Headlines about "Ret plans - policy"

Gathered from the web by the editors at BenefitsLink.com.
[Opinion] 401(k) Plans Work If Employer Contribution Rates Are High
Excerpt: "[G]enerous contribution rates are common among universities, according to a 2007 survey by the American Association of University Professors. About 30% of responding institutions reported a typical contribution rate of 10% and 14% contribute more. In fact, most universities have offered a successful 401(k)-style plan since the 1940s . . . ." (Jane White of Retirement Solutions)

[Guidance Overview] USERRA Benefits Under Title IV of ERISA (PDF)
1 page. Excerpt: "According to the final rule, so long as the participant is reemployed within the time limits prescribed by USERRA, even if the reemployment occurs after the plan's termination date (bankruptcy filing date, in the case of the bankruptcy of a covered plan sponsor filed on and after September 16, 2006), the PBGC will treat the participant as having satisfied the reemployment conditions as of the plan's termination date.Thus, the participant's benefits would be guaranteed for periods up to the plan's termination date. This final rule is effective December 17, 2009 and will apply to reemployments covered under USERRA initiated on or after December 12, 1994 (the effective date of USERRA). This is great news for affected participants. Starting December 17, 2009, the PBGC will start adjusting final benefit determinations of affected participants and make back payments with interest. The PBGC emphasizes that the scope of this final rule is very narrow. It only applies to the unique circumstances affording special protection to participants serving in the uniformed services entitled to benefits under USERRA." (Transamerica Center for Retirement Studies)

[Opinion] The Pension Committee Comments on H.R. 2748, the Retirement Security Needs Lifetime Pay Act of 2009 (PDF)
3 pages. Excerpt: "The tax incentive for annuities in H.R. 2748 currently excludes qualified defined benefit (DB) plans. We strongly urge you to treat qualified defined benefit plans no less favorably than other sources of retirement income. With so many people reaching retirement age but having to postpone retirement due to declining account balances, our public policies should encourage the expansion of the defined benefit system, rather than create another reason for employers to end their defined benefit plans in favor of defined contribution plans. As lump sums are currently available in many DB plans, an incentive to select the annuity option in all defined benefit plans is good public policy ? whether it encourages expansion of defined benefit plans, discourages further cutbacks in DB benefits, or gives participants more of a reason to elect the annuity option over the lump sum option. We believe this incentive should be available to all annuities provided from defined benefit plans, whether or not they are backed by the PBGC or an annuity contractfrom a private insurance company." (American Academy of Actuaries)

Journal of Pension Economics and Finance enters New Phase
Excerpt: "The Journal of Pension Economics and Finance (JPEF), the only academic journal focusing on the economics and finance of pensions and retirement income programs, announces a new editorial structure and a broadening of its mission effective January 2010. Since 2002, the JPEF has provided an invaluable and influential forum for original research and international policy debate in the pensions area. Demographic aging and tumultuous capital markets are challenging the future of retirement around the globe. The JPEF will lead the way in exploring what these factors imply for retirement security and pension sustainability, and in demonstrating which new models will ensure resiliency in retirement systems. JPEF publishes original research papers; it also offers an Issues & Policy section with reviews of the state of debate on pension policies around the world. In addition, the journal includes reviews on publications of key interest to its readers. JPEF is co-sponsored by the International Organization of Pension Supervisors (IOPS) and the OECD." (Pension Research Council; registration required to download fulltext of paper)

Retirement-Product Developments Accompany Reform Drive
Excerpt: "Financial services firms are urging Congress to adopt retirement savings reforms in the next few years and are readying products that could profit from them. Several executives are recommending that lawmakers make changes that would ensure income from savings lasts through retirement. Robert L. Reynolds, the president and chief executive officer of Putnam Investments, said defined contribution plans, specifically 401(k)s, need to be improved so that their income stream does not run out too early. People should be able to put a portion of their 401(k) assets in annuities to ensure lifetime income, he said. 'The industry has done a good job of helping people accumulate money,' Reynolds said. 'Now we need to do a better job of helping people manage their 401(k) plans when they reach retirement.'" (Bank Investment Consultant and SourceMedia, Inc.)

