SlideShare a Scribd company logo
Managing A Frozen Pension Plan Should  Your Strategy Change? Presented by Heath Merlak, Actuary www.nyhart.com Copyright 2011. All Rights Reserved.
Heath Merlak Actuary heath.merlak@nyhart.com | (618) 606-4906 Qualifications or certifications:Fellow of the Society of Actuaries, a Fellow of the Conference of Consulting Actuaries, and is an Enrolled Actuary    
Today’s Discussion How did we get here? Frozen Plans Are Still Active Plan Termination Considerations for Frozen Plans Strategies and Steps to Managing a Frozen Pension Plan 3
Several factors are driving plan sponsors to close or freeze their pension plans Shift from long-term to short-term outlook for determining pension costs Capital markets have been volatile Resulting contribution requirements and balance sheet impacts have been volatile  4
Frozen Plans Are Still Active Although frozen, all the requirements to manage the plan remain Minimum required contributions  ASC 715 expense and disclosure Administration of the plan Most importantly, the majority of the pension risk still remains with the plan sponsor 5
Plan Termination Considerations 2
What’s Our Goal for Our Frozen Pension Plan? Maintain the plan and limit “noise” to our business Maintain the plan and target plan termination only if required funding and asset performance result in minimal cash outlay to terminate the plan (“Wait & See”) Develop strategy to terminate the plan within a stated period of time                                                                                                            7
Maintain the Plan Plan sponsors may choose to maintain the plan indefinitely for reasons that may include: Belief they can provide benefits at a lower cost than purchasing annuities and manage the associated risks Funding shortfall is too great to consider terminating the plan within the next 5 years Suspect participant data making plan termination too difficult 8
Steps to consider for maintaining a frozen plan Cost projections and sensitivity testing Determine expected required contributions Assess sensitivity of results to asset performance & interest rates Identify if settlement accounting will apply          Assess strategies to lower risk Consider changing asset allocation as plan becomes better funded Add lump sum feature to the plan Review annuity purchase opportunities Administrative and compliance review 9
Wait & See Plan sponsors may target plan termination but allow the funding rules to naturally get them to fully funded over several years In this situation you will want to reviewsteps outlined on prior page and… 10
….in addition, you should Conduct feasibility review Monitor progress more frequently than annually Review of investments  Review plan document and participant data Determine strategy for settling obligations Assess strategies to lower risk and ease pain of plan termination Annuity buy-in and buy out Lump sum feature                                                                                                       11
Develop Strategy to Terminate the Plan Within Specified Timeframe Plan sponsors may target plan termination aggressively setting goals for plan termination  In most cases, this will be accomplished through normal contributions plus additional amounts needed to fully fund the plan upon termination                                12
Develop Strategy to Terminate the Plan Within Specified Timeframe The steps outlined previously apply in this situation along with the following: Feasibility review Coordinate with asset advisors Identify short-term implications Get buy-in from senior leadership, Board, etc. Begin thorough participant data review immediately Monitor funded status at least quarterly 13
Any Questions? This concludes our discussion
Looking for more benefit presentations? So Where is the Peak? Register for upcoming educational events on pensions, 401(k), healthcare and other actuarial and employee benefits topics at: www.nyhart.com/events/
ACTUARY 	        & EMPLOYEE BENEFITS 16 Actuaries Consulting In 48 States. Nyhart is one of the nation’s largest independent actuarial and employee benefit firms, consulting to and administering the plans for clients with more than $14 billion in assets. Our team of benefit advisers deliver personalized analysis and recommendations, translating complex calculations and issues into common language that enables corporations, associations, churches and governments to effectively manage their retirement and health care benefits.
ACTUARY 	        & EMPLOYEE BENEFITS Established in 1943, Nyhart is an ESOP with 84 employees and offices in Indianapolis, Chicago, Atlanta and Kansas City.  Areas of Expertise Include: ,[object Object]
 Defined Benefit & Pension

More Related Content

What's hot

5 t rowe price target date evaluation framework
5 t rowe price target date evaluation framework5 t rowe price target date evaluation framework
5 t rowe price target date evaluation framework123jumpad
 
B2B Webinar January 2011
B2B Webinar January 2011B2B Webinar January 2011
B2B Webinar January 2011dlinehan2
 
Considering MEPs and METs - Brian Nicholson
Considering MEPs and METs - Brian NicholsonConsidering MEPs and METs - Brian Nicholson
Considering MEPs and METs - Brian NicholsonBPAS
 
Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues
Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues
Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues The 401k Study Group ®
 
Concepts of NPA( Non Performing Asset)
Concepts of NPA( Non Performing Asset)Concepts of NPA( Non Performing Asset)
Concepts of NPA( Non Performing Asset)TUSHAR RANJAN BARIK
 
Current Pension Risk Management Strategies
Current Pension Risk Management StrategiesCurrent Pension Risk Management Strategies
Current Pension Risk Management StrategiesCarol Buckmann
 
Open Architecture Target-Date
Open Architecture Target-DateOpen Architecture Target-Date
Open Architecture Target-DateRichard Davies
 
IDFC Sterling Value Fund_One pager
IDFC Sterling Value Fund_One pagerIDFC Sterling Value Fund_One pager
IDFC Sterling Value Fund_One pagerIDFCJUBI
 
Just Invest w Nollette
Just Invest w NolletteJust Invest w Nollette
Just Invest w Nollettesnollette
 
3A - Pensions valuation - Kevin Barnes and Richard Soldan
3A - Pensions valuation - Kevin Barnes and Richard Soldan3A - Pensions valuation - Kevin Barnes and Richard Soldan
3A - Pensions valuation - Kevin Barnes and Richard SoldanCFG
 
Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...
Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...
Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...Sagar Garg
 
4A - Accounting update - Pesh Framjee and Ray Jones
4A - Accounting update - Pesh Framjee and Ray Jones4A - Accounting update - Pesh Framjee and Ray Jones
4A - Accounting update - Pesh Framjee and Ray JonesCFG
 
Re enroll - copy
Re enroll - copyRe enroll - copy
Re enroll - copyjtort36
 
Retirement Annuity Accounts (RAAs)
Retirement Annuity Accounts (RAAs)Retirement Annuity Accounts (RAAs)
Retirement Annuity Accounts (RAAs)Lauren Eisdorfer
 
Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...
Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...
Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...BPAS
 
5A - Writing your charity's investment policy - Kate Rogers and Jane Tully
5A - Writing your charity's investment policy - Kate Rogers and Jane Tully5A - Writing your charity's investment policy - Kate Rogers and Jane Tully
5A - Writing your charity's investment policy - Kate Rogers and Jane TullyCFG
 

What's hot (20)

5 t rowe price target date evaluation framework
5 t rowe price target date evaluation framework5 t rowe price target date evaluation framework
5 t rowe price target date evaluation framework
 
New York Direct 529 Plan Updates
New York Direct 529 Plan UpdatesNew York Direct 529 Plan Updates
New York Direct 529 Plan Updates
 
B2B Webinar January 2011
B2B Webinar January 2011B2B Webinar January 2011
B2B Webinar January 2011
 
Considering MEPs and METs - Brian Nicholson
Considering MEPs and METs - Brian NicholsonConsidering MEPs and METs - Brian Nicholson
Considering MEPs and METs - Brian Nicholson
 
08 ratio
08 ratio08 ratio
08 ratio
 
Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues
Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues
Institutionalizing DC Plans | A Starting Point for Addressing Fiduciary Issues
 
Concepts of NPA( Non Performing Asset)
Concepts of NPA( Non Performing Asset)Concepts of NPA( Non Performing Asset)
Concepts of NPA( Non Performing Asset)
 
Business finance final
Business finance finalBusiness finance final
Business finance final
 
Current Pension Risk Management Strategies
Current Pension Risk Management StrategiesCurrent Pension Risk Management Strategies
Current Pension Risk Management Strategies
 
Open Architecture Target-Date
Open Architecture Target-DateOpen Architecture Target-Date
Open Architecture Target-Date
 
IDFC Sterling Value Fund_One pager
IDFC Sterling Value Fund_One pagerIDFC Sterling Value Fund_One pager
IDFC Sterling Value Fund_One pager
 
Just Invest w Nollette
Just Invest w NolletteJust Invest w Nollette
Just Invest w Nollette
 
3A - Pensions valuation - Kevin Barnes and Richard Soldan
3A - Pensions valuation - Kevin Barnes and Richard Soldan3A - Pensions valuation - Kevin Barnes and Richard Soldan
3A - Pensions valuation - Kevin Barnes and Richard Soldan
 
Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...
Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...
Stakeholders of Projects, Project life Cycle, Product vs Production, Feasibil...
 
