Defined Benefit Pension Plan Contributions: To 2021 and Beyond

While so many people across the country are looking forward to the end of this calamitous year – believing that 2021 will offer remedies for a global pandemic and an ailing economy, plan sponsors now should be plotting a strategy for the upcoming year and beyond. The Federal Reserve’s recent statement of “lower interest rates for longer” impacts defined benefit plan sponsors as they determine an approach to plan contributions – not just for 2021, but likely the next few years. Navigating a possible multi-year stretch of lower interest rates will be challenging for defined benefit pension plan sponsors, particularly for organizations feeling the effects of a pandemic-induced recession.

Forecast to Move Forward

This is an unusual recession, where the economic impact of the pandemic is varied. A number of industries are suffering, while others are seeing strong growth.  Certain manufacturers, supermarkets and online retailers, video conferencing firms and other companies enabling remote work have reported robust sales in recent months. The hospitality and entertainment industries, auto manufacturers and their suppliers, and numerous sectors of retail and manufacturing industries have been especially impacted through this pandemic.

Steering safely forward will require forecasting and guidance from the plan’s actuaries, and the first discussion with your actuary should focus on how the organization is currently faring. Organizations that have been hurt financially are likely to experience a “double whammy” as the company’s income drops and required contributions to their defined benefit pension plan increase.

Defined Benefit Pension Plan Contributions Forecast Chart

2020 Plan Contributions vs 2021 Cash Flow

Key to the contribution strategy conversation is determining how much the organization can afford to contribute. Some plan sponsors may choose to defer required 2020 plan contributions to January, 2021, while those companies having a good financial year may opt to contribute on the normal schedule, and may also contribute more than the required amount.

The decision to defer 2020 plan contributions, effectively at least doubling their contribution requirements in 2021, should be made only after weighing the pros and cons. Deferring may give the company time to come up with the funds needed, but the deferral may strain the organization’s cash flow with a large lump sum contribution coming due at the beginning of next year and other plan contributions required through 2021. Forecasting the organization’s financial picture is essential and it’s important to get answers to these questions in determining the contribution strategy:

  • When will the company’s cash flow improve?
  • How will our business be affected if another partial shutdown occurs and the economy continues to falter over the next nine months?
  • Should the organization finance its plan contributions now to either accelerate or avoid deferring future funding?
  • If plan contributions are deferred, can the lump sum contribution and other plan contributions be paid later from cash flow, through borrowing, or a combination?
  • Beyond the contribution impact, are there other impacts to the plan or the organization, such as PBGC premiums, by deferring or prepaying the plan contributions?

Look Beyond 2021

For most calendar year defined benefit plans, 2020 contributions will be lower than those required for the 2019 calendar year. Strong asset returns in 2019 resulted in that bit of good news, but plan sponsors should expect contributions to be higher for 2021 and beyond.

Economists are forecasting that the ripple effects of the pandemic on the economy will be widespread, taking several years to fully recover.  In light of an expected gradual recovery and the Fed’s message of ‘lower for longer’ interest rates, plan sponsors should anticipate having to manage their plans through a period of lower investment earnings and higher contributions, and understanding the reasonable range of contributions to expect is important.  Having a five- to ten-year contribution forecast that incorporates the economic outlook for the next several years will provide valuable insight on future contribution levels and help companies develop a longer-term funding strategy.

With low interest rates, plan sponsors have slowed down their annuity purchases from previous years, but some companies may consider offering a lump-sum window to their eligible participants to continue shrinking their obligations for their plans. These de-risking initiatives can create additional costs, so it’s important to understand the impact of these initiatives on future plan contributions before taking action. 

In addition, implementing a lump-sum window, not only needs to be fully explored with your actuarial team and legal counsel, the plan sponsor will also need to fully communicate the offer to participants to achieve the desired results. Support staff should be available to answer questions and assist participants with completing and submitting paperwork, if needed. During the pandemic, support should be virtual through call centers, microsites and other electronic meeting solutions.


As 2020 draws to a close, charting a course for DB plan contributions over the next few years is a wise decision that plan sponsors can make. Forecasting contribution levels, developing a contribution strategy, and implementing the plan are integral to moving forward as we experience “lower rates for longer”. Findley’s actuaries and consultants can offer guidance in developing defined benefit pension plan contribution strategies to navigate the return to normal.

