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<< Older News   |  February 23, 2017

Benefits in the News

Text of SEC Investor Bulletin: Robo-Advisers
U.S. Securities and Exchange Commission
Feb. 23, 2017
"Before making a decision about whether to invest through a robo-adviser, or in deciding which robo-adviser might be best for you, you should do your own research. Make sure the robo-adviser and the investment portfolio it puts together for you are a good match for your investment needs and goals, and that you understand the potential costs, risks, and benefits of using that particular robo-adviser. [This bulletin highlights] some issues you may want to consider in making these important decisions."
Voters in Arizona and Washington State Approve Paid Sick Leave Mandates
Willis Towers Watson
Feb. 23, 2017
"Arizona and Washington have recently joined Connecticut, California, Massachusetts, Oregon and Vermont in mandating statewide paid sick leave, and Montgomery County, Maryland, expanded its existing paid sick leave law. Going in the opposite direction, Ohio banned paid sick leave mandates, and five jurisdictions in Illinois opted out of a county law mandating paid sick leave."
Text of SEC Guidance Update: Robo-Advisers (PDF)
U.S. Securities and Exchange Commission [SEC]
[Official Guidance]
Feb. 23, 2017
15 pages. "[D]epending on their business models and operations, robo-advisers should keep in mind certain unique considerations as they seek to meet their legal obligations under the Advisers Act. This Staff guidance offers suggestions for how robo-advisers may address some of these issues.... [T]here may be a variety of means for a robo-adviser to meet its obligations to its clients under the Advisers Act ... This Staff guidance focuses on robo-advisers that provide services directly to clients over the internet. This guidance, however, may be helpful for other types of robo- advisers as well as other registered investment advisers."
Helping Millennials Save for Retirement
Society for Human Resource Management [SHRM]
Feb. 23, 2017
"Employers are offering a wide range of financial resources to their younger employees and using novel incentives to encourage participation and progress toward money management goals. Education is a common approach: Many employers offer in-person and online classes on a variety of financial topics. Some organizations provide multi-week 'boot camp' programs, followed by sessions on specialized topics."
International Pension Plan Survey 2016
Willis Towers Watson
Feb. 23, 2017
"Key findings [include]: [International Pension Plans (IPPs) and International Savings Plans (ISPs)] are offered by companies in excess of 20 business sectors, with high prevalence in Banking and Finance, Oil and Gas, Industrials, and Engineering and Power. 59% have been established with a 'retirement objective' (IPPs), with 41% having more a shorter-term 'savings objective' (ISPs).... IPPs/ISPs are increasingly being used for local employees based in countries where there are serious economic difficulties by paternalistic sponsoring employers."
University's Links to Catholic Church Not Sufficient to Exempt Its Disability Plan From ERISA
Thomson Reuters / EBIA
Feb. 23, 2017
"For many years, most courts (and the DOL and IRS) treated plans maintained by church-affiliated organizations as church plans even if they were not established by a church; the narrower reading embraced by the appellate courts ... is a relatively recent development. In March, the U.S. Supreme Court is scheduled to hear arguments on this issue (in those cases), and a decision is expected before the current term ends in June. While those cases all involve pension plans, health and welfare plans like the disability plan here are likely to be affected by the Court's decision." [Durham v. Prudential Life Ins. Co. of America, No. 16-8202 (C.D. Cal. Feb. 10, 2017)]
Health Experts Consider a Post-ACA World (PDF)
Employee Benefit Research Institute [EBRI]
Feb. 23, 2017
"[H]ow, exactly, is the law likely to change, and how will this fundamental policy shift affect the U.S. health care and health insurance systems? Those questions were explored by a panel of health and policy experts at EBRI's 79th policy forum held in Washington last December ... The short answer, as the new administration was taking shape: Nobody knows. But whether it's a 'repeal and replace,' as many congressional Republicans have advocated ever since the law was enacted in 2010, or 'repeal and delay' or 'partial repeal' or 'repair' (as some are now suggesting) or just 'repeal,' it seems certain that change is on the way."
2016 Year-End Devenir HSA Research Report
Feb. 23, 2017
"The number of HSA accounts rose to 20 million, holding almost $37 billion in assets, a year over year increase of 22% for HSA assets and 20% for accounts for the period of December 31, 2015 to December 31, 2016.... The average investment account holder has a $14,971 average total balance ... Health plan partnerships continued as the leading driver of new account growth, accounting for 37% of new accounts opened in 2016."
Reading the Fine Print: Do ACA Replacement Proposals Give States More Flexibility and Authority?
