Milliman announced today that we have added the Painters and Allied Trades District Council 82 DC Plan as a defined contribution client. The plan covers collectively bargained members in the states of Minnesota, Wisconsin, and North Dakota with approximately 2,300 participants and $155 million in plan assets.
Milliman is providing recordkeeping, consulting, and communication services for the District Council 82 defined contribution plan.
We are thrilled that the Trustees of the Painters and Allied Trades District Council 82 DC Plan chose to hire Milliman. The Trustees decided to merge two different plans together and it was necessary they had a solid solution in place for their members. The Trustees were confident in our reputation for client service and the solution and approach we discussed resonated with them.
Milliman was recently retained by a multinational company to provide actuarial services for its retirement programs in six countries. This article by Danny Quant highlights how Milliman’s solution turned the initial valuation contract into broader consulting opportunities.
Milliman has published 2017 retirement plan calendars for single-employer defined benefit (DB) plans, multiemployer DB plans, and defined contribution (DC) plans. Each calendar provides key administrative dates and deadlines.
• 2017 single-employer DB calendar
• 2017 multiemployer DB calendar
• 2017 DC plans calendar
Along with downloading each calendar, be sure to follow us at Twitter.com/millimaneb where we tweet upcoming dates and deadlines for plan sponsors.
Implementing a daily-valued Taft-Hartley defined contribution (DC) plan that participants can self-direct offers advantages to both trustees and participants. Milliman’s John Donohue explains some of the advantage in his Multiemployer Review article “Taking the Taft-Hartley defined contribution plan to the next level.”
Here’s an excerpt:
When participants have been working in their occupations for 20 to 30 years, it is likely they have accumulated sizable account balances. Allowing them to self-direct their accounts during the early to middle years of their careers can have a significant impact in helping them achieve their retirement goals. For those participants who have little interest in choosing their investments or are too busy to pay attention to the benefit, investing their money into a qualified default investment alternative (QDIA), such as a target date fund, allows for an investment strategy that aligns the participant’s retirement date with his or her investment risk (i.e., portfolios shift to a more conservative allocation as the member gets older). A QDIA is a default fund for participants who do not make an election, and as long as certain criteria are met it affords plan trustees fiduciary protection under ERISA §404(c). Moving to self-direction enables additional fiduciary protection for trustees attempting to manage an investment allocation that provides expected returns for the long-term retirement horizon of a 20-year-old participant while mitigating the volatility risk of a 60-year-old participant nearing retirement. These two objectives fall on opposite sides of the investment spectrum and highlight a significant challenge that is extremely difficult to achieve.
As participants approach retirement, an important component of retirement planning is the ability to develop a holistic view of all benefits accrued: defined benefit, defined contribution, Social Security, etc. When a defined contribution plan is not valued daily, the participant is viewing dated information that does not take into account market fluctuations and contributions for the current period. Allowing the plan to be valued daily will enable them to view their account balances or request current information about their accounts. Therefore, the participant will have a better understanding of his or her retirement needs.
In the same regard, bringing increased visibility to the defined contribution plan for apprentices and journeymen allows them to create a strategy for how to invest their accounts. Based on their individual situations, participants can invest their balances more conservatively or more aggressively. There are also professionally managed investment tools and programs that can take into consideration all of the participant’s retirement accounts, such as outside assets, spousal accounts, etc. These tools can assist members with providing investment allocations of their defined contribution plans based on these other benefits.
By year-end 2016, sponsors of calendar-year single-employer retirement plans must adopt necessary and discretionary plan amendments to ensure compliance with the statutory and regulatory requirements of ERISA and the tax code. This Client Action Bulletin looks at key areas—including administrative compliance issues—that sponsors of such defined benefit (DB) or defined contribution (DC) plans should address by December 31, 2016.
In a defined contribution (DC) world, retirees are forced to make critical decisions, often with little or no assistance. Most of these individuals choose to take a single lump-sum distribution either immediately or soon after they terminate employment.
This paper from the Center for Retirement Research at Boston College asserts that distribution provisions in DC plans are critical factors in evaluating the risk of falling into poverty in old age.
Specifically, the paper states that reliance on non-annuitized DC benefits with fairly easy access to lump-sum distributions puts elderly households at risk of not having sufficient income (or assets) to sustain themselves or, if they are not already in poverty at retirement, falling into poverty as the household members age or die off.
As workers continue to age, this will become a greater problem as those covered by defined benefit plans retire from the workforce and are replaced by those covered only by DC plans. So what can plan sponsors do to minimize the probability of their retirees falling into poverty?
Extrapolating from thoughts in the paper, the conclusion is that plan sponsors should encourage the following behaviors:
• Not taking lump-sum distributions before retirement
• Annuitizing some or all DC benefits when possible
• Choosing joint-and-survivor options when available