De-risking and Corporate Pension Plans: How Corporations Manage Risks?
Over the years, defined benefit pension plans have become increasingly complex, resulting in escalated risks and legal challenges faced by corporations and plan sponsors. As pension de-risking has become more attractive to several corporations, challenges beyond an employer's control can skyrocket and create a set of complex perils, such as inadequate investment returns, unfavorable changes to pension liabilities, and regulatory pitfalls.
To effectively manage these risks, management teams and trustees are required to measure and compare the value of assets against the value of pension liabilities. They must ensure that their pension plan de-risking strategies are aligned with the plan sponsor’s long-term objectives.
In this LIVE Webcast, a remarkable panel of thought leaders and professionals, brought together by The Knowledge Group, will help the audience understand the important aspects, particularly, the legal issues hounding De-risking and Corporate Pension Plans. Speakers will present best practices on how corporations can manage possible risks and legal challenges.
Key topics include:
- U.S. Corporate Pension Plans – An Overview
- Pension De-Risking Techniques
- Transfer Liability Strategies
- Retain Liability Strategies
- Buy-Ins vs. Buy-Outs
- Pension Risk Drivers
- Longevity Risk
- Investment Risk
- Costs of Corporate Pensions
- Pension Risk Management
Nick Meggos, Consulting Actuary
Ongoing to Frozen: frozen plans have different concerns
- Types of Risk in a Pension Plan
- Economic (Investment, Interest Rates, Inflation)
- Open-Ongoing vs. Frozen Perspectives
- Ongoing Plan
- After the Freeze
- Terminating versus waiting: Side by side comparison
- Costs of maintaining plan
- Bet on interest rates
- Capital constraints
Terry Dunne, Managing Director
Millennium Trust Company
- Potentially reduces financial risk by downsizing liabilities
- Reduces operational costs permanently
- Lump sum window – allows participants the choice many really want
- And control, investment choice and allows them to leave an inheritance
- Best practice – it takes operational readiness / planning / real work
- Coordination with Finance and HR
- The need for accurate participant information
- Establish procedures and stay on time
- Seek out the right consultants and ERISA counsel
- Fiduciary responsibility – must provide communications to participants
- Again, the need for accurate participant information
- Communications campaign
- Legitimize the offer to the participants with appropriate communications
- Continuous communications – formal letters, postcards, election kits
- Need call center support
- Qualified IRA Provider for missing/non-responsive
- Must have technology/infrastructure to handle
- Client service model
- Search efforts
- Must select an IRA provider that will be a partner in the process and provide best in class client service to the plan sponsor and the participants.
Sarah N. Lowe, Partner
Kilpatrick Townsend & Stockton LLP
Structuring annuity transaction
- Settlor role
- Fiduciary role
The various fiduciary structures
- Plan fiduciary
- Annuity Committee
- PF or AC with Independent Expert
- PF or AC with Independent Fiduciary
Determine Fiduciary Structure
- Properly appoint
- IE or IF RFP
- Insurer RFP
- Numbers of insurers
- Types of annuities: separate account, general account, split deals
- Assets in Kind
- Form Documents for review
- Press Release
- Initial bids/final bids
- DO IB 95-1 Diligence and Analysis
- Purchase Agreement
- Standard or Modified
- Prohibited Transaction Strategies
- PTE 84-14
- Service Provider Exemption
William E. Ryan, President and Chief Fiduciary Officer
Evercore Trust Company, N.A.
- Annuity Structure and Population
- Lift out
- Spin Term
- Small amounts
- Conversions of Existing Annuities
- How does selection get made?
- The parties and their roles
- Split/single annuity
- Annuity Terms
- Third Party Beneficiary Rights
- Right to Change Beneficiaries
- No assignment of benefits
- No change in form without Annuitant’s Consent
- Other items
- What happens post selection
- Date must be final
- Welcome kits
Who Should Attend:
- Employee Benefits Lawyers
- Pension Plan Sponsors
- Pension Risk Managers
- Corporate Lawyers
- Corporate Counsel
- Top Level Management
- Compensation and Benefits Consultants
- Human Resource & Benefits Personnel
Sarah Lowe focuses her practice on employee benefits, with an emphasis in the areas of qualified plans, related ERISA fiduciary issues and pension plan investments. She regularly reviews and negotiates provisions of pension plan investments on behalf of large pension funds, including hedge funds and other alternative investments. She also routinely assists structuring private investment funds and their portfolio investments so that they avoid being subject to ERISA fiduciary rules. As part of her practice, she regularly advises clients on compliance with ERISA’s rules regarding fiduciary duties and prohibited transactions.
Ms. Lowe has provided counsel to and negotiated on behalf of clients regarding employee benefit issues in connection with mergers, acquisitions, dispositions, and other business transactions. She has also researched and advised public and private employer clients regarding issues related to design, preparation, communication, administration, and operation of qualified plans and the related funding vehicles, including pension and profit sharing plans, 401(k) plans, rabbi trusts, and cafeteria plans.
Sarah Lowe focuses her practice on employee benefits, with an emphasis in the areas of qualified plans, related ERISA fiduciary …
Terry brings over 35 years of sales and marketing experience in the financial services industry to his role developing the firm’s comprehensive automatic rollover product.