4A - Accounting update - Pesh Framjee and Ray Jones
4A - Accounting update - Pesh Framjee and Ray Jones4A - Accounting update - Pesh Framjee and Ray Jones
4A - Accounting update - Pesh Framjee and Ray Jones
 
Re enroll - copy
Re enroll - copyRe enroll - copy
Re enroll - copy
 
Retirement Annuity Accounts (RAAs)
Retirement Annuity Accounts (RAAs)Retirement Annuity Accounts (RAAs)
Retirement Annuity Accounts (RAAs)
 
Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...
Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...
Fee Policy Statement Kit: Best Practices for Managing Plan Expenses - Brian B...
 
5A - Writing your charity's investment policy - Kate Rogers and Jane Tully
5A - Writing your charity's investment policy - Kate Rogers and Jane Tully5A - Writing your charity's investment policy - Kate Rogers and Jane Tully
5A - Writing your charity's investment policy - Kate Rogers and Jane Tully
 
Client Case Study
Client Case StudyClient Case Study
Client Case Study
 

Viewers also liked

Optimising processes to minimise administration
Optimising processes to minimise administration Optimising processes to minimise administration
Optimising processes to minimise administration NowPensions
 
Digital Strategies for Employee Engagement
Digital Strategies for Employee EngagementDigital Strategies for Employee Engagement
Digital Strategies for Employee EngagementStephan Schillerwein
 
Redefining the swedish national pension portal (Minpension.se)
Redefining the swedish national pension portal (Minpension.se)Redefining the swedish national pension portal (Minpension.se)
Redefining the swedish national pension portal (Minpension.se)Patrik Malmquist
 
Service Delivery - Pension Sector
Service Delivery - Pension SectorService Delivery - Pension Sector
Service Delivery - Pension SectorMuibat Ijaiya
 
Pension review checklist
Pension review checklistPension review checklist
Pension review checklistAvantis Wealth
 
What will be the impact of the end of AE contrivbution phasing?
What will be the impact of the end of AE contrivbution phasing?What will be the impact of the end of AE contrivbution phasing?
What will be the impact of the end of AE contrivbution phasing?Henry Tapper
 
Webinar slides - Strategies for pensions & estate planning
Webinar slides - Strategies for pensions & estate planningWebinar slides - Strategies for pensions & estate planning
Webinar slides - Strategies for pensions & estate planningThe SMSF Academy Pty Ltd
 
DB Transfers - Seizing the opportunity
DB Transfers - Seizing the opportunityDB Transfers - Seizing the opportunity
DB Transfers - Seizing the opportunityHenry Tapper
 

Viewers also liked (9)

Optimising processes to minimise administration
Optimising processes to minimise administration Optimising processes to minimise administration
Optimising processes to minimise administration
 
CIPP AAP pensionsync
CIPP AAP pensionsyncCIPP AAP pensionsync
CIPP AAP pensionsync
 
Digital Strategies for Employee Engagement
Digital Strategies for Employee EngagementDigital Strategies for Employee Engagement
Digital Strategies for Employee Engagement
 
Redefining the swedish national pension portal (Minpension.se)
Redefining the swedish national pension portal (Minpension.se)Redefining the swedish national pension portal (Minpension.se)
Redefining the swedish national pension portal (Minpension.se)
 
Service Delivery - Pension Sector
Service Delivery - Pension SectorService Delivery - Pension Sector
Service Delivery - Pension Sector
 
Pension review checklist
Pension review checklistPension review checklist
Pension review checklist
 
What will be the impact of the end of AE contrivbution phasing?
What will be the impact of the end of AE contrivbution phasing?What will be the impact of the end of AE contrivbution phasing?
What will be the impact of the end of AE contrivbution phasing?
 
Webinar slides - Strategies for pensions & estate planning
Webinar slides - Strategies for pensions & estate planningWebinar slides - Strategies for pensions & estate planning
Webinar slides - Strategies for pensions & estate planning
 
DB Transfers - Seizing the opportunity
DB Transfers - Seizing the opportunityDB Transfers - Seizing the opportunity
DB Transfers - Seizing the opportunity
 

Similar to Managing a Frozen Pension Plan

Comprehensive Financial Plan
Comprehensive Financial PlanComprehensive Financial Plan
Comprehensive Financial PlanChris Precourt
 
Financial planning & forecasting
Financial planning & forecastingFinancial planning & forecasting
Financial planning & forecastingDavid thugu
 
