Ford Motor Seeks Delayed Implementation of Mortality Table Regs

March 29, 2017

Internal Revenue Service
CC:PA:LPD:PR (REG 112324-15)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

Re: Mortality Tables for Determining Present Value Under Defined Benefit Pension Plans

To Whom It May Concern:

We appreciate the opportunity to comment in response to the Internal Revenue Service (IRS) proposed rule on "Mortality Tables for Determining Present Value Under Defined Benefit Pension Plans."

As a large sponsor of defined benefit plans globally, Ford Motor Company values the continued flexibility from the IRS on the use of substitute mortality tables that best reflect the unique populations and plan experience of our main hourly and salaried plans in the United States. In total these plans cover over 250,000 of our active and retired employees.

Pursuant to Rev. Proc. 2008-62, we requested to use substitute mortality tables — reflecting a full five years of fully credible experience — for our main hourly and salaried pension plans, beginning with the plan year commencing January 1, 2015 for a term of 10 years. The request was approved on November 13, 2014 and we have been applying these plan-specific mortality tables since.

While the proposed rules present a meaningful change to the methodology for developing substitute mortality tables, the underlying plan and population experience for Ford has not changed. We have not experienced a substantive gain or loss related to mortality since adopting our substitute tables, nor would we necessarily expect such a result given our large plan population, fully credible experience, and the fact these plans have been closed to new entrants for several years. Therefore, we would not expect a materially different result in predicted future mortality from any base mortality tables derived from the new process.

As a result, we do not believe the effort and expense required to reproduce and re-apply for substitute tables is justified. We would instead request that the new rules "grandfather'' any previously-approved substitute mortality tables for their full remaining approved term, subject to existing restrictions on credible experience, significant plan population changes, or substantive change in predictive accuracy of future mortality.

Regarding mortality improvement scales, we would encourage the IRS to consider any impacts to plan sponsors from potential funding volatility associated with annual updates to the scale. While we do not intend to be prescriptive, we would caution against any unintended consequences from an annual update and suggest that the final rules should continue to result in a minimum funding standard that is stable and predictable over time.

Finally, given the compressed timeline proposed for compliance with the new rules, we believe it is necessary for the IRS to delay implementation beyond 2018 to allow for further study and consideration by plan sponsors.

Thank you in advance for consideration of our requests. Should you wish to discuss these specific comments further, please do not hesitate to contact the undersigned.

Stacey Steslicki
Director, Employee Benefits Finance
Ford Motor Company
sstesli1@ford.com

Ron Lang
Assistant Tax Officer
Ford Motor Company
rlang@ford.com