Headlines about "Ret plan investments - misc"
Gathered from the web by the editors at BenefitsLink.com.
Funded Status of U.S. Pensions Rises to 74.1 Percent in January
"Rising equity markets in the U.S. and around the world contributed to a 1.7 percentage point increase in January in the funded status of the typical U.S. corporate pension plan ... [t]he strong start to the year from stocks drove the funded status of the typical plan to 74.1 percent." (BNY Mellon)
Controlling Pension Funding Volatility The Top Priority For Third Year In A Row
"For the third consecutive year, an SEI Quick Poll found that pension plan sponsors view controlling funded status volatility as the top priority for their organizations. Not far behind, plan sponsors identified the need to improve the funded status of their pension plans as the second most important priority this year." (SEI)
More U.S. Workers Put 401(k) Investments on Autopilot
"More U.S. workers with 401(k) plans are selecting or defaulting to simple target-date mutual funds, an investment strategy that took its lumps during the credit crisis, but have emerged with greater popularity." (Reuters)
[Guidance Overview] Special Report: New Guidance on Retirement Plan Lifetime Income Options
"Although the guidance [released by the Treasury Department last week] removes certain regulatory barriers and clarifies uncertainties in the law, it fails to address certain important legal and administrative issues that need to be considered before implementing these options." (Proskauer Rose LLP)
The ERISA Litigation Newslett, February 2012
Covers 'the Fourth Circuit's decision ... [which] held that ERISA's duties of prudence and diversification require more than a showing of a failure to investigate or diversify to equate to causation of loss and therefore liability ... several court decisions ... which suggest that, in some jurisdictions, courts have seemingly abandoned the policy and purpose behind the exhaustion doctrine's creation: namely, to keep the courts from acting as surrogate plan administrators." (Proskauer Rose LLP)
[Guidance Overview] Are Participant Contributions Being Contributed to Your Plan on a Timely Basis?
"Besides violating ERISA, failing to make the deposits on a timely basis creates two problems: [1] Participants in the 401(k) plan miss out on the interest or other income that would have been earned had such amounts been timely contributed to the plan. [2] The employer receives a direct or indirect 'benefit' from the use of the same 'plan assets' during the period that such assets should have been held in the 401(k) plan." (McDonald Hopkins)
[Guidance Overview] Proposed Regulations on Longevity Annuity Contracts (PDF)
"The account balance is reduced by the value of the [Qualified Longevity Annuity Contract] to arrive at the amount to use for the [required minimum distribution] calculation. This, in essence, eliminates the potential need to begin taking distributions from the QLAC earlier than anticipated, which would increase the cost of the annuity and reduce the account balance faster than may be necessary." (Ascensus)
[Guidance Overview] The ERISA Decision of the Year?
"If you were going to read just one ERISA decision this year ? or were starting from scratch, with a blank slate, and wanted to know the law governing breach of fiduciary duty claims under ERISA ? I would read this one, Judge Holwell of the Southern District of New York's opinion in Prudential Retirement Insurance and Annuity Co. v. State Street Bank and Trust Company." (Boston ERISA & Insurance Litigation Blog)
[Guidance Overview] 2011 Decisions of Interest in ERISA Cases (PDF)
Pages 6-7 of 8 pages. Court Denies Plaintiffs' Attorneys' Claim for Fees in ERISA Action and Second Circuit Adopts Presumption of Prudence Standard in ERISA Stock Drop Litigation. (Schulte Roth & Zabel)
EBSA Semiannual Regulatory Agenda Addresses Fiduciary Rules, Fee Disclosure, Target Date Rules
"Among the items in EBSA's final rule stage are: Improved disclosure rules to help pension plan fiduciaries determine if fees for an arrangement for services are 'reasonable.' A rule to implement section 501 of the Pension Protection Act of 2006 (PPA; P.L. 109-280) to require the administrator of a defined benefit pension plan to provide participants, beneficiaries, and other parties with an annual funding notice. Rules to enhance the information that must be disclosed concerning target date, or similar age-based, qualified default investment alternatives." (Wolters Kluwer Law & Business / CCH)
