Integrated risk management roundtable for Dutch pension funds

Milliman has organized a roundtable discussion to explore integrated risk management (IRM) for Dutch pension funds on Wednesday, 27 September 2017, in Amsterdam. While the Dutch National Bank (DNB) devotes a lot of attention to IRM and expects pension funds to have a structured approach, we find that many funds have difficulty formalizing one.

At this roundtable, Milliman consultants will discuss the following:

• What is IRM and what does it entail?
• What are common IRM strategies and policies for Dutch pension funds?
• How can the pension board perform a thorough risk assessment?
• How can the board ensure proper commitment to IRM?
• How can the board ensure adequate monitoring and evaluation?
• How can the board ensure that the DNB is satisfied with a funds’ IRM?

Seats are limited. If you would like to attend, email us here for more information.

Should 401(k) sponsors continue offering employer stock?

There are several valuable reasons why companies include employer stock in 401(k) plans. However, increased risk of litigation has caused many employers to reconsider the decision to offer employer stock as an investment option. In her article “Employer stock in a 401(k) plan,” Milliman’s Kara Tedesco outlines initiatives for plan sponsors to consider when deciding to maintain or discontinue their employer stock offering.

Regulatory roundup

More retirement-related regulatory news for plan sponsors, including links to detailed information.

Hardship and loan relief for Hurricane Irma victims
The Internal Revenue Service (IRS) announced that 401(k) plans and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Irma and members of their families. This is similar to relief provided last month to victims of Hurricane Harvey. Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features.

In addition, the plan can ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement as described in Announcement 2017-13.

For more information, click here.

DOL to provide immediate grants and assistance for Hurricane Irma recovery efforts
In cooperation with state and local partners, the Department of Labor (DOL) is setting aside funding to make grants to assess workforce needs in the U.S. Virgin Islands, Puerto Rico, Florida, and other states in response to Hurricane Irma. The Department will continue to work cooperatively with states and territories to assess needs as they develop and respond accordingly.

For more information, click here.

DOL extends Hurricane Harvey compliance guidance and relief to employee benefit plans impacted by Hurricane Irma
The DOL announced employee benefit plan compliance guidance and relief for victims of Hurricane Irma that parallels that which it already provided to victims of Hurricane Harvey regarding verification procedures for plan loans and distributions, participant contributions and loan payments, blackout notices, and group health plan compliance.

For more information, click here.

PBGC issues technical update on active participant reduction reportable events
The Pension Benefit Guaranty Corporation (PBGC) is providing an alternative method for determining whether an active participant reduction due to attrition must be reported to PBGC under § 4043.23(a)(2). This is to eliminate possible duplicative reporting for plans that reported an active participant reduction due to a single-cause under § 4043.23(a)(1).

For more information, click here.

Milliman FRM Market Commentary: August 2017

Emerging market equities pushed higher in August as the rest of world took a breather. In this month’s commentary, Milliman’s Joe Becker addresses the following:

• With their ninth consecutive month of positive returns, EM equities are having their best year since 2009.
• US equity market volatility was low on average, but was itself volatile, finishing the month at its highest level since May.
• The yield curve flattened as the yield on the 10-year Treasury saw its largest one-month decline since June 2016.
• Heading into 2018, a confluence of fiscal and monetary circumstances have the potential to significantly affect the supply of and demand for government bonds, and by extension, interest rates.

To learn more, download the full commentary at MRIC.com.

Corporate pensions face largest monthly loss of 2017 in August

Milliman today released the results of its latest Pension Funding Index (PFI), which analyzes the 100 largest U.S. corporate pension plans. In August, the funded status of these plans fell by $17 billion – the largest loss year-to-date – due to a decrease in the benchmark corporate bond interest rates used to value pension liabilities. The Milliman 100 PFI plans saw their deficit swell from $281 billion as of July 31 to $298 billion at the end of August. The funded ratio dropped from 83.8% to 83.0% over the same time period, and is now below where it was at the beginning of 2017 for the first time this year.

The funded ratio for the Milliman 100 plans continues to teeter up and down during 2017, and now we find it below the mark set at the beginning of the year. It will be interesting to see how discount rates will change over the next few months and how the potential release of updated mortality tables will affect pension contributions and funded status going forward.

Looking forward, under an optimistic forecast with rising interest rates (reaching 3.80% by the end of 2017 and 4.40% by the end of 2018) and asset gains (11.0% annual returns), the funded ratio would climb to 87% by the end of 2017 and 100% by the end of 2018. Under a pessimistic forecast (3.40% discount rate at the end of 2017 and 2.80% by the end of 2018 and 3.0% annual returns), the funded ratio would decline to 81% by the end of 2017 and 74% by the end of 2018.

To view the complete Pension Funding Index, click here. To receive regular updates of Milliman’s pension funding analysis, contact us here.

Roundtable on UK defined benefit pension schemes

MBW International, a United Kingdom (UK) based joint venture between Milliman and Barnett Waddingham, has organized a roundtable discussion entitled “UK defined benefit pensions, a current overview: What can we learn in the Netherlands?” on Tuesday, 3 October 2017.

The roundtable is aimed at Dutch companies with a deficit in their UK defined benefit (DB) pension scheme as well as companies interested to learn more about the latest UK pension developments.

The roundtable will focus on the following topics:

  • An update on the UK pensions market and the impact it is having on Dutch companies – this will include recent analysis by the leading UK actuarial firm Barnett Waddingham LLP (the analysis will be distributed at the event).
  • Current market opportunities which could help companies tackle their UK pension problems, including:
  1. Changes to the way UK employees can access their pension savings that make it more attractive for them to transfer DB benefits into a defined contribution arrangement. This helps reduce the scale of the historic DB obligations.
  2. Continuing developments in the UK bulk annuity market.
  • What can we learn in the Netherlands from our UK counterparts?
  • Management of international pension plans – how can this be done in a more harmonized manner to increase efficiency, reduce risk, and achieve greater consistency across a business.

MBW International Directors Nick Griggs and Andrew Vaughan are guest speakers. Both Nick and Andrew have considerable experience dealing with these UK pension issues.

Seats are limited. If you would like to attend, email us here for more information.