Comments on Regulatory and Reporting Proposals
In an Oct. 2 letter to Moody’s Investors Services, the Pension Practice Council commented on Moody’s proposal to adjust the pension liability and cost information reported by state and local governments and their pension plans. “The appropriate measures of pension obligations depend on the purpose of the measurement,” the council wrote. “The reported actuarial results under GASB’s standards are not necessarily appropriate as a basis for other purposes, such as Moody’s comparing pensions and other incurred debt.”
In comments submitted on Oct. 1 to the Financial Accounting Standards Board, the Pension Accounting Committee expressed concern about the inclusion of obligations for pension and other postretirement and postemployment benefit plans within the proposed accounting standards update, Financial Instruments (Topic 825) — Disclosures about Liquidity Risk and Interest Rate Risk. The substantive differences between employee benefit plans and other financial instruments make it inappropriate to include both within a single disclosure standard, the committee wrote.
The Pension Practice Council identified a number of issues with the Assessment and Disclosure of Risk Associated with Pension Obligations, Plan Costs, and Plan Contributions discussion draft, which was released by the Actuarial Standards Board (ASB) in June 2012. The council outlined its concerns in an Oct. 1 letter to ASB’s Pension Committee.
The Pension Committee commented on proposed regulations concerning the prohibited payment option under single-employer defined benefit plans when a plan sponsor is in bankruptcy in an Aug. 20 letter to the Internal Revenue Service (IRS).
Academy Reps Meet with Treasury
Senior Pension Fellow Don Fuerst and members of the Pension Committee met with Treasury Department officials on July 23 to provide actuarial insight on regulatory issues related to the pension funding provisions in the Moving Ahead for Progress in the 21st Century Act (MAP-21) legislation, which was enacted on July 6. The Pension Committee followed up the meeting with a letter on Aug. 2 urging the Treasury to implement the MAP-21 pension provisions quickly.
Map-21 Guidance and Rates Released
The IRS issued a notice on Aug. 16 announcing new 25-year average segment rates and adjusted 24-month average segment rates used for pension funding. Notice 2012-55 provides guidance on the new rate structures used to compute the funding target and other items under Section 430 of the tax code and Section 303 of ERISA. The guidance reflects the changes made to the tax code and ERISA by MAP-21. The IRS on Sept. 11 released guidance on the special rules relating these provisions. |