Defined benefit plan sponsors face a squeeze on funding status from two directions. For one, ongoing and renewed COVID-19 lockdowns worldwide will potentially reduce the value of investments of pension fund assets as stock markets could decline as a result of closed businesses. Second, pension funds aren’t keeping pace with contributions as workers are furloughed and contributions are reduced or delayed. Correspondingly, members of defined contribution plans face similar shortfalls in the funding of their own pension pots.
While multinational companies face the key question of how far they should go towards helping employees financially, governments worldwide have instituted various programs or measures to provide short-term relief. In this article, Milliman’s Danny Quant provides a global roundup of these measures in various countries.
COVID-19 has been an inflection point for institutions of higher learning in the United States. Midway through the 2020 semester, campuses shut down, refunded students’ room and board, and made unbudgeted investments in transitioning to virtual environments.
For the 2021 academic year, most institutions are expecting declines in room and board payments, student enrollment, endowment returns, and alumni and donor giving. Public institutions are expecting lower state appropriation funding than they received in 2020. Alongside these projected revenue shortfalls, investments in social decisions need to continue to provide both distance and on-campus education in the fall of 2021.
One of the ways institutions are responding to these financial challenges is to rethink their staffing models and reduce faculty and staff costs. Some are implementing hiring and travel freezes, deferred retirement contributions, salary reductions, furloughs, and freezing of annual merit increases. Some have gone further to eliminate staff positions and terminate faculty contract renewals, or change them to one-year contracts.
In this paper, Milliman’s Radhika Philip explains that workforce transitions need to be conducted with sensitivity and doing so can ultimately strengthen the institution’s reputation with its diverse stakeholders.
The passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, as well as general liquidity and business continuity concerns resulting from the financial effects of COVID-19, have created circumstances calling for reductions in executive compensation. However, employers and employees must carefully consider how any reductions are implemented to remain compliant with Internal Revenue Code Section 409A.
In this article, Milliman’s Dominick Pizzano and White & Case’s Henrik Patel and Kenneth Barr review executive compensation issues that should be examined during these turbulent times.
The COVID-19 pandemic has precipitated short-term and long-term economic responses that will continue to unfold. In the meantime, employers have many questions regarding Internal Revenue Service (IRS) minimum required contributions (MRCs) for their defined benefit plans.
In this article, Milliman actuary Esther Peterson summarizes the components that feed into the MRC calculation and considers how potential consequences may trickle down into the MRC calculation for future plan years.
In this Milliman webinar, consultants Lauren Busey, Heidi tenBroek, and Larry Daniels discuss results from the recent Milliman Northwest Healthcare COVID-19 Pulse Survey. The survey summarizes key actions local healthcare employers are taking to address employee benefits and compensation issues as a result of the current pandemic.
For more perspective on the survey, read Lauren’s article “Managing benefits and compensation for healthcare workers in the time of COVID-19.”
The emergence of the COVID-19 pandemic has had a massive impact on the U.S. economy and workforce. Millions have been furloughed or laid off, while others have struggled to do their essential jobs or work from home amid limited child care, stay-at-home orders, and social distancing guidelines. Even as the nation slowly gets back to work, the pandemic will undoubtedly have long-lasting effects on the economy, and by extension on employee benefits.
The 14th annual Northwest Benefits Survey—which includes data collected from February to April 2020 from 138 organizations located in Alaska, Idaho, Oregon, and Washington—captured the situation immediately before COVID-19 began affecting the United States. Despite the uncertainty of the moment, the observations from the 2020 Northwest Benefits Survey help clarify some strong trends that will likely have relevance in the future. From the expanded use of telehealth to the increasing importance of wellness benefits, employers may feel a need to reexamine their benefits in order to better support their employees and determine the way forward for their organizations during this global health crisis.
To learn more, read the article “Five key observations from the 2020 Northwest Benefits Survey” by Milliman’s David Evans.