The FASB’s Phase 1 Proposals Contain Several Controversial Provisions
On March 31, the Financial Accounting Standards Board (FASB) released its exposure draft of proposed phase 1 changes to accounting for defined benefit pensions and other postretirement benefit plans. Some of the more controversial changes could significantly affect corporate financial statements and impose new administrative burdens on some companies. Legal, Legislative Uncertainty Continues for Hybrid Plan Sponsors
As Congress entered its April recess, hybrid plan sponsors remained in a state of sustained uncertainty about the legal status of their plans. Legislation that would prospectively clarify their status is pending before a pension reform conference committee, but the House and Senate provisions differ significantly and negotiations are expected to be contentious. Pension Reform Negotiations Continue
Congress began a two-week legislative recess on April 7, leaving pension reform on hold. When lawmakers return to the conference committee negotiating table, they must try to agree on key reform issues: how to determine at-risk status, new rules for credit balances, the length and conditions for smoothing periods for assets and interest rates, the best way to transition to new funding rules, the legal status of hybrid pension plans and much more. Some Employers Finding Relief From Rising Health Care Costs, According to NBGH/Watson Wyatt Survey
Escalating increases in health care costs in recent years have wreaked havoc on companies’ compensation budgets, often holding pay and other perks hostage. Health care costs continue to rise, but at least the rate of increase has slowed. And some employers are finding ways to regain control over these costs, according to the latest National Business Group on Health/Watson Wyatt Employer Survey on Purchasing Value in Health Care. IRS Releases Final Revisions to Relative Value Regulations
When plan participants become eligible for their pensions, they generally must choose from several optional forms of payment, typically including a qualified joint and survivor annuity (QJSA). Optional forms of payment are usually equal in value. However, differences may arise from less-than-full actuarial reductions for longevity or surviving spouse benefits, mandated actuarial assumptions or simplified actuarial factors.
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