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July 3, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Senior Compensation Analyst
for Buck Consultants in IL

Pension Plan Administrator
for MAGII Pension Services in NY

Senior Account Executive - Group Benefits
for The Fedeli Group in OH

Plan Administrator
for The Newport Group, Inc. in FL, TX, VA

Retirement Plan Education Specialist
for The Newport Group, Inc. in NC

Senior Section 125 Compliance Analyst
for Insperity in TX

Retirement Plans Regional Sales Manager
for Mutual of Omaha in DC, MD

Retirement Plans Regional Sales Manager
for Mutual of Omaha in DE, NJ, PA

Retirement Plans Regional Sales Manager
for Mutual of Omaha in CT, MA, RI

Retirement Plans Regional Sales Manager
for Mutual of Omaha in MA

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Webcasts and Conferences

Health Care Reform after the Supreme Court Decision
Nationwide on July 11, 2012 presented by Buck Consultants

After the Supreme Court’s Ruling: What’s Next for Employer Plans?
Nationwide on July 18, 2012 presented by Thomson Reuters / EBIA


We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe

Pension Funding Relief and PBGC Premium Increase Passed by Congress
"Under current law, generally, DB liabilities are, for plan funding purposes, valued using three (short-, medium- and long-term) 'segment rates' derived from a corporate bond yield curve based on rates averaged over 24 months.... The new law a puts floor (and a ceiling) on these segment rates, based on a trailing 25-year average[.]" (October Three)


The ERISA Outline Book 2012 Edition. Get Your Copy Today!   [Advert.]

Sponsored by ASPPA

The ERISA Outline Book is both a reference book and a study guide on qualified plans, and it is the recommended study resource for IRS Enrolled Retirement Plan Agent (ERPA) Program. Get your copy today!


First GASB, Now Moody's: Local Governments Brace for Changes in Measurement of Pension Underfunding
"Moody's Investors Service said on Monday ... that according to its estimate, the total liabilities for fiscal 2010 were more than three times the amount reported by local governments.... Moody's is seeking public comment through the end of August on four major changes it plans to make in how it treats pension liabilities.... Cities and counties are likely to see downgrades, [Managing Director Timothy Blake] said. That is partly because some liabilities in state pension plans that also cover localities will be allocated to the specific local governments. Currently, some of those liabilities might not be broken out by the individual city, town or school that is part of a state plan." (Reuters)

Despite Funding Relief, DB Contributions to Be More Than Minimum for Many Sponsors
"Many plan sponsors have previously said they intend to make large contributions to their pension plans. Even if required contributions are lowered, some plan sponsors may still want to make large payments into their plans because of record levels of cash on corporate balance sheets and low interest rates available in credit markets." (PLANSPONSOR.com)

General Services Administration Offers Employees Early Retirement Buyout Package
"The General Services Administration is offering buyouts and early retirement packages to 1,200 employees ... The offer will end July 20 and is the second of three rounds of buyouts the agency is offering.... GSA's offer is the latest in a recent spate of buyouts offered to federal employees in an effort among federal agencies to contain costs. Within the last 20 months, nearly 7,000 Agriculture Department employees have accepted buyout offers. In May, the Postal Service offered buyout incentives to nearly 45,000 mail handlers." (The Washington Post)

NTSAA Checklist for 403(b) or 457 Plan Sponsors: Whether to Hire a Consultant and How to Find One
"The checklist helps 403(b) and 457 plan sponsors assess the need for a consultant, as well as decide whether a formal request for proposal (RFP) is needed to choose one. It also includes a list of questions to ask a potential consultant." (National Tax Sheltered Accounts Association)


Managing your 401(k) Plan: A Day in the Life of a Healthy 401(k) in 2012   [Advert.]

Sponsored by Lorman and BenefitsLink.com

Live audio conference: identify and address major trends and challenges facing 401(k) plan sponsors in maintaining a benefit plan that will meaningfully prepare their employees for retirement. Discounted price for BenefitsLink readers.


Language of Fee Disclosures Requires Careful Thought to Minimize Backlash
"Employers need to think beyond simply meeting the requirements and more about providing clarity—in part because the required disclosure includes a slew of fees that a plan participant might potentially pay; but some plan participants will not pay all of those (such as brokerage-window fees for self-directed accounts, loan fees and/or fees for investments they do not hold) ... Some people are going to take a calculator and add up all the fees ... And they may go to you and say, 'You said I was paying 1.3%, but this says I am paying 2%.'" (PLANSPONSOR.com)

Pension Liabilities in United Kingdom's Largest Companies Rise to 35% of Combined Market Capitalization
"[L]iabilities of the FTSE 350's final salary pension [plans], as shown in their company accounts, have now reached 35% of their sponsoring companies' combined market capitalisation. This is the highest level this proportion has ever reached.... [I]t's evident why final salary pension [plans] are posing such financial headaches for their sponsors. When the final salary pension [plan] liability is over a third of the FTSE 350's market capitalisation, there's no wonder that small changes in pension [plans] are having a disproportionate effect on the sponsor's finances." (Aon Hewitt)