Questions regarding what your plan’s contributions requirements for 2021 and beyond? Contact Tom Swain in the form below.

Published October 8, 2020

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The Road Less Traveled – Compensation Impacts of COVID-19

No map or plan could have prepared organizations for the compensation impacts of COVID-19. The bumpy path likely involves more hairpin turns and steep slopes before arriving at the destination – the new normal. Designing, implementing and analyzing compensation strategies as a part of an employer’s total rewards strategy requires agility and stamina. Most importantly, organizations must utilize strong data to back a thorough understanding of what it takes today and will take in the future to balance business needs with the ability to attract, retain and reward employees using every total rewards tool, including compensation.

Businesses with Unique Compensation Impacts

Developing and implementing the best compensation plan is not a one-size-fits-all exercise. COVID-19 shifted the growth trajectories of businesses and strategies within various sectors of the economy. With those changes come reformulations in the numbers, make up, and needs of employee populations. Each variation requires compensation strategies that were, most likely, not part of this year’s original total rewards plans. Developing the right compensation plan is not universal and differing approaches reflect the unique needs across the economy.

For businesses that suffered downturns, employee furloughs, layoffs and reductions in staff likely came with compensation price tags in the forms of severance, benefits transitions and salary reductions. These businesses need to reevaluate their overall business strategy and realign their total rewards package to meet current needs.

Businesses that have thrived during this pandemic may see increased compensation costs through recruitment, hiring and retention costs. It has been difficult for many organizations to attract workers to essential services jobs and many have reached deep to offer higher wages, bonus payments, and ongoing incentives to be an employer of choice in a difficult hiring market.

Regardless of which side a business falls on, the pandemic has impacted compensation. In April 2020, surveyed more than 1,000 companies, 65%, indicated no change to base pay in 2020, 10% saw a reduction in base pay during 2020 and 17% froze salaries at pre-COVID-19 levels.

Compensation Impacts of COVID-19

Common Considerations

Even as business sector needs vary, reviewing compensation structures within organizations involves careful analysis of several components within the framework of short and long-term planning. As one of the largest expenses to every company, managing financial viability of compensation is critical. Businesses need to recognize and react to immediate needs and adjust their total rewards strategy to address compensation, as the veil of the COVID-19 pandemic slowly lifts. Considerations to weigh include:

Base pay structures – Examining the data used to develop a base pay structure involves reviewing the original assumptions and data sources. It is safe to assume that five-year-old data will not accurately represent today’s conditions. It may be time to utilize more current data to update the underlying structure of base pay plans to more accurately reflect the current and future financial impacts of the pandemic. 

Incentive compensation – Businesses assessing incentive compensation plans on an annual basis may still require additional analysis in the short term to ensure incentive compensation is financially practical for an organization that may be struggling. Companies experiencing growth and profitability are likely to continue or increase incentive pay to reward and motivate performance. In every case, incentive compensation should align with current business conditions and the company’s strategic plan. 

Premium pay – Businesses with essential workers and organizations experiencing growth are using premium payments as a way to attract and retain employees. According to a recent World at Work pulse survey, incentives and spot payments are more popular now than prior to the onset of the global pandemic. Of the 26% of organizations offering hazard pay, 9% offer a flat cash amount, 8% tie incentives to hours and shifts worked and 9% offer hazard pay based on other performance criteria.

Executive compensation – It may be likely for many employers that the pre-pandemic budgets set for short-term incentive (STI) and long-term incentive (LTI) targets no longer apply. Employers will need to consider addressing the compensation targets in the future and the availability and role of discretion with variable pay.

Taking action to address the needed compensation shifts may culminate in a stronger compensation plan that meets the needs of the organization and its employees.

Data-Driven Decisions

Compensation evaluation requires market data as one source of information used to align practices with markets and create a fair play environment within organizations. Compensation studies and surveys are typically published one year after completion. Historically, the data lag has not been significant enough to be of major concern to compensation professionals but during these unprecedented times, market compensation information is severely impacted by data lags. Current surveys won’t reflect COVID-19 related shifts in base pay, Payroll Protection Program impacts or cash incentive payments made during pandemic business operations. These factors must be taken into account when using data produced in 2020.

Therefore, additional information sources are useful. Some sources are aggregated more frequently, and the savviest compensation plan designers augment traditional data points with other sources of information including pulse surveys from reputable sources and industry publications.

