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/.

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?

Thoughts?

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