Tag Archives: pension plans

Employee Benefits: Increased premiums on the horizon for defined benefit pension plans

On Monday, President Barack Obama signed into law The Bipartisan Budget Act of 2015 (BBA). The BBA will result in a significant increase in the premiums paid by defined benefit pension plans covered by the Pension Benefit Guaranty Corporation (PBGC).

Prior to some last minute haggling last week, the proposed budget being discussed already provided for an increase in the PBGC premium rates. However, lobbyists for the farming and agriculture industry were able to negotiate the removal of a cap on the amount of insurance provided for crop insurance, requiring revenue to be raised somewhere else. Under the adage of “our lobbyists are better than yours,” the additional revenue came on the backs of defined benefit plan sponsors by means of an additional increase in the PBGC premium rates. 

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IRS announces new retirement plan limitations for 2016

On Oct. 21, 2015, the IRS announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the 2016 tax year. The limits are based upon the Social Security cost-of-living increases. For the third time in the last 40 years (all three having occurred in the last six years) there will be no cost of living adjustment increase. As such, while some applicable IRS limits will be rising in 2016, all of the following retirement plan limitations will remain the same as those in place for the 2015 tax year. 

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Multiemployer Pension Plan: Serious challenges Multiemployer Pension Plans in 2014

Multiemployer pension plans which are the product of the collective-bargaining process, offer employers, especially small businesses, the opportunity to provide retirement benefits to their workers without the administrative expenses and burdens of sponsoring a separate company retirement plan. The Employee Retirement Income Security Act (ERISA), enacted in 1974, established a pension plan termination insurance program whereby the Pension Benefit Guaranty Corporation (PBGC), a wholly-owned U.S. Government corporation, administered an insurance program for participants in both single-employer and multiemployer pension plans. Prior to the enactment of ERISA, multiemployer plans had broad discretion to modify provisions of the plan that, after adoption, were found to be unaffordable over time. Prior to the passage of the Multiemployer Pension Plan Amendment Act of 1980 (“MPPAA”), a company with union employees participating in a multiemployer plan could simply walk away from the multiemployer plan to which it had previously contributed and leave the remaining participants liable to fund past service liabilities, plus the costs of current and future service liabilities. The MPPAA created the concept of multiemployer plan withdrawal liability under which employers who left multiemployer plans with unfunded vested benefits were assessed a withdrawal fee based on their proportionate share of such underfunding.

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Toni Pilzner quoted in "GM, Bank of America, American Airlines Freeze Pension Plans," by Allen Smith – published by SHRM

General Motors (GM), Bank of America and American Airlines announced recently that they will freeze their pension plans.

GM announced on Feb. 16, 2012, that effective Sept. 30, 2012, it will freeze its defined benefit pension plan for U.S. salaried employees, who instead will receive contributions to a defined contribution plan.

“This initiative will affect GM’s U.S. salaried employees hired prior to Jan. 1, 2001. Salaried employees hired after that date are already covered by a defined contribution plan,” the company stated. 

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Week of January 23, 2012 on ILN Today – Roundup!

It’s time for another roundup here on a rainy Friday morning in New Jersey!

Once again we’re seeing some excellent content coming out of our member firms from around the world – I highly recommend checking out these articles and blog posts. I’m switching over entirely to a top 10 each week, so without further ado, here’s your roundup for this week!

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Employee Benefits Alert: Tough economy creates tough decisions for pension plans

The defined benefit pension plan is one of the little discussed casualties of the economic and financial crisis in recent years (“Pension Plan”).

Pension Plans are subject to various funding requirements.  Very simplistically, Pension Plans must utilize the services of actuaries who determine the value of the benefits that have been accrued under the Pension Plan and the level of contributions required to fund the accrued benefits.  Pension Plans are defined benefit plans in that they provide a specified benefit payable to the participant, or his or her beneficiaries, beginning upon the participant’s retirement.  Unlike a 401(k) Plan or a Profit Sharing Plan, which have individual investment accounts for each of the participants, a Pension Plan’s assets are held in a single pool.  The sponsoring company or entity remains responsible for ensuring that sufficient assets are in the pool to pay the benefits that have been earned under the Pension Plan.

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