2015-06-09 Four Steps to Successful Retirement Plan Management
2015-06-09 Four Steps to Successful Retirement Plan Management2015-06-09 Four Steps to Successful Retirement Plan Management
2015-06-09 Four Steps to Successful Retirement Plan ManagementRaffa Learning Community
 
Slide summary: Disclosure of dividends - policy and practice
Slide summary: Disclosure of dividends - policy and practiceSlide summary: Disclosure of dividends - policy and practice
Slide summary: Disclosure of dividends - policy and practiceThomas Toomse-Smith
 
Hiring the Right Auditor for your Benefit Plan
Hiring the Right Auditor for your Benefit PlanHiring the Right Auditor for your Benefit Plan
Hiring the Right Auditor for your Benefit PlanClark Schaefer Hackett
 
Risks and resileince May seminar slides.PPTX
Risks and resileince May seminar slides.PPTXRisks and resileince May seminar slides.PPTX
Risks and resileince May seminar slides.PPTXFelixPerez547899
 
Financial goals and performa statement
Financial goals and performa statementFinancial goals and performa statement
Financial goals and performa statementSoniya Bhasin
 
The Ins and Outs of Planned Gift Accounting
The Ins and Outs of Planned Gift AccountingThe Ins and Outs of Planned Gift Accounting
The Ins and Outs of Planned Gift AccountingBlackbaud
 
University of rizal system2
University of rizal system2University of rizal system2
University of rizal system2Imee Limos
 
Capital Budgeting PPT.pptx
Capital Budgeting PPT.pptxCapital Budgeting PPT.pptx
Capital Budgeting PPT.pptxadnankhan765563
 
Sample deck august 2012
Sample deck august 2012Sample deck august 2012
Sample deck august 2012John Wood
 
Chapter17 judgmentalbehavioural
Chapter17 judgmentalbehaviouralChapter17 judgmentalbehavioural
Chapter17 judgmentalbehaviouralAKSHAYA0000
 
Grading the Pensions Protection Act, 10 Years Later
Grading the Pensions Protection Act, 10 Years LaterGrading the Pensions Protection Act, 10 Years Later
Grading the Pensions Protection Act, 10 Years LaterCallan
 
What is a 'financial planning' Means ?
What is a 'financial planning' Means ?What is a 'financial planning' Means ?
What is a 'financial planning' Means ?Mohammed Sroor . AAT
 

Similar to Managing a Frozen Pension Plan (20)

Comprehensive Financial Plan
Comprehensive Financial PlanComprehensive Financial Plan
Comprehensive Financial Plan
 
Comprehensive plan
Comprehensive planComprehensive plan
Comprehensive plan
 
Financial planning & forecasting
Financial planning & forecastingFinancial planning & forecasting
Financial planning & forecasting
 
2015-06-09 Four Steps to Successful Retirement Plan Management
2015-06-09 Four Steps to Successful Retirement Plan Management2015-06-09 Four Steps to Successful Retirement Plan Management
2015-06-09 Four Steps to Successful Retirement Plan Management
 
Slide summary: Disclosure of dividends - policy and practice
Slide summary: Disclosure of dividends - policy and practiceSlide summary: Disclosure of dividends - policy and practice
Slide summary: Disclosure of dividends - policy and practice
 
Hiring the Right Auditor for your Benefit Plan
Hiring the Right Auditor for your Benefit PlanHiring the Right Auditor for your Benefit Plan
Hiring the Right Auditor for your Benefit Plan
 
Risks and resileince May seminar slides.PPTX
Risks and resileince May seminar slides.PPTXRisks and resileince May seminar slides.PPTX
Risks and resileince May seminar slides.PPTX
 
Financial goals and performa statement
Financial goals and performa statementFinancial goals and performa statement
Financial goals and performa statement
 
Buyer's Guide
Buyer's GuideBuyer's Guide
Buyer's Guide
 
A Financial Advisors Guide to Cash Balance Retirement Plans
A Financial Advisors Guide to Cash Balance Retirement PlansA Financial Advisors Guide to Cash Balance Retirement Plans
A Financial Advisors Guide to Cash Balance Retirement Plans
 
26846 BPR TRUST
26846 BPR TRUST26846 BPR TRUST
26846 BPR TRUST
 
The Ins and Outs of Planned Gift Accounting
The Ins and Outs of Planned Gift AccountingThe Ins and Outs of Planned Gift Accounting
The Ins and Outs of Planned Gift Accounting
 
