DATAIR Employee Benefit Systems, Inc.

DC Plan Administrator
for Capital Retirement Plan Services, Inc. in PA

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

Client Service Consultant
for AUL/OneAmerica Financial Partners, Inc. in TX

Retirement Plan Design and Administration Manager
for SS&G in OH

Staff Attorney
for Pension Rights Center in DC

Daily Valuation Administrator
for Verisight, Inc. in CA

Daily Valuation Recordkeeper
for Northwestern Bank in MI

Sr. Manager of Product Development
for Charles Schwab in AZ

Retirement Education Consultant (Spanish Bilingual)
for AUL/OneAmerica Financial Partners, Inc. in CO

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"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - 15 Cities
Nationwide on August 29, 2012 presented by SunGard Relius

 

[Guidance Overview]

Transportation Bill Includes Several Pension Provisions In Addition to Funding Stabilization
"[In addition to the interest-rate provisions of the transportation bill, the] increase in PBGC premiums effectively takes further premium increases off the table at the end of the year when Congress will again be scrambling to find further revenue to pay for tax extenders. The bill also includes other pension-related changes, such as a provision to extend the ability of employers to transfer excess pension assets to fund retiree health benefits and expand it to allow transfers for retiree life insur.ance, as well as several PBGC governance provisions. The bill establishes a new Participant and Plan Sponsor Advocate to act as a liaison with participants in PBGC-terminated plans and to assist plan sponsors in resolving disputes with PBGC." (Committee on Investment of Employee Benefit Plan Assets)

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[Guidance Overview]

Pension Reforms in Surface Transportation Reauthorization Package
"The funding relief, however, does not apply for calculating lump sum distributions, limits on deductible contributions to single-employer plans, PBGC variable-rate premiums, financial reporting under Section 4010 of ERISA, and qualified transfers of excess pension assets to retiree medical accounts." (Haynes and Boone, LLP)

[Guidance Overview]

Service Provider Fee Disclosure FAQs
"[E]ven with all of the guidance from the DOL, questions and uncertainty abound. What do these regulations actually require? How will this impact our business model? What will be the "standard" way our industry will address certain particularly thorny disclosure issues? These are all good questions that need to be answered in short order. And we expect questions to continue long after the final regulation's effective date, as service providers realize that they are subject to these rules after the fact or receive questions from their clients. In addition, other DOL regulatory projects will likely impact the disclosure obligation, such as the fiduciary definition project. To assist service providers in navigating the new world of fee disclosure, [the authors] are compiling and responding to a running list of questions[.]" (Faegre Baker Daniels LLP)

[Guidance Overview]

Participant-Level Fee Disclosure FAQs
"To date, service providers have carried most of the load, studying the new fee-disclosure rules and preparing their own disclosure forms, but that is beginning to change. Retirement plan fiduciaries are starting to receive fee disclosures from their service providers, and in their capacity as plan fiduciaries, they have their own legal duties to review and understand the disclosures, object to those that don't comply, take the disclosures into account as they evaluate providers, and possibly replace providers. And once that Part 2 process is complete, the plan fiduciaries must turn to Part 3, ensuring that their plan participants also receive appropriate disclosures about fees and other investment-related information. To assist plan fiduciaries in carrying out their fee disclosure duties, [the authors] are compiling, and responding to, a running list of questions[.]" (Faegre Baker Daniels LLP)

Moody's Requests Comments on Proposal to Adjust Pension Liabilities and Costs Reported for State and Local Government Pension Plans
"On July 2, Moody's Investor Services issued a Request for Comment on its proposal to implement four adjustments to the pension liability and cost information reported by state and local governments and their pension plans. The proposed adjustments, which Moody's would calculate, are intended to improve the comparability of pension information across governments and facilitate the calculation of combined measures of bonded debt and unfunded pension liabilities in Moody's credit analysis. Comments are due by August 31, 2012. This Bulletin summarizes Moody's proposed adjustments and indicates where they echo the revised accounting standards .. recently announced by [GASB]." (Segal)

