NIPA (National Institute of Pension Administrators)

Benefits Consultant, Small Group & Mid Market
for Northwestern Benefit Corporation of Georgia in GA

Defined Benefit Calculation Analyst
for New York Life Retirement Plan Services in MA

Benefits Implementation Project Manager
for California Location in CA

Regional Bundled Sales Specialist
for Nationwide Insurance in AZ, CA, CO, KS, OR, WA

Relationship Manager
for Aspire Financial Services in FL

Defined Contribution Plan Administrator
for The Benefit Practice in CT

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ASPPA Benefits Council of Cleveland - Half Day DB Plan Workshop
in Ohio on June 26, 2012 presented by ASPPA Benefits Council of Cleveland

Not Your Ordinary TPA: What Wal-Mart and Nordstrom Can Teach Us Webcast
Nationwide on June 20, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)

Determination Letters and Plan Document Changes Webcast
Nationwide on June 26, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)

[Guidance Overview]

Fee Disclosures Almost Here; What Should Plan Sponsors Do?
"As the deadline for service providers to provide the required [fee] disclosures (i.e., July 1, 2012) draws close, it seems like an opportune time to consider what plan sponsors should do with this all this data, and what other steps they should consider taking.... The most important thing is that plan sponsors must realize that mere receipt of the fee information by the plan sponsor is not enough. In fact, we would argue the opposite is true." (Porter Wright Morris & Arthur LLP)

DATAIR! More Choices – Better Guidance – Less Cost   [Advert.]

Documents, SPDs, Amendments, Administrative Forms
401(k)/Profit Sharing, 403(b), DB and Cash Balance Plans
(888) 328-2474    Sales@DATAIR.com    www.DATAIR.com

[Guidance Overview]

Another Question is Answered in the Who's the Employer Q&A Column
What is the effect of the recent Advisory Opinion on bonding requirements for open MEPs? (BenefitsLink.com)

[Guidance Overview]

IRS and Treasury Give Back Significant Ground on Governmental Plans Normal Retirement Age Definition
"[In] IRS Notice 2012-29 [issued April 18, 2012], the IRS and Treasury have signaled their agreement with many in the governmental plans community that the requirements of the 2007 Final Normal Retirement Age Regulations should not be imposed on governmental retirement plans that do not provide for in-service distributions.... [A] governmental plan that does not 'provide' for in-service distributions before a participant's attainment of age 62 does not need to contain a definition of normal retirement age; alternatively, a governmental plan that does not make in-service distributions may contain a definition of normal retirement age that does not conform to the requirement of the 2007 Final Normal Retirement Age Regulations that normal retirement age not be attainable until the participant has reached a specified chronological age." (Strasburger)

[Guidance Overview]

IRS Revenue Rulings Clarify Use of Deferred Annuities in Retirement Plans (PDF)
An overview of two revenue rulings issued on Feb. 2, 2012 explaining how proposed IRS regulations on lifetime income annuity products (also issued on that date) would affect existing annuity requirements when employers offer lifetime income options under their retirement plans. (Ascensus)

[Guidance Overview]

When Is a Group Not a Group? DOL Issues Guidance on Multiple Employer 401(k) Plans
"[I]t is important for employers (particularly their CFOs) who have adopted Open MEPs to consider the extent of their potential liability for failure to file Form 5500 and to engage in annual plan audits during the time in which they believed the arrangement satisfied the requirement of a single plan under ERISA. It is difficult to predict whether the DOL will apply this enforcement position only to new MEPs or also to existing ones." (CFO.com)

Presumption of Prudence Continues to Shield Fiduciaries From Liability Following Drop in Value of Employer Stock
"Plan fiduciaries did not breach their ERISA duties by retaining company stock as an investment option, despite a significant drop in the value of the stock price, the U.S. Court of Appeals in New York (CA-2) has ruled. The mere decline in the value of the company's stock price did not indicate that the company was in such a dire condition as to rebut the applicable presumption of prudence." [Fisher v. JP Morgan Chase & Co. (CA-2)] (Wolters Kluwer Law & Business / CCH)