The Road Ahead

Even as businesses reopen and employees get back to work, early indicators tell us that the COVID-19 pandemic will impact employers and employees for longer than originally anticipated. Understanding the overall financial impact on businesses will continue to be the primary step in designing and implementing an effective compensation strategy.

In all cases, compensation can be an emotional factor in the employee value proposition. The same level of analysis and thought that lays the foundation for compensation planning must be used to develop compensation communication. Addressing issues requires careful and clear communication around compensation as a component of total rewards. In all cases, compensation is more than a wage package. Leveraging a total rewards approach allows employers to offer traditional and non-traditional benefits to recognize and reward employees.

Depending on your company’s financial health, companies are finding new ways to leverage compensation to attract and retain employees. For example:

  • Microsoft announced that it pays all hourly service providers during the COVID-19 pandemic regardless of whether or not their services are needed.   
  • Starbucks will pay employees for up to 14 days if they have been diagnosed with, exposed to or in close contact with someone with the coronavirus. 
  • Amazon and other retail giants are paying hourly employees $2 more per hour than pre-pandemic rates.


Compensation continues to be the largest expense for employers. Managing the complexities and leveraging the power of pay programs to attract, retain and engage employees has grown more difficult in recent months due to the swiftness and intensity of COVID-19. We expect this to continue throughout this year and into 2021. It is more important than ever for organizations to examine their compensation strategy and ensure it is viable for the near future. To learn more about navigating the compensation impacts of COVID-19, contact Jen Givens in the form below:

Published September 3, 2020

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DOL Issues Guidance on Lifetime Income Disclosure for Defined Contribution Plans

If you have a really good memory you might recall that way back at the end of last year Congress actually passed a significant retirement bill called the Setting Every Community Up for Retirement Enhancement Act (the “SECURE Act”). We prepared a brief article about the impact the SECURE Act would have on defined contribution accounts that you can find here.

COVID-19 and the employee benefit issues it has created seems to have overshadowed the SECURE Act, but the folks at DOL apparently remembered that they had been given a task. Section 203 of the SECURE Act amended ERISA to require that individual account balance plans add lifetime income disclosure to at least one participant account statement a year and the DOL was given until December 20, 2020, to provide plan sponsors with guidance on how these disclosures should be provided. The DOL has now released this guidance in the form of an interim final rule (IFR) along with a helpful fact sheet.

DOL Issues Guidance on Lifetime Income Disclosure for Defined Contribution Plans

Let’s Assume

The lifetime income disclosure illustrations are meant to provide participants with some idea of what their account balance would provide as a stream of income at retirement. The IFR provides plan sponsors with a set of assumptions and rules that must be used to prepare illustrations and comply with the disclosure requirements. These include:

  • The calculation will use a point-in-time current value of the participant’s account balance and does not assume future earnings.
  • It is assumed the participant would commence the lifetime income stream on the last day of the benefit statement period after the participant has attained age 67 (Normal Social Security Retirement Age for most individuals). If the participant is already over age 67 his/her actual age should be used.
  • The lifetime income illustrations must be provided in the form of a single life annuity based on the participant’s age and as a 100% qualified joint and survivor annuity presuming that the joint annuitant that is the same age as the participant.
  • Monthly payment illustration calculations will project forward using the current 10-year constant maturity Treasury rate (10-year CMT) as of the first business day of the last month of the statement period.
  • Assumed mortality for purposes of the calculation must be based on the gender neutral mortality table in section 417(e)(3)(B) of the Code – the mortality table used to determine lump sum cash-outs for defined benefit plans.
  • Plans that offer in-plan distribution annuities have the option to use the terms of the plan’s insurance contracts in lieu of the IFR assumptions. For clarification purposes, it is important to note that nothing in the lifetime income disclosure rules require that plans offer annuities or lifetime income options.
  • Plans must use model language provided in the IFR to explain the life-time income illustrations to participants.

Sweet Relief

The concept of lifetime income disclosure has been under consideration by Congress and federal regulators for many years and one concern has always been what would happen if the actual results a participant experiences is not as good as these projections. The IFR addresses this concern by providing that if plan sponsors and other fiduciaries follow the IFR’s assumption and use the model language to comply with the lifetime income disclosure rules those fiduciaries will not be liable if monthly payments fall short of the projections.

