Compliance December 3, 2013

PBGC Revises Retirement Age Table

The Pension Benefit Guaranty Corporation (PBGC) updated the expected retirement age table used to compute benefit values for distressed pension plans facing involuntary termination.
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The updated table applies to distressed and terminating pension plans with valuation dates falling in 2014. Officials at the PBGC use the table to compute the value of early retirement benefits and, thus, the total value of benefits defined under a pension plan.

Changes to the table are designed to provide an updated correlation between the amount of a participant’s benefit and the probability that the participant will elect early retirement, according to a statement from the PBGC in the Federal Register. Such considerations factor significantly into the annuitization process and other valuation processes associated with distressed and terminating pensions. 

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Use of the table falls under PBGC’s pension plan termination insurance program, as stipulated in Title IV of the Employee Retirement Income Security Act (ERISA), especially subpart B of Section 4044.

A copy of the table, as well as an explanatory statement from the PBGC, is available here.

Products December 3, 2013

BNY Mellon Offers Liquidity Administration

Investment service provider BNY Mellon released a liquidity administration service as part of its fund-of-hedge-funds (FoHF) offering.
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The service will provide clients across BNY Mellon’s alternative fund administration and traditional custody segments with enhanced liquidity monitoring, reporting and analysis, plus advanced portfolio modeling capabilities. It is aimed at existing FoHF clients who use ad hoc or manual processes for liquidity administration, as well as public or corporate pension plans that require more sophisticated analytics and monitoring of their alternative investments portfolio.

Clients will have access to the service through the BNY Mellon Connect portal. The new service is fully integrated with the company’s FoHF custody and accounting systems, which helps to streamline trade execution instructions.

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The service will enable clients to forecast redeemable investment amounts through “what if” analyses, along with information on notice periods, lockups, and cash settlement and redemption fees by investment.

“Many organizations perform their own liquidity analysis through vendor software, internal applications, or manually,” says Alan Flanagan, BNY Mellon, global head of product management for alternative investment services. “Being able to outsource liquidity administration offers clients more comprehensive analysis, improved scenario modeling and greater transparency. These are all much sought after by fund-of-funds managers and institutional clients with a large alternatives allocation.”

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