Regulatory roundup

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

Clarification to guidance on mergers and transfers between multiemployer plans issued

The Pension Benefit Guaranty Corporation (PBGC) published a final rule to implement its authority to facilitate mergers of multiemployer pension plans. PBGC has posted a clarification to the preamble in the second example of how a plan can demonstrate that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan’s ability to remain solvent.

For more information, click here.

House Approves Federal Minimum Wage Increase

The House of Representative voted to approve a manager’s amendment to the “Raise the Wage Act” (H.R.582), which would increase the federal minimum wage to $15 an hour from $7.25 by 2025, and then annually adjust the amount based on median wages. The bill would also gradually phase out separate lower wages for tipped workers, youth, and individuals with disabilities. The minimum wage has not been increased since 2009.

To learn more, click here.

Defined contribution audit improves data quality

After consolidating several defined contribution (DC) plans into two plans, one multi-discipline healthcare system hired Milliman to become each plans’ recordkeeper. During implementation meetings, the client expressed frustration that they were still experiencing historic data issues three years after merging the plans. To ensure the most accurate data possible was loaded to the Milliman system, the implementation team gathered data files from the prior recordkeeper, a census from the client, and historic payroll files for each employee group. The implementation team used these files to compile a full list of participants and then rebuilt each participant’s service history.

In the year following the conversion, the Milliman team worked with the client to tackle the immense project of fully auditing all participant data. This included verifying basic information like employment status and service history as well as more complex issues like vesting and deferral elections. After the audits were completed, the client was comfortable with relying on the Milliman system to track deferral election changes and withdrawal requests.

To learn more, read the case study “Large client data audit” by Milliman’s Elizabeth Dey and Tyler Thornton.

Corporate pension funding inches up in June despite low interest rate environment

Milliman today released the results of its latest Pension Funding Index (PFI), which analyzes the 100 largest U.S. corporate pension plans. In June, these pensions experienced a $1 billion increase in funded status, as superior asset growth was able to offset rising pension liabilities due to a decrease in the benchmark corporate bond interest rates used to value those liabilities.

June’s solid 2.82% investment return raised the Milliman 100 PFI asset value by $38 billion, which more than made up for investment losses experienced in May and continues the upward march of asset returns seen during most of 2019. However, with the monthly discount rate falling to 3.45%, the lowest it’s been in nearly three years, PFI liabilities increased as well, by $37 million. As a result, the Milliman 100 PFI funding changed only incrementally: the funded ratio inched up from 87.7% at the end of May to 88.0% as of June 30.

The low discount-rate environment – the likes of which we haven’t seen since September 2016 – would spell a lot more trouble for corporate pensions if it weren’t for 2019’s overall asset gains. In fact, three years ago the PFI deficit was nearly double what it is today. Investment returns for 2019 have exceeded expectations in every month of the year except May; if discount rates increase in the second half of the year, this could be a truly favorable year for corporate pensions.

Looking forward, under an optimistic forecast with rising interest rates (reaching 3.75% by the end of 2019 and 4.35% by the end of 2020) and asset gains (10.6% annual returns), the funded ratio would climb to 95% by the end of 2019 and 111% by the end of 2020.  Under a pessimistic forecast (3.15% discount rate at the end of 2019 and 2.55% by the end of 2020 and 2.6% annual returns), the funded ratio would decline to 85% by the end of 2019 and 78% by the end of 2020.

To view the complete Pension Funding Index, click here. To see the 2019 Milliman Pension Funding Study, click here.

To receive regular updates of Milliman’s pension funding analysis, contact us here.

Regulatory roundup

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

Proposed rule issued on making miscellaneous corrections, clarifications, and improvements
The Pension Benefit Guaranty Corporation (PBGC) released a proposed rule concerning the making miscellaneous corrections, clarifications, and improvements to its regulations on reportable events and certain other notification requirements, annual financial and actuarial information reporting, termination of single-employer plans, and premium rates.

For more information, click here.

Milliman FRM Insight: May 2019 Market Commentary

After a record-setting first four months of 2019, the S&P Global 1200 Index gave back nearly half its year-to-date (YTD) return in May’s decline. The volatility of the S&P 500 began the month below the 18% volatility threshold of the S&P 500 Managed Risk Index and remained below it the entire month. After rising 35% during the first four months of 2019, the price of oil fell 5% in May as trade wars obscured the path to global economic growth. The most recent Consumer Price Index (CPI) data show annual inflation climbed to 2%. While realized inflation moved higher, inflation expectations fell by nearly 30 basis points in May.

Milliman’s Joe Becker offers more perspective in this month’s market commentary. Download the full commentary at

How can employers communicate effectively to different generations?

What constitutes effective HR communication for Millennials, Gen-Xers, and Boomers today? In the latest episode of Critical Point, Milliman’s Heidi tenBroek and Jill Godschall discuss how generational differences, behavioral economics, and technology are driving change in the HR communications space.

To listen to the entire podcast, click here. Also, to hear past Critical Point episodes, click here.