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July 20, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Medicare Benefit Advisor
for Northwestern Benefit Corporation of Georgia in GA

Senior Manager, Wellness and Healthcare Solutions
for Kohl's Department Stores - Corporate in WI

Pension Administrator/Employee Benefits Consultant
for CliftonLarsonAllen in IL

Assistant General Counsel
for 1199SEIU Family of Funds in NY

Pension Administrator
for ExpertPlan, Inc. in NJ

Retirement Plan Specialist
for Transamerica Retirement Services in OH

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Webcasts and Conferences

"457(b) Plans for 401(k) Practitioners" Web Seminar - Encore Presentation
Nationwide on August 23, 2012 presented by SunGard Relius


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[Official Guidance]

Text of Final OPM Regs Providing Presumption of Insurable Interest for Same-S.ex Domestic Partners of Federal Employees (Survivor Annuities)
"An employee or Member of Congress (Member) in good health may elect a reduced annuity at retirement to provide for an insurable interest annuity for anyone who has an insurable interest in the continued life of the employee or Member.... Prior to publication of this rule, a same-s.ex domestic partner of an employee or Member was not included in the list of relationships presumed to have an insurable interest in the continued life of the employee or Member. If an employee or Member elected an insurable interest annuity for a person who did not receive the presumption [provided by prior regulations], the employee or Member had to submit affidavits along with his or her election to prove that the designated individual had an insurable interest in the continued life of the employee or Member." (U.S. Office of Personnel Management)


Qualified Plan Essentials Plus Series, Twelve 60-minute modules   [Advert.]

Sponsored by McKay Hochman

QP Essentials Plus provides in-depth understanding of qualified retirement plans. Each session focuses on a specific area of plan design and/or compliance. There are three live modules and nine recorded. Click here for information.


[Guidance Overview]

The Financial Effect, Benefits and Limitations of the Safe Harbor 401(k) Plan Top-Heavy Exemption
"If the plan uses a nonelective contribution to satisfy the ADP safe harbor, the top-heavy exemption offers little financial relief for the employer since the safe harbor contribution may be equal to the top-heavy minimum. The employer's safe harbor contribution liability could be somewhat less than the 3% top-heavy minimum, however, because the employer satisfies the ADP safe harbor nonelective by basing the contribution on any nondiscriminatory definition of compensation (e.g., 'net' compensation), and may limit the contribution to the prescribed percentage of compensation while a participant, whereas the Code bases the top-heavy minimum contribution on '415' (total) compensation for the entire plan year." (SunGard Relius)

[Guidance Overview]

IRS Eliminates Signature Requirement for Automatic Extensions of Deferred Vested Benefit Information Filings
"The Internal Revenue Service (IRS) has issued a proposed rule that removes a small but irritating problem for many employee benefit plans. The rule concerns the process for obtaining an automatic extension for filing deferred vested benefit information with the IRS and eliminates the requirement that the extension request be signed. Plans may follow the proposed rule for extension requests filed on and after June 21, 2012. In addition, the IRS has clarified the number of plans for which extensions can be requested on one form." (The Segal Company)

Ask the Right Questions When Given Workplace Investment Advice
"More employers are offering education and advice about retirement planning as part of their 401(k) plans, and the kind of one-on-one training that [a] Michigan storage-products company made available to its workers has shown some tangible results. The company's plan provider ... analyzed savings behavior among 45,000 participants who attended group sessions or one-on-one meetings in 2011. Those who participated in the individual meetings had higher contribution rates and were more likely to automatically boost deferrals," (Chicago Tribune; free registration required)

Greek Civil Servants Face More Cuts in Pensions, Union Says
"The Greek government plans to cut lump-sums paid to civil servants on retirement by more than a fifth, according to the civil servants' union, which said it will resist the measure. The one-time pension payments are set to fall by 22.3 percent, on top of a 20 percent reduction in earlier rounds of austerity measures, the union, ADEDY, said in an e-mailed statement. The union's leadership met with Labor Minister Ioannis Vroutsis in Athens yesterday. The minister rejected proposals for securing the viability of civil servants' pension funds, according to the union statement." (Bloomberg)

Public Pensions Are About To Look Less Healthy
"The health of public pension plans—the retirement plans for teachers, firefighters, police officers and other state and local governments—has gotten plenty of attention lately. Some plans are hurting, and numbers from state and local governments suggest their public pension plans are underfunded by about $1 tril.lion. But that gap between what they owe and what they have on hand today is about to look bigger—much bigger, in some cases." (National Public Radio)

Pennsylvania Pension Woes Weigh on Credit Ratings
"Credit rating agencies are warning Pennsylvania about the high cost of its pension system, with Standard & Poor's Ratings Services saying on Thursday that it could downgrade the state in the next two years if the problem isn't fixed. S&P changed its outlook on the state's debt to 'negative' from 'stable,' saying it was concerned in part about mounting spending pressure for public pensions amid a slow-growth economy. S&P affirmed the 'AA' credit rating on the state's GO debt, but said the rating could drop a notch if Pennsylvania does not enact pension reform." (The New York Times; free registration required)