Pension Plan Sponsors View Controlling Funded Status Volatility As the Top Priority for Their Organizations
Of the poll participants identifying this as a top focus for 2012, nearly three-quarters (70%) said it is at least a 'high priority,' with almost half (43%) of those saying it is an 'extremely high priority." (PLANSPONSOR.com)
British Pensions Face £85 Billion
British companies with defined benefit pension schemes are likely to face rising pressure to plug deficits that could grow by 85 billion pounds this year against a backdrop of falling bond yields and prolonged market volatility[.] (The New York Times)
[Guidance Overview] Plan Fiduciaries Should 'Welcome' Final Regulations Regarding Service Provider Disclosures
[I]n the view of the DOL, plan fiduciaries need the information called for in the Final Regulations in order to satisfy the fiduciary standards of ERISA when selecting and monitoring service providers. (Verrill Dana, LLP)
CFTC's Business Conduct Rules Do Not Conflict with ERISA's Fiduciary Regs, Says Borzi
"Final business conduct rules adopted by the Commodity Futures Trading Commission (CFTC) do not conflict with ERISA's fiduciary regulations and do not make swap dealers or major swap participants engage in fiduciary conduct, according to Phyllis Borzi, Assistant Secretary for [EBSA]." (Wolters Kluwer Law & Business / CCH)
Top 1,000 Retirement Funds Tread Water in 2011
"According to Pensions & Investments' latest annual survey, the combined assets of the top 1,000 U.S. retirement plans edged up 2.3%, or $148.6 billion, to $6.71 trillion. The largest 200 plans, meanwhile, saw their assets climb 1.7% to $4.965 trillion." (Pensions & Investments; free registration required)
Top 200 Pension Funds Still Investing in Alternatives
"In the 12 months ended Sept 30, investments by defined benefit plans among P&I's Top 200 grew by double digits across all of the alternative asset classes, compared to the year-earlier survey . . . ." (Pensions & Investments; free registration required)
BofA Investor Lawsuit Wins Class-Action Status
"Investors suing Bank of America Corp won class-action status for their lawsuit accusing the bank of fraudulently misleading them about the 2008 takeover of Merrill Lynch & Co and the size of Merrill's losses and bonus payouts." (Reuters via The New York Times; free registration required)
Another 12 Basic Retirement Plan Concepts that Every Financial Advisor Should Understand
"[Financial advisors] should be aware of some very basic concepts on how the industry works in order to stand out among their competition as well as augmenting their client's overall retirement plan experience." (JD SUPRA)
Video: Pension Funding Discussion on CNBC
"CNBC's 'Fast Money' interviewed John Ehrhardt . . ., with a focus on what the interest-rate-driven pension funding deficit means for corporate pension contributions." (Retirement Town Hall)
2nd Circuit Should Rehear 401(k) 'Stock Drop' Cases,DOL Argues in Recent Brief
"Last fall, a divided three-judge panel of the 2nd Circuit ruled that fiduciary decisions to offer company stock as a 401(k) investment option are entitled to a presumption of prudence and should be reviewed only for an abuse of discretion ? not held to a stricter standard. Though the so-called 'Moench presumption' has been adopted by five appeals courts, it finds no support in ERISA and 'leads to absurd results,' DOL asserts." (Mercer)
Are Custom Target Date Funds Right for Your Plan? (PDF)
"Currently, a large percentage of plan sponsors use TDFs that are pre-packaged vendor products, commonly offered by an investment management firm that may also serve as the plan recordkeeper in bundled situations. These products typically use the vendor's proprietary funds as their component investment options. There is often little overlap between the funds underlying the target date fund and those in the plan's core lineup." (Aon Corporation)
[Opinion] Hidden Burden of Ultra-Low Interest Rates?
