EBSCOhost 112921356 REGULATORY SCRUTINY, LABOR UNIONS, AND PENSION FREEZES

(To learn which date applies, see “Are there any special rules if my plan ends in bankruptcy?” in the General FAQs About PBGC.) See Guarantees for Disabled Participants in Single-Employer Plans for more information. Church plans are not covered by PBGC’s insurance program unless they elect to be covered. Automatic Married Benefit Form / Automatic Unmarried Benefit Form – The types of annuities that a pension plan automatically provides to married and unmarried participants, respectively.

Others use a yield
curve constructed by a third party (e.g., Citigroup or an actuarial firm). Entities that use hypothetical bond portfolios to support the discount rate
to measure their postretirement benefit obligations should evaluate the
impact of current market conditions on both bond pricing and bond selection. Vested Benefits – Generally, pension benefits that a participant has earned a right to receive from a pension plan that are not subject to forfeiture.

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Commission on Veterans’ Pensions (commonly known as the “Bradley Commission”) in 1955–56. Pensions may extend past the death of the veteran himself, continuing to be paid to the widow. Employees must understand vesting, the amount of time to begin to accumulate and earn the right to pension assets. Because a sponsor’s disclosures for fair value measurements for
postretirement plans are excluded from the scope of ASC 820, the FASB’s fair
value measurement disclosures project addressed the sponsor’s fair value
disclosures that are specific to postretirement plans. Employers must also disclose significant concentrations of risk
in the plan assets. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update such forward-looking statements, except as required by law.

• Financial Assistance (for Multiemployer Plans only) – Under PBGC’s multiemployer insurance program, a PBGC loan provided to a multiemployer plan that is insolvent.
• A cash balance plan is a defined benefit plan made to appear as if it were a defined contribution plan.
• An entity should assess
  each of these events on the basis of the particular facts and circumstances.

Entities should consider the effect that decreases in plan
assets and changes in postretirement benefit obligations could have on the
computation of the gain or loss amortization component of net periodic benefit
cost. Many entities record the minimum amortization amount (the excess
outside the “corridor”).7
In the current environment, many entities have experienced a decline in both
the benefit obligation and the asset value, resulting in a tighter corridor,
and accumulated losses may have increased. Accordingly, this component of net
periodic benefit cost may be greater than previously estimated. In addition, management must be able to conclude that the
results of using a shortcut to calculate its discount rate, such as an index,
are reasonably expected not to be materially different from the results of
using a discount rate calculated from a hypothetical portfolio of
high-quality bonds. In measuring the benefit obligations, management should
understand, evaluate, and reach conclusions about the reasonableness of the
underlying assumptions that could be affected by unrest in the credit
markets. To obtain concessions from labor, managers in some cases face incentives to report lower earnings by adopting downward biased accounting estimates.

4 Curtailment accounting

Using pension plans’ expected rate of return and discount rate assumptions offers a potential advantage over discretionary accrual estimates because they are directly observable and not likely to be affected by firm performance. The “cost” of Pension plan accounting estimates and the freezing a defined benefit plan is not easily calculated, and requires an actuary or actuarial software. However, even with the best of tools, the cost of a defined benefit plan will always be an estimate based on economic and financial assumptions.

Maximum Guaranteed Benefit (for Single-Employer Plans only) – The largest benefit amount that PBGC can guarantee by law. Generally, the maximum guarantee for a single-employer defined benefit plan is fixed as of the plan termination date. However, if a plan ends during a plan sponsor’s bankruptcy that began on or after September 16, 2006, the maximum guarantee is fixed as of the bankruptcy filing date. Mandatory Employee Contributions – Money that participants must contribute to a defined benefit plan as a condition of employment or plan participation, or to get employer-funded plan benefits. Alternate Payee – A participant’s spouse, former spouse, child, or other dependent who, under a Qualified Domestic Relations Order (QDRO), has a right to receive some or all of the participant’s pension benefits under a pension plan.

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Set up by the employer, these may be wholly funded by the employee, who can opt for salary deductions or lump sum contributions, which are generally not permitted on 401(k) plans. 6 CB plans are a hybrid type of pension plan in which employers guarantee rates of return, as in a DB plan, but the employee receives a separate account that increases in value from both employer contributions and the plan rate of return, as in a DC account. The amounts that winners gain and losers lose at age 67 are generally greater for last-wave boomers than those in the first-wave because last-wave boomers have more years to compound gains or loses in DC accounts and accrue benefits in DB accounts before reaching age 67. The differences do not monotonically rise by cohort because of the nonlinear DB accrual patterns by age. Among winners, average per capita family incomes are projected to increase by $2,100 for first-wave boomers and by $2,800 for last-wave boomers (Table 9).