Employee Benefits 2009 Year-End Checklist, Year in Review, and Planning Ahead for 2010 (PDF)
9 pages. Excerpt: "In addition to the items on the legislative agenda, both the Department of Labor and the Internal Revenue Service have important guidance projects still awaiting release, some or all of which may be issued in 2010. Employers should stay tuned for news about the following items in particular: Pending Department of Labor guidance requiring enhanced disclosure to plan participants about benefit plan administrative costs and investment expenses, and enhanced disclosureobligations from plan service providers to plan fiduciaries. Department of Labor regulations governing the provision of investment advice to retirement plan participants. Congress is also considering legislation in this regard. IRS regulations governing cafeteria plans and flexible spending accounts, particularly with respect to compliance with non-discrimination rules." (Harter Secrest & Emery LLP)

[Opinion] The Retirement Problem
Excerpt: "The problems, in short, are that we don't save enough and we don't invest very well. One could argue that these are a matter of choice. People could save more, and they could make smarter investing decisions. But given that they don't, we could very well see tens of millions of seniors without enough money to live decently in retirement. Given that prospect, perhaps we should question leaving retirement security to individual choices and free markets." (The Washington Post; free registration required)

[Opinion] Union Pension Bailout Bill Would Burden Employers and Taxpayers
Excerpt: "[Labor union] leaders habitually put high principle aside when their own hides need bailing out. Case in point: a bill introduced in late October by Rep. Earl Pomeroy, D-N.D. (see photo), the Preserve Benefits and Jobs Act of 2009 (H.R. 3936). This legislation would enlist taxpayers to support troubled union-sponsored multiemployer pension plans and impose major burdens upon employers. Ultimately, the general public will pay the tab. It's another example of how interest-group politics benefits the relative few at the expense of the great many." (National Legal and Policy Center)

Updated Summary of Leading Single Employer Funding Relief Proposals (PDF)
35 pages. Excerpt: "On June 24, 2009, the House Education and Labor Committee approved H.R. 2989 (as amended), the 401(k) Fair Disclosure and Pension Security Act of 2009, which was introduced by Representative George Miller (D-CA), Chairman of the Committee. The bill included provisions affecting defined benefit plan funding. On October 27, 2009, Representatives Earl Pomeroy (D-ND) and Pat Tiberi (R-OH), Members of the Ways and Means Committee, introduced a funding relief bill, the Preserve Benefits and Jobs Act of 2009 (H.R. 3936). This bill follows in most respects a discussion draft released by Representative Pomeroy on August 27, 2009. On April 22, 2009, House Minority Leader John Boehner (R-OH) introduced H.R. 2021, which included funding proposals. This chart summarizes the single-employer funding proposals in the bills. The new aspects of the Pomeroy/Tiberi bill, as compared to the Pomeroy discussion draft, are in bold." (American Benefits Council)

[Guidance Overview] President Obama's Retirement and Savings Initiative
Excerpt: "As part of the Obama administration's retirement and savings initiative, the IRS recently issued guidance designed to encourage retirement savings. This new Regulatory Brief provides a summary of that guidance. The new guidance covers: Paid time off contributions to qualified plans. Timing of automatic savings increases in plans using automatic contribution arrangements. Adding automatic enrollment to 401(k) plans. A safe harbor explanation for eligible rollover distributions. Rollover distributions to Roth IRAs." (The Vanguard Group, Inc.)

