Issue Brief on Social Security Options to Aid the Elderly
The Social Security Committee released an issue brief in June that looks at options to change Social Security to address some of the concerns and financial needs of older Americans who live beyond their estimated life expectancy but lack adequate resources.
The issue brief notes that retirees’ lifespans have been increasing over the past few decades, resulting in older segments of the U.S. population increasing in both absolute numbers and as a percentage of the population. Policy changes—such as targeted benefit supplements, longevity benefit riders, and changes to the Social Security Retirement Age—could address some of the challenges.
Issue Brief Provides Perspective on 2016 Social Security Report
Soon after the Social Security Trustees issued its 2016 report in late June, the Academy’s Social Security Committee released an issue brief that examines the social insurance program’s long-term solvency issues. The issue brief recommends that Congress act soon to improve the long-term financial outlook of the program.
LEGISLATIVE AND REGULATORY
Intersector Group Releases Excerpt from September Meeting with Treasury, IRS
The Intersector Group released in September a meeting notes excerpt regarding Form 5500 clarifications from its September 2016 meeting with the Treasury Department and Internal Revenue Service.
Comments to Senate Aging Committee on Open Multiple Employer Plans
The Pension Committee submitted comments in September to U.S. Senate Special Committee on Aging Chairman Susan Collins that recommended adding a defined benefit multiple employer plan (MEP) option and an open defined retiree MEP design. The latter is a new concept designed to offer retirees the opportunity to roll over assets to a provider specializing in retiree solutions rather than leave defined contribution assets in their employer’s plan or roll assets into an IRA with all the attendant decision making.
Comments to PBGC on Mergers and Transfers
The Multiemployer Plans Subcommittee submitted a comment letter in August on the Pension Benefit Guaranty Corporation’s (PBGC) proposed rule on mergers and transfers between multiemployer plans. PBGC rules should focus on “promoting mergers and transfers between multiemployer plans that postpone projected insolvencies, increase benefit security for plan participants and beneficiaries, and reduce expected long-term losses for PBGC’s multiemployer program,” the letter stated.
Task Force Sends Comments to Labor Department
The Lifetime Income Risk Joint Task Force submitted a comment letter in August to the Department of Labor on proposals for increasing retiree income options, including creating additional safe harbors that encourage delivering lifetime income. Although current rules permit employers to provide retirees who participate in a defined contribution plan the option to either purchase income annuities or take a structured withdrawal program, employers rarely offer these options, partly out of concern about the additional fiduciary liability employers would assume by expanding plan options, the letter stated.
Comments on Improving Availability of IRS Actuaries to Profession
The Pension Committee submitted a comment letter in July to the IRS on its decision to limit pension actuaries’ ability to interact with IRS actuaries and other experienced employee benefits personnel. “U.S. retirement systems are exceedingly complex, and the ability of pension actuaries and the IRS to exchange timely, useful information is vital to the smooth operation of the systems,” the letter said.
PROFESSIONALISM
ASB Pension Task Force Report Released
The Actuarial Standards Board (ASB) released the report of its Pension Task Force (PTF), which began work nearly two years ago to review input from various sources on actuarial standards of practice (ASOPs) regarding public pension plans, for the purpose of developing suggestions for the ASB’s consideration.
The proposed modifications would be applicable to both public- and private-sector plans, and are part of an ongoing effort by the ASB to strengthen pension-related ASOPs. The details of the PTF’s suggestions, including its rationale for each suggestion as well as summaries of the input received through outreach to stakeholders, can be found in the report.
Second Exposure Draft on Proposed Risk ASOP
The Actuarial Standards Board (ASB) approved in June a second exposure draft of a proposed new actuarial standard of practice (ASOP), Assessment and Disclosure of Risk Associated with Measuring Pension Obligations and Determining Pension Plan Contributions. Key changes to the second exposure draft include expanding the scope of the proposed ASOP from applying only to actuaries when performing a funding valuation of a pension plan to applying also to actuaries when performing a pricing valuation of a proposed pension plan change that would, in the actuary’s professional judgment, significantly change the types or levels of risks of the pension plan. It also was updated to exclude actuarial services in connection with applications for benefit suspensions under the Multiemployer Pension Relief Act of 2014.
Third Exposure Draft on Proposed Modeling ASOP
The ASB also approved in June a third exposure draft of its Modeling ASOP. Key changes included: narrowing the scope but, within that scope, making the guidance less subject to professional judgment as to its applicability; clarifying the definitions for “model,” “data,” and “model run;” and clarifying guidance with respect to using models designed or built by others.
An op-ed in the Times-Herald (Vallejo, Calif.) that drew attention to the funding challenges facing the California Public Employees’ Retirement System (CalPERS) referenced a Pension Practice Council issue brief’s call for pension plans to have a strategy in place to attain or maintain a funded status of 100 percent or greater over a reasonable period of time.
UPCOMING
PBGC’s Reeder Keynotes Academy’s Annual Meeting and Public Policy Forum
Tom Reeder, director of the Pension Benefit Guaranty Corp. (PBGC), will be a keynote speaker at the Academy’s 2016 Annual Meeting and Public Policy Forum in Washington on Nov. 3-4. Held less than a week before Election Day, this two-day event will give you an opportunity to interact with policymakers and other stakeholders important to the profession, and an in-depth look at the top public policy issues facing the actuarial profession. For more information, click here.
If you have any questions, suggestions, or comments about Retirement Account, please contact Matthew Mulling, the Academy’s pension policy analyst, at Mulling@actuary.org .
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