Employee Benefits Headlines

Gathered from the web by the editors at BenefitsLink.com.
H1N1 Paid Sick Leave Splits Democrats, Advocacy Groups
Excerpt: "The House labor committee will hold a hearing on the Emergency Influenza Containment Act the week of November 16. It's unclear when or if a companion Senate bill will be introduced." (Workforce Management)

Harkin Promises Approval of Sexual Orientation Discrimination Legislation in 2010
Excerpt: "A pivotal senator on employment issues predicts congressional approval next year of legislation that would ban workplace discrimination against homosexuals." (Workforce Management)

Will the SEC Apply New Executive Compensation Disclosure Rules for 2010 Proxy Season?
Excerpt: "[On November 5, 2009], John White (former Director of the SEC's Division of Corporation Finance, now with a small NY law firm known as Cravath) and Paula Dubberly (currently Associate Director) each commented that: 'you probably ought to begin drafting your officers and directors questionnaire based on the new rules.' It doesn't sound promising." (Executive Compensation Blog by Michael Melbinger of Winston & Strawn)

Factsheet on Current U.S. Retirement Account Balances
Excerpt: "The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005." (Urban Institute)

[Guidance Overview] Towers Perrin Monthly Regulatory Round-Up: Retirement (PDF)
Excerpt: "The Monthly Regulatory Round-Up is a high-level summary of legal and regulatory developments that occurred during the past month that may be relevant to large employers." (Towers Perrin)

[Guidance Overview] Towers Perrin Monthly Regulatory Round-Up: Health & Welfare (PDF)
Excerpt: "The Monthly Regulatory Round-Up is a high-level summary of legal and regulatory developments that occurred during the past month that may be relevant to large employers." (Towers Perrin)

[Guidance Overview] Towers Perrin Monthly Regulatory Round-Up: Executive Compensation (PDF)
Excerpt: "The Monthly Regulatory Round-Up is a high-level summary of legal and regulatory developments that occurred during the past month that may be relevant to large employers." (Towers Perrin)

[Guidance Overview] 403(b) Document Deadline Approaching
Excerpt: "Final Treasury Regulations issued under Internal Revenue Code ('Code') Section 403(b) generally require all 403(b) arrangements to be maintained pursuant to a written plan document. Originally required to be in place by December 31, 2008, in late 2008 the IRS extended the documentation deadline to December 31, 2009. Accordingly, employers that maintain a 403(b) plan or otherwise make such an arrangement available to their employees should confirm that their 403(b) documentation is in compliance immediately." (Seyfarth Shaw)

Benefit Plan Protection: What Insurance Policies Are Needed?
Excerpt: "Experience has shown that benefit plans can face a wide range of potential legal claims and that comprehensive protection requires more than one type of insurance coverage. This publication discusses some common claims involving three insurance policies that can protect benefit plans, their trustees, fund office staff and, by endorsement, agreed-upon people or entities: fidelity bonds, fiduciary liability insurance and employment practice liability insurance." (Segal Company)

Survey Finds Widespread Deficiency in Retirement Preparation
Excerpt: "Despite the economic downturn's effect on the retirement plans of 50-something investors, only 23% of respondents to a recent survey are salting away more for retirement and 57% never changed their deferral rate." (PLANSPONSOR)

[Guidance Overview] Federal Reserve Board Enters Executive Pay Debate with Proposal for Oversight of Incentive Compensation
Excerpt: "The proposal does not create specific compensation guidelines or impose specific limits on executive pay. Rather, the Fed has advanced a series of principles for supervisory review of incentive pay programs. Under the proposal, incentive compensation arrangements must (i) provide incentives that do not encourage excessive risk-taking beyond the organization's ability to effectively identify and manage the risk, (ii) be compatible with effective controls and risk management and (iii) be support by strong corporate governance, including active and effective board oversight." (Kilpatrick Stockton)

