporations and hospital conversions which include only not-for-profit corporations.”

Relative to the 2014 acquisition of St. Joseph, Kilmartin’s only requirement relative to the pension fund was a stipulation that CharterCARE make a $14 million contribution to the pension fund.

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