2011 Pension Funding Relief

Pension Funding Relief passed in 2010, allowing employers to utilize relief in two years out of 2009, 2010 and 2011. But only 2% of employers used it in 2010. Electing Pension Funding Relief could provide a meaningful and useful benefit for your business in 2011 and 2012 as well. 

How does it work?  If your assets have underperformed, or if interest rates have gone down, the value of your assets have decreased, creating an unfunded liability.  By electing Pension Funding Relief you could put less money in your plan and use those funds to grow your business. 

Under Pension Funding Relief, you are allowed to either extend payments on the unfunded liability to 15 years or make interest only payments for the first two years. 

Where can you get help?  An actuary can help you decide the best course of action by evaluating your plan to see if Pension Funding Relief will help.   

Most actuaries have tools to help clients manage their way through pension funding issues. The tools consist of:

• Pension funding relief
• Plan design
• Asset liability matching
• Buying an annuity to cover retiree liability
   

There are many ways to take action and reduce your risk, while building a solid foundation for the future. Having an actuary review the issues and provide guidance is an important step to taking control of your business needs and staying compliant with plan funding rules.

 

Lisa Pfautz, Enrolled Actuary
Markley Actuarial Services