A defined benefit pension plan design that reduces employer risk while assuring participants a guaranteed minimum lifetime benefit is attracting increased interest from certain business sectors. Known as an adjustable pension plan, the design derives its name from the fact that the benefit earned by participants is based not just on employees' compensation and years of service, but also on returns on investment of plan assets like in defined contribution plans. [More]
The IRS has issued a private letter ruling approving a pension designed with Adjustable Pension Plan (APP) features. The ruling resolves an uncertainty with respect to a particular design formula that can be used to customize the APP (AKA Variable Defined Benefit, or VDB Plan) to meet the needs of plan sponsors. [More]
A recent report by the Government Accountability Office (GAO) identifies Cheiron's variable DB plan, also known as the "adjustable pension plan" (APP) as an option "for a flexible DB plan to address risks facing multiemployer plans." The NCCMP's "Target Benefit" model was also cited.
In very broad terms, an APP plan is developed on a conservative (e.g., 5%) rate of return and mortality assumption. Benefits are adjusted to account for varying economic conditions. The more conservative nature of the plan results in more stable financial costs for the employers. The pooled risks (mortality and investments) provide better benefits than a defined contribution plan would for the participants.[More]
On Jan. 1, 2013 Cheiron Inc. combined forces with EFI Actuaries to expand and build upon its leadership role in the actuarial consulting field. [More]
Journalists, advertising professionals and other New York Times employees, represented by the Newspaper Guild of New York Local 31003 CWA, have just embraced the adjustable pension plan (APP) concept by ratifying, by an eight-to-one margin, a new four-year labor contract featuring the innovative design pioneered by Cheiron.
Cheiron provided strategic advice to the New York Times Company and the Newspaper Guild as it analyzed how to maintain its pension program in a manner that preserved essential protections for workers, while assisting the company to manage its liabilities with greater predictability and flexibility. [More]
Cheiron Consulting Actuary Richard Hudson joined a panel of pension scholars and experts Sept. 20 to testify at a U.S. Senate hearing titled "pension modernization for a 21st Century workforce." [More]
In a move that might signal an important trend in pension design, a major labor union and employer have agreed to adopt an Adjustable Pension Plan (APP) effective January 1. [More]
The variable defined benefit plan (VDB) design is beginning to catch the attention of traditional career-average DB plan sponsors who are looking for alternatives to terminating their existing plans, Cheiron CEO Gene M. Kalwarski, FSA, EA, MAAA, told trustees attending the IFEBP's 57th Annual Employee Benefits Conference in New Orleans recently. [More]
Longtime IRS veteran James E. Holland, Jr., ASA, EA, FCA, MAAA, joined Cheiron, Inc. on January 4 as the firm's Chief Research Actuary. Holland, who had been Assistant Director, Employee Plans Rulings and Agreements since February 2008, left the Service after a distinguished 36-year career. [More]
"It's time to think of new ways to encourage employers to provide pensions for their workers, and new types of pensions that do not put the full investment responsibility on workers," U.S. Labor Secretary Hilda Solis told a recent gathering of retirement thought leaders in Washington.
Cheiron President Gene Kalwarski, another speaker at the gathering sponsored by "Retirement USA," presented an outline for an alternative pension design, the Variable Defined Benefit Plan. [More]