As a result of the 2008 financial crisis the federal government passed the Employee Retirement Income Security Act (ERISA) http://webapps.dol.gov/elaws/elg/erisa.htm , which ensures that employee benefit plans are established or maintained in a fair and financially sound manner. In addition, employers have an obligation to provide promised benefits and satisfy ERISA’s requirements for managing and administering private retirement and welfare plans. Consequently legacy A&D companies have a fiduciary responsibility to make significant contributions to employee’s pension funds. Pension fund contributions have a significant impact on the retirement plan component of Fringe. Knowing competitor’s pension fund strategy allows ARDAK’s clients to maintain a significant competitive advantage.
General Assumptions and Methodology
Analysis is performed utilizing ARDAK’s proprietary Rate Derivation (RD) methodology and public domain financial data. Wrap rates were developed for each of competitor, with Low Level Decompositions performed to determine the retirement contribution to fringe. The retirement contribution to fringe was then factored by the estimated retirement funding profiles to predict the retirement contribution to fringe’s effect on future wrap rates.