Tag Archives: layoffs

Reading list: COVID-19 implication for pension plans

The financial effects of the COVID-19 pandemic is a big concern for pension plan sponsors. The following list of articles highlights several topics sponsors must consider to navigate the landscape successfully now and moving forward.

COVID-19 to leave multiemployer pension system more distressed than ever
By Kelly Coffing, Tim Connor, Nina Lantz

Activities in many industries have slowed with concern that the recovery of normal operation could take years, reducing the contributions coming into multiemployer pension plans. This Multiemployer Review explains how COVID-19 could leave the multiemployer pension system even more distressed.

Impact of COVID-19 on your pension plan: CARES Act funding relief for single-employer defined benefit plans
By Delbert Zamora

Single-employer defined benefit plan sponsors need to weigh the impact of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This article focuses on the CARES Act provision allowing deferment to January 1, 2021, of required plan contributions due in the 2020 calendar year.

Impact of COVID-19 on your pension plan: Market volatility and the effect on single-employer plans
By Scott Preppernau

The pandemic has created turmoil for the financial markets, raising profound and potentially long-lasting concerns for pension plan sponsors. This article explores several key financial measurements and plan requirements to help single-employer pensions traverse the current situation.

Pension risk management: COVID-19 FAQs
By William Strange

Market volatility resulting from the coronavirus outbreak has led many organizations to ask a variety of questions related to pension risk management. This FAQ highlights some of those questions with corresponding answers.

Impact of COVID-19 on your pension plan: Considerations for layoffs
By Jeff Baker

Many employers are implementing layoffs to maintain economic viability, which have the potential to create some unintended consequences to pension plans. This article focuses on several plan issues that sponsors should consider following a workforce reduction such as layoffs or furloughs.

Can multiemployer pension plans survive COVID-19?
By Ladd Preppernau and Carrie Vaughn

The effect of the coronavirus on the economy and financial markets has major implications for multiemployer plans. This Multiemployer Alert presents several questions and answers that sponsors must think about concerning their plans.

Reducing staff? Your defined benefit plan can help ease the pain

The effect of COVID-19 has been devastating for some businesses. In a relatively short amount of time, we’ve seen thriving businesses brought to their knees—some closing temporarily or for good. Others, anticipating a longer recovery period, are considering some difficult changes such as laying off workers.

If your company is being forced to downsize or temporarily close, don’t forget that you can leverage your defined benefit plan during these difficult times. You can make the transition for your employees more palatable by:

  • Offering an early retirement window:During an early retirement window, you are able to offer enhanced benefits to encourage retirement. Consider offering medical benefits to bridge the gap and to make the offer even more worthwhile. Although an early retirement window reduces active participant cost, it can increase the cost of pensions paid over time (but is less problematic with well-funded plans).
  • Lowering Normal Retirement Age:Amending the plan to lower the Normal Retirement Age would allow employees to collect full retirement benefits earlier while working elsewhere. This should be carefully considered as you could risk losing high-quality workers to competitors, and a lower Normal Retirement Age becomes a permanent feature of the plan.

It’s possible you will need to consider more drastic action and close your doors permanently. If you are unable to fund, manage, or administer the plan, a plan termination is the likely scenario. In these unprecedented times, remember your defined benefit plan can ease the pain as you make difficult decisions such as workforce reductions.

As you consider taking action and want to discuss how you could leverage your defined benefit plan, contact your Milliman consultant.

This blog post is the second of a three-part series on workforce management during the coronavirus pandemic.