The 2015 premium filings to the Pension Benefit Guaranty Corporation (PBGC) requires the reporting of information about the de-risking activities of pension plans as part of their annual premium payment filings. The data set includes participant counts split between participants in and not in pay status for both lump-sum windows and annuity purchases in the last two years. For lump-sum windows, the participant counts include those eligible for the window and the actual number who elected a lump-sum under the window. For annuity purchases, the participant counts are limited to those for whom an annuity was purchased. If accurate data are not available, then reasonable estimates are acceptable. Finally, data are not required to be reported if the lump-sum window closed or the annuity purchase was made less than 60 days before the premium filing is made. So for a calendar year plan that files the 2015 premium filing on October 15, 2015, the information to be provided encompasses de-risking activities from January 1, 2014, through August 16, 2015.

It will be interesting to watch what the PBGC does with the information it collects. According to the PBGC, it is interested in collecting this data because information about risk transfers is critical to PBGC's ability to assess its future financial condition. Back in 2013, Joshua Gottbaum, then executive director of the PBGC, reported to the ERISA Advisory Council that pension plan lump-sum cash-outs to retirees are like cigarettes: they are legal, many people like them, and they are bad for you. With the current financial condition of the PBGC and its role in protecting participants pension rights, it may be that the PBGC is interested in providing more detailed regulation on the de-risking activities of pension plan sponsors.

During the past several years, we have seen many of our clients undertaking both lump-sum windows and looking into annuity purchases. For the 2014 year-end accounting disclosures, historically low interest rates combined with updates to mortality assumptions have driven up the calculated pension obligations. As a result, companies will be reporting very large pension deficits on their balance sheets. Because of the impact of pension plans funded status on corporate financial statements, the interest of companies in de-risking activities will continue and may even increase from prior levels.