Proposed Pension Funding Stabilization: How Does It Affect the Single-Employer Defined Benefit System?
Research Projects – Pension
An analysis of the pension funding stabilization provisions in the Senate-passed MAP-21 bill
The SOA is pleased to make available a research report from the Rapid Retirement Research Initiative that provides a system-wide analysis of how the pension funding stabilization provisions contained in the Senate-passed Moving Ahead for Progress in the 21st Century Act (MAP-21 bill) would affect funding requirements for the U.S. private single-employer defined benefit (DB) pension system. The report demonstrates the short-term implications of the provisions, such as the deferral of cash contribution requirements, as well as the broader implications of the bill, such as its effect on the volatility of contribution requirements, the transparency of disclosures, and the solvency of the system.
This report is not intended to advocate a position for or against the pending legislation. Rather, the purpose of this research is simply to provide an objective, actuarial analysis of the potential impact of the legislation on the funding requirements for corporate defined benefit plans. While we hope that this actuarial analysis will help inform policy makers on some implications of the proposed legislation, we recognize there are many other issues they must also consider when evaluating the merits of the bill, including the state of the economy, the current low level of interest rates, the impact on plan sponsors, and other factors. Consequently, the Society of Actuaries does not take any position on the merits of the legislation and whether it should or should not be passed.
Special thanks to the Pension Benefit Guaranty Corporation and Barrie and Hibbert for supplying data that was used in our analysis.
We extend additional thanks to the Modeling Oversight Group and other experts who provided helpful input during the review of the research, including:
- Chet Andrzejewski
- Chris Bone
- Mike Boot
- Don Fuerst
- Ian Genno
- Dani Goraichy
- Eric Keener
- Emily Kessler
- Jerry Mingione
- Andy Peterson
- David Pitts
- Tom Terry
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