REGULATORY MATTERS
Pension Committee Submits Comments on Late Premium Payment Relief
The Pension Committee submitted a comment letter in June to the Pension Benefit Guarantee Corporation (PBGC) expressing appreciation for proposed regulations providing a reduction or partial waiver of the penalty due upon the late payment of premiums to the single employer and multiemployer insurance programs. Reducing late-payment penalties will ease the financial burden on plan sponsors at a time when they have experienced significant increases in the amount of the annual premiums paid, the committee wrote.
Comments Submitted on 2017 Applicable Mortality Tables
The Pension Committee submitted a comment letter to the IRS and Treasury in June requesting that the 2017 Applicable Mortality Tables be issued as soon as possible. Because of the significance of changes to the statutory mortality tables and the resulting public-policy implications, the committee said it believed it was vital to allow sufficient time for review by the actuarial and plan sponsor community, and for evaluation of submitted comments and testimony by IRS and Treasury prior to issuing final regulations.
Intersector Group Releases March Meeting Notes with Treasury, IRS, PBGC
The Intersector Group released the notes of its March 2016 meeting with the Treasury Department and Internal Revenue Service, and the notes of its March 2016 meeting with the PBGC in June.
Pension Committee Submits Comments to IRS on Closed DB Plans
The Pension Committee submitted comments in April to the IRS regarding the proposed regulations for nondiscrimination relief for closed defined benefit (DB) plans. The proposed regulations would allow plans that were in compliance with the applicable nondiscrimination rules at the time they were closed to continue to provide benefit accruals to the participants in those plans for as long as possible, the letter states.
The proposed regulations will provide relief for some employers and help stem the trend toward fully freezing pension plans, the letter says, but notes that many plan sponsors will not be able to use the closed-plan rules for a variety of reasons. The committee suggests that the regulations need to go further in order be effective.
Committee Comments on Disclosure Requirements for DB Plans
The Pension Accounting Committee submitted comments in April to the Financial Accounting Standards Board on its exposure draft on changes to the disclosure requirements for defined benefit plans.
The exposure draft identifies seven disclosure requirements that could be removed from and five that would be added to Subtopic 715-20 of the exposure draft, Changes to the Disclosure Requirements for Defined Benefit Plan. Generally, the committee writes that “the amendments would result in improved decision-useful information” with one exception regarding the elimination of the accumulated benefit obligation disclosure.
Pension Practice Council Weighs In on Personal Discount Rates
The Pension Practice Council submitted comments in April to the Department of Defense expressing concerns regarding the use of a personal discount rate as the basis for converting certain monthly pension benefits to a one-time, lump sum payment that a pensioner could elect to receive.
The methodology, included in the National Defense Authorization Act for Fiscal Year 2016, could result in the use of higher discount rates than those used in private pensions, resulting in lower lump sum payments to the pensioner, according to the comments. Personal discount rates are not explicitly condoned by Actuarial Standards of Practice, according to the letter, and there are no generally accepted actuarial principles or practices for selecting or utilizing personal discount rates.
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