Pension Finance Update, November 2009
Excerpt: "In our monthly pension finance update, we review changes in market-driven assets and liabilities during the month of October. While both asset levels and discount rates generally fell during the month, funded ratios for many plans will be very similar to those that they experienced at December 31, 2008." (JPMorgan)

[Guidance Overview] ERISA: Life After the Stock Market Shock (PDF)
14 pages; reprinted by permission to the author from the Benefits Law Journal. Excerpt: "As the current financial crisis continues to unfold, questions abound about why the wheels fell off our economy and what, if anything, ERISA plan fiduciaries should do in response. What follows is the author's best guess as to what happened and what new problems ERISA fiduciaries face after the stock market shock." (Jones Day)

[Official Guidance] Composite Corporate Bond Rate Table Updated for November 2009
Corporate bond weighted average interest rate is 6.44%. (Internal Revenue Service)

[Official Guidance] Weighted Average Interest Rate Table Updated for November 2009
4.36 percent. (Internal Revenue Service)

[Official Guidance] Funding Yield Curve Segment Rates Updated for November 2009
Excerpt: "The 24-month segment rates are used for minimum funding requirements if a plan's first plan year begins after 2007, or if an election is made not to use the transitional rule of ?430(h)(2)(G) of the Code. The following rates are the 24-month segment rates for use with respect to the applicable month and year listed." (Internal Revenue Service)

Convenience, Choice, And Control Are Important Factors As Investments Become More Conservative
Excerpt: "Saving for retirement is very important, according to 96.9% of respondents to a survey conducted by ING Institute for Retirement Research. In addition, respondents overwhelmingly (92.4%) said that automatically deducting from the paycheck is the best way to save; 83.6% said that their employer's plan was very important for saving for retirement, with 11.4% saying that their employer plan is fairly important." (Wolters Kluwer Law & Business)

[Opinion] CalPERS' $65 Million Middle Man: Time for Reform
Excerpt: "[T]he Los Angeles Times [this week exposed] $53 million of finders' fees going to a paid hustler with cozy connections to the board and the former CEO who is now on his payroll. Top that off with $33,000 in campaign contributions to the former chair of the board's investment committee, and you've got a colossal 'pay to play' scandal that will undoubtedly draw the attention and the ire of the S.E.C." (Governing.com)

Pets Are Healthcare Dependents, Too
Excerpt: "With the economy starting to turn around, employees are still keeping a close eye on their money. But bring up their beloved pet, and they're all ears." (Employee Benefit Adviser; free registration required)

Target Date Retirement Funds: Lack of Clarity Among Structures and Fees Raises Concerns (PDF)
21 pages, dated October 2009; summary of the committee's research. (U.S. Senate Special Committee on Aging:)

Long-Term Care Insurance: A Companion Report to the Study of Employee Benefits: 2009 & Beyond (PDF)
Excerpt: "Ownership of Long-Term Care Insurance Among U.S. Workers Has Not Kept Pace With Increases in Concern and Need; Access to Coverage and Misperceptions About Cost of Care Are Barriers" (Prudential)

House Financial Services Committee Approves Investor Protection Act
Excerpt: "[On November 4, 2009,] the House Financial Services Committee passed H.R. 3817, the Investor Protection Act, by a vote of 41-28. The legislation is part of a broader effort to modernize America's financial regulatory system and was introduced by Rep. Paul E. Kanjorski (D-PA), Chairman of the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises." (U.S. House of Representatives, Financial Services Committee)

403(b) Prototype Likely to Allow for Vesting Schedules
Excerpt: "The Internal Revenue Service (IRS) is reportedly working on a final revenue procedure for Section 403(b) prototype plans that takes into account comments received. So said James Flannery, a tax law specialist at IRS, said at the annual conference of the American Society of Pension Professionals and Actuaries (ASPPA), according to a BNA report." (PLANADVISER)