Something to Keep in Mind

Plan sponsors and participants should keep in mind that the product obtained as a function of complying with these lifetime income disclosure rules is going to yield something quite different than the results that would be achieved through an interactive projection of a participant’s account.  Many retirement plan vendors and financial planners will utilize projection tools that take into account future contributions and earnings as well as attempting to anticipate potential market fluctuations and interest rate changes rather than simply basing a projection on a static period of time. While a participant may find the figures that would be generated by this lifetime income disclosure useful as a year over year comparative tool the participant should also explore other planning tools for a more complete and robust retirement projection.

Timing & Effective Date

This IFR was publicly released on August 18, 2020, and it is expected to be published in the Federal Register very soon. Interested parties have been given 60 days to comment on what the DOL has set forth. The idea is that the DOL will take the comments it receives and make any adjustments it feels are merited to the guidance and then issue final regulations that will supersede the IFR. The guidance in the IFR will be effective one year after publication in the Federal Register. If you have any questions regarding these topics and updates, please contact John Lucas in the form below.

Published September 3, 2020

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Middle Tennessee Employee Benefits Council Virtual Breakfast Meeting

Join Findley’s Tom Swain and Cory Panning for the Middle Tennessee Employee Benefits Council Virtual Breakfast Meeting where they will present a strategic approach for building a financial well-being program that engages employees, helping them achieve better control of their financial lives and better planning and action for their retirement. 

Friday, September 18, 2020


Retirement Readiness Starts with Financial Wellbeing: A Strategic Approach for Building Your Financial Well-Being Program – Check it out!

How To Successfully Navigate A DOL ESOP Investigation

“Dear Sir or Madam…our office has scheduled a review of the above captioned plan to determine compliance with the provisions of ERISA.” A formal notice from the Department of Labor (DOL) can bring a sense of unease to any employee stock ownership plan (ESOP) practitioner. However, by developing an understanding of why DOL ESOP investigations occur and familiarizing oneself with the DOL’s audit practices, navigating one will be less ominous.

What Is A DOL ESOP Investigation?

The DOL enforces the federal laws of retirement plans under the Employment Retirement Income Security Act of 1974 (ERISA). ERISA provisions grant the DOL authority to conduct investigations of ESOPs and, unlike those conducted by the Internal Revenue Service (IRS), it has the discretion to investigate and reinvestigate any plan it so chooses. Because ESOPs fall under the governance of ERISA, fiduciary duty is required to those who administer, manage, or control plan assets and any ESOP fiduciary is required to act solely in the best interests of the plan’s participants.

Beginning in 2005, the DOL’s ESOP review project initially focused on the valuation of privately-held employer securities purchased by the ESOP.  Even more so today, ESOP trustees are under continued scrutiny from the DOL regarding this subject matter. The trustee must continually demonstrate due diligence in analyzing the transaction and determine that the valuation procedures considered when authorizing the share purchase result in the trust’s payment of no more than fair market value (i.e. “adequate consideration”). Ultimately, the DOL monitors whether participants are being overcharged for the stock acquired by the plan. Failure of any ESOP trustee to uphold this duty may result in them being held liable for making the ESOP trust whole, as evidenced by an increase of monetary settlements in recent court rulings.

How To Successfully Navigate A DOL ESOP Investigation

Why Was Our ESOP Selected?

Because the DOL does not detail their selection process, understanding why your ESOP is under investigation remains unclear. They commence for various reasons, including through referrals from other government agencies or media sources, via plan participant complaints, through computer generated targeting (e.g. collecting information on Form 5500), or by random audit. Many of the investigations do not occur until after a fiduciary breach occurs and the severity of any infraction will determine any company/civil penalties or criminal proceedings. Additionally, DOL enforcement agencies typically provide little advance notice, so knowing how to respond before an investigation begins is critical.

What Can We Expect?

The formal investigation process begins after receipt of a notification letter from a DOL regional office. This letter requests an abundance of plan documentation, including:

  • Plan and trust document
  • ESOP board minutes and correspondence
  • ESOP allocation report
  • ESOP trust statements
  • Copies of Form 5500
  • ESOP loan documents
  • Payroll data
  • Service provider agreements

This information must be provided to the investigator within a certain deadline, although extensions may be granted. It is good practice for a company to establish a point of contact (i.e. ERISA legal counsel) to help aid in the information exchange process. This helps to avoid disruptions, maintains organization, and ensures all requested materials are reviewed and properly addressed. Once all requested documentation is received, the DOL conducts on-site visits comprised of in-person interviews, including key personnel, plan fiduciaries, and those involved with the day-to-day operations of the ESOP. During this stage, it is crucial that legal counsel represent those being interviewed since they can detail what to expect and inform those interviewed of their rights during the process.