Ventura County, Calif., Pension Board Lowers Assumed Investment Return from 8% to 7.75%
"The [Ventura County, California] pension board lowered the assumed rate of return on its $3 bil.lion fund to 7.75 percent from 8 percent Monday, joining a wave of funds that are downgrading their estimates of what the market will produce to cover government workers' lifetime benefits.... Those lower assumed returns mean the unfunded liability for the plan covering county government employees will increase by $100 mil.lion ... The unfunded liability was last calculated at $775 mil.lion." (Ventura County Star)

How to Take Full Advantage of Your 403(b) Plan for Retirement Savings
"Most teachers are covered not by 401(k) retirement savings plans but 403(b) plans, which have tax-deferral rules similar to 401(k)s but often limit investment choices to insur.ance products, such as annuities. Some colleges match 403(b) contributions, but most K-12 public schools do not. If your employer matches your contributions, invest at least enough to get the full match. But before you put all your retirement money into a 403(b), do a little digging. Understand expenses and surrender charges.... Find the best deal.... Be careful before switching.... Consider a Roth IRA." (Chicago Tribune)

Employer That Sold Division Not Exempt from Withdrawal Liability Under MPPAA
"An employer was not exempt from withdrawal liability under the Multiemployer Pension Plan Amendments Act (MPPAA) because the purchaser of one of its operating divisions lacked the obligation to contribute substantially the same number of contribution base units to the pension fund post-sale as the employer had contributed pre-sale, according to the U.S. Court of Appeals in New York City (CA-2). Although the purchaser had an obligation to contribute to the pension fund at the same contribution base unit rate, it had no obligation to contribute substantially the same number of hours of employee pay to the fund. Thus, the sale did not qualify the employer for an exemption from withdrawal liability." (Wolters Kluwer Law & Business / CCH)

401(k) Plan Sponsors and the Mutual Fund Expense Ratio Wild Goose Chase
"Even the [Investment Company Institute's] numbers suggest nearly one in four 401(k) plans (i.e., those using funds with load fees or 12b-1 fees) could be paying fees they don't need to. This, however, is not an issue with the 401(k) concept, but with plan sponsors who have not properly educated themselves as to their fiduciary duties. Some may also fault the DOL for failing to penalize these plan sponsors, but since the new Fee Disclosure Rule now places the responsibility for disclosure squarely on the shoulders of the plan sponsor, an argument can be made the DOL is moving in the right direction. Which gets us back to the original issue: Are 401(k) plan sponsors being misled by an undue emphasis on mutual fund expense ratios (as opposed to loads and 12b-1 fees)?" (Fiduciary News)

Report Recommends No Changes to Wisconsin Public Employee Pensions
"Democrats and public workers were fearful that the report would recommend dramatic changes to the pension system, which is the only fully funded state plan in the country. Walker had asked for the study to focus on the possibility of shifting to an optional defined contribution plan or allowing employees to opt out of the system all together. The report said that neither would amount to an improvement, given the state pension's strong financial health and its unique risk-sharing features." (Bloomberg Businessweek)

IRS Turns Attention to Excess IRA Contributions, Failure to Take Required Minimum Distributions
"The dreaded tax man is about to make life difficult for people who don't take the required minimum distributions (RMD) from their retirement accounts, which typically starts at age 70, and for IRA investors who may be socking away more in tax-free savings than they're allowed. The crackdown on IRA errors by the Internal Revenue Service is part of an effort to bring in millions of dollars in tax penalties that go uncollected each year ... The IRS will report to the Treasury Department by Oct. 15 on how it plans to go after taxpayers who make contribution or withdrawal errors[.]" (AARP)

Pension Finance Update, July 2, 2012 (PDF)
"While the big news for pension sponsors last week was the passing of funding relief legislation (discussed [in this article]), the markets ended the first half of 2012 with a bang. Stocks enjoyed their best day of the year on the last trading day in June, capping the most volatile month of the year in the market, and leaving pension sponsors modestly ahead through the first half of 2012." (October Three)

[Opinion]

Statement of American Benefits Council on Pension Provisions of Transportation Funding and Student Loan Legislation
"'The Federal Reserve Board's ongoing low-interest-rate policy has had the unintended effect of making pension funds appear less well funded than they truly are, triggering abnormally high pension liabilities. The interest rate stabilization provision included will help many employer pension plan sponsors navigate our extraordinary economic environment,' said [American Benefits Council President James A. Klein]. 'As much as we appreciate the inclusion of pension funding stabilization, we strongly disagree with the decision to impose an additional $9 bil.lion in pension plan premium hikes ... The increase in insur.ance premiums paid to the [PBGC] effectively acts as a tax increase on companies that sponsor these plans for their employees.'" (American Benefits Council)

[Opinion]

Don't 'Fix' Wisconsin's Successful Pension System
"There are plenty of things in state government in need of reforming, but Wisconsin's pension system ain't one of them. The Pew Center recently named the system one of the few nationwide that's meeting its obligations. And the State of Wisconsin Investment Board, which is responsible for investing pension assets, [showed] independently collected data detailing WRS' strong returns over many years in comparison with many other pension funds and the market as a whole." (The Cap Times)