Roth IRA Conversion Mania: My IRA for a Calculator That Works
Excerpt: "No matter who converts, what is certain now is that financial-services firms are rolling out -- at a breakneck pace -- new tools and resources designed to help IRA owners figure out whether a conversion makes sense or not." (MarketWatch)

State and Local Pension Gap May Be $1 Trillion
Excerpt: "U.S. state and local government pensions are underfunded by $1 trillion and may need to seek federal guarantees for their debt, according to Orin Kramer, chairman of New Jersey's Investment Council." (Bloomberg)

Lawyer in New York Pension Fraud Case Agrees to Settle
Excerpt: "Lawrence Reich, the attorney whose case sparked multiple investigations into pension fraud last year, has agreed to pay more than $240,000 to the New York State attorney general's office to settle his case. Under the deal, Reich agreed to forfeit any claims to pension credits earned after he was falsely reported as a full-time employee of five Long Island school districts at the same time." (Newsday.com)

[Guidance Overview] Private Health Insurance Provisions of H.R. 3962
Excerpt: "This report summarizes key provisions affecting private health insurance, including provisions to raise revenues, in Division A of H.R. 3962, the Affordable Health Care for America Act . . . ." (Congressionsl Research Service via OpenCRS.com)

[Guidance Overview] Reminders for Qualified Retirement Plans of Imminent PPA '06 Compliance Deadlines
Excerpt: "This Compliance Alert reminds sponsors of qualified plans about imminent deadlines for compliance with certain provisions of the Pension Protection Act of 2006 (PPA '06). Most significantly, by December 31, 2009, sponsors of calendar-year plans must adopt amendments required by PPA '06. Moreover, sponsors of defined benefit plans that chose to provide PPA '06-required individual benefit statements to all active, vested participants every three years (instead of providing an annual notice of availability upon request) are reminded that the first of these periodic statements must be provided for the 2009 plan year, subject to a delayed effective date for collectively bargained participants." (Segal Company)

[Guidance Overview] Verizon Escapes $1.6 Billion Pension Liability for Drafting Error
Excerpt: "A federal judge in Illinois who ruled last year that Verizon was bound by the language in its defined benefit plan document even if it included a drafting error has now decided that Verizon can simply correct the error that could have cost $1.67 billion." (PLANSPONSOR)

Temporary Paid Sick Leave Legislation Introduced to Deal with H1N1, Other Illnesses
Excerpt: "As concern over H1N1 and influenza-related illnesses continues to spread, legislation that would require employers to provide up to five days of paid sick leave per year to workers afflicted with influenza or other, similar contagious illness has been introduced in the U.S. House of Representatives. The bill applies to employers with 15 or more employees where workers comply with the employer's directive to go home or stay home from work because of a contagious illness." (Jackson Lewis)

Seniors Can Boost Their Social Security Benefits by 'Re-Retiring'
Excerpt: "People who began collecting Social Security at age 62 and restart their retirement benefits at 70 would get about 76% more a month. The catch is that they must repay what they had already received." (Los Angeles Times)

Banner Year for Federal Benefits: One Other Big Benefit May Be On the Way
Excerpt: "Despite a deficit of $12 trillion or so, a major recession and unemployment of about 10%, this has been a banner year for federal employee benefits. With the passage of the Defense authorization bill into law, federal employees found themselves with a new list of benefits (or at least changes) including: . . . [Also,] you may find that you have the ability to rollover the cash value of your unused sick leave or annual leave balances that cannot be carried into the next year into your Thrift Savings Plan account." (FedSmith)

SEC to Firms: Cut the Mind-Numbing Disclosures
Excerpt: "The SEC expects to soon start reviewing disclosure requirements for quarterly and annual filings. The agency wants to figure out what information should be omitted and what needs to be added. . . . " (Business Insurance)

