The division ready the brand new Interpretive Bulletin 95 overview to adjust to part 321 of the Setting Each Group Up for Retirement Enhancement (Safe) 2.0 Act. Safe 2.0 drafters requested the division to inform Congress whether or not it thinks the bulletin must be revised or supplemented with further steerage.
The market information: Between 2015 and 2022, about 3,135 of the 39,839 single-employer outlined profit plans insured by the PBGC used both lump-sum pension profit buyouts or annuity purchases to switch pension threat, in keeping with a brand new PBGC report cited by Su.
In 2022, the single-employer plans included within the report nonetheless had about 24 million members, however, over the earlier seven years, profit buyouts and annuity purchases had eliminated 3 million members from the PBGC’s threat pool.
Pension profit buyouts have been way more widespread than group annuity purchases, however group annuity purchases affected extra folks.
In 2022, for instance, lump-sum buyouts eliminated fewer than 100,000 folks from the PBGC threat pool. Group annuity purchases eradicated the necessity for the PBGC to guard the pension advantages of 300,000 folks.
The annuities: Some stakeholders advised Labor Division officers that non-public fairness companies are shopping for the annuity issuers and writing the annuities by way of reinsurance firm associates based mostly in jurisdictions with weak capital necessities.
Different stakeholders advised division officers that many life insurers with conventional homeowners are utilizing related methods, and that non-public fairness homeowners could also be safer than conventional homeowners as a result of they’ve higher entry to exterior capital, Su mentioned.
“Just a few stakeholders consider that captive and offshore reinsurers could warrant extra scrutiny than unaffiliated home reinsurers licensed in the US, because of the distinction in regulatory necessities,” she added.
Whether or not state insurance coverage warranty funds present safety that’s higher than or worse than PBGC pension fund insurance coverage has been one other controversial matter.
“The problems raised by stakeholders are complicated,” Su mentioned. “There have been few, if any, areas of consensus.”
The division ought to get extra public enter and attempt to preserve any modifications to the interpretive bulletin from having unintended penalties, Su mentioned.
Julie Su. Credit score: U.S. Division of Labor