Financier to Head Federal Pension Benefit Guaranty Unit
Excerpt: "Joshua Gotbaum, an operating partner at the investment firm Blue Wolf Capital, is expected to be named director of the Pension Benefit Guaranty Corporation by President Obama, the White House said Monday in a statement. Mr. Gotbaum, a former chief of the September 11th Fund charity, also served in the administrations of Presidents Jimmy Carter and Bill Clinton." (The New York Times; free registration required)

California Officials Drafting Placement Agent Bill
Excerpt: "Legislation currently being drafted in California would force pension placement agents to register as lobbyists in that state and would eliminate a pay plan for the agents where their compensation is tied to the amount of an eventual pension mandate. A Wall Street Journal news account, quoting anonymous sources, said California Controller John Chiang and Treasurer Bill Lockyear are working on the proposals. Both are board members of the California Public Employees' Retirement System ( CalPERS). The Journal said the proposal would also require all compensation to be disclosed, ban placement-agent campaign contributions, and establish a $10 monthly limit on gifts to pension officials from any individual at a placement-agent firm." (PLANSPONSOR.com; free registration required)

To Encourage Saving for Retirement, Use Research to Change Policy
Excerpt: "The Obama Administration wanted to reverse [the borrowing] trend and promote saving, and, particularly, saving for retirement. Why the latter? Less that half the work force has access to a retirement plan at work. And, fewer than 10 percent of those without workplace retirement plans have one of their own. So, to push for retirement savings was wise public policy. How did the Obama Administration know what to do? The simple answer: It's what the research says to do. What research informs this policy initiative? The question at the heart is the following: How does (or can) society encourage positive behavior? Should government attempt to affect certain decision-making behaviors? What techniques and tools of science, particularly cognitive science, are likely to steer people toward better choices?" (New Jersey On-Line LLC)

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)

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)

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)

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)

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))

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)

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)

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)

U.S., Massachusetts Clash in Court Over Federal Benefits for Same-Sex Couples
Excerpt: "The United States government and Massachusetts are clashing over the issue of extending federal benefits to married same-sex couples, with the Obama administration arguing that the government is not obligated to provide benefits to gay couples." (Berkshire Eagle)

What the Stock Market Decline Means for the Financial Security and Retirement Choices of the Near-Retirement Population
Excerpt: "Simulations with a structural retirement model suggest the stock market decline will lead the early boomers to postpone their retirement by only 1.5 months on average." (Social Science Research Network)

IRS Requests Applications for IRS Advisory Committee on Tax Exempt and Government Entities
Excerpt: "The Secretary of the Treasury invites those individuals, organizations, and groups affiliated with employee plans and tax-exempt organizations to nominate individuals for membership on the ACT. Nominations should describe and document the proposed member's qualifications for membership on the ACT. Nominations should also specify the vacancy for which they wish to be considered.' (Editor's note: the document is silent as to which vacancies exist, however.) (Internal Revenue Service)

[Opinion] The 401(k): Don't Believe the Hype
Excerpt: "If someone made me America's personal-finance dictator, I'd scrap the 401(k). These workplace retirement plans are inequitable, as some companies offer good ones, some bad ones and others none at all. Fees are often too high. And even the better plans often don't provide enough investment options. Instead, I'd like to see the Roth IRA opened up to allow 401(k)-sized contributions - $16,500 a year instead of $5,000. (Or $22,000 and $6,000 for people 50 and over.) And I'd like to see the Roth's income limits lifted, so anyone could have one. . . . But since I'm not running things, the best I can do is suggest ways to make the traditional 401(k) work best." (Community Television Foundation of South Florida Inc.)

Pension Funding Relief, PBGC Improvements Called for in HELP Committee Hearing
Excerpt: "In testimony Thursday before the U.S. Senate Committee on Health, Education, Labor and Pensions (HELP), witnesses urged legislators to loosen up funding rules for defined benefit pension plans. Richard Jones, Chief Retirement Actuary at Hewitt Associates, said the perils that DB plans are facing today are not only due to the struggling economy, but are exacerbated by regulatory changes that limit the flexibility in how and when companies fund their plans. 'The imminent need is for temporary relief to help employers solve the funding problems exacerbated by the recession,' he said." (PLANSPONSOR.com; free registration required)