Retirement Readiness Ratings and Retirement Savings Shortfalls for Gen Xers (PDF)
"This ... article provides sensitivity analysis on the Retirement Readiness Ratings(tm) by giving additional information on the percentage of the at-risk population that is relatively close to having adequate financial resources for retirement income adequacy.... [T]his article focuses on the Gen Xer cohort (born between 1965–1974) in an attempt to assess the impact that eligibility for participation in a 401(k) plan has on these values." [Article begins at page 9 of PDF.] (Employee Benefits Research Institute)

Unions Attempt Legal and Regulatory Approach to Derail Pension Reform
"Immediately after San Jose's Measure B passed last week, the unions filed a court challenge against the initiative.... In the private sector, employers can reduce employee-pension benefits going forward, but in California, anyway, the courts have prohibited benefit reductions for public employees.... Mayor Chuck Reed explained in response to the union lawsuit: 'Measure B was carefully crafted to follow California law. San Jose is a charter city and the California Constitution gives charter cities "plenary authority" to provide in their charters for the compensation of their employees. San Jose's City Charter reserves the right of the City Council and the voters to make changes to employees' retirement benefits[.]'" (City Journal)

The Retirement Outlook for 20-Somethings
"The vision of Florida, golf courses, cruises, and RV trips didn't fit ... [A group of 20-somethings] all agreed that our generation, with its student-debt, terrible economy, and little ability to trust the solvency of social security, has to redefine our image of retirement." (Reuters via FoxBusiness.com)

Tentative Deal Reached on Big Changes in Michigan's Teacher Retirement System
"The Michigan Legislature is poised to vote Thursday on the biggest changes in the state's teacher retirement system in a generation ... Senate Republicans have agreed—for now—to hold off on their plan to move newly hired school employees into a 401(k)-only retirement plan, keeping intact a hybrid pension/401(k) system that has been in place since mid-2010. Older workers will remain in a pension-only, or defined benefit, plan regardless." (mLive.com)

Lump-Sum Pension Offer a Tough Call for General Motors, Ford Retirees
"Thousands of auto retirees in Michigan are losing sleep over the idea of taking on a risk that they've never dreamed they'd have to consider: Should they trade in their treasured monthly pension check for a final payout when they're already in their 60s or 70s? How exactly would that work out? ... What's clear is that more companies want to unload whatever pension risk they can onto their former workers." (Detroit Free Press)

IRS Rule Could Delay San Jose Pension Reforms
"A key part of a pension reform approved by San Jose voters last week needs IRS approval, similar to an Orange County pension reform held up for three years ... The problem is a U.S. Internal Revenue Service rule in 2006 that could deny the usual tax-deferred status if an individual public employee chooses a retirement plan with a lower benefit. Giving current employees the option of choosing a lower pension plan, or paying more to keep the current plan, is a key part of an agreement Orange County negotiated with employees in 2009 as well as Measure B approved by San Jose voters last week." (CalPensions)

More on Using a 401(k) Rollover to Buy a Business
"No matter how many times the IRS raises a red flag about [Rollovers as Business Start-ups ('ROBS')] arrangements, they keep popping up in the popular press.... Earlier this year, the IRS ... said that while some of the ROBS were successful, many of the companies studied by the IRS had gone out of business within the first 3 years of operation, with the owners experiencing significant monetary loss, bankrup.tcy, personal and business liens, or had their corporate status dissolved by the Secretary of State, either voluntarily or involuntarily." (The Pension Protection Act Blog)

401(k) Eligibility Key Driver in Retirement Readiness (PDF)
"For those [Gen Xers] with no future years of eligibility, the average retirement savings shortfall is projected to be approximately $78,000 per individual. Those ... with at least 20 years of future eligibility are projected to have an average financial shortfall at retirement of approximately $23,000." (Employee Benefits Research Institute)

