Archive for the ‘Private Sector Pensions’ Category

Heroes Act Summary

Though unlikely to be enacted now H.R. 6800, The Heroes Act, could be a portent of what we get with a Biden administration so, with that in mind, here are some excerpts taken from a summary prepared by the Democratic staff of the House Committee on Appropriations dealing with pension matters of interest (to me).

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Bloomberg’s Threat

Moving to the forefront of 2020 presidential election coverage are Pete Buttigieg’s PDAs while Mike Bloomberg’s policy statement on retirement security is left to dangle. While pandering to many and likely of no consequence to most I am personally threatened by a particularly distasteful aspect of this feeler (Bloomberg’s that is).

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McClatchy Seeks Bankruptcy

newjerseyglobe reports:

“McClatchy’s Plan provides a resolution to legacy debt and pension obligations while maximizing outcomes for customers and other stakeholders,” said McClatchy CEO Craig Forman.

USA Today reports:

Although bankruptcies can result in pensioners receiving less than they were due, McClatchy said Thursday that it believes its plan “would not have an adverse impact on qualified pension benefits for substantially all plan participants.” In a court filing, McClatchy listed the PBGC as its largest unsecured creditor with a claim of $530 million. The PBGC and a federal judge would have to sign off on the company’s pension plan and sale.

Here are the real reasons for the bankruptcy filing.

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PBGC Takes On Big Brothers

The Employee Benefits Plan of Big Brothers Big Sisters of Metropolitan Detroit terminated as of September 14, 2018 with the Pension Benefit Guaranty Corporation (PBGC) taking over as trustee on October 7, 2019.

That should have been it as the PBGC would have taken the plan assets (valued at $140,200 as of 12/31/18) and started paying out benefits up to guaranteed limits. However, in this case there is a twist.

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Saving Local Journalism?

Included in the $1.4 trillion spending bill for FY 2020 (pages 1585 – 1597) was the Save the Community Newspaper Act which, according to the Seattle Times:

will allow privately held community newspapers to stretch out payments owed to pension plans that have been frozen through years of industry trouble. Without the urgently needed relief, these newspaper companies would face immense obligations coming due in 2021 under federal pension contribution laws. This long-sought relief reduces the annual bill to a manageable level while preserving pensioners’ rights to every penny they are due.

So what will this do for the Seattle Times?

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McClatchy Seeks Bailout

McClatchy Co., the third-largest newspaper publisher in the U.S. by circulation, has frozen pension payments to some former executives and enlisted the services of a bankruptcy-administration firm as it seeks a government takeover of its retirement plan, the company’s chief financial officer said – Wall Street Journal

Benefit accruals have been frozen in The McClatchy Company Retirement Plan for years but unfunded liabilities remain – in part due to having to pay PBGC premiums in the $15 million range annually. Based on Schedule SB data the company has not made contributions since 2015, using a dwindling Prefunding Balance as justification for shortchanging the plan.

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Private Pension Plans – 2017 Update

The Employee Benefits Security Administration (EBSA) released a report on private pension plans (excluding “one-participant” plans) based on data taken from 2017 5500 filings.

Of most interest:

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Hope for SECURE in Year-End Funding Package

According to an ASPPA article:

Hill staff worked throughout the weekend to put the finishing touches on the nearly $1.4 trillion spending bill for FY 2020, which will likely be the last “legislative vehicle” for 2019 – and things look promising for the Setting Every Community Up for Retirement Enhancement (SECURE) Act to be attached to that spending bill.

“As of right now, things look likely that SECURE will be in the year-end funding package that Congress must pass in order to keep the federal government running,” noted Brian Graff, CEO of the American Retirement Association, who was tracking progress on the negotiations throughout the weekend.

…….

“We are continuing to press the issue, and could know for sure within hours,” Graff said.

According to ASPPA the legislation would:

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‘It’s really over’ for most of us 4,061

USA Today had a story about corporate plans heading for extinction noting:

Most U.S. companies no longer offer defined-benefit pensions, which typically provided guaranteed monthly payments to workers when they retired….[A]ccording to Mercer’s 2020 Defined Benefit Outlook…63% of companies with defined-benefit pensions “are considering termination” of the plan within half a decade…. Alicia Munnell, director of the Center for Retirement Research at Boston College, said in a recent interview: “It’s really over in the private sector. The question is, just when does the last plan close down?” The number of pension plans offering defined benefits – which means the payouts are guaranteed – plummeted by about 73% from 1986 to 2016, according to the Department of Labor’s Employee Benefits Security Administration.

Which got me to thinking where my profession of Enrolled Actuary (EA), which exists solely to certify to the funding of Defined Benefit plans, is headed.

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PBGC Claims McClatchy

McClatchy Co., the third-largest newspaper publisher in the U.S. by circulation, said it has begun talks with its creditors and federal authorities about a possible government takeover of its pension fund as it tries to relieve considerable liquidity pressure due to its pension responsibilities and debt loan – Wall Street Journal

Benefit accruals have been frozen in The McClatchy Company Retirement Plan for years but unfunded liabilities remain – in part due to having to pay PBGC premiums in the $15 million range annually. Based on Schedule SB data the company has not made contributions since 2015, using a dwindling Prefunding Balance as justification for shortchanging the plan.

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