What Happens Next?

At the end of the audit period, the DOL must decide whether to take any further action. This phase of the DOL ESOP investigation may take several months and, during that time period, the DOL may discontinue communication with the contact person. Ideally, an investigation ends with receipt of a “no action” letter, meaning the DOL has found no improprieties during its audit. To the extent that the DOL ESOP investigation uncovers violations of ERISA, they will issue a Voluntary Compliance Letter. The letter generally details the facts gathered by the DOL during the investigation, outlines the violations that they have uncovered, and invites discussions related to the remedy of such violations. The DOL may also insist on entering into a written settlement agreement, of which, civil penalties may be imposed. Should settlement not be amenable to both parties, the DOL may also provide the IRS with their findings, which may impose further penalties or excise taxes.

In summary, one should not underestimate the seriousness of a DOL ESOP investigation or the resulting outcome. In the interest of transparency, the department does provide online access to its enforcement manual, detailing their internal audit guidelines and checklists. With a thorough review of these documents and an understanding of the general steps of an ESOP DOL investigation, any plan sponsor can successfully navigate one.

Questions regarding the process of ESOP investigations? Contact the Findley consultant you normally work with or Aaron Geibel in the form below.

Published August 28, 2020

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Powerful Insights from Interactive Forecasting of Defined Benefit Pension Plan Results

With the current volatility in long-term bond rates and in the investment market, plan sponsors should examine the impact of the market on the future of their defined benefit pension plan.

The market downturn due to COVID-19 severely impacted the funded status of defined benefit pension plans, and the ramifications could project out many years into the future.


Financial experts at any organization will agree that one of the problems with defined benefit pension plans is the volatility of cash funding requirements due to the sensitivity of the plan measurements to changes in the market. Many plan sponsors seek strategies to keep cash requirements as level as possible.

The difficulty for many stakeholders at organizations that sponsor defined benefit pension plans lies in understanding how the various factors are interrelated so that there is confidence in decisions made to improve the defined benefit pension plan’s financial position.

The following case study illustrates the power of interactive modeling on understanding the extent that different variables, like cash contributions, long-term bond rates, and asset returns, affect the future outlook for the defined benefit pension plan.

Case Study

The plan sponsor of a frozen defined benefit pension plan has been closely following the funded status of the plan. Based on annual forecasts, they developed a strategy with their actuary to contribute $5 million per year to be well enough funded to consider a plan termination in seven years.

Powerful Insights from Interactive Forecasting of Defined Benefit Pension Plan Results

The market downturn due to COVID-19 significantly changed this forecast. The actuary updated the current forecast to recognize the decrease in the market value of assets, lower bond rates for valuing liabilities, and lower expected rate of return for 2020 and 2021.

The updated forecast showed that the required contributions were no longer level and more than doubled compared to their original strategy due to overriding minimum funding rules, and the plan termination time horizon had extended to twelve years.


The plan sponsor worked with their actuary and asset advisor to model various “what if” situations quickly using an interactive modeling tool. Visually seeing the impact of future changes in the various economic variables on the defined benefit pension plan, helped to develop an approach for usage of available cash and to formulate next steps to monitor the defined benefit plan’s financial position.

Powerful Insights from Interactive Forecasting of Defined Benefit Pension Plan Results

Interactive Forecasting Results

Different variables were changed in several variations of the projections, and some great information was obtained:

  • If looking at contributions alone and trying to achieve level amounts, doubling the contributions to $10 million only shortens the plan termination funding time horizon to eleven years.
  • When considering level contributions of $7.5 million, there are a few years in the projection period when those contributions are not enough, but the plan termination funding time horizon remains at twelve years, and they would have saved some cash, especially in the short term.
  • If contributions are increased to $7.5 million, AND there is some economic recovery in 2021, then level contributions can be achieved.

Instead of needing to (somewhat blindly) decide to double contributions and to continue that for the foreseeable future, the interactive forecast showed that even a modest economic recovery has more of a long-term effect on the defined benefit pension plan’s results and plan termination time horizon than large additional cash contributions alone. Increasing planned contributions somewhat, and regrouping and using the interactive forecasting tool with updates periodically is the best short-term strategy for them.

