Many Retiree Healthcare Plan or (Other Post-Employment Benefit or OPEB) sponsors have established OPEB trusts to pre-fund future benefit payments for retirees. As these funds have accumulated substantial sums, plan sponsors are now considering payment strategies from those funds.
Plan sponsors often have questions about the best time to use money from the OPEB trust to pay benefits, what it means for a plan to be 100% funded, and what is a good spend-down approach if the plan is closed to future hires/participants. They also wonder if the annual recommended contribution to the trust matters and how to coordinate or reconcile any recommended contribution with annual benefit payments.
Each month we’ll look at one of those questions beginning next month with a response to the question: What does it mean that a plan is 100% funded?
Stay tuned.
- Part 2: Contributions to and benefit payments from Retiree Healthcare Plan Assets – What does it mean that a plan is 100% funded?
- Part 3: Contributions to and benefit payments from Retiree Healthcare Plan Assets – If the recommended contribution is $-0-, may benefits be paid from the OPEB plan trust?
- Part 4: Contributions and benefit payments from Retiree Healthcare Plan Assets – What other funding consideration should be kept in mind?
Christian Veenstra, ASA, FCA, MAAA, EA
President, Watkins Ross
Watkins Ross is a 100% Employee-Owned Consulting, Actuarial & Administrative Firm Providing Retirement Plan Services