University of rizal system2
University of rizal system2University of rizal system2
University of rizal system2
 
Capital Budgeting PPT.pptx
Capital Budgeting PPT.pptxCapital Budgeting PPT.pptx
Capital Budgeting PPT.pptx
 
Sample deck august 2012
Sample deck august 2012Sample deck august 2012
Sample deck august 2012
 
Financial Tips for Survival
Financial Tips for SurvivalFinancial Tips for Survival
Financial Tips for Survival
 
Chapter17 judgmentalbehavioural
Chapter17 judgmentalbehaviouralChapter17 judgmentalbehavioural
Chapter17 judgmentalbehavioural
 
Leveraged Planning Solutions
Leveraged Planning SolutionsLeveraged Planning Solutions
Leveraged Planning Solutions
 
Grading the Pensions Protection Act, 10 Years Later
Grading the Pensions Protection Act, 10 Years LaterGrading the Pensions Protection Act, 10 Years Later
Grading the Pensions Protection Act, 10 Years Later
 
What is a 'financial planning' Means ?
What is a 'financial planning' Means ?What is a 'financial planning' Means ?
What is a 'financial planning' Means ?
 

More from Nyhart Actuary & Employee Benefit Consultancy (7)

The Hidden Costs to Participants of High-Fee Funds In Your Portfolio
The Hidden Costs to Participants of High-Fee Funds In Your PortfolioThe Hidden Costs to Participants of High-Fee Funds In Your Portfolio
The Hidden Costs to Participants of High-Fee Funds In Your Portfolio
 
Liability Driven Investing to Achieve Better Pension Returns
Liability Driven Investing to Achieve Better Pension ReturnsLiability Driven Investing to Achieve Better Pension Returns
Liability Driven Investing to Achieve Better Pension Returns
 
10 Questions to ask your 401(k) or 403(b) Vendor To Get Fee Transparency
10 Questions to ask your 401(k) or 403(b) Vendor To Get Fee Transparency10 Questions to ask your 401(k) or 403(b) Vendor To Get Fee Transparency
10 Questions to ask your 401(k) or 403(b) Vendor To Get Fee Transparency
 
Healthcare Benefit Cost Strategies for 2012
Healthcare Benefit Cost Strategies for 2012Healthcare Benefit Cost Strategies for 2012
Healthcare Benefit Cost Strategies for 2012
 
Comparing Healthcare Benefits in Indiana
Comparing Healthcare Benefits in IndianaComparing Healthcare Benefits in Indiana
Comparing Healthcare Benefits in Indiana
 
The Impact of IRS Regulation 408(b)(2) & Your 401(k)
The Impact of IRS Regulation 408(b)(2) & Your 401(k)The Impact of IRS Regulation 408(b)(2) & Your 401(k)
The Impact of IRS Regulation 408(b)(2) & Your 401(k)
 
High Pension Costs: When and Where is the Peak
High Pension Costs: When and Where is the PeakHigh Pension Costs: When and Where is the Peak
High Pension Costs: When and Where is the Peak
 

Recently uploaded

Introduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdfIntroduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdfSafa444074
 
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad, Mandi Bah...
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad,  Mandi Bah...NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad,  Mandi Bah...
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad, Mandi Bah...Amil Baba Dawood bangali
 
Proposer Builder Separation Problem in Ethereum
Proposer Builder Separation Problem in EthereumProposer Builder Separation Problem in Ethereum
Proposer Builder Separation Problem in EthereumRasoulRamezanian1
 
Falcon Invoice Discounting: Optimizing Returns with Minimal Risk
Falcon Invoice Discounting: Optimizing Returns with Minimal RiskFalcon Invoice Discounting: Optimizing Returns with Minimal Risk
Falcon Invoice Discounting: Optimizing Returns with Minimal RiskFalcon Invoice Discounting
 
how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.DOT TECH
 
Summary of financial results for 1Q2024
Summary of financial  results for 1Q2024Summary of financial  results for 1Q2024
Summary of financial results for 1Q2024InterCars
 
how can I sell my locked pi coins safety.
how can I sell my locked pi coins safety.how can I sell my locked pi coins safety.
how can I sell my locked pi coins safety.DOT TECH
 