Increasing Life Expectancy and the Fall and Rise in the Retirement Age
"This paper provides a theoretical foundation for a U-shaped evolution in the retirement age. By assuming no markets for annuities markets in a simple two period overlapping generations model with lifetime uncertainty, we show that increasing life expectancy can explain the observed evolution in the retirement age. In addition, we show that annuity market imperfections may provide a utilitarian rationale for an unfunded public pension system that counterbalances the intergenerational transfer of wealth arising from unintended bequests." (University of Southern Denmark, Department of Business and Economics)

Firefighters Sue to Block Pension Changes in St. Louis
"Trustees of the Firemen's Retirement System of St. Louis sued the city Tuesday, as they have threatened to do for months, to block Mayor Francis Slay's sweeping pension overhaul—even as the mayor's plan continued to roll through the Board of Aldermen. The trustees' six-count suit seeks a temporary restraining order and judgment against Slay's proposal, which would close the current fire pension system and replace it with one with vastly less-expensive benefits." (STLtoday.com)

Pensions Seek Magic 8% Return Using Neglected Junk Debt
"U.S. pension-plan managers are pouring cash into debt from the smallest speculative-grade borrowers, seeking to meet targeted 8 percent returns at a time when average yields are at about record lows.... Fund managers that oversee retirees' health and pension benefits are seeking the debt of smaller junk-rated borrowers, pushed toward riskier investments as the Federal Reserve pledges to hold interest rates near zero through 2014." (Bloomberg)

Frozen DB Plans Largely Unchanged During First Half of 2012
"Results of the biannual survey, which looks at 150 different corporate DB plans each time, were nearly identical to the results of the January survey, when 46% of the plans were active, said Jon Waite, director, investment management advice and chief actuary at SEI Institutional Group. "My guess is it is going to stay status quo for some period of time," Mr. Waite said ... Plans that wanted to or were likely to close or freeze already took those steps a few years ago, he added." (Pensions & Investments)

Employers and Business Groups Urge Congress to Adopt Pension Funding Relief
"Over 200 employers and trade associations, representing thousands of pension plans covering millions of employers, have signed a letter urging Congress to enact legislation to stabilize the pension funding interest rate rules. Similar actions have been urged by Mercer and by [ASPPA]." (Wolters Kluwer Law & Business / CCH)

San Jose Formally Acts to Lower Pensions for New Hires
"A week after voters overwhelmingly passed a measure to cut costly city employee retirement plans, the San Jose City Council took the first step to put those intentions into action by voting Tuesday to shrink pension benefits for new city hires. Under the council's 9-1 vote with several union-backed members joining in support, new city workers except for police officers and firefighters will have to pay half the cost of their pension, which will have smaller payouts and a higher retirement age. The city is seeking reduced pensions for new cops and firefighters through arbitration." (San Jose Mercury News)

Volatility of DC Plans Leads to Measurable Delay in Retiring
"[A] federal retirement system shift to defined contribution (DC) pensions quasi-randomly exposes retirement income to the financial markets. The amount of additional exposure is increasing with income and amounts to an estimated 20% of retirement income for the highest income quartile. During the financial crisis, this exposure translates to an additional 3 percent loss in retirement income. [This study finds that] retirement age federal employees reduce their annual retirement rate from 20 to 15 percent in the year of the crisis.... [A] high income employee with a pure DC retirement plan will respond to the crisis by delaying retirement more than a year longer than a comparable non-DC employee." (Social Science Research Network)

401(k) Fees: Soon, People Will See What They Paid in Previous Quarter
"Employers, advisers and fund companies are bracing themselves for a flood of calls this fall when participants in 401(k) plans learn for the first time just how much they paid in fees the previous quarter. The disclosures [that must be provided by August 30] will simply show what an employee could pay in fees on various investment options in their 401(k) plans. But the real 'aha' moment for many plan participants is likely to occur sometime after Nov. 15 when they receive account statements detailing what they actually paid in fees the previous quarter—in dollars and cents." (The Economic Times)

Demand Soaring for Pension Risk Transfers to Insurers
"[E]xperts in the sector say GM's splash was so big, there may be somewhat limited capacity for more mega-sized deals in the market for pension-risk transfers. Still, the market could be in the tens of billions over the next few years ... For years, plan sponsors have held off on buying single-premium group annuities to transfer risk, hoping that interest rates would rise from historically low levels ... Hewitt Ennisknupp ... estimated there were about 200 single premium group annuity deals done last year, worth about $900 mil.lion—just one-third of what had been done even four years previously." (Reuters)

