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Federal District Court Dismisses City of Providence Claim That Buck Consultants Miscalculated COLA Savings

"A U.S. district court has dismissed a lawsuit in which the city of Providence, Rhode Island, claimed a miscalculation by Buck Consultants caused it to miss out on cost savings for its pension plan by leading it to settle a lawsuit with a union and retirees. The city [had alleged] that Buck overestimated the amount the city would save by suspending cost-of-living adjustments (COLAs) for the city's pension plan[.]" [City of Providence v. Buck Consultants, No. 13-131 (D.R.I. Nov. 13, 2015)]

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Xerox to Buy Parent of Buck Consultants for $6.4 Billion

Excerpt: Xerox Corp. said Monday that it plans to acquire Affiliated Computer Services Inc., the parent company of Buck Consultants L.L.C., in a cash-and-stock transaction valued at $6.4 billion.

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Buck Consultants Comment Letter to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)

"Congress has considered this issue of lifetime income in the past. The fact that legislation has been proposed suggests that Congress believes that the Department does not have the authority to regulate on this topic without Congressional mandate.... [We] encourage delaying this requirement until authorized by legislation.... Any mandate by the Department also will result in increased costs that will in many cases be passed along to participants -- further depleting the funds that will be available to them for retirement. Even if the employer picks up the cost, there will likely be an impact to employees because the total dollars allocated for benefits is generally limited."

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City of Providence Sues Buck Consultants Over Pension Savings Calculations

"The lawsuit accuses Buck of miscalculating $700,000 of savings the city expected this year through pension reform. 'When compounded annually over the next 28 years, the error amounts to $10.8 million in today's dollars,' [Providence Mayor Angel] Taveras said ... The city alleges breach of contract, breach of fiduciary duty, negligence and violation of the Rhode Island False Claims Act. The lawsuit claims Buck admitted the mistakes and said it had made other undisclosed calculation errors that accounted for the lost savings."  MORE >>

Buck Consultants Comment Letter to Actuarial Standards Board on Proposed Revision of ASOP No. 6, 'Measuring Group Benefit Obligations and Determining Retiree Group Benefits Plan Costs or Contributions' (PDF)

"[I]f the commitment of employers who do not have material experience to affect the pool is only to provide what is effectively deep discounted merchandise, why should we as a profession require them to ignore that discount? If these employers can no longer reflect the community rated premiums in their obligations, the measurement of those obligations will increase significantly, while the underlying cost remains as it had been previous to the change in the ASOP. That could cause some employers to reduce or eliminate the retiree medical benefits that they currently provide. Other employers could be harmed by the unexpected huge increase in their liabilities, which could potentially cause other financial difficulties (for example, reduction in bond ratings or breach of loan covenants)."

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Providence, Rhode Island, Says It's Getting Bucked

"That's what happened [this week] when Buck Consultants was sued by the city of Providence, RI for multiplying some number by 9 instead of 10. In a plan that is 31.85% funded due primarily to a set of funding rules designed specifically to understate contributions Buck accidentally understated them too much by making a math error that even politicians could grasp."

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Defined Benefit Pensions: Still the Best Bang for the Buck (PDF)

[A recent TIAA-CREF/Arnold Foundation paper] fails to offer a concrete cost analysis that supports their assertion that DC plans provide benefits at a cost equivalent to that of DB plans. NIRS stands by our research. The structural DB cost advantages quantified in [the 2008 NIRS Study] 'A Better Bang for the Buck' -- derived from well-documented research on investment returns, fees, and asset allocation -- remain valid based on current data about DB and DC plan features and performance."  MORE >>

Overview of COBRA Changes in Stimulus Bill, with Comments by Buck (PDF)

6 pages. Excerpt: ARRA is meant to be a fast-acting stimulus to the economy. In keeping with that goal, the new COBRA provisions are effective almost immediately, and plan sponsors must quickly map out a compliance strategy.  MORE >>

Faulty COBRA Notices Can Cost Big Bucks

"While we don't know the exact number of class action plaintiffs, we do know that Ms. Marrow was one of three covered participants in her family.... For the Marrows alone, this would amount to $452,100 ... The plaintiffs argue that the COBRA notice incorrectly stated that qualifying beneficiaries had 60 days from their last day of employment to elect COBRA continuation coverage.... The plaintiffs also argue that expressing the deadline as a number of days from a specific date requires qualified beneficiaries to perform calendar calculations." [Marrow v. E.R. Carpenter Company, Inc., No. 23-2959 (M.D. Fla. Feb. 4, 2025)]  MORE >>

Where Does the Buck Stop? The Plan Administrator

"[E]mployers should not become complacent and assume that they have contracted out all responsibility for the administration of their ERISA plans. There are ways of mitigating some of the liability (contractually, insurance) but ultimate responsibility and liability remain with the ERISA plan administrator."  MORE >>

Buck Up, Boomers. You're Still Better Off Than Your Parents.