The new type of smart, sustainable entrepreneurship and the next day | Europe...
The new type of smart, sustainable entrepreneurship and the next day | Europe...The new type of smart, sustainable entrepreneurship and the next day | Europe...
The new type of smart, sustainable entrepreneurship and the next day | Europe...Antonis Zairis
 
where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)DOT TECH
 
how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.DOT TECH
 
is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024DOT TECH
 
9th issue of our inhouse magazine Ingenious May 2024.pdf
9th issue of our inhouse magazine Ingenious May 2024.pdf9th issue of our inhouse magazine Ingenious May 2024.pdf
9th issue of our inhouse magazine Ingenious May 2024.pdfAnkur Shah
 
How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.DOT TECH
 
Can a Pi network coin ever be sold out: I am ready to sell mine.
Can a Pi network coin ever be sold out: I am ready to sell mine.Can a Pi network coin ever be sold out: I am ready to sell mine.
Can a Pi network coin ever be sold out: I am ready to sell mine.DOT TECH
 
how can I send my pi coins to Binance exchange
how can I send my pi coins to Binance exchangehow can I send my pi coins to Binance exchange
how can I send my pi coins to Binance exchangeDOT TECH
 
Next Cryptocurrencies to Explode in 2024.pdf
Next Cryptocurrencies to Explode in 2024.pdfNext Cryptocurrencies to Explode in 2024.pdf
Next Cryptocurrencies to Explode in 2024.pdfKezex (KZX)
 
一比一原版UO毕业证渥太华大学毕业证成绩单如何办理
一比一原版UO毕业证渥太华大学毕业证成绩单如何办理一比一原版UO毕业证渥太华大学毕业证成绩单如何办理
一比一原版UO毕业证渥太华大学毕业证成绩单如何办理yonemuk
 
Digital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners BrochureDigital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners BrochureFinTech Belgium
 
Jio Financial service Multibagger 2024 from India stock Market
Jio Financial service  Multibagger 2024 from India stock MarketJio Financial service  Multibagger 2024 from India stock Market
Jio Financial service Multibagger 2024 from India stock Marketfuturecapsadvisor
 
The Advantages of Choosing Falcon Invoice Discounting
The Advantages of Choosing Falcon Invoice DiscountingThe Advantages of Choosing Falcon Invoice Discounting
The Advantages of Choosing Falcon Invoice DiscountingFalcon Invoice Discounting
 

Recently uploaded (20)

Introduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdfIntroduction to Economics II Chapter 28 Unemployment (1).pdf
Introduction to Economics II Chapter 28 Unemployment (1).pdf
 
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad, Mandi Bah...
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad,  Mandi Bah...NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad,  Mandi Bah...
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad, Mandi Bah...
 
Proposer Builder Separation Problem in Ethereum
Proposer Builder Separation Problem in EthereumProposer Builder Separation Problem in Ethereum
Proposer Builder Separation Problem in Ethereum
 
Falcon Invoice Discounting: Optimizing Returns with Minimal Risk
Falcon Invoice Discounting: Optimizing Returns with Minimal RiskFalcon Invoice Discounting: Optimizing Returns with Minimal Risk
Falcon Invoice Discounting: Optimizing Returns with Minimal Risk
 
how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.how can i trade pi coins for Bitcoin easily.
how can i trade pi coins for Bitcoin easily.
 
Summary of financial results for 1Q2024
Summary of financial  results for 1Q2024Summary of financial  results for 1Q2024
Summary of financial results for 1Q2024
 
how can I sell my locked pi coins safety.
how can I sell my locked pi coins safety.how can I sell my locked pi coins safety.
how can I sell my locked pi coins safety.
 
The new type of smart, sustainable entrepreneurship and the next day | Europe...
The new type of smart, sustainable entrepreneurship and the next day | Europe...The new type of smart, sustainable entrepreneurship and the next day | Europe...
The new type of smart, sustainable entrepreneurship and the next day | Europe...
 
where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)where can I sell pi coins at the best rate (Market Price)
where can I sell pi coins at the best rate (Market Price)
 
how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.how can I sell my pi coins in China 2024.
how can I sell my pi coins in China 2024.
 
is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024is pi Network coin available for sale in 2024
is pi Network coin available for sale in 2024
 
9th issue of our inhouse magazine Ingenious May 2024.pdf
9th issue of our inhouse magazine Ingenious May 2024.pdf9th issue of our inhouse magazine Ingenious May 2024.pdf
9th issue of our inhouse magazine Ingenious May 2024.pdf
 
How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.How do I unlock my locked Pi coins fast.
How do I unlock my locked Pi coins fast.
 