"The Federal Reserve, which cut its target for the federal funds rate to a zero-to-0.25 percent range on Dec. 16, 2008, said last month that rates would remain 'exceptionally low' at least through late 2014. While the unprecedented period of near-zero rates is meant to aid an ailing economy, it poses challenges for banks, insurers, pension funds, and savers." (Leo Kolivakis)
Managing Volatility in Defined Benefit Plans
12 pages. '[The paper explains why] (1) interest rates directly impact plan funding levels/contribution volatility, and (2) a declining-rate/low-rate environment can quickly lead to funding level shortfalls for plans utilizing a traditional total-return investment strategy; and [discusses] how liability-driven investing (LDI) works and why, for many DB plans, it may be a better approach than a total-return strategy." (Principal Financial Group)
[Guidance Overview] District Court Permitted to Look Beyond Charged Conduct to Calculate Restitution Amount for Theft from Plan
"A district court did not err when, to calculate a restitution amount, it considered losses stemming from an individual's nine-year pattern of theft from her employees' retirement accounts, instead of focusing solely on losses incurred in the year that encompassed the charged criminal conduct, the U.S. Court of Appeals in San Francisco (CA-9) has ruled." (Wolters Kluwer Law & Business / CCH)
Webcast and Written Testimony: Hearing Entitled 'Examining the Challenges Facing PBGC and Defined Benefit Pension Plans'
February 2, 2012. (Subcommittee on Health, Employment, Labor, and Pensions; Education and the Workforce Committee; U.S. House of Representatives)
401(k) Plan Sponsors Less Confident That Employees Will Be Financially Prepared for Retirement (PDF)
"84 percent of polled executives responsible for [401(k)] plans say only some or very few employees will be financially prepared for retirement, a new Deloitte survey reveals. . . . To encourage plan participants to make better use of their 401(k), nearly half of plan sponsors (49 percent) are offering features that automatically increase participants' contribution levels. However, nearly two-thirds (64 percent) of plan sponsors report that fewer than 10 percent of participants take advantage of this opportunity." (Deloitte; International Foundation of Employee Benefit Plans; International Society of Certified Employee Benefit Specialists)
Deloitte's 2011 401(k) Benchmarking Survey (PDF)
68 pages. 'While plan sponsors and fiduciaries are generally aware of the fees charged for the administration of their plans, the possibility exists that many will be surprised by the sum total of costs." (Deloitte)
[Opinion] A Closer Look at the Braden v. Wal-Mart Case: How Not to Run a 401(k) Plan
"The Wal-Mart case is the poster child for the way in which a 401(k) plan should not be run: plan investment options bearing excessive and entirely unnecessary costs, undisclosed conflicts of interest, lack of meaningful disclosure of costs to plan participants (which was actually part of the agreement between plan fiduciaries), and, I'd argue, an apparent absence of any serious fiduciary mindset on the part of the plan sponsor fiduciary and the trustee fiduciary." (Morningstar Advisor)
[Guidance Overview] DOL Finalizes, Delays 401(k) Fee Disclosure Rules
"The final regulations 'strongly encourage' service providers to offer plan fiduciaries a 'guide' or summary of their disclosures. The DOL included a sample guide as an appendix to the final rule. Debate about whether to require such a summary disclosure is rumored to have delayed the release of the final rules. For now, the summary is voluntary, but the DOL strongly hinted that it may make the summary mandatory in future regulations." (Benefits in Brief)
[Guidance Overview] Final ERISA Section 408(b)(2) Regulations Include Significant Differences from Interim Rules
"These regulations make several significant changes . . . including: [1] Excluding certain frozen IRC Section 403(b) plans issued before January 1, 2009 from coverage under the regulations; [2] Enhancing the information relating to 'indirect compensation' required to be disclosed; [3] Adding certain investment-related disclosures to facilitate compliance with DOL regulations under ERISA Section 404(a); [4] Extending the effective date to July 1, 2012. This has the effect of delaying the effective date of most participant-level disclosures under ERISA Section 404(a) to August 30, 2012." (Practical Law Company)
Treasury Eases Rules on Annuities in Retirement Plans
"Employers have been reluctant to adopt annuities in retirement plans they sponsor because of concern that fees are too high and that they would be held liable for their choice of insurers. Americans have resisted buying the insurance because they don't want to lock up their assets." (Bloomberg)
Who's on The Hook for Decisions Made in Your 401(k)?
"If you are a business owner, on the Board of Directors or serve on the Plan Investment Committee, follow the line of questions from a 'hypothetical deposition' directed to you and picture how you would answer the questions." (Forbes)
New 401(k) Policies Are a Mixed Bag
"Most workers won't see their companies offering annuities anytime soon, concedes David Wray of the Plan Sponsor Council of America, an employer group. He said employers would be concerned about choosing solid insurance companies and reasonably priced annuities for their workers." (Reuters)
Underfunded Pensions: The Looming Crisis Facing Investors
"It's no secret that the financial crisis and resulting malaise has taken its toll on bank stocks, commodities and Treasury yields. But it may be have triggered another ripple ? one that has gone somewhat unnoticed. Pension funds have become seriously underfunded." (CNBC)
[Official Guidance] Text of Final 408(b)(2) Regs on Fee Disclosures to Plan Fiduciaries by Covered Service Providers (PDF)