Fight Over Employee Pension Contribution Requirement Heats Up in Florida Supreme Court
"With Republican legislative leaders and the Florida League of Cities already weighing in, Gov. Rick Scott and Cabinet officers have asked the state Supreme Court to approve a plan requiring public workers to chip in money to the state pension system. Lawyers representing Scott, Attorney General Pam Bondi and Chief Financial Officer Jeff Atwater filed an initial brief that asks justices to overturn a Leon County circuit judge's ruling that said already-hired employees could not be forced to contribute 3 percent of their salaries to the Florida Retirement System." (News-Press.com)

G.M. Might Propose Pension Buyouts to Union
"General Motors may seek a deal with the United Automobile Workers to offer pension buyouts to union retirees similar to offers made recently to 42,000 white-collar retirees. G.M.'s chief executive, Daniel Akerson, said on Tuesday that the company could discuss the possibility of pension buyouts with the U.A.W. before the current union contract expired in 2015." (The New York Times; free registration required)

Addressing Budget Problems by Reducing Retirement Savings Tax Incentives: What's the Data?
"Many, including, e.g., President Obama's National Commission on Fiscal Responsibility and Reform, have suggested that tax reform should involve a reduction of marginal rates and a broadening the tax base. The idea is that you can increase revenues by lowering rates while closing 'loopholes.' The big 'loophole' targets are the Child Tax Credit, the Earned Income Tax Credit, the mortgage deduction, health care tax benefits and retirement savings tax benefits. In this article we review some of the basic data on just how big the tax benefits for retirement savings are." (October Three LLC)

October Three LLC's Pension Finance Update, May 31, 2012 (PDF)
"Pension sponsors suffered a substantial setback in May—declining stock markets pulled down assets while declining interest rates pushed up liabilities. When the dust settled, gains from the first quarter of 2012 had been wiped out and both 'model' plans we track now find themselves in slightly worse shape than at the end of 2011." (October Three LLC)

[Opinion]

Text of Comments by ASPPA to DOL ERISA Advisory Council on Challenges and Best Practices for Beneficiary Designations
"Implementing best practices with respect to beneficiary designations is an ounce of prevention that will benefit plan sponsors, participants and beneficiaries. There is no best solution for all plan administrators as the best practices will vary based on the size of the plan sponsor, the service providers, and even employee demographics. It requires a coordinated effort among all affected parties. Participants have ultimate responsibility to ensure designations are in effect that meet their desires. Whatever processes and tools are implemented must enable and motivate participants to take on this responsibility." (American Society of Pension Professionals & Actuaries)

[Opinion]

America's Looming Pension Shock
"[W]hile many public-sector workers are seeing their pensions being cut back dramatically, about half of private-sector workers have no pension at all. Tens of thousands of older workers are taking Social Security early—foregoing a substantial portion of their maximum benefit—because they've lost their jobs and cannot find employment. The net result of all this is a looming crisis for state and local governments, both because of the declines in tax revenue resulting from lower incomes as well as the fact that poor people put far more demands on government services than the non-poor." (Governing)

[Opinion]

Text of Testimony by American Benefits Council to ERISA Advisory Council on Income Replacement in Retirement (PDF)
"While the Council's companies strongly believe disclosure and education are the first steps toward appropriate use of lifetime income products, such disclosure should be encouraged, not mandated. Many questions remain unanswered with respect to providing additional information to participants regarding what a current or hypothetical account balance may translate into in terms of dollars and cents at some future point in time if distributed in the form of a lifetime stream of income. The range of views about the appropriate assumptions to be used in translating benefits into different forms and the best methodologies for evaluating participant responses and behavior create an extremely challenging environment for employers trying to provide meaningful retirement benefits to their employees." (American Benefits Council)

[Opinion]