Small Business Employees Are 50% More Likely To Lose Health Care Coverage
Excerpt: "Employees of small businesses are 50% more likely to lose coverage as workers at large businesses, according to a recent report released jointly by the Department of Health and Human Services (HHS) and the Small Business Administration (SBA). In addition, the report, Insurance at Risk: Small Business Employees Risk Losing Coverage, found that half of workers in small firms that do not offer health benefits remain uninsured." (Wolters Kluwer Law & Business)

[Guidance Overview] Employers Offering Health Benefits Can No Longer Ignore HIPAA
Excerpt: "If you are an employer offering health insurance to your employees (a Health Plan Sponsor), you know that your group health plan (including any medical, dental, vision and health FSA benefits) is considered a 'covered entity' under the HIPAA privacy and security rules. For many of you who are Health Plan Sponsors, HIPAA privacy and security compliance was a one-time event involving a plan amendment, a few changes to vendor agreements, a notice to plan participants and some training. Unfortunately, Health Plan Sponsors can no longer ignore HIPAA." (DrinkerBiddle)

[Guidance Overview] 2009 Year-End Health and Welfare Issues
Excerpt: "2009 is quickly coming to a close and health and welfare plan sponsors should address several recent legal developments and ongoing compliance requirements before year-end. In particular, calendar year plans should be amended (and SPDs updated) to reflect the new requirements that will be effective January 1, 2010, including Michelle's Law, expanded mental health parity requirements and GINA. Plan Sponsors should also ensure that plan changes needed for CHIPRA and the COBRA subsidy are implemented and documented." (DrinkerBiddle)

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2008
Excerpt: "About 56 percent of all working-age (21?64) wage and salary employees work for an employer or union that sponsors a retirement plan. Among full-time, full-year wage and salary workers ages 21?64 (those with the strongest connection to the work force), just under 63 percent worked for an employer or union that sponsors a plan." (Employee Benefit Research Institute (EBRI))

[Guidance Overview] Defensive ERISA Preemption Inadequate To Sustain Removal Of Subrogation Dispute
Excerpt: "In this opinion, the district court holds that the group health insurer improperly removed the reimbursement dispute to federal court. In its opinion the court provides perspective on complete versus conflict preemption in the context of ERISA plan reimbursement claims." (Health Plan Law blog by Attorney Roy Harmon III)

[Guidance Overview] IRS Begins Section 409A Audits
Excerpt: "This news may come as an unwelcome surprise to many who were hoping that the complexities and uncertainties of Section 409A might delay the IRS's enforcement efforts until more guidance was available and practices further developed. Information Document Requests ('IDRs') from the IRS to companies undergoing audits reveal that the IRS requires an audited company to disclose details of pay practices that could be subject to Section 409A and also to consider the possible application of Section 409A to these practices." (Jones Day)

[Guidance Overview] Defined Benefit Plan Funding Relief Bill Introduced; Implications for Plan Sponsors
Excerpt: "Congressmen Pomeroy (D-ND) and Tiberi (R-OH) have introduced the Preserve Benefit and Jobs Act of 2009, a bill implementing many of the defined benefit plan funding relief proposals being advocated by sponsor and participant groups. In this article we review the bill and its implications for plan sponsors." (J.P. Morgan)

[Guidance Overview] Required Health Plan Annual Notices ? 2009 Edition
Excerpt: "As benefit and open enrollment planning begins for many organizations each fall, it should be remembered that there are a number of annual health plan notices that must be sent to plan participants each year. Below is a list of notices to keep in mind, and ensure that they are sent as necessary:" (Kushner & Company, Inc.)