401(k) Plans: Several Factors Can Diminish Retirement Savings, but Automatic Enrollment Shows Promise for Increasing Participation and Savings
Testimony presented by Barbara D. Bovbjerg, director, education, workforce, and income security, before the Senate Special Committee on Aging, October 28, 2009. 22 pages. Excerpt: "Recently, policy makers have focused attention on the ability of 401(k) plans to provide participants with adequate retirement income and the challenges that arise as 401(k) plans become the predominant retirement savings plan for employees. As a result, GAO was asked to report on (1) challenges to building and maintaining of savings in 401(k) plans, and (2) recent measures to improve 401(k) participation and savings levels." (U.S. Government Accountability Office)

Pension Funding Relief Bill Makes Congressional Debut
Excerpt: "Rep. Earl Pomeroy, D-North Dakota, introduced a bill Tuesday, October 27, that would give businesses some breathing room from the strict funding rules imposed by a landmark pension reform bill than went into effect last year. . . . 'Without additional action, January 1, 2010, will bring to bear very significant additional funding requirements,' said Pomeroy, a member of the House Ways and Means Committee. 'This is going to put extraordinary pressure on companies to freeze their pension plans.'" (Workforce Management; free registration required)

Fact Sheet on the Preserve Benefits and Jobs Act Introduced by Congressmen Earl Pomeroy and Pat Tiberi (PDF)
1 page. Excerpt: "Congressman Pomeroy and Tiberi believe Congress should pass reasonable pension funding relief to keep employees working and give them security in knowing their pensions will be there when they need them." (American Benefits Council)

Section-by-Section Summary of the Preserve Benefits and Jobs Act As Proposed by Pomeroy-Tiberi (PDF)
3 pages. (American Benefits Council)

House Members Introduce Pension Funding Relief Measure
Excerpt: "U.S. House Representatives Earl Pomeroy (D-North Dakota) and Pat Tiberi (R-Ohio) have introduced a bill to further ease funding requirements for defined benefit plan sponsors. The Preserve Benefits and Jobs Act expands pension funding relief provided in the Worker, Retiree and Employer Recovery Act (WRERA) in 2008 and the Department of the Treasury regulatory guidance for 2009 reducing employer contributions. The Congressmen said the funding relief would continue worker and retirees' protections against pension benefit accruals being frozen in 2009 and 2010, as enacted by WRERA, and would protect future retirees by prohibiting pension plans from being drained by lump sum ad hoc benefits to certain individuals." (PLANSPONSOR.com; free registration required)

Re-Envisioning Retirement Security; A Conference
Excerpt: "On October 21, 2009, Retirement USA held a conference, Re-Envisioning Retirement Security, in Washington, D.C. Labor Secretary Hilda Solis delivered the keynote address, and other notable speakers included Richard Trumka, president of the AFL-CIO; Anna Burger, SEIU secretary-treasurer and chair of Change to Win; and Pulitzer Prize-winning journalist David Cay Johnston. Conference participants heard why a new private retirement system is needed; learned about the principles that should underlie a new system; and discussed proposals for a universal, secure, and adequate system for the future. Retirement USA is an initiative that is working to create a system that, along with Social Security, will provide universal, secure, and adequate retirement income to future retirees. [Conference materials are linked from the target page.]" (Retirement USA)

Retirement Savings: Automatic Enrollment Shows Promise for Some Workers, but Proposals to Broaden Retirement Savings for Other Workers Could Face Challenges
Excerpt: "Because of questions about the extent of retirement savings and prospects for a sound retirement for all Americans, GAO was asked to determine (1) what is known about the effect of automatic enrollment policies among the nation's 401(k) plans, and the extent of and future prospect for such policies; and (2) the potential benefits and limitations of automatic IRA proposals and state-assisted retirement savings proposals. To answer these questions, GAO reviewed available reports and data, and interviewed plan sponsors, industry groups, investment professionals, and relevant federal agencies." (U.S. Government Accountability Office)

