Compliance September 28, 2015

PBGC Issues New Solvency Projections

Modest improvements show in solvency of multiemployer and single-employer programs
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The projected insolvency date for the insurance program for multiemployer pension plans, which cover more than 10 million Americans, has been delayed by three years, according to the FY 2014 Projections Report released by the Pension Benefit Guaranty Corporation (PBGC).

The risk of program insolvency has decreased over the near term due primarily to the new premium revenues anticipated under the Multiemployer Pension Reform Act of 2014 (MPRA). It is more likely than not that the program’s assets will be depleted in 2025, compared with 2022 in last year’s report, and the risk of insolvency grows rapidly thereafter.

Projections for the PBGC’s insurance program for single-employer plans, which cover about 31 million people, show that the program’s financial condition continues to be likely to improve and conclude that it is highly unlikely to run out of funds in the next 10 years. PBGC modeled 5,000 simulations for the 2014 Projections Report, and none showed that the program would be unable to pay the benefits it owes in 2025.

The Projections Report is PBGC’s annual actuarial evaluation of its future operations and financial status. Its projections are not predictions, but rather provide a range of estimates of the future status of insured pension plans and their effect on PBGC’s financial condition, based on hundreds of different economic scenarios.

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Products September 28, 2015

Index Crediting Strategy for Voya’s Annuities Suite

Voya Financial announces a new index crediting strategy for its suite of fixed index annuity products.
Reported by

Voya Financial, a provider of retirement products and services to institutional clients, has announced a new index crediting strategy to diversify its suite of fixed index annuity product lines.

The approach, the Voya Point-to-Point Volatility Control Strategy, features Deutsche Bank’s proprietary CROCI (cash return on capital invested) US 5% Volatility Control Index. This provides a dynamic investment option that aims to reduce volatility by allocating between select U.S. stocks and cash.

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More than nine in 10 (91%) working Americans think it’s important to have investment options that offer exposure to the equity markets when planning their retirement portfolio, according to findings from the Voya Retire Ready Index.

Voya says that, given the historically low interest rate environment and low cap rates on many fixed index annuities, investors are seeing the value of volatility control strategies.

Besides offering an alternative to other popular benchmark strategies that are capped, the Voya Point-to-Point Volatility Control Strategy provides upside potential minus a spread rate. A lower spread rate helps customers maximize their investment, while their principal remains protected even with market downturns. Customers can lock in potential index credit gains on an annual basis to their fixed index annuity contract—giving them the benefits of compounding interest.  


 

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