MAP-21 Applied Most Often to Larger Plans with Lower Funding Ratios

The Moving Ahead for the 21st Century Act (MAP-21) pension-funding stabilization provisions, which have been in effect for two years, are most likely to be applied to the determination of funding requirements of larger plans, those with lower funding ratios and plans with a higher number of inactive participants, a new Society of Actuaries (SOA) study shows. The SOA based its research on the data that defined benefit plans reported on their 2012 Form 5500 filings, the most recent the federal government has made publicly available.

All private-sector, single-employer DB plans can measure their funding targets with the MAP-21 pension funding stabilization provisions; in 2012, 81 percent of those plans did so, as did 91 percent of the aggregate funding targets that SOA reviewed. Plans with funding waivers and frozen DB plans applied the provisions slightly more often than the median — 87 percent and 83 percent, respectively. 

SOA said that the when the stabilization provisions were applied, they lowered funding requirements. Nonetheless, it found that more than half of all plan sponsors still contributed more to their plans than the law required. SOA reported that approximately 59 percent of the plans and 56 percent of the aggregate funding targets received excess contributions. 

SOA concluded that there is a correlation between the funded ratio of plans and their operation and contribution deferral. Still, it said, the plans that had the maximum deferral created by the pension funding stabilization provisions were not among the worst-funded plans to which the provisions were applied.

John Iekel is Senior Writer and Editor for the ASPPA Net and NTSA Net portals.