109 pages. 'This document contains a final regulation under the Employee Retirement Income Security Act of 1974 (ERISA or the Act) requiring that certain service providers to pension plans disclose information about the service providers' compensation and potential conflicts of interest. These disclosure requirements are established as part of a statutory exemption from ERISA's prohibited transaction provisions. This regulation will affect pension plan sponsors and fiduciaries and certain service providers to such plans." (U.S. Employee Benefits Security Administration)
[Guidance Overview] Second DOL 'Fact Sheet'; Description of Major Changes to Final Fee Disclosure Rule
"The final rule's effective date has been extended to July 1, 2012, to allow additional time for compliance." (U.S. Employee Benefits Security Administration)
[Official Guidance] DOL 'Fact Sheet' on Final Regs on Service Provider Disclosures Under ERISA Section 408(b)(2)
"The final rule reflects a number of technical and other changes . . . including the following: . . . Expansion of the information that must be disclosed concerning a [Covered Service Provider's] receipt of indirect compensation to include a description of the arrangement between the payer and the CSP pursuant to which indirect compensation will be paid; Conformance of investment-related disclosures for covered plans' designated investment alternatives to the requirements of the Department's participant-level disclosure regulation; and A separate provision for the disclosure of changes to investment-related information, which must be updated at least annually." (U.S. Employee Benefits Security Administration)
[Guidance Overview] DOL Publishes Final 408(b)(2) Fee Disclosure Regs; Treasury Publishes Regs on 'Lifetime Income' Options
"[T]he U.S. Departments of Labor and the Treasury today announced two executive actions designed to help enhance security for millions of Americans saving for retirement. The measures will expand transparency in the 401(k) plan marketplace and broaden the availability of retirement plan options so that Americans can maximize their ability to save responsibly and securely." (U.S. Employee Benefits Security Administration)
Interview With Prof. Ron Rhoades on Revenue Sharing
"I would advise plan sponsors to avoid any revenue-sharing arrangements, of any type, between the advisors and other vendors of the plan. This includes not only payment for shelf space, but also soft dollar compensation and other 'back-channel' payments. Establish the compensation of the investment adviser in advance -- before any investment recommendations are made -- either as a flat fee, hourly fee, or percentage of assets (or some combination thereof)." (Fiduciary News)
Kodak Employee Sues Company Directors Over Stock
"[The plaintiff, an Eastman Kodak employee,] said in the lawsuit, which seeks class-action status, that the directors and officials did not disclose to stock-plan participants complete information about Kodak's dire financial condition and kept its investments in the company's equity when it was no longer prudent." (Reuters via the New York Times; free registration required)
Long Term Outlook of Stock Market Likely Attractive
"The long-run outlook for the global stock market is likely to be attractive despite a backdrop of elevated market volatility, below-average growth expectations, and near-0% short-term interest rates, according to Vanguard's Long-Term Economic and Capital Markets Outlook." (PLANADVISER.com)
Guide to the 404a5 Opportunity for Retirement Advisors, Part I: Counseling Plan Participants
"Mark down May 31, 2012 in your calendar. That's the date by which 483,000 U.S. retirement plans must send to their participants the initial disclosures required by new Department of Labor rules under Section 404a5 of ERISA. . . . DOL estimates that the rule will affect 72 million active participants who hold $3 trillion of plan assets. . . . It is your job, and opportunity, to help them anticipate, interpret and act on information contained in 404a5 disclosures." (Benefits Pro)
[Opinion] Setting Interest Rates Too Low: The Fed's New Tax on Retirees
"Last week, the Federal Reserve rolled out their inflation forecast and interest rate intentions through 2014 . . . . This financial repression will result in a trillion dollar transfer of real wealth from fixed income investors to the persons, businesses and governments borrowing at below free-market rates." (Forbes)
How Index Trading Increases Market Vulnerability
"The popularity of index funds and ETFs . . . comes at the cost of 'trading commonality,' or 'basket trading,' across the market. Many stocks within an index being traded are simultaneously bought and sold. As a consequence, the stocks in an index tend to move together throughout the trading day." (Morningstar Advisor)
[Guidance Overview] What Is a Fiduciary (and Why Should We Care)?
"Advisers, as fiduciaries, have a legal mandate to place client interests first. Advisors, on the other hand, must only provide 'suitable' investments to clients while placing their firm's interests first. This means a lot of those 'self-dealing' types of transactions." (BenefitsPro)
IRIC Provides Product Fact Sheets for Several of the Retirement Income Solutions Offered in the Marketplace
"These reference documents will allow plan sponsors, advisors, and consultants to engage in an objective analysis based on a consistent approach to comparing retirement income products." (Institutional Retirement Income Council)
[Guidance Overview] Final 'Business Conduct Rules' for Swap Dealers Include Safe Harbor for ERISA Plans
"The Commodity Futures Trading Commission (CFTC) included a safe-harbor for ERISA plans under the 'business conduct standards' for swap dealers under the Dodd-Frank Act . . . . In a letter to the CFTC, [DOL] affirmed that the final rule will not require swap dealers to engage in conduct that will cause them to become ERISA fiduciaries." (Deloitte via BenefitsLink.com)
Target-Date Funds Get Customized as Plan Sponsors Take Charge
"Custom target-date funds are beginning to proliferate at the expense of their off-the-shelf counterparts. That's due to plan sponsors wanting to have greater control over what's in a fund and have access to a wider array of investments to put in them." (On Wall Street and SourceMedia, Inc.)
