The July 2016 edition of the Benefits Magazine published by the International Foundation of Employee Benefit Plans includes an article on creating a funding policy, written by Cary Franklin of Horizon Actuarial Services, LLC.

A copy of Cary's article can be downloaded via the link below.
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                          Creating A Funding Policy

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The article was reproduced with permission from the International Foundation. For the full July 2016 edition of the Benefits Magazine, visit www.ifebp.org.​

At Horizon Actuarial Services, LLC, we are actuaries, not investment professionals.  Therefore, when developing assumptions as to what returns a pension plan’s assets might be expected to earn in the future, we look to our colleagues in the investment advisory community.  Each year, we survey different investment advisors and ask them to provide their “capital market assumptions” – their expectations for future risk and returns for different asset classes in which pension funds commonly invest.

The information gathered from this survey can help answer the commonly-asked question: “Are my plan’s investment return assumptions still reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumptions, such as its asset allocation and the maturity of its participant population.  Any of these factors can make the expected return for one plan very different from others.  Therefore, this report does not opine on the reasonableness of any one plan’s investment return assumptions.  Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 35 investment advisors who participated in the 2016 edition of this survey.

The report on the results of the 2016 Survey can be viewed below.

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                    2016 Survey of Capital Market Assumptions

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This is the fifth edition of the survey for which we have published a report. Prior editions can be found below:

          | 2012 Survey | 2013 Survey | 2014 Survey | 2015 Survey |

The Mechanical Contractors Association of America, Inc. (MCAA) and Horizon Actuarial Services, LLC have partnered to build an inventory of historical data for multiemployer pension plans in the construction industry.

The purpose of this inventory is to summarize and analyze key trends in plan demographics, cash flows, investments, funding, and costs over a ten-year period, from 2004 through 2013. By analyzing these trends, we can better understand how these construction industry plans have evolved over the past decade and where they may be headed in the future.  This report also examines plan investment fees and operating expenses for construction industry plans. If you are a plan trustee, you may find this section of the report useful as a comparison tool.

As an appendix, the report  provides detailed results by trade within the construction industry, as well as a separate section containing exhibits specific to plans co-sponsored by MCAA employers and the Plumbers and Pipefitters.  This report also provides a listing of all of the construction industry plans included in the inventory. If you are an employer participating in one or more of these plans, the information in this listing will help you comply with the new multiemployer plan disclosures required by the Financial Accounting Standards Board (FASB).

The report can be viewed below.

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    Inventory of Construction Industry Pension Plans: Fourth Edition
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The report can also be viewed at the MCAA’s website.

Horizon Actuarial Services, LLC has partnered with the International Foundation of Employee Benefits Plans to conduct a study of U.S. multiemployer defined benefit pension plans.  The study covers multiemployer plans in all industries, building upon the similar study of construction industry plans that Horizon Actuarial originally conducted with the Mechanical Contractors Association of America (MCAA) in 2012.
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The report – The Multiemployer Retirement Plan Landscape: A Ten-Year Look (2004-2013) – is available at the International Foundation’s website at www.ifebp.org/multiemployerretirement. The report provides a look at historical trends for U.S. multiemployer retirement plans for the ten-year period from 2004 to 2013.  It will help plan trustees, professional service providers, and policymakers gain a better understanding of these plans and their environment. The report may also serve as a useful comparison tool, enabling trustees and advisors to understand how their plans compare with others with respect to demographics, cash flows, investments, and funding.

This is the second edition of the report to include information on multiemployer defined contribution (DC) retirement plans, as well as multiemployer defined benefit (DB) pension plans.
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Please contact your Horizon Actuarial consultant if you have any questions.

At Horizon Actuarial Services, LLC, we are actuaries, not investment professionals.  Therefore, when developing assumptions as to what returns a pension plan’s assets might be expected to earn in the future, we look to our colleagues in the investment advisory community.  Each year, we survey different investment advisors and ask them to provide their “capital market assumptions” – their expectations for future risk and returns for different asset classes in which pension funds commonly invest.

The information gathered from this survey can help answer the commonly-asked question: “Is my plan’s investment return assumption still reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumption, such as its asset allocation and the maturity of its participant population.  Any of these factors can make the expected return for one plan very different from others.  Therefore, this report does not opine on the reasonableness of any one plan’s investment return assumption.  Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 29 investment advisors who participated in the 2015 edition of this survey.

The report on the results of the 2015 survey can be viewed below.

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         2015 Survey of Capital Market Assumptions

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This is the fourth edition of the survey for which we have published a report. Prior editions can be found below:

          | 2012 Survey | 2013 Survey | 2014 Survey | 

On June 17, 2015, the Internal Revenue Service (IRS) and Pension Benefit Guaranty Corporation (PBGC) issued guidance on the Multiemployer Pension Reform Act of 2014 (MPRA), which was signed into law last December.

The IRS’s guidance comes in the form of a revenue procedure regarding the application and approval process for benefit suspensions under MPRA.  The IRS has posted the revenue procedure on its website.  The revenue procedure was issued in conjunction with temporary and proposed regulations providing guidance on benefit suspensions.

The PBGC’s guidance comes in the form of an interim final regulation on the partition rules under MPRA.  The PBGC has posted a press release regarding the regulation on its website, which includes a link to the regulation itself.  The regulation provides guidance on the process of applying for a partition, including information required from the plan sponsor as part of the application.

Horizon Actuarial Services, LLC has partnered with the International Foundation of Employee Benefits Plans to conduct a study of U.S. multiemployer defined benefit pension plans.  The study covers multiemployer plans in all industries, building upon the similar study of construction industry plans that Horizon Actuarial originally conducted with the Mechanical Contractors Association of America (MCAA) in 2012.

The report – The Multiemployer Retirement Plan Landscape: A Ten-Year Look (2003-2012) – is available at the International Foundation’s website at www.ifebp.org/multiemployerretirement. The report provides a look at historical trends for U.S. multiemployer retirement plans for the ten-year period from 2003 to 2012.  It will help plan trustees, professional service providers, and policymakers gain a better understanding of these plans and their environment. The report may also serve as a useful comparison tool, enabling trustees and advisors to understand how their plans compare with others with respect to demographics, cash flows, investments, and funding.

While the first edition of the report (covering the ten-year period from 2002 through 2011) focused only on multiemployer defined benefit (DB) pension plans, this second edition of the report also includes information on multiemployer defined contribution (DC) retirement plans.
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Please contact your Horizon Actuarial consultant if you have any questions.

At Horizon Actuarial Services, LLC, we are actuaries, not investment professionals.  Therefore, when developing assumptions as to what returns a pension plan’s assets might be expected to earn in the future, we look to our colleagues in the investment advisory community.  Each year, we survey different independent investment advisors and ask them to provide their “capital market assumptions” – their expectations for future risk and returns for different asset classes in which pension funds commonly invest.

The information gathered from this survey can help answer the commonly-asked question: “Is my plan’s investment return assumption still reasonable?”  Of course, there are many factors to consider when evaluating a plan’s investment return assumption, such as its asset allocation and the maturity of its participant population.  Any of these factors can make the expected return for one plan very different from others.  Therefore, this report does not opine on the reasonableness of any one plan’s investment return assumption.  Nevertheless, we hope this report will be a useful resource for trustees, actuaries, and investment professionals alike.

Horizon Actuarial sincerely thanks the 23 investment advisors who participated in the 2014 edition of this survey.

The report on the results of the 2014 survey can be viewed below.

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                                    2014 Survey of Capital Market Assumptions
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This is the third edition of the survey for which we have published a report.  The 2013 edition of our survey can be found here, and the 2012 edition can be found here.