Health Affairs
Feb. 23, 2017
"[T]he fine print in some plans to replace the ACA would take away state authority over health insurance benefit design, premium rates, marketing, and consumer complaint resolution. A close examination of these proposals shows they would turn upside down a longstanding principle of federal-state regulation of insurance, which provides that the states should be the primary source of health insurance oversight and consumer protection, with the federal government only stepping in to set minimum standards or fill gaps."
Paid Family Leave Is Proposed Again in Congress
Wolters Kluwer Law & Business
Feb. 23, 2017
"On February 7, Representative Rosa DeLauro (D-Conn.) and Senator Kirsten Gillibrand (D-N.Y.) reintroduced the Family And Medical Insurance Leave (FAMILY) Act, along with 112 cosponsors in the House and 26 in the Senate (H.R. 947; S. 337).... The bill would create a national paid family and medical leave insurance program aimed at ensuring that American workers would no longer have to choose between a paycheck and caring for a family member."
Impact of Changing the Age Rating Limit for Health Insurance Premiums (PDF)
Feb. 23, 2017
"Premiums for adults ages 60 and older would increase by an average of $3,192 per year, from about $14,724 to $17,916. This represents a 22 percent increase. Premiums for adults ages 50-59 would increase by an average of $1,524 per year, from about $11,316 to $12,840. This represents a 13 percent increase."
Health Reform: American Businesses Are Critical Partners for Success (PDF)
Marsh & McLennan Companies
Feb. 23, 2017
11 pages. "We are on the cusp of a major transformation in how people access care and how care is delivered.... The potential savings are vast, and would help achieve the important goal of expanding health coverage to more people while preserving the employer-based system that Americans value so highly. [This paper presents] four recommendations to achieve these goals: [1] Address healthcare cost growth and avoid shifting costs to private payers; [2] Maintain favorable tax treatment of employer-sponsored benefits; [3] Update health savings account rules; [4] Create a 'President's Healthcare Leadership Council'."
How the DOL Fiduciary Rule Will End Most Mutual Fund Share Classes
Michael Kitces in Nerd's Eye View
Feb. 23, 2017
"[T]he fiduciary rule doesn't actually require that advisors use the lowest cost fund, period ... However, if the advisor is going to recommend an actively managed fund ... it better be the cheapest version of the fund available, because using anything different would represent a conflict of interest for the advisor enriching themselves at the expense of the client with an unecessarily-more-expensive product. Yet taken to its logical conclusion, this means that most variable annuity and mutual fund share classes will be rendered entirely irrelevant under [the DOL fiduciary rule]!"
American Benefits Council Comment Letter to IRS on IRS Notice 2016-67, Rules for Implicit Interest Pension Equity Plans
American Benefits Council
Feb. 23, 2017
"We see no basis under the law for treating the assumption for pre-retirement mortality as part of the interest crediting rate subject to the market rate rules.... If implicit interest is not made subject to the market rate rules: [1] We urge the IRS to issue prospective guidance confirming this, so that the uncertainty is resolved. [2] In this guidance, we ask the IRS to approve any reduction based on the contrary interpretation for all purposes (including qualification, funding, and benefit restrictions), provided that the reduction is voided prospectively within a reasonable specified period after the issuance of the guidance (such as six months). [3] There would need to be anti-cutback relief to permit any prior reduction to be voided. Because a market rate can in many instances be lower than a non-market rate, we would need this anti-cutback relief. [4] The guidance should state that the voiding of the prior reduction would not require a 204(h) notice."
American Benefits Council Comment Letter to Oregon State Treasury on Oregon Retirement Savings Plan
American Benefits Council
Feb. 23, 2017
22 pages. "[T]he revised proposed rules would cause the [Oregon Retirement Savings Plan (ORSP)] to significantly disrupt existing Qualified Plans and their participants by effectively dictating the design of retirement plans that already meet the numerous and stringent requirements imposed by federal law. Although it has since been communicated that this was not the intent of the new language, this situation only highlights the importance of the Board examining how the ORSP could affect our current retirement system and avoiding any adverse effects on employers who currently sponsor a retirement plan. The only way to ensure that correct result is for the ORSP to permanently exempt all current plan sponsors from the Plan's requirements in accordance with Oregon's authorizing legislation."
Seventh Circuit Decision Holds ERISA Does Not Authorize Contribution Suits Brought by Plans Against Other Payers
Godfrey & Kahn S.C.