[Opinion] Are Company Pension Fund Return Forecasts Way Too Sunny?
"Judging by many companies' recent financial statements, they must believe their pension plans are run by . . . unheralded baby Buffetts." (The Wall Street Journal)
California Public Pension Funds' Earnings Dip Amid Gloomy Forecasts
"The nation's two largest public pension funds last week reported slim annual investment earnings, CalPERS 1.1 percent and CalSTRS 2.3 percent, as experts continue to say hitting their long-term earnings target, 7.75 percent, will be difficult." (Calpensions)
Global Pensions Asset Study, 2012 (PDF)
"This is a study of the 13 largest pension markets in the world and accounts for more than 85% of global pension assets. The countries included are Australia, Canada, Brazil, France, Germany, Hong Kong, Ireland, Japan, Netherlands, South Africa, Switzerland, the UK and the US." (Towers Watson)
Global Pension Fund Assets Hit Record High in 2011
"Global institutional pension fund assets in the 13 major markets grew by 4% during 2011 to reach a new high of US$28 trillion, up from US$26 trillion in 2010 according to Towers Watson's Global Pension Assets Study released today." (Towers Watson)
[Opinion] The Striking Impact of Transparency, the Prohibited Transaction Rules and the Exclusive Benefit Rule
"If we step back for a minute, we can see the extraordinary policy underlying 408(b)(2), the prohibited transaction rules and the exclusive benefit rules (which apply even to non-ERISA plans). These rules seek to set aside and protect from others the individual wealth of those who accumulate benefits under these plans." (Robert J. Toth, Jr., Business of Benefits)
[Guidance Overview] Practitioners' Forum Discussion: Loomis v. Exelon Corp.
"[T]he Seventh Circuit affirmed a lower court's holding that the plan fiduciary did not breach its duties under ERISA . . . by offering retail mutual funds as part of the investment options in a participant-directed defined contribution plan." (Compensation Planning Journal via The Bureau of National Affairs, Inc.)
[Opinion] Comments to DOL on Disclosure of Compensation Arrangements to Plan Fiduciaries by Broker-Dealers (PDF)
"[I]f broker-dealers feel the need to disclose every potential compensation arrangement for a brokerage account, plan fiduciaries will likely be overwhelmed by such information, rendering it virtually useless. . . . One possible way to eliminate this burdensome disclosure is to limit the 408b-2 compensation disclosures for brokerage accounts to the disclosures required under applicable securities laws." (Drinkle Biddle & Reath)
Readers Rate Their 401(k) Plans
"In assessing the quality of their plans, the investment lineup was the biggest determinant of participant satisfaction." (Morningstar, Inc.)
Boomer Retirements Likely to Boost IRA Share of Retirement Market
"Total IRA assets represent 29.7% of total retirement market assets currently, and as large defined contribution (DC) plan rollovers continue to fuel asset levels, IRAs will encompass 33% of the total retirement market by 2016." (PLANSPONSOR.COM)
Pension Accounting Changes Negatively Affecting Earnings Statements
"The Boeing Company, AT&T, UPS, Windstream Corp. and FirstEnergy Corp. all announced that lower discount rates and a change to recognizing pension gains and losses in the year in which they occur, rather than amortizing them over time, has resulted in a charge for pensions." (PLANSPONSOR.COM)
Ann Combs Previews Retirement and Investment Issues Facing Washington This Year
"From congressional initiatives such as the debt ceiling and tax reform to the 2012 regulatory agenda, Ms. Combs discusses many topics vital to retirement plan sponsors -- and how you can benefit from Vanguard's voice in Washington." (The Vanguard Group, Inc.)
Romney May Cost Private Equity as Pensions Warn of Backlash
"Mitt Romney's campaign for the Republican presidential nomination may be costing his private- equity backers a lot more than they bargained for. Attacks by opponents portraying Bain Capital LLC, Romney and other buyout managers as corporate looters who enrich themselves at the expense of ordinary workers have put a spotlight on the industry that will affect negotiations about future investments, according to officials and trustees at public pensions." (Bloomberg L.P.)
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