Products November 25, 2013

UBA Partners with Vita Benefits Group

November 25, 2013 (PLANSPONSOR.com) – United Benefit Advisors (UBA) has partnered with Vita Benefits Group.
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Based in Mountain View, California, Vita Benefits Group is a provider of employee benefits consulting and brokerage services to employer groups of varying sizes. In addition to having relationships with major insurance carriers and negotiating medical and ancillary benefits for client partners, Vita also offers wellness program solutions.

“Joining UBA allows us to expand our knowledge of the benefits landscape, both in the U.S. and overseas,” says Karl Hansen, CEO and principal of Vita. “Engaging with such a vast network of firms will only improve our client experience in all aspects of insurance and employee benefits. Vita is excited about our future as a partner firm with UBA, as we prepare for the new benefits challenges of 2014 and beyond.”

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As the newest partner of UBA, Vita joins a network of more than 140 employee benefits advisory firms that service employers across the United States, Canada and Europe. Vita will have the ability to tap the expert knowledge of more than 2,000 benefit professionals through its partnership with UBA.

“We’re thrilled to welcome the Vita Benefits Group into the UBA family,” says UBA CEO Thom Mangan. “Vita’s broad range of services and penchant for one-of-kind client relations makes for a very attractive partner firm.”

United Benefit Advisors is an independent employee benefits advisory firm. Vita Benefits Group is a part of The Vita Companies, an employee benefits firm specializing in employee benefits, welfare plan compliance and administration, and 401(k) retirement plans.

Administration November 25, 2013

Understanding Discount Rates for Pension Obligations

November 25, 2013 (PLANSPONSOR.com) – A new issue brief examines approaches for selecting discount rates when measuring pension obligations.
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The brief from the American Academy of Actuaries, “Measuring Pension Obligations,” starts out by explaining that pension obligations can refer to the estimated payments made to pension plan participants. The present value of this obligation to participants is then expressed as a single amount to be paid on a specific date.

This present value, explains the brief, is dependent upon the discount rate. The discount rate is defined as the interest rate used to bring future cash flows to the present to account for the time value of money. The brief looks at two approaches for selecting discount rates—those that are market based and those that are based on expected returns. 

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The brief defines a market-based approach as one that uses a discount rate based on observable data from financial markets. An approach based on expected returns, on the other hand, is defined as using a discount rate based on the estimated return of a pension plan’s investment portfolio.

Delving deeper, the brief looks at solvency value, which is a measurement used under the market-based approach. This measurement determines an amount that a pension plan needs to invest in default-free securities to provide the benefits with certainty. The brief also discusses budget value, a measurement used under the return-based approach. This measurement determines an amount that will be sufficient to provide benefits if the portfolio earns the expected returns on assets.

The difference between these two values represents the gain that the plan sponsor anticipates by taking on risk in a diversified portfolio.

According to the authors of the brief, “The difference between the solvency value and the budget value provides insight in to the risk and potential rewards of the diversified portfolio.” The authors also explore related scenarios, which include plan sponsors using return-seeking assets in a diversified portfolio, as well as plans using a contingent asset similar to a call option.

The full issue brief can be downloaded here.

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