[Opinion] Getting Real About 401(k) Dollar Caps; Australia's Limit on Contributions by Older Employees Reflects Actual Retirement Needs
Excerpt: "Not only are Australian employers required to contribute the equivalent of 9% of pay to their employees' accounts up to a salary ceiling of more than $145,000 -- compared to the equivalent of 3% here, but workers over age 50 can contribute over $100,000 per year to their accounts. This is nearly 20 times the measly $5,500 additional contribution ceiling for those over 50 in the U.S, a ceiling that also remains unchanged in 2010." (Jane White of Retirement Solutions)

New York Attorney General Unveils Plan to Overhaul State Pension System
Excerpt: "New York Attorney General Andrew Cuomo unveiled his plan to overhaul the state pension system, even as the state comptroller expressed concern that there could be constitutional problems with it. . . . The proposed legislation would impose stringent limits on political contributions, require extensive disclosures from investment fund personnel, create a code of conduct, compel any licensed professional to report conflicts of interest, and would bar investment firms from using placement agents or lobbyists to get business from the state pension fund.One of the more significant proposals is to change oversight of New York's $120-billion pension fund - the state's single largest asset, Cuomo said - from the current system of sole trustee to a 13-member, bipartisan board of trustees. Currently, only three states - New York, Connecticut and North Carolina - have pension funds with a sole trustee." (Newsday)

[Guidance Overview] Tomlinson Reversal May Suggest Fair Pay Act Is Fatal to Ripeness Arguments in ADEA Pension Cases
Excerpt: "The Fair Pay Act provides that, for purposes of Title VII, the Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act (ADEA), an unlawful act occurs with respect to discriminatory compensation: When the discriminatory compensation decision or practice is adopted. When a person becomes subject to the discriminatory compensation decision or practice. When a person is affected by application of the discriminatory compensation decision or practice, including each time wages, benefits or other compensation is paid, resulting from the decision or practice. As it relates to pension benefits, the Fair Pay Act states that 'nothing in [the] Act is intended to change current law treatment of when pension distributions are considered paid.'" (Faegre & Benson LLP)

Highest Earners Get Biggest Tax Breaks for Saving for Retirement
Excerpt: "Low wage earners face the most challenges saving for retirement, yet the tax subsidies for retirement saving are skewed overwhelmingly in favor of top earners. Since tax breaks for 401(k)s and similar retirement plans are tied to a participant's income tax rate, low-income taxpayers receive modest or no tax subsidies for each dollar put into these plans. The highest-paid workers, who have more resources to save for retirement without government assistance, receive the largest tax breaks." (Economic Policy Institute)

[Opinion] Do We Still Need ERISA? Only If We Want to Shortchange Savers
Excerpt: "With the technological advancements in money management platforms and payroll systems, one has to wonder whether the costs associated with ERISA compliance could be removed from the retirement plan system. If we could safely remove those costs, it's likely we could help employees accumulate between 20% and 30% more money for retirement. So it's worth considering. Since most employees work for small employers, and the costs of complying with the Employee Retirement Income Security Act of 1974 are high for small plans, most plans are carrying a big compliance drag. While it's difficult to estimate the exact drag on retirement assets, it's probably somewhere in the range of 0.5% to 1% of assets, depending on the size of the plan." (Investment News; free registration required)

Changes in Retirement Policies and Solutions Needed, According to Report
Excerpt: "A new report says that although the trend toward greater individual responsibility for retirement security will undoubtedly continue, there is much that employers, financial institutions, and the government can do to modernize their retirement policies and solutions in order to help Americans achieve a secure and dignified retirement. The McKinsey & Co. study debuts a 'Retirement Readiness Index' which finds that the average American family faces a 37% shortfall in the income they will need in retirement - a savings gap of $250,000 per household at the time of retirement - taking into account expected payouts of Social Security and pensions, as well as personal savings including 401(k) and other retirement plans." (PLANSPONSOR.com; free registration required)