Even after identifying and excluding outliers, entities
should select a discount rate that is appropriate. Use of an inappropriately
high discount rate could result in an understatement of the benefit
obligation and, consequently, an overstatement of the plan assets. The discount rate may be affected by the volatility in the
financial markets and downgrades in the bond instruments that are used to
develop the rate. To support their discount rate, some entities seek advisers for
assistance in constructing hypothetical bond portfolios.

The Defined-Contribution Plan

3 Imputed rental income is the return that homeowners receive from owning instead of renting, in the form of reduced rent, less costs of homeownership. It is estimated as a 3.0 percent real return on home equity (the difference between the house value and the remaining mortgage principal). MINT projects DC pension participation and contributions using the 1996 SIPP matched to SSA’s Detailed Earnings Records.9 DC pension participation is estimated using a logit model. Separate models of the probability of participation are estimated for those who contributed to a plan in the previous year and those who did not contribute. An entity’s use of the CPI instead of the RPI as the inflation
index assumption for pension benefits should be evaluated in light of its specific
facts and circumstances.

Traditionally, defined benefit plans for employers have been administered by institutions which exist specifically for that purpose, by large businesses, or, for government workers, by the government itself. A traditional form of defined benefit plan is the final salary plan, under which the pension paid is equal to the number of years worked, multiplied by the member’s salary at retirement, multiplied by a factor known as the accrual rate. The final accrued amount is available as a monthly pension or a lump sum, but usually monthly. The benefits of defined benefit and defined contribution plans differ based on the degree of financial security provided to the retiree. With defined benefit plans, retirees receive a guaranteed payout at retirement, determined by a fixed formula based on factors such as salary and years of service.[8] The risk and responsibility of ensuring sufficient funding through retirement is borne by the employer or plan managers.

Client importance and unconditional conservatism in complex accounting estimates

In the current-year quarter, the impairment charges reduced net income by $19.3 million, or $0.70 per diluted share, while expenditures for Project Ascent reduced net income by $4.3 million, or $0.16 per diluted share. In the prior-year quarter, restructuring and impairment charges reduced net income by $8.1 million, or $0.29 per diluted share, while expenditures for Project Ascent reduced net income by $8.4 million, or $0.31 per diluted share. Note that last year’s net income and earnings per diluted share reflect the benefit of a lower tax rate due to the impact of favorable state tax adjustments. Working Retirement – A situation where a participant wants to start receiving, or continue to receive, pension benefits while working. Employees who leave employment under a “window” plan provision typically receive additional benefits above the amount that they would have normally received based on their age and service at the time they leave. Typically, plans reduce the monthly amount of an early retirement benefit to reflect the longer expected payout over a person’s life.

• MyPBA (for Single-Employer Plans only) – My Pension Benefit Account, the PBGC’s secure online application that allows participants and beneficiaries in PBGC-trusteed single-employer plans to update their personal information and perform benefit-related transactions with PBGC.
• After all incomes and assets are calculated, MINT calculates SSI eligibility and projects participation and payments for eligible participants.
• In a defined benefit pension plan, unfunded accrued liability (UAL) is the difference between the estimated cost of future benefits and the assets that have been set aside to pay for those benefits.
• The decrease in merchandise margin of 110-basis points was due to continued cost pressures on certain private-label merchandise, much of which we continued to absorb rather than passing on to the customer through price increases.
• Please see “Non-GAAP Measures” below and reconciliations of these non-GAAP measures to the comparable GAAP measures that follow in the tables below.

If a participant is eligible to receive a lump sum from a defined benefit plan or PBGC, the participant can transfer all or part of the lump sum into an IRA or other qualified plan. Annual Funding Notice – An annual notice of a pension plan’s funding status (see Plan Funding). Federal law requires that all single-employer and multiemployer defined benefit plans subject to Title IV of the Employee Retirement Income Security Act of 1974 (ERISA) send this notice each year to participants, beneficiaries, and certain other parties. Pillar 1, sometimes referred to as the public pillar or first-tier, answers the aim to prevent the poverty of the elderly, provide some absolute, minimum income based on solidarity and replace some portion of lifetime pre-retirement income. It is financed on a redistributive principle without constructing large reserves and takes the form of mandatory contributions linked to earnings such as minimum pensions within earnings-related plans, or separate targeted programs for retirement income. These are provided by the public sector and typically financed on pay-as-you-go basis.

In a major update of the state pension, the Pensions Act 2007, which aligned and raised retirement ages. Following that, the Pensions Act 2008 has set up automatic enrolment for occupational pensions, and a public competitor designed to be a low-cost and efficient fund manager, called the National Employment Savings Trust (or “Nest”). Germany’s mandatory state pension provisions are based on the pay-as-you-go (or redistributive) model.