Understanding the Significance of the Two New GASB Accounting Standards
"Under the current GASB standards ... the accounting measures essentially reflect the measures that are used to fund the plan. These standards reflect the pension cost in the pension expense, that is, the actuarially determined contribution to the plan. So there's a close connection to the way the benefit is funded and the way in which it's accounted for—a very close connection. Under the new Statements 67 and 68 that connection is broken. What the GASB is doing with the new standards is basically showing the full unfunded liability on the employer's balance sheet, which under current standards is shown in the notes of the financial statements.... The GASB has now moved up that number, put it on the balance sheet, and in addition wants to measure that unfunded liability in a substantially different way." (Bloomberg BNA)

GASB Adopts Extensive Revisions of Accounting Standards for Public Pension Plans (PDF)
"One of the most significant changes made by the new standards is the removal of the incentive to maintain funding in line with a GASB-defined expense. In the future, the sponsor of a system with a net pension liability will have to include it in its financial statements, regardless of how conscientious it has been about making contributions. This may be contrasted with present standards, which require disclosure of a net liability only to the extent that a 'net pension obligation' (NPO) exists." (Buck Consultants)

NBA Players Forced to Save Toward Retirement for First Time
"National Basketball Association players, who were paid an average of about $5 mil.lion last season, will be forced for the first time to save money for retirement. Players in the league this past season will receive $34 mil.lion, or 1 percent of what the league and union call basketball-related income, to be invested in an annuity ... Retired players can access the money before their pensions begin at age 50. Players can take an early pension at 45 ... Beginning next season, players also will surrender 5 percent to 10 percent of their salary for retirement. They automatically will be enrolled in the program and would have to opt-out to keep from participating in the plan[.]" (San Francisco Chronicle)

Financial Experience and Behaviors Among Women (PDF)
"Both younger women and baby-boomer women are 'not prepared' for retirement. Women under 35 have well-defined goals for their financial future. Although they frequently identify themselves as investment beginners and are less likely to say they feel very well prepared to make wise financial decisions than female baby boomers, they are the most likely to see financial decision making as their own responsibility, and they feel empowered to participate in or make decisions on their own. They also show a strong interest in receiving financial advice. Yet, they are not far from baby-boomer women in their perceptions about retirement readiness, with both groups saying they are way behind or haven't started planning for retirement." (Prudential Financial)

Funds in Inherited IRA Were Exempt from Debtor's Bankrup.tcy Estate
"Proceeds from a deceased person's annuity account that were transferred to a debtor's inherited individual retirement account (IRA) prior to bankrup.tcy were exempted from the debtor's bankrup.tcy estate under Bankrup.tcy Code Sec. 522(d)(12), according to a U.S. Bankrup.tcy Court. The rolled over amount was exempt from taxation under Code Sec. 408(e), and the funds did not cease to qualify for exemption because of a direct transfer from one tax-exempt account to another tax-exempt account." [In re Holly Anne Seeling, Debtor (Bankr. No. 11-30957, D. Mass., May 24, 2012)] (Wolters Kluwer Law & Business / CCH)

Promised and Actual Benefits in Mexican Social Security for the Transition Generation
"This paper provides a set of measurements of the actual benefits and costs of the general old age retirement plan provided to individuals by the Mexican pension system (MPS), which ... offers two basic plans. One is a defined benefit plan, available only to those registered before July 1997. The other is a defined contribution plan and is the default mandatory plan for all active workers.... [A]mong workers with the option of receiving the benefits of the new or the old laws, very few will choose the new one under a non-inflationary environment. While inflation has historically reduced the benefits of the old law to a very large degree, the levels of inflation and low interest rates associated to the Great Recession mean that benefits under the old law have become very attractive; for the same reason, the tax on earnings after the mandatory retirement age have become so high that any eligible worker is expected to retire as soon as they legally can." (Social Science Research Network)

Face-to-Face Education Drives Better Retirement Savings Behavior
"[E]mployees who attend personalized, one-on-one sessions at the worksite take more positive actions including participating more and saving more. Analysis shows that, over time, the higher deferral rate combined with the commitment to increase savings among those who attended one-on-one meetings could mean an additional $242,000 at retirement—based solely on employee deferrals. That could translate into an extra $905 more a month in retirement income, which is 69 percent higher than participants who didn't have one-on-one education." (The Principal Financial Group)

Ohio's Public Pension Plans Need More Cuts, Consultant Says
"Hundreds of thousands of state and local government employees in Ohio could face additional cuts in their retirement and health-care benefits under a long-awaited consultant's report unveiled yesterday. In part because the legislature has dawdled in approving plans to revamp the retirement systems, Ohio's five public-employee pension funds need further trims on top of reductions contained in a series of bills passed by the Senate in May. State law requires each system to have a funding setup designed to meet all financial obligations within 30 years." (The Columbus Dispatch)