Can a Pi network coin ever be sold out: I am ready to sell mine.
Can a Pi network coin ever be sold out: I am ready to sell mine.Can a Pi network coin ever be sold out: I am ready to sell mine.
Can a Pi network coin ever be sold out: I am ready to sell mine.
 
how can I send my pi coins to Binance exchange
how can I send my pi coins to Binance exchangehow can I send my pi coins to Binance exchange
how can I send my pi coins to Binance exchange
 
Next Cryptocurrencies to Explode in 2024.pdf
Next Cryptocurrencies to Explode in 2024.pdfNext Cryptocurrencies to Explode in 2024.pdf
Next Cryptocurrencies to Explode in 2024.pdf
 
一比一原版UO毕业证渥太华大学毕业证成绩单如何办理
一比一原版UO毕业证渥太华大学毕业证成绩单如何办理一比一原版UO毕业证渥太华大学毕业证成绩单如何办理
一比一原版UO毕业证渥太华大学毕业证成绩单如何办理
 
Digital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners BrochureDigital Finance Summit 2024 Partners Brochure
Digital Finance Summit 2024 Partners Brochure
 
Jio Financial service Multibagger 2024 from India stock Market
Jio Financial service  Multibagger 2024 from India stock MarketJio Financial service  Multibagger 2024 from India stock Market
Jio Financial service Multibagger 2024 from India stock Market
 
The Advantages of Choosing Falcon Invoice Discounting
The Advantages of Choosing Falcon Invoice DiscountingThe Advantages of Choosing Falcon Invoice Discounting
The Advantages of Choosing Falcon Invoice Discounting
 

Managing a Frozen Pension Plan

  • 1. Managing A Frozen Pension Plan Should Your Strategy Change? Presented by Heath Merlak, Actuary www.nyhart.com Copyright 2011. All Rights Reserved.
  • 2. Heath Merlak Actuary heath.merlak@nyhart.com | (618) 606-4906 Qualifications or certifications:Fellow of the Society of Actuaries, a Fellow of the Conference of Consulting Actuaries, and is an Enrolled Actuary    
  • 3. Today’s Discussion How did we get here? Frozen Plans Are Still Active Plan Termination Considerations for Frozen Plans Strategies and Steps to Managing a Frozen Pension Plan 3
  • 4. Several factors are driving plan sponsors to close or freeze their pension plans Shift from long-term to short-term outlook for determining pension costs Capital markets have been volatile Resulting contribution requirements and balance sheet impacts have been volatile 4
  • 5. Frozen Plans Are Still Active Although frozen, all the requirements to manage the plan remain Minimum required contributions ASC 715 expense and disclosure Administration of the plan Most importantly, the majority of the pension risk still remains with the plan sponsor 5
  • 7. What’s Our Goal for Our Frozen Pension Plan? Maintain the plan and limit “noise” to our business Maintain the plan and target plan termination only if required funding and asset performance result in minimal cash outlay to terminate the plan (“Wait & See”) Develop strategy to terminate the plan within a stated period of time 7
  • 8. Maintain the Plan Plan sponsors may choose to maintain the plan indefinitely for reasons that may include: Belief they can provide benefits at a lower cost than purchasing annuities and manage the associated risks Funding shortfall is too great to consider terminating the plan within the next 5 years Suspect participant data making plan termination too difficult 8
  • 9. Steps to consider for maintaining a frozen plan Cost projections and sensitivity testing Determine expected required contributions Assess sensitivity of results to asset performance & interest rates Identify if settlement accounting will apply Assess strategies to lower risk Consider changing asset allocation as plan becomes better funded Add lump sum feature to the plan Review annuity purchase opportunities Administrative and compliance review 9
  • 10. Wait & See Plan sponsors may target plan termination but allow the funding rules to naturally get them to fully funded over several years In this situation you will want to reviewsteps outlined on prior page and… 10
  • 11. ….in addition, you should Conduct feasibility review Monitor progress more frequently than annually Review of investments Review plan document and participant data Determine strategy for settling obligations Assess strategies to lower risk and ease pain of plan termination Annuity buy-in and buy out Lump sum feature 11
  • 12. Develop Strategy to Terminate the Plan Within Specified Timeframe Plan sponsors may target plan termination aggressively setting goals for plan termination In most cases, this will be accomplished through normal contributions plus additional amounts needed to fully fund the plan upon termination 12
  • 13. Develop Strategy to Terminate the Plan Within Specified Timeframe The steps outlined previously apply in this situation along with the following: Feasibility review Coordinate with asset advisors Identify short-term implications Get buy-in from senior leadership, Board, etc. Begin thorough participant data review immediately Monitor funded status at least quarterly 13
  • 14. Any Questions? This concludes our discussion
  • 15. Looking for more benefit presentations? So Where is the Peak? Register for upcoming educational events on pensions, 401(k), healthcare and other actuarial and employee benefits topics at: www.nyhart.com/events/
  • 16. ACTUARY & EMPLOYEE BENEFITS 16 Actuaries Consulting In 48 States. Nyhart is one of the nation’s largest independent actuarial and employee benefit firms, consulting to and administering the plans for clients with more than $14 billion in assets. Our team of benefit advisers deliver personalized analysis and recommendations, translating complex calculations and issues into common language that enables corporations, associations, churches and governments to effectively manage their retirement and health care benefits.
  • 17.
  • 18. Defined Benefit & Pension
  • 20. Employee Stock Ownership Plan
  • 22. Healthcare Actuarial ConsultingLearn more at www.nyhart.com