Without the interactive tool, it would not have been apparent that waiting for some economic recovery was the right approach for now. It also would not have been clear that contributing higher amounts (within reason) in the hopes of getting things back on track actually does nothing to achieve that goal. That kind of insight is valuable when working on organization-wide approaches for allocation of cash, while also being responsible about trying to put future strategies like defined benefit pension plan termination back on track.

To discuss interactive projections for a defined benefit pension plan, plan sponsors should reach out to their actuary. Alternatively, contact Colleen Lowmiller in the form below, and with just a little information, Findley’s actuaries can put together interactive forecasting information to assist with strategy sessions.

Published on August 27, 2020

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Realign Your Sales Organization Webinar

Learn how organizations and sales structures are changing and aligning strategy, people, behaviors, and goals to meet their targets in 2020 with Findley’s Tom Hurley and Dan Simovic.

Over the past few months, our clients have been talking about sales incentives. The pandemic has disrupted the marketplace, forcing organizations to rethink their business development strategies, revisit sales goals and incentives, and potentially restructure the sales organization. It is primetime to get serious about sales compensation planning and design. It’s about more than “best practices”. It’s about “best thinking” based upon changes in the market and how your organization can adapt to the sales function. The topics include:

  • Social Distancing | Customer Distancing
  • Adjusting to Market Changes
  • Revisiting Core Guiding Principles
    • Value Proposition
    • Market Strategies
    • Goals & Metrics
    • Sales Incentive Planning
  • What needs to change?
  • Aligning Hunters & Farmers to SIP Framework
  • Ideal Attainment Distribution

Tuesday, September 15, 2020


Check it out!

Quarterly Contributions: To Delay or Not to Delay. PBGC Premium Savings Either Way

Looking for the silver lining in the clouds hanging over 2020? Through the CARES Act, defined benefit pension plan sponsors have a unique opportunity for significant savings in Pension Benefit Guaranty Corporation (PBGC) premiums. For plan sponsors who pay a PBGC variable premium based on their defined benefit pension plan’s unfunded liability, there are two options for premium savings – for those who have continued to make quarterly payments for the 2020 plan year, and for plan sponsors who expect to delay all 2020 contributions until December 31, 2020.

Quarterly Contributions: To Delay or Not to Delay. PBGC Premium Savings Either Way

Savings for Continuing Quarterly Contributions

Plan sponsors who have continued their 2020 plan year contributions will earn PBGC premium savings by reassigning the 2020 quarterly contributions to the 2019 plan year. Typically, this reassignment is not permitted unless there is an acceleration of the final 2019 contribution (due September 15, 2020 (calendar year)) to the first quarterly due date of 2020 (April 15, 2020 (calendar year)).

The CARES (Coronavirus Aid, Relief, and Economic Security) Act states that 2020 quarterly contribution funding deadlines for defined benefit pension plans have been extended to December 31, 2020. As a result, once the final 2019 plan year contribution is made, the 2020 quarterly contributions can be reassigned to the 2019 plan year. The savings to the variable rate premium is approximately 4.3 percent of the amount of contributions reassigned to the 2019 plan year.1

On September 21, 2020 the PBGC updated its guidance. Plan sponsors are no longer required to have contributions in the plan at the time of certification. While the usual filing due date of October 15, 2020 still applies (for calendar year plans), once contributions are made after that date, the plan sponsor can amend their filing and apply for a refund.

Updated to reflect PBGC Press Release Number: 

Savings through Delaying 2020 Contributions

A PBGC premium savings option also is available for plan sponsors who have planned to delay all 2020 contributions until December 31, 2020. Similar to above, the PBGC premium is still due October 15, 2020 (for calendar year plans). However, an amended filing can be prepared to receive a refund after the contributions are made by December 31, 2020.

The savings to the variable rate premium, in this case, would be about 4.3 percent of the amount of contributions reassigned to the 2019 plan year.

Choose a Strategy and Save

For example, assume that a plan sponsor has three required 2020 quarterly payments of $250,000. Implementing one of the strategies could bring nearly $32,000 in PBGC premium savings. There is some administrative work required to take advantage of these opportunities, but it’s not overwhelming and likely worth the effort.

The calculation to determine the amount of actual contributions and credit balance elections is complex and differs for each plan. To learn more about how your company’s defined benefit pension plan’s variable PBGC premium could be affected by either of these strategies, contact Larry Scherer in the form below.

