D. Greene & Company
970 Dewing Avenue, Suite 300
Lafayette, CA 94549
(925) 284-8630
david@dgreenecompany.com
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Pension Plan Terminations
David W. Greene
2002 SOA Spring Meeting
Session 007 June 24, 2002
Terminating a defined benefit plan is a complicated process with potentially over 2 dozen
separate tasks. Many of these tasks are completed by actuaries. Some by the Plan
Sponsor. Some by attorneys. Some by specialty consultants like ourselves.
What can you expect of this session?
− A sense of the process that includes tasks you might not have thought about.
− The level of detail and precision that is needed in this process vs. ongoing
actuarial work.
Handout #1 is a timetable of the major tasks. Tom covered many of the forms. I’m
going to concentrate on a few of the tasks that we are almost always involved in. These
are:
− The up front preparation work,
− Searching for missing participants and deaths,
− Drafting the request for proposal to obtain a group annuity quote,
− Conducting the due diligence meeting,
− Holding the bid auction,
− Reconciling the data after purchase, and
− A possible PBGC audit
Preparation – the Importance of Starting Early
− Plan amendments may need to be adopted in advance.
− Example: Plan Sponsor that calculated voluntary contributions in terms of current
trustee’s investment vehicles; needed to change to fixed or indexed rate so
insurance company could administer effectively.
− Example: Plan Sponsor that had disability provision in pension plan; changed to
provide this benefit through long-term disability plan.
D. Greene & Company
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− Determine whether the lump sum option should be offered to those not currently
eligible. Especially relevant if interest rate was high at beginning of plan year but
rates are dropping. If Plan Sponsor wants to make a change, a plan amendment
will be needed.
− Hedge strategy.
− Develop data requirements.
− Receive and edit initial census data.
Deceased and Missing Parti