Annual Pension Investment Shortfall Looms: How to Solve for the Missing 2%?
"Pension plan sponsors face significant challenges. Retirement obligations continue to increase, and the two major equity market setbacks in 2000 and 2008 have produced widening funding gaps. So what does the future hold? Will their plans be able to reliably achieve their stated return objectives? Unfortunately for plans relying solely on traditional equities and fixed income, the prospects look grim. Our analysis suggests these plans will likely experience a 2% shortfall per annum over the next seven to 10 years." (Pensions & Investments)

GM, Ford Hope Lump-Sum Pensions Ease Obligations
"Financial advisers everywhere are watching how a significant lump-sum payout deal plays out with two big carmakers. Pension experts caution that many retirement plan sponsors could be dangling lump-sum payouts before their retirees in years ahead. The rules changed in 2012 involving how lump-sum payouts could be calculated—and some say employers could have more incentives down the road to move to limit their own risks associated with managing pension plans." (USA TODAY)

Pension Deficits Deepen in Corporate Britain and U.S.
"Chronically weak stock markets and record low bond yields have pushed company pension deficits in the United States and Britain sharply higher, adding to the burden of retirees living longer than ever before, reports said on Tuesday. Reuters In the United States the aggregate deficit of S&P 1500 companies grew $59 bil.lion (38 bil.lion pounds) in the first half of the year to $543 bil.lion, consultancy Mercer said. Corporate America is sitting on total liabilities of $2.09 tril.lion against total assets of $1.55 tril.lion, Mercer added. The picture is no less bleak in Britain, where the combined deficit of FTSE 100 companies more than doubled over the past year to 41 bil.lion pounds, actuarial firm Lane, Clark & Peacock (LCP) said in a separate report." (The New York Times; free registration required)

Dutch Pension Fund Sues Goldman Sachs
"Dutch pension fund Pensioenfonds Vervoer has filed two claims totaling up to 240 mil.lion euros ($300 mil.lion) against a unit of Goldman Sachs Group, alleging negligence leading to losses ... The transport workers' pension fund alleged that Goldman Sachs Asset Management International, in its capacity as fiduciary manager, made inappropriate investments at the height of the financial crisis, lawyers Brown Rudnick said. The claims, filed at the High Court in London on Monday, relate to the period 2006-2010." (The New York Times; free registration required)

FINRA's Quasi-Fiduciary Rule
"As the securities industry awaits a fiduciary rule from the SEC for brokers and advisors, Wall Street's self-regulator caught most observers off guard with its recent, unexpected pronouncement of a 'best interest' standard for brokers under a revised suitability rule." (fi360 Blog)

Deconstructing the Discretionary Fiduciary Models: ERISA Section 3(38) Investment Managers vs. Discretionary Trustees (PDF)
"Over the last several years, awareness surrounding the various fiduciary roles that retirement-plan advisors and consultants play when serving their clients has been on the rise. Contributing to this awareness are organizations dedicated to promoting fiduciary best practices and the increased exposure to content available via an ever-growing number of industry conferences. Not surprisingly, the observed result is the selling of expertise through the creation of new credentials." (Journal of Pension and Benefits via Unified Trust)

Focus Retirement Plan Meetings on Raising Enrollment
"Automatically enrolling new employees into employer-provided 401(k)s, 403(b)s and other defined contribution plans is becoming more popular ... But annual enrollment meetings—often held around the fall open enrollment season—remain important for educating employees about the value of participation, encouraging adequate savings deferral rates and reaching out to those who were not auto enrolled.... Recommendations from the white paper include: Keep easy-enroll cards within reach at all times.... Create a sense of urgency.... Follow up with education.... Measure success." (Society for Human Resource Management)

[Opinion]

Moody's Changes Pension Solvency Assumptions from 7.5% to 5.5%
"Using these assumptions, at a rate of return of 7.5% per year, each employee must contribute an amount equivalent to 17.5% of their salary into their pension fund every year. At a rate of 5.5% per year, this contribution rate goes up to 30% of salary. Put another way, if you accept Moody's verdict that pension funds should not expect to earn more than 5.5% per year, and you want to keep pensions solvent, then every state and local employee in California just got a 12.5% raise. Or you might consider this: If there are 1.5 mil.lion state and local government workers in California who make, on average, $70,000 per year (again, these are conservative assumptions), then California's taxpayers will have to come up with another $13.1 bil.lion per year." (California Public Policy Center)