Before joining Millennium Trust, he served as director of marketing and client service at Harris Associates, and also held positions at Chicago Title and Trust, Arthur Andersen, and Harris Trust and Savings Bank. Terry has written on a number of retirement plan topics including plan terminations, search efforts for missing plan participants, uncashed checks, and bankruptcy and abandoned plans. His work has been published by the American Society of Pension Professionals and Actuaries (ASPPA), Sage’s Compensation & Benefits Review, International Foundation for Employee Benefits Plans, National Association of Bankruptcy Trustees, and Thomson Reuters’ Westlaw Journal.
He holds a bachelor's degree in economics from the University of Notre Dame, an M.B.A. in accounting and finance from the University of Chicago, and a master's degree in taxation from DePaul University. He has previously held the Certified Public Accountant®, Certified Financial Planner® and Personal Financial Specialist® designations.
Terry brings over 35 years of sales and marketing experience in the financial services industry to his role developing the …
Mr. Ryan is Managing Director and Chief Fiduciary Officer. He joined Evercore Trust from Morgan Stanley, where he was an Executive Director in the Legal and Compliance Division and head of ERISA Law, responsible for coordinating ERISA and qualified tax issues for Morgan Stanley's Institutional Securities Group (institutional brokerage), Morgan Stanley Investment Management (asset management), and Morgan Stanley Smith Barney (retail brokerage). Prior to joining Morgan Stanley, He was the chief ERISA/Benefits counsel for Prudential Financial, Inc. from 1995 through 2004, handling ERISA-related HR, compensation and product issues for Prudential Insurance, and was in private practice in New York from 1987 through 1995, specializing in ERISA issues. On behalf of various industry groups, he has met with and testified before the U.S. Department of Labor, the Treasury Department, the White House, and various state regulators on fiduciary and other retirement issues. He has also served on various industry groups, including the SIFMA Retirement Committee (where he served as co-chair from 2010-2013).
Mr. Ryan holds a A.B. Degree in History from Princeton University in 1984, a J.D. from Stanford Law School in 1987 (where he was an editor of the Stanford Law Review), and a Masters in Taxation (LL.M.) from New York University School of Law in 1995.
Mr. Ryan is Managing Director and Chief Fiduciary Officer. He joined Evercore Trust from Morgan Stanley, where he was an …
Nick Meggos graduated from Bradley University with a B.S. in Mathematics and Economics. He is an Enrolled Actuary and a Fellow of the Conference of Consulting Actuaries.
Nick has 18 years of pension actuarial consulting experience and has expertise in plan design analysis, plan terminations, lump sum windows and general retirement plan consulting. Nick focuses much of his time consulting with clients not only on the annual management of their pension plans, but also on strategies and considerations regarding long term costs and future sustainability of the plans. Prior to becoming an actuary Nick worked for five years in economic research at the Federal Reserve.
Nick Meggos graduated from Bradley University with a B.S. in Mathematics and Economics. He is an Enrolled Actuary and a Fellow …
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Method of Presentation:
Experience in financial services or employee benefits
NASBA Field of Study:
Management Services - Technical
NY Category of CLE Credit:
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About Kilpatrick Townsend & Stockton LLP
Kilpatrick Townsend is a multi-practice international firm of 650 attorneys, with 18 offices in the United States and abroad. The firm’s Employee Benefits & Executive Compensation attorneys work on behalf of clients throughout the United States and internationally in all areas of employee benefits, executive compensation and ERISA litigation, representing a cross section of businesses, ranging from Fortune 100 public companies to family-owned businesses and start-up companies. The diverse and innovative client base they support provides cutting-edge work that keeps them at the forefront of critical developments in the field. The team’s primary service areas include, Business Transactions, ERISA Litigation, Executive and Deferred Compensation, Fiduciary Counseling, Health & Welfare Plans, Pension Fund Management, and Retirement Income Plans.
About Millennium Trust Company
Millennium Trust Company is a leading Automatic Rollover IRA provider for retirement plans. Their solutions are tailored for open, terminated and abandoned plans and help plan sponsors comply with DOL Safe Harbor requirements for automatic rollovers. They work with a wide range of professionals and offer a full complement of solutions to address such plan related issues as: missing participants, uncashed checks, benefit distributions and notification services.
About Evercore Trust Company, N.A.
Evercore Trust, a national trust bank and subsidiary of Evercore, provides investment management, independent fiduciary, and trustee services to employee benefit plans.
With over $39.8 billion in assets under administration as of September 30, 2016, Evercore Trust has ongoing discretionary responsibility for qualified and non-qualified employee benefit plans, including defined benefit pension plans, VEBAs, ESOPs, 401(k) plans, profit sharing plans, and rabbi trusts, many of which plans hold large blocks of company stock.
Evercore Trust has provided services to employee benefit plans sponsored by America's leading corporations and institutions since 1987.
Nyhart is a national employee benefit consulting, actuarial, and administration firm that has been in business since 1943. In addition to full service de-risking solutions, the firm provides actuarial services, consulting and administrative services for defined contribution and defined benefit plans, consulting and administrative services for FSA, HRA, HSA and COBRA, as well as human resource consulting to more than 1,500 clients in 50 States. Nyhart has offices in Indianapolis, Chicago, Kansas City, Atlanta, St. Louis, San Diego, Houston, Denver and New York.