Text of Letter from American Benefits Council to Congressional Leadership/Committees Urging Action on DB Plan Funding Stabilization and Opposing PBGC Premium Increases (PDF)
"As a result of the uncertainty of pension funding obligations, generally, and the prospect of inflated contributions, specifically, many critical business decisions are on hold. Hiring is delayed, layoffs are being announced, capital investments and other transactions vital to economic recovery are stymied. In the charitable sector, funds are being re-directed from meeting organizations' core philanthropic missions. In all these instances, well-intentioned policy that is deliberately keeping interest rates at historic low levels to assist economic recovery is, in part, hindering that very recovery by imposing costs that simply are not needed to ensure income security for current or future retirees, nor financial protection for the [PBGC]." (American Benefits Council)

[Opinion]

The Real Cost of Public Pensions
"Policymakers at every level of government are confronting the cost of fringe benefits for public-sector workers. The difficulty of placing an economic value on public employees' pensions, however, means that policymakers rarely know whether benefits are excessive, especially as interest groups take advantage of the confusion by advancing misleading arguments. This paper discusses how to properly calculate the cost of public defined-benefit pension benefits, compares the cost of these benefits to private-sector retirement plans, and refutes two of the most common arguments that public pension benefits are somehow modest." (The Heritage Foundation)

Effects of Nursing Home Stays on Household Portfolios (PDF)
"Medicare estimates that by 2020, 12 mil.lion older Americans will need some form of long-term care—care that can be very expensive and, for the most part, not covered by Medicare. This study looks at how a particular form of long-term care, nursing home care, affects asset holdings of senior households." (Employee Benefits Research Institute)

Sixth Circuit Upholds ERISA Preemption of State Law Claims Against Nonfiduciary Bank Holding 401(k) and Health Plan Assets
"[Tennessee's Uniform Fiduciary Act ('UFA')] shields depositary banks from liability arising from the actions of a fiduciary depositor, unless the bank acts with 'actual knowledge' of a breach or 'knowledge of such facts that its action ... amounts to bad faith.' Because ERISA provides a remedy against nonfiduciaries who knowingly participate in a fiduciary's violation of ERISA, see 29 U.S.C. Section 1132(a)(3), the district court found that ERISA preempted any allegations of 'knowing' or 'bad faith' conduct that escaped the UFA's bar. We agree." Editor's note: See also the strong dissenting opinion: "There is no ERISA purpose or policy served by withdrawing the protection of state laws of general application. What is the possible harm caused by the enforcement of state laws providing damages if a bank recklessly allows its depositors' money to be embezzled by a fiduciary?" [McLemore v. Regions Bank, Nos. 10-5480/5491, 6th Cir. June 8, 2012.] (Justia.com)

[Opinion]

Federal Civil Service Pay Reform's Time Has Come
"A panel of economists and public policy observers revisited the federal pay debate in Washington on Wednesday, spouting reams of information on methodologies, data sets and regression analysis, but offering little insight into what shape government compensation reform should take." (Government Executive)

[Opinion]

Text of Statement of American Academy of Actuaries to ERISA Advisory Council: 'Managing Disability Risks in an Environment of Individual Responsibility' (PDF)
"Starting to save early, saving consistently, investing prudently, and avoiding early use of retirement funds can lead to a financially secure retirement.... Unfortunately, there is much less activity in addressing another serious threat to the retirement security of workers: ... the loss of earnings and the related ability to save for retirement due to a long-term disability. While most of the challenges mentioned earlier can be addressed by improving individual decisions, the individual generally has little control over the onset of a disability. Losses due to disability are not adequately mitigated by saving more or starting earlier." (American Academy of Actuaries, Actuarial Value Subgroup)

Sibson Consulting Expands Human Capital Consulting Expertise
(Sibson Consulting)

ASPire Financial Services Appoints Two Industry Veterans to its Board
(ASPire Financial Services)

Unified Trust Names New Institutional Consultant
(Unified Trust Company, NA)

Cedar Brook Financial Partners’ Eric Rubin is Recipient of National Achievement Award
(Cedar Brook Financial Partners)

Industry Veteran to Head Guardian's West Coast Retirement Sales
(Guardian)