[Opinion]

How New GASB Rules Affect the Public Pension Debate
"Will the new rules overstate liabilities? Yes, they most definitely will, but they will also introduce more transparency and accountability into US public pension systems, alleviating fears of a muni debt crisis. But changing accounting rules is not enough. Importantly, US public pensions need a major overhaul of the governance model, one that emulates Canadian, Dutch and Danish pensions. This is the only thing that will fundamentally bolster pensions for the long-term, helping to fix the pathetic state of state pension funds." (Pension Pulse)

[Opinion]

Text of Comments by American Benefits Council to IRS and EBSA Requesting Expedited Guidance under Pension Funding Interest Rate Stabilization (PDF)
"[T]here is a critical and urgent need for Treasury and the Internal Revenue Service to publish the 25-year averages of the segment rates pursuant to section 40211 of the Act. Plan sponsors need to know the 25-year averages as soon as possible -- ideally by the end of July in order to prepare for ... the September 15, 2012 deadline (in the case of calendar year plans) for making contributions for 2011." (American Benefits Council)

IRS Issues Guidance on Section 83(b) Election for Restricted Stock: Sample Language For Filing, Plus Tax Examples
"Despite the fact that the filing must include specific information about the property (i.e. shares), such as its value and transfer date, the IRS has no form for the Section 83(b) election. IRS Revenue Procedure 2012-29 presents a sample of acceptable language for making the election. It also provides examples showing the election's tax impact when the stock is later sold after vesting or if the grant is repurchased or forfeited before vesting. The examples confirm a major risk with the Section 83(b) election: should the shares never vest, you do not get a tax credit for the taxes you paid up front." (myStockOptions.com)

In Difficult Economy, Employees Get Greater Purchasing Power Through Workplace Employee Purchase Programs
"[A]bout one in five U.S. households owes more on credit cards, medical bills, student loans and other unsecured debt than they have in savings, checking accounts and other liquid assets. However, in a survey ... among 2,099 U.S. adults age 18+, of whom 700 were employed full time and/or their spouses are employed full-time, 37 percent of those who are employed full-time and/or whose spouse is employed full time said they would be 'at least somewhat likely' to use employee purchase programs for major purchases, if given the opportunity[.]" (Wolters Kluwer Law & Business)

American Airlines Eyes End to Retiree Welfare Benefits, Wants Revision to Retirement Plans
"American Airlines and its parent company, AMR Corp., want to put the brakes on employer-paid health care and life insur.ance benefits for about 40,000 retirees. Company spokesman Bruce Hicks has described the move as 'very similar' to a proposal for future retirees, who would be given access to medical coverage as long as they pick up the tab.... Retirement savings plans for pilots are also on the chopping block, though the airline has offered to sweeten the pot in order to pursue a plan-design overhaul with significant long-term implications." (Employee Benefit News)

Tailor Benefit Communications to Different Learning Styles
"If employees do not understand the benefits they are offered, they may have difficulty choosing the benefits that are most relevant to their age and stage of life, and that of their families, according to a new report. And when employees can make informed benefits choices, they are more likely to value the safety net offered through their employers.... [T]he key to providing employees with an effective benefits education is a 'three-plus-three' communications strategy—allowing employees at least three weeks to review their benefit options, using at least three types of education methods." (Society for Human Resource Management)

National Compensation Survey of Employee Benefits in the United States
"Access to employer-provided benefits was greater in medium and large private industry establishments than in small establishments in March 2012 ... Access, or availability of a benefit, was 57 percent for medical care benefits in small establishments (those with fewer than 100 employees), compared with 89 percent in large establishments (those with 500 employees or more). In private industry, retirement benefits were available to 50 percent of workers in small establishments, 79 percent of workers in medium size establishments (those employing between 100 and 499 workers), and 86 percent of workers in large establishments." (U.S. Bureau of Labor Statistics)

Mutual of Omaha Retirement Plans Division Appoints New Regional Sales Managers in Key Markets
(Mutual of Omaha)