[Opinion]

Louisiana's State Retirement Systems Remain Broken Despite Some Progress
"Currently, less than half of [Louisiana's] overall long-term retirement liabilities of $51.4 bil.lion (pensions and healthcare) are funded. Through a series of initiatives—such as increasing employee contributions, raising the retirement age for some and changing the way the state's generous retirement benefits are calculated—Governor Jindal sought to modernize Louisiana's system for providing benefits to public employees. But in the end, the outrage expressed by state employees proved to have more of an impact on many legislators than the notion of fiscal responsibility, and only one significant retirement reform bill survived the treacherous legislative journey." (ZacharyToday.com)

[Opinion]

Public Pension Double-Dipping: Around the Rules and Back to Work
"New York has a fair and sensible law that restricts public retirees from double dipping—that is, collecting both a pension and a public salary at the same time -- without an urgent public need. Yet year after year, the state and local governments find hundreds of such urgent public needs—sometimes the same pressing need that they had a year ago, or two, or even 20. There's no one, they say, who is as ready, willing and able, not in all the ranks of all the people who are not retired. ... This is ... an abuse of the state pension system, which ends up supporting hundreds of people who have retired relatively early in life only on paper, but who in reality continue to draw a public paycheck." (Albany Times-Union)

[Opinion]

Wisconsin Should Open Retirement System to Private Sector Workers
"All workers deserve financial security in their retirement years. Wisconsin should use the Wisconsin Retirement System as a model and expand the WRS to cover workers in the private sector to ensure that all Wisconsin workers—public and private—will have financial security. Wisconsin could be the first state in the nation to provide a 'defined benefit' pension plan with guaran.teed fixed payments for life to all retired workers." (The Cap Times)

[Opinion]

Shifting School Employees to a 401(k) Is the Most Important Thing
"[C]itizens concerned that Michigan may eventually follow Greece, California and Illinois down the road to fiscal perdition should remain focused on the thing that really matters in this dispute: To stop digging a deeper liability hole by no longer enrolling new school employees in the 'defined benefit' pension system. The House Republicans [who decided not to replace the plan with a defined contribution type of plan] ... have cranked-out articles and videos emphasizing how 'complicated' this issue is, and there are indeed some thorny issues. But the value of capping the state's pension liabilities is not in dispute. Examples from around the country underline just how critical this is." (Michigan Capitol Confidential)

Benefits in General; Executive Compensation

IRS Revenue Ruling Addresses Code Sec. 162(m), RSUs, Dividends and Dividend Equivalents
"In Rev. Rul. 2012-19, the IRS ruled on whether dividends and dividend equivalents related to restricted stock and RSUs can be treated as performance-based compensation for purposes of Section 162(m)(4)(c). Rev. Rul. 2012-19 contains two fact patterns, regarding publicly held corporations X and Y. Both have restricted common stock and RSU plans based on the common stock of each. The restricted stock and RSUs granted under the plans of both corporations vest upon reaching certain pre-established, objective performance goals and otherwise meet the requirements of Treas. Reg. 1.162-27(e). Therefore, compensation received due to the vesting of the restricted stock and vesting and payment of the RSUs would qualify as performance-based compensation and be excluded from the applicable employee's compensation subject to the Section 162(m) limitation." (Winston & Strawn LLP)

Surprising Ways the New Health Care Plan Can Speed Up Your Financial Independence Day
"The real benefits are for early retirees who are too young to qualify for Medicare but don't have access to a group health insur.ance plan.... [S]tarting in 2014, the law will forbid insurers from denying coverage to people based on pre-existing conditions and will limit how much insurers can discriminate based on age. In addition, it may become easier to shop for health insur.ance through new online state-based exchanges." (Forbes)

Pay Decisions Narrowly Focused on Benchmarks
"Many organizations' pay decisions may be misguided or unbalanced as they spend too much time focused on external comparisons and not enough time looking internally to measure and assess the actual workforce and business impact of their total reward practices. According to new research by WorldatWork and Mercer, most compensation professionals use techniques such as benchmarking among internal and external peer groups (95% and 90%, respectively) and ongoing reporting (87%) to make pay decisions in their organizations. Using more sophisticated analytical techniques such as projections, simulations and predictive modeling are significantly lower at 80%, 64% and 43%, respectively." (Mercer)

Same-S.ex Marriage: Legal and Legislative Update (PDF)
"As state and federal law continues to evolve, it is important that employers offering benefits to same-s.ex domestic partners understand and monitor how state and federal laws affect these benefits." (Buck Consultants)

Employee Ownership Update for July 2, 2012
NCEO Executive Director Loren Rodgers discusses how the Affordable Care Act will increase capital gains rates on some taxpayers, which in turn will increase the value of the ESOP Section 1042 rollover; a case alleging a fiduciary violation resulting from following plan directions; employee ownership outside the U.S.; and the Aspirations 2012 conference. (National Center for Employee Ownership)

Press Releases



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