PBGC Updates Rate Tables on Expected Retirement Age, Missing Participants Mortality Assumption

The Pension Benefit Guaranty Corporation published a final rule on Friday amending its regulation on the allocation of assets in single-employer plans.

The amendment involves substituting a new table for determining the expected retirement age of participants in pension plans undergoing distress or involuntary termination. The guidance applies to plans with valuation dates falling in 2025, according to the final rule, which is effective January 1, 2025.

This table is needed to compute the value of early retirement benefits, and, thus, the total value of benefits under a plan. The expected retirement age, or XRA, is one of the assumptions used to determine liabilities under ERISA section 4044.

For ERISA section 4044 calculations, the age at which benefits are assumed to commence depends on two factors:

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Whether the benefit amount is considered low, medium or high (the Retirement Rate Category), and
When participants, under the provisions of their plan can begin receiving reduced and unreduced benefits (the XRA tables).

A copy of the table is available on PBGC’s ERISA Section 4044 Retirement Assumptions web page.

The final rule also provides the mortality assumption for use with PBGC’s missing participants programs for determination dates in 2025. The current table for the missing participants programs provides the mortality assumption only for benefit determination dates on July 31 and later in 2024. The final rule updates the table to provide the mortality assumption for benefit determination dates in 2025.

In addition, the PBGC determined that notice of, and public comment on the rule are “impracticable, unnecessary and contrary to the public interest,” as the PBGC’s update of the tables for calendar year 2025 are routine.

Plan administrators also need the updated tables to value benefits in a timely manner. As a result, the PBGC stated that the public interest is best served by issuing these tables “expeditiously” without an opportunity for notice or comment. The PBGC wrote that good cause exists for making the table set forth in the amendment effective less than 30 days after publication to allow the use of the proper tables to determine the value benefits for dates in early 2025.

Tags: ERISA, mortality tables, PBGC, Pension Benefit Guaranty Corporation

A new academic group named the “Shadow SEC” announced its formation this week.

The organization made up of six legal and business academics aims to provide, encourage, facilitate and distribute policy discussions related to U.S. securities laws and matters involving the Securities and Exchange Commission, the Shadow SEC group said in a statement.

“Our intention is to meet regularly and provide thoughtful commentary based on history, economics, market practices, and SEC law,” the group said in a statement.

The founding members are all university professors and include John Coates, professor of law and economics at Harvard Law School, John C. Coffee, Jr., professor of law at Columbia Law School, James Cox, professor of law at Duke University School of Law, Jill Fisch, professor of business law at the University of Pennsylvania Law School, Merritt Fox, professor of law at Columbia Law School, and Joel Seligman, dean emeritus and professor at Washington University School of Law

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“Our purpose is to provide advice on how best to improve securities markets and preserve and fortify the SEC, which throughout its 90-year history has demonstrated a remarkable ability to adjust – through statutory changes, rulemaking, and enforcement actions – to constantly evolving securities products and securities markets and broker-dealer, investment adviser, governance, and accounting practices,” the group wrote in the statement.

The organization said it plans to announce one or two more members this month; and seeks to include others in “seeking the wisest possible federal securities laws and policies.”

They also backed President-elect Donal Trump’s nomination of Paul Atkins to chair the SEC. If approved by the Senate, he is expected to have a less aggressive regulatory regime than his recent predecessors and is also notable for his push to advance cryptocurrency guidelines and use in the markets.

“As an initial statement, we congratulate Paul Atkins on his nomination to be the next SEC chair. Paul earlier served as an SEC commissioner and has worked at the SEC during both Democratic and Republican administrations,” the group wrote. “We recognize that he has the requisite experience, knowledge, and intelligence for the position. We reserve the right to disagree with policies that he may propose.”