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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The funded status for most pension plans is anticipated to drop significantly and plan sponsors face sharply higher contributions for 2011, according to an analysis by Mercer actuaries. These are some of the conclusions from a Mercer analysis of 849 private-sector single-employer plans subject to the Pension Protection Act of 2006 (P.L. 109-280; PPA), with more than $191 billion in combined assets as of January 1, 2010, and covering more than 4 million participants.
Mercer estimates that, among the private-sector plans it studied, more than two-thirds will see required contributions jump from last year by at least 50%, and at least one quarter will likely see contributions more than double. Low interest rates, coupled with declines in equity prices, will hit plan sponsors with a vengeance in 2011, Mercer says, "but the full effects of this one-two punch won't be fully felt until 2012 and beyond."
Without changes to the pension funding rules, Mercer expects the funded status for many plans in 2011 will likely decline significantly as a result of prior periods of equity declines and falling interest rates. This, in turn, will lead to a drop in funded ratios, increases in required contributions in 2011, and a decline in total credit balances for surveyed plans.
Additional contribution increases expected in 2012
Further sizable increases in minimum required contributions and cash contributions are expected for 2012 as equity markets remain volatile, interest rates continue to decline and credit balances are exhausted, according to the Mercer analysis. The combined effect of these events, said Mercer, will place additional pressure on pension plan funding levels and trigger higher required contributions for coming years due to the short time for funding unexpected changes in investment returns and interest rates under the PPA.
Source: Mercer press release.
For more information, visit http://www.wolterskluwerlb.com/rbcs.
For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.
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