ERISA Advisory Council to Meet November 3-4
Excerpt: "The Advisory Council on Employee Welfare and Pension Benefit Plans (the ERISA Advisory Council) has announced an open meeting on November 3?4, 2009. The purpose of the open meeting is for the Advisory Council members to finalize their recommendations to be presented by the Advisory Council to the Secretary. At the November 4 afternoon session, the Council members will receive an update from the Assistant Secretary of Labor for the Employee Benefits Security Administration (EBSA) and present their recommendations. The Council recommendations will be on the following issues: (1) Promoting Retirement Literacy and Security by Streamlining Disclosures to Participants and Beneficiaries, (2) Stable Value Funds and Retirement Security in the Current Economic Conditions, and (3) Approaches for Retirement Security in the United States. Descriptions of these topics are available on the Advisory Council page of the EBSA Web site. Organizations or members of the public wishing to submit a written statement may do so by mail or e-mail on or before October 27, 2009. Individuals or representatives of organizations wishing to address the Council may request to do so. Oral presentations will be limited to ten minutes, but an extended statement may be submitted for the record." (International Foundation of Employee Benefit Plans)

Redefining Defined Contribution Plans to Enhance Retirement Security
18 pages. Excerpt: "Legislators, plan sponsors, and plan participants are questioning the long-term viability of the DC system, and whether DC plans are equipped to serve as the primary retirement savings vehicles for most Americans. These doubts are natural in light of the losses sustained; total assets in DC plans declined by over $1 trillion during 2008. Although the market collapse has increased the urgency of efforts to reform DC plans, it is important to note that the shortcomings of these plans existed long before the current financial crisis, and will persist after an eventual market recovery. Most participants are not saving enough, retirement income is not protected from adverse marketconditions, and participants can exhaust their assets during retirement." (Prudential Retirement)

[Opinion] What Exactly Does It Mean to Finance Retirement?
Excerpt: "Let's talk really macro policy for a bit. 401(k) plans and DB plans are (private) vehicles for financing retirement income. Social Security is a public vehicle for the same purpose. So, in fact, is Medicare. As people age, medical costs make up a greater and greater share of the cost of living. For many, in the end, medical costs are all you spend money on. So, one pretty useful way to think about Medicare is as another (public) vehicle for financing retirement." (PLANSPONSOR.com; free registration required)

Group Seeks Answers for Retirement 'Crisis'
Excerpt: "America faces a retirement crisis, says an influential group of organizations that have started a new retirement initiative called Retirement USA. Wednesday, the group meets in Washington, D.C., to begin searching for solutions. Retirement USA was launched last March by the Economic Policy Institute, the National Committee to Preserve Social Security and Medicare, the Service Employees International Union and the Pension Rights Center. The coalition has grown since, adding the AFL-CIO, the National Caucus and Center on Black Aged and the National Consumers League, among others. The group's goal is to create a new retirement system that works in conjunction with Social Security and existing plans." (USA TODAY)

[Opinion] Alternative to 401(k)s Is a Tax Trap in Disguise
Excerpt: "An employee's 401(k), then, can take credit for one or more of the following: 1) the current plan, 2) previous 401(k) money left at former employers, and 3) roll-over IRAs. According to McKinsey and company, anyone in their 60s has five times more money than would have been their retirement nest-egg of the pre-401(k) era. (a McKinsey statistic.) Why? Because average job tenure has always been seven years, and retirement plans were operated with vesting schedules that denied any benefit at all to those who left before 10 years." (San Jose Mercury News)

[Guidance Overview] Governance and Compliance Advisory Update for Retirement Plans: October 2009
Excerpt: "September saw an increase in significant retirement plan regulatory activity." (Towers Perrin)

