Research Projects
Research Studies–Data Requests
Call for Papers–Funding Strategies for Single Employer Defined Benefit Plans under PPA
Overview
The Pension Protection Act of 2006 (PPA) has fundamentally changed the landscape for funding of single employer defined benefit pension plans in the U.S. Examples of the changes made include: (1) the requirement that funding liabilities be based solely on corporate bond rates, rather than an expected rate of return on plan assets; (2) the adoption of a single method for calculating plan liabilities (the traditional unit credit method); (3) the introduction of funding-based benefit restrictions impacting benefit accruals and payment of lump sums; and (4) restrictions on the use of carryover and prefunding balances (formerly referred to as credit balances). These developments have happened in an environment of significant investment losses and an increasing number of frozen plans.
While many details of the PPA funding rules have not yet been finalized via regulations, employers (and their actuaries) need to devise funding strategies now. In light of the PPA changes and other recent events, many plan sponsors are revisiting longstanding funding strategies. Funding strategies under PPA may differ based on a plan sponsor's desire to: (1) fully fund a plan to allow plan termination; (2) avoid benefit restrictions or at-risk status; (3) reduce PBGC variable rate premiums; (4) maximize the possibility of allowing for a level funding contribution over time given the restrictions of minimum required contributions or maximum tax deductible contribution or (5) not have surpluses due to asymmetric treatment of overfunding and underfunding.
Content
The Pension Section Research Team is seeking papers outlining effective funding strategies under PPA. It is not expected that there is a one-size fits all approach. As such, authors are encouraged to share their opinions and perspectives. Primary considerations of interest include what conditions make a given strategy appropriate, when strategies need to be reviewed and/or revised, and how robust a single strategy can be. Papers considering stochastic methodology and issues are also of interest.
The following is a list of potential issues that authors may wish to consider. Please note these issues are only intended to serve as examples and are not meant to restrict potential ideas in any way.
- What is the proper contribution level in order for a plan to maintain a relatively consistent contribution pattern in the future?
- What should be the relationship between FAS expense and plan funding considerations?
- How should contribution strategies vary based on a plan sponsor's investment strategy?
- How do a plan's demographics impact funding strategy?
- How have funding strategies changed under PPA versus prior to PPA?
- How do credit balances affect funding now and in the future?
- What events can significantly impact (or threaten) funding strategy?
- How does potential funding relief legislation affect overall funding strategy?
- How does a plan's initial funded status affect its strategy?
As mentioned, this is just a sample of issues that may fall under the scope of this Call for Papers. Authors may also combine several issues when developing their abstracts.
Procedure for Submission of Abstracts
Please submit an abstract or outline of your proposed paper by December 15, 2009 to:
- Barbara Scott
- Society of Actuaries
- f: 847.273.8592
- e–mail: bscott@soa.org
At a minimum, the abstract submission should include a brief description of the subject of the paper, a list of key items to be covered and a brief biographical paragraph summarizing the author's experience, prior publications and presentations and contact information.
Procedure for Reviewing Abstracts
Submitted abstracts will be evaluated by a review group for their potential for presentation at an SOA-sponsored event targeted in 2010. The exact dates and details will be decided at a later time.
Abstract submissions will be accepted, accepted subject to revision or declined. The review group is scheduled to complete its evaluation of the abstracts/outlines in January 2010.
Submission of Papers
All papers must be based on accepted abstracts and submitted in a complete format no later than June 15, 2010.
The procedure for submission of papers includes the following specific guidelines:
- Submissions that have a copyright must be accompanied by written permission to reprint.
- Submissions should be made electronically to Barb Scott at bscott@soa.org.
Publication and Presentation
The review group, after receiving all submissions, will determine if a meeting event for presenting the papers is appropriate. Should this occur:
- It is anticipated that travel and lodging expenses for authors selected to present at the event will be reimbursed, up to certain limits.
- A final determination as to the number of papers invited to present will be made after all abstracts have been submitted and reviewed.
- It is anticipated that all accepted papers will be published. The papers will appear in an on-line monograph and, where appropriate, in Society of Actuaries publications. Upon author request, accepted papers may also be submitted to peer-reviewed journals.
- Authors can submit their papers to other publications provided that the Society of Actuaries can maintain the right to publish the papers.
- The Society of Actuaries prefers to publish all papers and to copyright all published papers without a previous copyright. However, it will work with authors as necessary for special publication situations.
- The Society of Actuaries reserves the right to reject or not publish any papers not meeting the criteria and standards set by the review group.
Questions
Please direct any questions regarding this Call for Papers to:
- Steven Siegel, Research Actuary
- Society of Actuaries
- ph: 847.706.3578
- f: 847.273.8578
- e–mail: ssiegel@soa.org