RECENT ACTIVITIES
Comments on Projection of Cash Balance Plan Benefits to IRS and Treasury
The Pension Committee submitted a comment letter to the IRS and the Treasury Department in May on the projection of benefits under cash balance plans with variable interest credits. The letter states that additional guidance is needed, and that “clear and workable rules will encourage the sponsors of such plans to retain them and may lead to the creation of new cash balance plans, potentially affecting retirement benefits and providing access to lifetime income options for millions of Americans.”
PPC Letter to Congress on Pension-Related Revenue Offsets
The Pension Practice Council (PPC) sent a letter to congressional leaders in April that cites concerns about recent legislation scored by the Congressional Budget Office that uses revenue raised from the private-sector pension system to offset unrelated spending increases. Pension Benefit Guaranty Corporation (PBGC) premiums are deposited into on-budget revolving funds, and the receipt of these premiums is now counted as revenue without any offset for the payment of benefits that will be provided by those premiums, the letter states.
The PPC proposes excluding premiums in the scoring process to more appropriately align with the administration and practical operation of the PBGC.
PC Comment Letter on Mortality Tables
The Pension Committee submitted a comment letter to the IRS in late March on its proposed regulations to update mortality tables for determining present values for defined benefit pension plans.
The committee offered several suggestions on substitute mortality tables to enhance clarity and understanding, as well as comments on additional simplifications, automatic approvals, credibility thresholds, treatment of subpopulations, collar adjustments, and aggregation of male and female experience. The letter also addressed the basic table, construction of §417(e) tables, challenges for large multiple-employer plans and a suggestion for multiemployer plans.
Subcommittee Notes from Meeting With Treasury, Labor, and PBGC
In late March, the Multiemployer Plans Subcommittee released notes from its February meeting with officials of the Treasury and Labor departments and the PBGC that related to applications by multiemployer pension plans in critical and declining status to suspend benefits or partition liabilities.
The discussion focused on actuarial assumptions, plan sponsor considerations, the review process, and informal consultation. For applications to suspend benefits or partition liabilities, federal officials said Treasury has ultimate authority over their reviews but the department will consult with PBGC and Labor during the review process.
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