[Guidance Overview] In Pennsylvania, New Killed-in-Service Benefit Requires Immediate Action
Excerpt: "Providing what could be significant relief for many municipal police pension plans, Governor Edward G. Rendell signed Act 51 of 2009 into law on October 9, 2009. Effective immediately, Act 51 provides for a killed-in-service benefit to be funded by the Commonwealth of Pennsylvania equal to the monthly salary of the deceased officer, adjusted annually for the cost of living. The benefit is payable to the deceased's surviving spouse or, if there is no surviving spouse, to the deceased's minor children under the age of 18. If those children are attending college, they can receive the benefit up to the age of 23." (Ballard Spahr LLP)

Social Security $250 Payments' Debate Revs Up
Excerpt: "President Obama's plan to send $250 checks to more than 50 million Social Security recipients who won't get cost-of-living adjustments in January is gathering support in Congress, but outside experts and budget watchdogs say the payments are unjustified. . . . Experts on Social Security blasted the plan, both as a replacement for the COLA and as a way to stimulate the economy. Seniors don't deserve the money without inflation, they said, and don't need it as much as those laid off in the recession." (USA TODAY)

[Guidance Overview] Tips Offered on Retirement Plan Changes
Excerpt: "The Internal Revenue Service will change tax forms to allow refunds to be automatically deposited into retirement accounts. Whether the money is directed at an individual retirement account or a defined contribution plan such as a 401(k), employers and their employees need to be sure not to exceed the annual contribution limits for these plans. In 2009, the limit on contributions by individuals to 401(k) plans is $16,500, and the limit on contributions to IRAs is $5,000, with certain exceptions." (The National Underwriter Company; free registration or paid subscription required)

Most California Voters Back Proposed Public Pension Changes to Reduce Benefit Costs
Excerpt: "Californians favor changing the pension system for newly hired state and local government employees, and most back three possible scenarios that could reduce benefits, a new poll finds." (The Press-Enterprise)

[Opinion] TIME Magazine's 401(k) Plan Cover Story: Bad Facts, Bad Story
Excerpt: "[T]his article is emblematic of the uneven, at times unfair, coverage of 401(k)s during the market decline." (Vanguard Blog)

Restoring Americans' Retirement Security: A Shared Responsibility (PDF)
31 pages. Excerpt: "McKinsey's analysis indicates that a consistent focus on four policy principles could enable the average American family to reduce their retirement readiness gap by nearly half, injecting over $3.5 trillion in incremental assets into the retirement system over the nextdecade. These four principles are: (1) improving the accessibility of retirement plans, (2) increasing plan participation and savings ratesfor all Americans, especially lower- and middle-income households, (3) helping Americans to better manage their in-retirement risks in order to draw a stable 'retirement paycheck,' and (4) enabling Americans to work longer. The trend toward greater individual responsibility for retirement security will undoubtedly continue, particularly given the deteriorating state of employer and government balance sheets." (McKinsey & Company, Inc. via Retirement Made Simpler)

The Displacement Effect of Public Pensions on the Accumulation of Financial Assets
Excerpt: "The generosity of public pensions may depress private savings and provide incentives to retire early. While there is plenty of evidence supporting the latter effect, there remains considerable controversy as whether or not public pensions crowd out private savings. This paper uses international micro-datasets collected over recent years to investigate whether public pensions displace private savings." (University of Michigan Retirement Research Center)

Obama Proposes $250 for Retirees to Augment Social Security Checks
Excerpt: "President Barack Obama proposed giving payments of $250 to more than 50 million retired Americans who won't get an increase in their Social Security checks next year. The announcement on Wednesday came ahead of the Social Security Administration's expected announcement that seniors will not receive a cost-of-living adjustment in 2010 because of the poor economy." (Capitol Hill Publishing Corp.)