Note: This article refers to dates for a calendar plan year, but the strategies also apply to non-calendar plan years.

1 Although the PBGC variable premium rate for 2020 is 4.5 percent of the unfunded pension plan’s liability, the premium saving is approximately 4.3 percent due to interest discounting of contributions.

Updated September 24, 2020

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Reach Remote Employees for a Successful Benefits Enrollment

Employees have never been known to clamor for information about their health and welfare benefits. In fact, studies show that most workers would prefer to do just about anything else besides learning about their benefits program. But it’s 2020 – a year when a pandemic seems to have turned the world upside down – so be prepared for remote employees to immerse themselves in your company’s benefits enrollment communications.

The double-whammy of the COVID-19 pandemic and an economic crisis has many American workers concerned about their benefits and the financial security that comes with company-provided health and welfare benefits. As employees face decisions during open enrollment, more attention may be paid to the coverage they need for 2021 – from medical plan options to disability benefits and supplemental life insurance.

Reach Employees for Successful Remote Benefits Enrollment

Employees who previously wouldn’t glance at voluntary benefits such as critical illness insurance and long-term care coverage may now review the offerings and consider enrolling in the plans. Are there benefits that employees should be taking advantage of? For the upcoming enrollment, employers can enhance their benefits package by adding one or two voluntary benefit options.

Enrollment is also an opportunity to remind employees of the COVID-19 benefits that are available through the company’s medical plan. Those benefits typically include the waiver of COVID-19 testing.

With a better understanding of their benefits, employees gain a greater appreciation of the value of the employer-provided health and welfare programs.

New Normal, New Ways to Reach Workers

Getting employees to that point of understanding and appreciation means educating them about their various benefit options. And, with the pandemic continuing to force social distancing, employers won’t be scheduling in-person enrollment meetings or health fairs. This year’s enrollment calls for a new approach to reaching a remote workforce.

As tempting as a passive enrollment may be in this chaotic year, employers should lean toward active enrollments so that employees go through the decision-making process about the important health and welfare plans that provide them some security.

Through this pandemic, video conferences, teleconferences, and webinars have become second nature to most employees who are working remotely and these tools can be very effective methods of communicating your benefits program this fall. Video conferencing and webinars allow employers to present updates for the 2021 benefits package and also respond immediately to questions from employees.

Without in-person enrollment meetings or one-on-one sessions with benefit advisors, employers should try to include online decision-making tools such as medical plan comparisons and benefit cost calculators in the enrollment process.

For employers who rely on a paper enrollment process, it’s time to consider moving to an online enrollment process. Protecting employee data as they make elections and enter information into the enrollment system remotely is essential.

Change Up the Communications

Employees now may be more interested in their benefits and employers can take advantage of this curiosity by mixing up their enrollment communications. Keeping in mind that many remote employees may not have printers, it will be helpful to provide communications that do not have to be printed. It’s also effective to keep messages brief and instructive – providing action items and spotlights on important content. While much of your communications can be online, postcards mailed to the home are often useful reminders for key messages and enrollment dates.

Changes to the benefit program – especially if it’s bad news – should be announced early and in a straightforward manner. Giving employees a “heads up” about higher costs or reduced benefits enables them to prepare for the impact of the change. It’s also important to have the buy-in of managers and supervisors so that the messaging they provide to employees is clear and consistent.

Highlighting certain benefits topics (i.e., an overview of enrollment and changes for 2021, or a video that explains the differences between consumer-directed health plans and a preferred provider organization option) into short 2D graphic videos allows employees to quickly and easily absorb complex information. Many remote employees are juggling work assignments, home-schooling their children, and maintaining a household, so access to short videos to learn about enrollment and their benefits can help in their decision-making process.

With the likelihood of more employees paying attention to their benefits today, Human Resources and Benefits staff may experience an increase in questions and requests for more information. As you prepare for enrollment, it may be beneficial to include “Frequently Asked Questions” that can be posted on the enrollment page of the company’s intranet or shared through an email to employees.


Certainly, this year’s enrollment brings challenges to reaching a remote workforce, but it also offers a chance to connect with them and improve their understanding and appreciation of their benefits package.

If you would like to learn more about how to help your employees navigate benefits remotely, please contact Dave Barchet in the form below.

Published August 19, 2020

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