When markets tanked in March of this year, pension plans also suffered as they tend to invest in stocks (aka companies).
You can imagine the if the stock price tanked, the total value of the pension plan also suffered.
Let create an example: Your pension plan holds $1 thousand. That is 100% fully funded.
If you take a commuted value of say $10 from that, you have withdrawn 1%.
Now let’s imagine the market crashes. Your plan drops to $900. It’s now 90% funded.
If you could take $10, you’d be withdrawing 1.1%. If 100 employees did that, the pension would be empty.
So what happened in March?
The regulator announced a ‘freeze’ which closed the federal pension plans to withdrawals to preserve money in the plans due to the significant market volatility from the COVID-19 pandemic.
On August 31, 2020 that ‘freeze’ on commuted value transfers and buy-out annuity purchases was lifted.
For more information, head over to the government’s COVID-19 FAQs page for Federally Regulated Private Pension Plans.