Defined Benefit Plans and COVID-19
Robert Powell, CFP®
The Society of Actuaries has just published a new report “Defined Benefit Plans and COVID-19: Immediate Challenges for Plan Sponsors.” This report provides insights into how plan sponsors are dealing with the economic issues related to COVID-19 in the current management of DB plans. There are three different types of plans in the U.S. – corporate plans (many of which are frozen), multi-employer plans, and public employee plans. Each plan type has a different structure, regulations and implications from the outbreak of COVID-19. The report includes a section on each type of plans and some general information. https://www.soa.org/resources/research-reports/2020/defined-benefit-covid-19-challenges/.
Defined Benefit Plans and COVID-19: Immediate Challenges for Plan Sponsors | SOA
This report summarizes observations raised during the conversation about current issues being discussed with clients to address immediate concerns as well as broader considerations about defined benefit plans.
In an email, Anna Rappaport, the chair of the SOA's Committee on Post-Retirement Needs and Risks, posed the following questions:
· What do you expect in the way of early retirement buyouts?
· Do you expect employers to rethink the design of their retirement plans? What might they want to do?
· Lack of emergency funds has been a barrier to retirement saving for some people. Do you expect employers to do more to encourage emergency funds?
· How do think retirement timing may change?
· Might there be increased interest in newer forms of risk sharing?
· Do you expect more multi-employer plans as a result of the SECURE act?
· States have been offering programs to help fill the gap for people without plans. Is this likely to grow?