The forum, “Retirement Plans After Windsor,” was originally
scheduled for June 26. The forum will cover implications of the U.S. Supreme
Court’s decision in United States vs. Windsor, as well as Revenue
Ruling 2013-17 and Notice 2014-19 on qualified retirement plans. IRS officials
will also address frequently asked questions posted on the IRS website that
relate to the Windsor decision and qualified retirement plans
(see “IRS
to Discuss Retirement Plans and Same-Gender Marriages”).
The
one-hour forum will take place at 2 p.m. Eastern Time on July 17. Those
interested in participating can register for the forum here.
A 25-page handout of material related to the forum can be downloaded here.
The funding for defined benefit (DB) retirement plans sponsored by S&P 1500 companies showed a slight improvement during June, according to a recent analysis from Mercer.
The consulting firm finds that the estimated aggregate
funding level for these DB plans increased by 1% in the month of June, ending
the second quarter of 2014 with a funded ratio of 85%. Small gains in equity
markets accompanied by increases in interest rates used to calculate corporate
pension plan liabilities drove the improvement in funded status.
While the collective estimated deficit of $330 billion (as
of June 30) was down $13 billion from the estimated deficit of $343 billion (as
of May 31), it has increased by $94 billion from the deficit of $236 billion
seen at the beginning of the year, says Mercer. This translates into a
year-to-date decrease in funded status of approximately 3%.
The analysis also finds that U.S. equity markets earned
about 1.9% during June based on the S&P 500 Index. Typical discount rates
for pension plans as measured by the Mercer Yield Curve increased
by one basis point to 4.07%, a slight improvement since last month’s low point,
which drove liabilities downward.
“Even with the very positive returns we have seen in most
equity markets this year, overall, U.S. corporate pension plans have lost
ground since the beginning of the year due to a 50 to 60 basis point drop in
discount rates,” says Jonathan Barry, a partner in Mercer’s Retirement
business, based in New York.
Barry explains that since the market downturn in 2008, there
have been a number of chances to lock in funded status gains, but that many
plan sponsors missed out on those chances. He adds, “Now we are seeing a big
uptick in the number of sponsors looking to manage this volatility and avoid
the ups and downs of the market. In particular, 2014 and 2015 look to be big
years for sponsors to execute on cashout programs for former employees, which
can serve to shrink the size of the plan and lower various costs associated
with managing pension programs.”
Mercer estimates the aggregate funded status position of
plans operated by S&P 1500 companies on a monthly basis. The estimates are
based on each company’s year-end statement and by projections to June 30 in
line with financial indices. This includes U.S. domestic qualified and
non-qualified plans and all non-domestic plans.
The
estimated aggregate value of pension plan assets of the S&P 1500 companies
as of December 31, 2013, was $1.80 trillion, compared with estimated aggregate
liabilities of $2.03 trillion. Allowing for changes in financial markets
through June 30, 2014, changes to the S&P 1500 constituents and newly
released financial disclosures, at the end of June the estimated aggregate
assets were $1.88 trillion, compared with the estimated aggregate liabilities
of $2.21 trillion.