Feb. 23, 2017
"A recent Seventh Circuit decision leaves ERISA plans paying claims without a remedy to enforce coordination of benefits clauses against other payers.... ERISA plans cannot ordinarily pursue reimbursement or contribution under state law theories, as such claims are typically pre-empted by ERISA. After this decision, they also cannot pursue reimbursement under ERISA." [Cent. States, Se. & Sw. Areas Health & Welfare Fund v. American Int'l Group, No. 15-2237 (7th Cir. Oct. 24, 2016)]
Callan 2017 DC Trends Survey
Callan Associates
Feb. 23, 2017
"The use of automatic contribution escalation increased markedly over the past year (63% in 2016 versus 46% in 2015). Caps on automatic contribution escalation have also markedly increased (27% in 2016 from 19% in 2015)....Nearly half (47%) of plan sponsors reported making a fund change due to performance-related reasons. This is the highest in the survey's history."
OMB Working to Finalize DOL Rule Delay
Feb. 23, 2017
"The DOL delay request -- sent to the OMB two weeks ago -- can take two forms, a proposed rule or an interim final rule. The biggest difference is the timing of required public comment. A proposed rule requires public comment before it can be published, while an interim final rule can be published first, with comment taken afterwards[.]"
Leave Management Continues to Vex Employers, but Outsourcing and Integrated Systems Help
Society for Human Resource Management [SHRM]
Feb. 23, 2017
"Outsourcing of [FMLA] administration continues to increase ... 34 percent of employers with 50 or more employees outsource FMLA leave to a third-party administrator (TPA). 45 percent of employers with 1,000 and more employees do so. 80 percent of employers that also outsource management of short-term disability (STD) and long-term disability (LTD) leave do so through the same TPA that manages FMLA leave on their behalf."
Kansas Court Again Upholds Fiduciary Rule as DOL Seeks to Delay Implementation
Miller & Chevalier
Feb. 23, 2017
"Judge Crabtree's decision came as no surprise. Last November, he denied Market Synergy's motion for a preliminary injunction of the new PTE 84-24. Deciding the issue on the merits, the judge twice noted that the parties submitted no new evidence in the most recent briefing and therefore, found 'no reason to depart from the legal conclusions and reasoning' set forth in his earlier order." [Market Synergy Group v. DOL, No. 16-4083 (D. Kans. Feb. 17, 2017)]
Millennials Could Drive More ESG Investing
Feb. 23, 2017
"Overall slightly more than half (51%) of Millennials say they view ESG/impact investing ideas favorably, while just 37% of Gen Xers and 32% of Baby Boomers agree. Millennials are also far and away the most likely to say their investments' impact on society and the environment should be among the most important and primary considerations when building portfolios."
Four GOP Legislative Alternatives to the ACA (PDF)
United Actuarial Services, Inc.
Feb. 23, 2017
"At the moment, four different proposals seem to be receiving the most attention.... [1] Cassidy-Collins' Patient Freedom Act of 2017 (S.191), [2] Paul Ryan's A Better Way, [3] Tom Price's Empowering Patients First Act of 2015 (HR 2300), and [4] Rand Paul's Obamacare Replacement Act (S.222) The Cassidy-Collins Bill seems like it has the best chance of garnering bipartisan support as it allows states the option of keeping the ACA if they wish. [This article describes] each of the four proposals[.]"
Large Cash Flows Change the Dynamics of a Pension Plan
Russell Investments
Feb. 23, 2017
"One feature of the maturation of the pension sector is that benefit payments have become a bigger consideration for many plans. Not only is there the administrative effort of ensuring cash is on hand each month to make the payments, but there's also a change in the dynamics of the plan itself."
Health Savings Accounts and Filing Your Taxes
Feb. 23, 2017
"As you prepare and compile tax documents, it's important to know what forms you may need to file if you have a Health Savings Account (HSA). In addition to Form 1040, there are two other very important documents -- Form 1099-SA and Form 8889."
Investment Return Volatility and the Los Angeles Fire and Police Pension Plan (PDF)
Rockefeller Institute of Government
Feb. 23, 2017
51 pages. "[This report examines] the potential implications of investment return volatility for the Los Angeles Fire and Police Pension Plan (LAFPP) ... one of five plans [selected] to analyze in detail.... [If] LAFPP's investment-return assumption is approximately correct over the long run, the plan has very little risk of becoming severely underfunded in the next thirty years, even if investment returns vary significantly from year to year.... Under plausible alternative investment-return assumptions, the risks of severe underfunding remain small but the city's contribution risks are greater."

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