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White Papers

ACCELERATE PENSION FUNDING AND DE-RISKING AHEAD OF TAX REFORM: A LESS TAXING EXERCISE

Corporate plan sponsors continue to grapple with the risks and rising costs associated with managing and maintaining their pension plans. Plan funded status, currently estimated at 84%, has been extremely volatile, increasing primarily due to strong equity performance amid continued low interest rates. Additionally, PBGC premiums have increased significantly—the variable rate premium rising from 3.4% today to at least 4.1% by 2019—and are a drain for underfunded plan sponsors. With the possibility of corporate tax reform on the horizon, plan sponsors may have a unique opportunity now to reduce PBGC expenses by accelerating funding and to deduct plan contributions at the current higher tax rate, resulting in a low risk, positive net present value (NPV) outcome. Further, by de-risking now, whether through enhanced LDI interest rate strategies or transferring risk, sponsors can avoid risk and potential costs associated with maintaining a plan.

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For more information on submitting a white paper, please contact Richard Scanlon at rscanlon@pionline.com or 212-210-0157.