Will 2022 Be the Year of the Reasonable Mortality Table?

Several cases are percolating in 2022 that spotlight ERISA. Among them, Hughes v. Northwestern University, on which SCOTUS heard oral arguments in early December, and which focuses light on the pleading standards required to challenge retirement savings plans. See Oral arguments transcript. SCOTUS also has been asked to review Howard Jarvis Taxpayers Association v. California Secure Choice Retirement Savings Program. That program, already representing 11,000 employers and having combined assets over $85M, requires a portion of California workers' earnings to be automatically deposited into IRAs, where the employer does not otherwise maintain a retirement savings program for those workers. And in Belknap v. Partners Healthcare System, Inc., a Massachusetts district court will consider a challenge to the mortality tables that the defined benefit plan of a large Massachusetts healthcare employer has relied on in calculating annuity payments, or their actuarial equivalents. Will reasonableness matter?  

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• The “Gaming” of Pension Plan Actuarial Assumptions
  Learn about other case challenges to defined benefit plan actuarial assumptions, which reference mortality tables and interest rates. According to the Belknap complaint, the employer used "typical and up-to-date actuarial assumptions" when calculating the value of all benefit forms for its financial statements and used “1950s-era inputs” (i.e., an interest rate of 7.5% and a 1951 Group Annuity Mortality Table) to calculate actuarial equivalence for joint and survivor benefits.

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  • ERISA. DOL issues supplement to June 3, 2020, Information Letter on private equity investments in ERISA retirement plans, cautioning that plan fiduciaries must have or obtain sufficient expertise for their prudent selection and monitoring and echoing commentator concerns over their propriety as a DC plan investment option. DOL, Supplemental Statement (Dec. 21. 2021); DOL Warns Retirement Managers About Private Equity’s Risks.
  • Health and Welfare Plans. DOL issues guidance concerning new compensation disclosure requirements for group health plan brokers and consultants under ERISA § 408(b)(2)(B) (29 U.S.C. § 1108(b)(2)(B)) pursuant to Consolidated Appropriations Act, 2021 (Pub. L. No. 116-260), Title II, Div. BB, § 202. Field Assistance Bulletin No. 2021-03 (Dec. 30, 2021).
  • Executive, Incentive, and Equity-Based Compensation. SEC staff modifies executive compensation reporting interpretive guidance in Staff Accounting Bulletin Series to align its views on fair value estimates of equity-based compensation grants while the company is in possession of material non-public information with current authoritative FASB standards. SEC, Staff Accounting Bulletin 120. 

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