Editor's Notes

  1. Administration of the plan includes filing forms with the IRS/PBGC, commencing benefits for participants, annual valuations and audits, etc.By freezing the plan, the growth of the risk has been curtailed but the benefits already accrued are unchanged.The funding liability remains unchanged when freezing the plan since this valuation is based on benefits accrued to date.The accounting liability may decrease since this valuation takes into account future pay growth, but the overall liability may only be decreasing by 10% depending on your plan design and demographics.
  2. In general, plan termination is a complicated process that will likely span 12 months or more. The plan termination will require coordination between HR, finance, actuary, and outside counsel. The PBGC audits most plan terminations (PBGC audits all plans with 300 or more participants) so the participant data preparation can be a significant project.Plan termination timeline will vary by plan and employer - PBGC outlines timing relationships between plan termination steps - IRS Determination Letter filing process adds uncertainty to timelineShortest timeline possible is 60 days - Assumes all notices, forms, etc. filed on day 1 and an IRS Determination Letter is not filedLongest possible timeline is 510 days (ignoring IRS Determination Letter delays)
  3. Add lump sum feature to the plan to payout benefits on an accelerated but gradual schedule or if the plan already pays lump sums remind terminated participants that lump sums are available.Review annuity purchase opportunities (“buy-in” or “buy out”) to move significant risks (mortality, interest rate, and market risk) to a third party for certain participant groups - Buy-out settles the obligation completely with a third party and the administration is handled by the third party. - Buy-in removes market, interest rate, and mortality risk. Administration of the plan still resides with the plan sponsor.Administrative and compliance review - Do we have the right resources helping us with this plan? - Should we consider outsourcing benefit administration of the plan? - Do we have checks and balances in place to capture regulatory changes?
  4. Feasibility review – how close are we?Monitor progress more frequently than annually - Market volatility may present an opportunity to settle obligations sooner than anticipated.Determine strategy for settling obligations – purchase annuities and/or payout lump sums. Review of investments - If we had to sell our investments today, does the plan own any investments that are not liquid (i.e., real estate)?
  5. Feasibility review – how close are we? What is our “magic” number to terminate? Do we want to fund more now to accelerate our timeline? Coordinate with asset advisors – likely will require shift in asset allocationIdentify short-term implications – expected return assumption for accounting purposes, available resources to manage plan termination process
  6. Feasibility review – how close are we? What is our “magic” number to terminate? Do we want to fund more now to accelerate our timeline? Coordinate with asset advisors – likely will require shift in asset allocationIdentify short-term implications – expected return assumption for accounting purposes, available resources to manage plan termination process
  7. Because rates are averaged over two years, it will take a couple of years for costs to declinePlans will likely see high requirements drop quickly to zero within a few years of rates increasing
  8. Areas of Expertise Include: Cash Balance Plan Defined Benefit & Pension Defined Contribution & 401(k) Employee Stock Ownership Plan (ESOP) Flexible Spending, HRA & HSA Healthcare Actuarial ConsultingLearn more at www.nyhart.com
  9. Areas of Expertise Include: Cash Balance Plan Defined Benefit & Pension Defined Contribution & 401(k) Employee Stock Ownership Plan (ESOP) Flexible Spending, HRA & HSA Healthcare Actuarial ConsultingLearn more at www.nyhart.com