Navigating Pension Plan De-Risking: Significant Implications to Employers and Retirement Policy
The interest in pension plan de-risking continues to heighten among corporate sponsors across the United States, as plan sponsors look for ways to reduce volatility on the balance sheet, in net income and in cash contributions. Two of the de-risking strategies that employers may engage include offering lump-sum distributions and/or transferring liabilities to a third party insurer. These strategies offer clear advantage to plan sponsors, but may also pose potential pitfalls on the company's retirement policy. To avoid unnecessary risk and volatility, companies must select the strategy that best suits their needs and will carry them through the next years to come.
This course offers an overview of the latest trends, critical issues and best practices on navigating pension plan de-risking. A panel of thought leaders and practitioners will help firms better understand the significant implications of de-risking to employers and retirement policy.
In a two-hour LIVE Webcast, the speakers will discuss:
- Pension Plan De-risking – An Overview
- Pension De-Risking Strategies
- Implementation of De-Risking Programs
- Legal Challenges and Risks
Robert Goldbloom, Principal
Introduction to Pension De-risking: What and Who is Driving the Market
- Methods to De-Risk (define and describe typical uses):
- Lump Sums
- Investment strategy
- Reasons for De-risking (and which methods above correspond)
- Market structure
- Types of players in the market and the roles they play
- Market Trends and Growth
- Cost to Maintain vs. Cost to Transfer
- Price monitoring
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 Transactions
- Termination or “lift out”
- Fiduciary versus Settlor Activity
- Why does it matter?
- Settlor Role
- Fiduciary Role
- Plan Fiduciary v. Annuity Committee
- Annuity Committee with Independent Expert
- Independent Fiduciary
- Remaining Participants for lift out
- RFP Process
- DOL IB 95-1 Analysis
- Purchase Agreement
- Annuity Terms
- Amend Plan to Purchase the Annuity
Insurance Company Analysis
- Analysis Frameworks
- Structural Considerations
- General vs. Separate Account
- Guaranty Assn Coverage
- Use of Multiple Insurers
- Financial Measures – Beyond the Six Criteria in 95-1
- Administration – Key Considerations
Ruth S. Marcott, Shareholder
Legal Challenges to Pension De-risking
- Lee v. Verizon - A case which provides a good example of potential claims in litigation
- Many thought this case was over, but the US Supreme Court just vacated the 5th Circuit’s recent dismissal of the matter and remanded review to the 5th Circuit under standards set in Spokeo
- Failure of SPD to properly communicate possible de-risking strategies
- Failure in communication generally under ERISA
- Breach of Fiduciary Duty
- By retirees who received annuities – they lost ERISA protection
- By participants left in the plan – Excessive cost to the plan with no benefit to them
- ERISA discrimination claims
- Are claims any different depending on the de-risking strategy chosen
- PBGC Compliance
- Additional reporting is required
- PBGC opines millions of participants will be subject to de-risking
- Regulatory Overview and Compliance
- IRS will review for compliance with its notices
- New fiduciary rules may impact disclosure and implementation of de-risking
- Other DOL involvement
Who Should Attend:
- Benefits Managers
- Compensation and Benefits Consultants
- Employment Law Attorneys
- Employee Benefits Attorneys
- Retirement Plan Financial Professionals
- Retirement Plan Sponsors
- Human Resource & Benefits Personnel
- Private and Public Companies
Terry Dunne is the Managing Director of the Rollover Solutions Group at Millennium Trust Company with responsibility for the development of Millennium’s comprehensive automatic rollover product.
With over 35 years sales and marketing experience in the financial services industry, Terry has been published by several organizations including the American Society of Pension Professionals and Actuaries (ASPPA), Sage’s Compensation & Benefits Review, and International Foundation for Employee Benefits Plans on a number of retirement plan topics including plan terminations, locating missing plan participants, un-cashed checks, and de-risking of DB Plans.
Terry 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 Dunne is the Managing Director of the Rollover Solutions Group at Millennium Trust Company with responsibility for the development …
Robert is Co-Founder and Principal of Penbridge Advisors.
At Penbridge, Robert advises clients on pension de-risking, including the pension risk transfer (PRT) market, its insurers, and the insurers’ pricing, products and practices. He has also advised insurance companies on developing their capabilities to enter the PRT market.
Robert developed Penbridge’s insurance company analysis capabilities, and served as a market expert to the Motorola Solutions’ Annuity Committee, supporting the fiduciary oversight of the company’s $3.1 billion annuity buy-out transaction in 2014.
On the subject of pension de-risking and PRT, he has co-authored several Penbridge white papers, has conducted industry surveys, and has been a speaker at industry conferences and the ERISA Roundtable.
Prior to Penbridge, Robert led AIG’s US Pensions Department for nearly 20 years, responsible for the management, operation and financial results of the department. During his tenure, the department developed a number of innovative group annuity products, and achieved significant growth and financial success.
Robert is a Fellow of the Society of Actuaries and a Chartered Financial Analyst. He has a BA from Dartmouth College and an MA from Columbia University.
Robert is Co-Founder and Principal of Penbridge Advisors. At Penbridge, Robert advises clients on pension de-risking, including the pension risk …
Ruth Marcott, a shareholder at Felhaber Larson in Minneapolis practices commercial law, specializing in employee benefits advice and litigation.
In the area of benefits, she provides advice on compliance with federal and state benefits laws (ACA, IRC, ERISA, MPPAA) governing qualified retirement plans, non-qualified plans, health plans and welfare plans. She advises numerous Taft-Hartley Multiemployer Plans, as well as employer-sponsored plans. She litigates ERISA actions, fiduciary claims, multiemployer pension withdrawal liability arbitrations, and executive compensation claims. She defends audits or investigations by the DOL or the IRS. She has assisted employers and independent fiduciaries in structuring and effectuating de-risking strategies.
Ruth is a graduate of the University of St. Thomas and the University of Minnesota Law School.
Ruth Marcott, a shareholder at Felhaber Larson in Minneapolis practices commercial law, specializing in employee benefits advice and litigation. In …
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 …
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About Millennium Trust Company
Millennium Trust Company is a leading Automatic Rollover IRA provider for retirement plans. Our solutions are tailored for open, terminated and abandoned plans and help plan sponsors comply with DOL Safe Harbor requirements for automatic rollovers. We 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. For more information, please visit our web site at www.mtrustcompany.com.
About Penbridge Advisors
Penbridge Advisors is a specialist pension information and advisory services firm founded in 2013.
Penbridge provides independent analysis and advice to help defined benefit plan sponsors make balanced, well-informed decisions regarding whether, how and when to de-risk their plans.
Penbridge also supports other plan advisors in a complementary way enabling them to provide coordinated, comprehensive pension de-risking information and advice to their existing plan sponsor clients. And it has advised insurance company and LDI investment managers on pension risk transfer.
Penbridge maintains the only industry database focused on the US pension risk transfer market. The database is designed to help sponsors and their advisors to become informed about the PRT market and to consider possible risk transfer solutions. It is free of charge to registered users as well as participating insurance companies.
About Felhaber Larson
Felhaber Larson is a full-service law firm located in Minneapolis & St. Paul with a more than 70-year history of serving clients. They offer a full range of services, with a strong emphasis on employee benefits, labor & employment law, business law and transactions, real estate, business, health law and civil litigation.
The Felhaber brand is Small Firm Relationships, Large Firm Impact. That's the promise they deliver to all of their clients who range from Fortune 500 companies to small businesses, start-ups and individuals.
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.