"This is a hard time to retire. The market is down 7% from last year and the rate of inflation has risen to 8.5%. Both are brutal to your bottom line when you're on a fixed income.... As bad as things seem, odds are you are in better shape than your parents or grandparents were. And if they got through retirement comfortably, so will you.... Greater access to retirement accounts means people are retiring with more money than before.... More money translates to more income in retirement."  MORE >>

A Better Bang for the Buck: Post-Retirement Experience Drives Cost Advantage for DB Plans Over DC Plans (PDF)

31 pages. "A typical DB plan has a 49 percent cost advantage compared to a typical individually directed DC plan because of longevity risk pooling, asset allocation, low fees and professional management.... A DB pension plan costs 27 percent less than an 'ideal' DC plan, with below-average fees and no individual investor deficiencies.... In other words, a typical DC plan costs nearly twice as much to provide the same level of retirement benefit as a DB plan, with four-fifths of the difference occurring post-retirement."

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The Little Differences Between 401(k)s and IRAs Can Cost Big Bucks

"Because tax-favored retirement accounts are supposed to be for retirement, the rules often impose tax and a 10% penalty on withdrawals before age 59½. Younger IRA owners who take out up to $10,000 to purchase a first home don’t owe the penalty, while younger 401(k) participants do."  MORE >>

Getting the Most Bang for Your Buck Out of a Severance Release

"In a recent Iowa case, an employee who signed a release in connection with a severance agreement later attempted to bring an ERISA claim for breach of fiduciary duty against the employer's ESOP plan.... Because the employee's acceptance of the release was knowing and voluntary, and because it was broad enough to cover the trustee as a fiduciary of the ESOP and to cover ERISA claims for breach of fiduciary duty, the court granted summary judgment in favor of the trustee." [Innis v. Bankers Trust Co. of South Dakota, No. 16-650, (S.D. Ia. Apr. 30, 2019)]  MORE >>

Governors Press Congress for Fast Bucks to Secure Obamacare Market in 2018

"A bipartisan succession of state governors and insurance commissioners told the [Senate Health, Education, Labor and Pensions (HELP) Committee] that there is no time for them to get their own reinsurance programs up and running in order to stabilize the market. What would help in the short term, they said, would be for the federal government to step in and do it -- temporarily.... Governors testified [on September 7, 2017] that reinsurance would lower premiums, thereby bringing young, healthy people into the risk pool and providing stability to the marketplace."

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The Big Squeeze: Big Bucks Paid to Alternative Investment Managers While Pension Deficits Get Worse

"[A] select few hedge fund and private equity titans have greatly benefitted from this shift into alternative assets, amassing extraordinary wealth, while U.S. public pension funds keep sinking deeper into a pension albatross, failing to deliver on these and other investments. Still, despite this reality, US pensions are rushing to invest more into alternatives, fearing a big downturn ahead.... The problem isn't paying fees when risk-adjusted performance is met. The problem is paying big fees for subpar or average returns in a low-return environment over a long period as your pension deficit gets worse."  MORE >>

How Pensions Pass the Buck to Future Generations

"A surprising reason dissident actuaries advocate using a much lower earnings forecast for public pension investment funds is 'intergenerational equity,' ensuring that the pensions of government workers are paid by the generation that receives their services.... With little or no risk of loss, investments with predictable yields could closely match the cost of pensions workers earn during a year, minimizing debt passed to future generations. But that would be costly. The yield on the 20-year Treasury bond last week was 2.2 percent."

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Outdated HIPAA Agreement Costs Business Associate Big Bucks

"An out-of-date business associate agreement and its potential [HIPAA] violations came with a $400,000 price tag for business associate Care New England Health System.... The business associate agreement, which was updated as a result of the OCR investigation in August 2015, failed to include revisions required under the January 2013 HIPAA Omnibus final rule."

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Still a Better Bang for the Buck: An Update on the Economic Efficiencies of Defined Benefit Pensions (PDF)

30 pages. "In this updated comparison of DB and DC plan costs, [the authors] take into account key developments in the retirement benefits landscape with regard to fees, investment strategies, and annuities, while building an 'apples to apples' comparison through a uniform set of demographic and economic assumptions.... A typical DB plan provides equivalent retirement benefits at about half the cost of a DC plan, and 29 percent lower cost than an 'ideal ' DC plan modeled with generous assumptions."

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Be Cautious of Offers to Pass the Fiduciary Buck

"The most aggressive of these fiduciary service marketers propose to transfer all employer fiduciary risk to themselves by the delegation of certain functions that may include plan administration, investment management or a combination thereof.... The employer is ultimately responsible for the providers they appoint to fulfill these roles and has an ongoing obligation to monitor the actions of each provider. While use of experts to fulfill these roles is often a prudent course of action for the plan fiduciary, they must always remember that their fiduciary obligation doesn't end with this appointment."

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