Why You Won't Be Able to Retire
Excerpt: "[T]he most recent reading shows that 51% of Americans will not be ready to retire at age 65, up from 44% in 2007. Frighteningly enough, that figure doesn't even take into account health-care or long-term care costs. When those costs are included, the percentage of Americans who aren't ready to retire jumps to 70%!" (Motley Fool)

[Guidance Overview] California Supreme Court Affirms Employer's Right to Offer Voluntary Equity Plan
Excerpt: "In a decision strengthening the right of employers and employees to negotiate the terms of employees' compensation, the California Supreme Court in Schachter v. Citigroup, Inc. . . . . affirmed summary judgment against an employee who claimed that his incentive compensation plan violated the California Labor Code." (Morgan Lewis)

[Guidance Overview] Broker-Dealers and Other Non-Fiduciaries as Fiduciaries? (Part 2)
Excerpt: "The ultimate outcome of the great wrestling match among the executive and legislative branches of the federal government, and various powerful financial services interest groups as to whether broker-dealers will be turned into fiduciaries and, if so, what kind of fiduciary standard they will have to live up to is not yet known, of course. Given that, many of the registered representatives who believe that they already are fiduciaries to their clients cannot be blamed for perhaps feeling as though they're in a state of suspended animation." (Morningstar Advisor)

Second Circuit Limits Impact of Employer's Oral Misrepresentation of Benefits Plan
Excerpt: "Ever since the Second Circuit Court of Appeals held more than 15 years ago in Mullins v. Pfizer, Inc. . . . that a fiduciary's material misrepresentation concerning the availability of future voluntary retirement benefits could be considered a breach of fiduciary duty under [ERISA], the Second Circuit has been a relatively hospitable venue for such claims. Larger companies had the impossible task of policing hundreds of potential manager/human resource personnel 'fiduciaries' to prevent misrepresentations; a misrepresentation, even in a casual conversation, could be an ERISA violation. This all changed on September 30, 2009, when the Second Circuit decided in Ladouceur v. Credit Lyonnais . . . ." (Paul Hastings)

Small Increases in Compensation Costs in September 2009
Excerpt: "Compensation costs and its components -- wages and salaries and benefits -- decelerated for private industry workers for the 12-month period ending September 2009, registering the smallest increases since each series began. The differences were not statistically different from last quarter. Wages and salaries make up about 70 percent of compensation and benefits make up the remaining 30 percent." (Bureau of Labor Statistics, U.S. Department of Labor)

Towers Perrin U.S. Legislative Tracking Chart: Retirement and Executive Compensation (PDF)
Excerpt: "Thousands of bills are introduced in Congress but only a select few are summarized on this chart. This selection represents our best judgment on the likelihood of enactment and the relevance of the issue for employers." (Towers Perrin)

Towers Perrin U.S. Legislative Tracking Chart: Health and Welfare (PDF)
Excerpt: "Thousands of bills are introduced in Congress but only a select few are summarized on this chart. This selection represents our best judgment on the likelihood of enactment and the relevance of the issue for employers." (Towers Perrin)

Springfield Missouri Voters Approve Tax to Top Up Underfunded Firefighter Pensions
Excerpt: "The city's proposed 3/4-cent sales tax to bolster the underfunded Police and Fire Pension Fund passed with 54.6 percent of the vote." (Springfield Business Journal)

[Opinion] Some Thoughts on Jones v. Harris And Mutual Fund Fees
Excerpt: "This is how it is supposed to happen in financial markets -- smart investors bring the price of a financial instrument to its 'true' value, making a tidy profit, and then regular people can buy it at the correct value, increasing value for all. The disturbing implication is we have a situation where there are multiple equilibria; one for savvy insiders, and a worse one for people who aren't finance professionals. Why aren't these converging at mutual funds?" (The Atlantic)

California Supreme Court Justices Question Conflict-of-Interest in San Diego Pension Case
Excerpt: "The California Supreme Court sounded ready yesterday to end the prosecution of six former city of San Diego pension board trustees, a move that could shut down part of a long-running legal battle. At a hearing that lasted more than an hour, the justices seemed skeptical about the case filed in 2005 by the county District Attorney's Office against the board members, charging them with breaking the state conflict-of-interest law." (SignOnSanDiego.com)