The Fall and Rise of Household Saving (PDF)
14 pages. Excerpt: "In the 1970s, the average personal saving rate was 9.6%. At one time, in 2005, it was less than 1%. For the 40 months between January 2005 and April 2008, the personal saving rate averaged 1.8%. That it was so low for an extended period of time would seem to be cause for worry. In the past, Congress has indicated a desire to promote household saving by, among other things, creating individual retirement accounts, and saving is an important consideration in proposals to reform Social Security. In May 2008, the personal saving rate began to rise. It is too early to tell with any certainty whether that represents the reversal of the long-term decline. What may seem unusual is that the recent rise in household saving occurred at a time of general economic weakness. While policymakers hope to stimulate aggregate demand with an expansionary fiscal policy, the increase in household saving resulted in more than $300 billion less in consumer spending than would have occurred had the saving rate not risen." (U.S. Congressional Research Service)

[Guidance Overview] Towers Perrin Monthly Retirement Regulatory Round-Up, September 2009 (PDF)
5 pages. Excerpt: "The Monthly Regulatory Round-Up is a high-level summary of legal and regulatory developments that occurred during July 2009 that may be relevant to large employers. Developments are sorted according to federal legislative developments, federal regulatory guidance, other developments (e.g., significant litigation, studies, select state law developments)." (Towers Perrin)

Rebuilding Workers' Retirement Security: A Labor Perspective on Private Pension Reform
Excerpt: "This chapter surveys the issues facing policymakers and workers' organizations thinking about rebuilding a viable retirement security system in the United States, in the context of declining defined benefit coverage and persistent serious flaws in defined contribution plans. The chapter lays out principles for a universal system of supplemental retirement income coverage based on mandatory contribution levels, mandatory portability, limitations on early withdrawals, and annuitization. The structure outlined envisions continued participant and employer choice of both investment strategy and benefit design, with incentives built in for collective asset management." (Pension Research Council; registration required to download fulltext of paper)

Compromise Defense Authorization Bill Measure Advances Retirement Reforms
Excerpt: "House-Senate negotiators included a number of pay and retirement provisions in a compromise version of the 2010 Defense authorization bill, overcoming the objections of Republican senators who blocked the language from the Senate version of the bill. The conference report, approved on Wednesday morning, includes a provision that would allow workers in the Federal Employees Retirement System to count unused sick leave toward their retirement. The provision would be phased in over a four-year period. Until Dec. 31, 2013, employees would receive 50 percent credit for unused sick time; they would receive full credit beginning on Jan. 1, 2014." (GovernmentExecutive.com)

[Opinion] Watson Wyatt Testifies in Support of Funding Relief for DB Plan Sponsors
Excerpt: "Testimony of Mark Warshawsky, Director of Retirement Research, Watson Wyatt Worldwide, presented to the House Committee on Ways and Means at the hearing 'Defined Benefit Pension Plan Funding Levels and Investment Advice Rules,' Oct. 01, 2009." (Watson Wyatt Worldwide)

Many Pension Plans Facing Sharply Higher 2010 Contributions, Mercer Tells Congress
Excerpt: "Pension funding relief already provided by Congress and the IRS has reduced what would have been dramatically higher 2009 required contributions for many sponsors, but a cash crunch looms for the 2010 plan year, Mercer told a congressional panel. 'Barring an enormous market recovery, we expect that many plans will face significantly increased required contributions,' said Mercer Principal Craig Rosenthal in testimony before the House Ways and Means Committee. Rosenthal presented findings from an extensive new Mercer study on the status of plans' funding and credit balance levels." (Mercer LLC)

House Ways and Means Committee October 1 Pension Funding Hearing
Excerpt: "The committee hearing comes on the heals of a special edition of the Employee Plans News issued by the Internal Revenue Service on Sept. 25 that included information on impending funding regulations. In addition to stating that the regulations will be issued 'in the near future,' it also provided further guidance on determining the adjusted funding target attainment percentage (AFTAP). Specifically, the IRS concluded that a plan with a Jan. 1, 2009 valuation date could use the lower monthly yield curves from any of the four months immediately proceeding January 2009 and change the valuation in 2010 and after. The guidance also said that all of this could be done without having to wait for IRS approval. This move is expected to help assist pension plans achieve a smoothed valuation rate and provide more predictability." (Financial Executives International)

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