The Moving Ahead for Progress in the 21st Century Act (MAP-21), signed into law last year, was designed to bring about temporary contribution funding relief for sponsors of single- and multiple-employer defined benefit plans. Until MAP-21, the low interest rates that have dominated U.S. markets for the last four consecutive years were resulting in escalating plan liabilities.

Because the impact of current interest rates is greatly muted under MAP-21, future interest rates and required contribution levels are more predictable. That is why many plan sponsors since the onset of MAP-21 have had multiyear contribution projection studies performed. The purpose of these studies is to understand the level contribution amount needed to smooth out contribution requirements over several years instead of dealing with the contribution spikes inherent with MAP-21 minimum requirements. Given the unknowns ahead, it is more important than ever before for pension actuaries to provide both technical MAP-21 assistance and risk management support to plan sponsors to guide them in their management of pension plans.

This article was first published in the Spring 2013 issue of the Actuarial Digest.