Christie Victory Could Mean Reform for New Jersey Pensions
Excerpt: "The pending arrival of the first Republican governor in New Jersey since 1997 also has renewed hope among some Democratic lawmakers that they can overhaul the state's pension system for public employees, which is underfunded by more than $34 billion." (Bloomberg)

Prichard Alabama Files Bankruptcy Over Pensions
Excerpt: "I have looked at every opportunity available to obtain money to help fund the retirement plan for the City of Prichard. After careful review of all of our options, bankruptcy protection seems to be the only solution left at this time. Over the past 50 years, the pension plan was amended by the Legislature more than fifteen times, and always the economic burden on the City was increased. . . . After several lawsuits filed by pensioners, it has forced us to come to this decision . . . ." (WKRG)

[Guidance Overview] COBRA Subsidy for Jobless Expires Soon
Excerpt: "If you are laid off in November or December, you still qualify for the subsidy for up to nine months. But come January, unless Congress extends the program, you are out of luck. So if you receive the bad news of a pink slip anytime soon, aim for your end date to be in the 2009 calendar year, and not 2010." (CNNMoney.com)

[Guidance Overview] Court Finds a Breach of Fiduciary Duty Despite Clear Statement in SPD that Employer Could Amend Retiree Medical Plan
Excerpt: "[The Third Circuit] held that Unisys breached its fiduciary duty by not informing retirees that Unisys retained the right to change the terms of their retiree medical benefits. In reaching this conclusion, the court rejected Unisys' key arguments that (1) there was no need to inform the individuals of Unisys' right to amend because no amendments were being contemplated at the time, (2) the Summary Plan Description (SPD) Unisys distributed expressly stated that Unisys retained the right to amend the plan, and (3) the injunction compelling Unisys to reinstate the plan without the right to change benefits impermissibly restricted Unisys in its capacity as a settlor." (Buchanan Ingersoll & Rooney)

[Guidance Overview] Court Says Participant in Overfunded DB Plan Has No Standing to Sue for Fiduciary Breach
Excerpt: "According to the opinion, all parties agreed that at the time [the plaintiff] filed his complaint, and at all times from 2001 to 2006, the plan was 'substantially overfunded,' according to actuarial valuation reports of the plan's assets and liabilities. The parties also agreed that plan never failed to pay benefits owed to participants or beneficiaries, and that AEGON had no intention to terminate the plan." (PLANSPONSOR)

House Committee Passes Investor Protection Act
Excerpt: "Among the bill's provisions is what the news release called a 'harmonized standard' for fiduciary responsibilities of broker-dealers and investment advisers. The bill also doubles the SEC's funding over five years and provides new enforcement power and regulatory authority." (PLANSPONSOR)

Drastic 401(k) Reform Unlikely, Expert Says
Excerpt: "Last month, Time magazine ran a cover story titled 'Why It's Time to Retire the 401(k).' But such calls have not won over the bulk of Democratic lawmakers or President Barack Obama, [attorney James Delaplane] said at the conference. The answers on issues such as 401(k) fees are coming from regulators like the U.S. Department of Labor, not from Congress, he said." (Workforce Management)

[Guidance Overview] 2009 Required Minimum Distributions: Plan Sponsors Have Decisions to Make by November 30, 2009
Excerpt: "Plan sponsors must decide by November 30, 2009, how the plan will treat 2009 RMDs. Plan sponsors have three choices: . . . ." (Warner Norcross & Judd)

[Guidance Overview] IRS Issues Final Regulations under Code Section 436; Single-Employer Defined Benefit Plans Affected (PDF)
At page 5. Excerpt: "On October 15, 2009, the Internal Revenue Service published final regulations construing the new funding and benefit restriction requirements applicable to single employer defined benefit plans for plan years beginning after December 31, 2009, under Internal Revenue Code ('Code') sections 430 and 436. . . . This article highlights some of the key provisions of the final regulations governing the benefit restriction provisions of Code section 436." (Trucker Huss)

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