Early Retirees' Fraudulent Misrepresentation Claims Time-Barred by ERISA's Three-Year Period for Fiduciary Breach
"The retirees argued that the six-year limitations period set forth in ERISA Section 413 should apply because the fiduciaries' alleged misrepresentation amounted to fraud and thus fell within the fraud-or-concealment exception to the normal three-year limitations period. The appellate court rejected this argument because the retirees failed to adequately plead that any fraud had taken place.... The court dismissed all other claims, ruling that (1) the union did not act as a ERISA fiduciary; (2) the retirees failed to state a claim for equitable estoppel; (3) the retirees failed to show the fund did not provide requested plan documents; and (4) ERISA preempted the retirees' state law claims." [Cataldo v. United States Steel Corporation (CA-6)] (Wolters Kluwer Law & Business / CCH)

69% of Non-Financial Corporate Pension Plans 'At Risk'
"Of 230 non-financial U.S.-based companies with pension obligations of $100 mil.lion or more, Fitch found that 160 are less than 80% funded, the 'at-risk' threshold defined in the Pension Protection Act of 2006. Standouts in that group were capital goods, consumer and retailing sectors, with median plan funding levels below 70%. For the remaining 70 companies, 43 plans were funded between 80% and 90%, and 27 companies were above the 90% level." (Pensions & Investments)

[Opinion]

Pension Fund Return Projections are Based on Arithmetic, Not Just History
"While stock returns can fluctuate hugely year to year, over the long-term (like the 30-year time horizon of most pension funds) they are a relatively predictable function of current price to earnings ratios and the rate of growth of the economy. Given current price to earnings ratios in the market, it would require an unprecedented economic collapse for the market to yield substantially lower returns than what pension funds are now assuming. Ruling out a complete economic collapse might be assuming that the future will be like the past, but this sort of extrapolation is pretty much impossible to avoid." (Business Insider)

[Opinion]

Compton May Be The Next City To Go; Then Victorville, Montebello, Los Angeles, Oakland
"As part of a growing trend, Compton California is on the verge of bankrup.tcy. When it files (and it will eventually), it will become California's 4th city to do so.... It's a safe bet to add Montebello and Victorville to the list. Moreover, some of the big guns will eventually go under as well. Unsound pension problems will be the death of many cities. [The author considers] Oakland and LA to be sure things. It's just a matter of time. Delays in filing will only waste more taxpayer money. Eventually cities will catch on and there will be a flood of bankruptcies." (Business Insider)

[Opinion]

Coming Out of Denial on Public Pension Sickness
"There's an old joke about a tombstone that says "I told you I was sick." This same sentiment can now be applied to many state and local governments who made unfunded promises for the future regarding public sector pensions and today are no longer financially able to honor these commitments. Continuing in their futile efforts to do so will only accelerate the total demise of the entire system, leaving nothing for anybody. So how do we fix this problem? Somebody has to feel the pain—either the public sector employees or the taxpayers, or both." (Chicago Tribune; free registration required)

[Opinion]

Public Pension Reform in California: Unpopular But Necessary
"There are currently 12,199 people receiving pensions of over $100,000 from the California Public Employees Retirement System (CalPERS). An additional 5,259 retired teachers make more than $100,000 from STRS. And there are 2,129 University of California retirees drawing annual pensions over that amount, the worst of which is a retired professor of dentistry and public health at UCLA who pulls in $337,000 a year—as a pension! The number of pensioners in this $100,000+ club is skyrocketing every year. The taxpayers of this state are footing the bill for overly generous pension benefits—and it'll get worse before it gets better." (Paradise Post)

[Opinion]

California: Pension Plague
"Missing investment targets has real-world consequences for California taxpayers. Without sufficient investment earnings, the funding gap for pension promises grows, requiring ever-larger contributions from taxpayers and draining dollars away from public services to pay for retirements. Persisting down that path is enormously reckless for a state budget with perpetual deficits and local governments staggering toward insolvency." (The Press-Enterprise)

[Opinion]

Beware Advice on Lump Sum Offers
"For retirees receiving steady monthly pension income, a lump-sum payout that must be stretched over a lifetime can bring lots of headaches and few clear advantages. For financial advisers, however, the lump-sum offers provide an opportunity to win some new clients who are suddenly flush with cash—and potentially earn asset-based fees or commissions by investing that money for retirees. And in a mad dash to offer advice on pension payouts, some financial advisers have stumbled over the facts. In some cases, they've downplayed the risks of taking a lump-sum payout, omitted some critical considerations for retirees facing this choice, or conflated terms of the Ford and GM offers." (Kiplinger)

[Opinion]

Vanguard Answers Questions About Annuity and Other Investment Options
"[Plan] sponsors and participants should keep in mind that variable annuities held within a tax-deferred vehicle provide no additional tax benefit and investors should only consider an annuity in this circumstance when features other than tax-deferral are desired.... [S]ome plan sponsors [have replaced] their stable value product with a money market option, even in this current low yield environment. And others have encountered issues with capacity, or the lack thereof, causing other issues.... Most of our plan sponsors have chosen a target-date fund as their qualified default investment option (QDIA). But some others have a balanced fund or risk-based fund in their lineup." (The Vanguard Group, Inc.)

[Opinion]

Can American Pension Funds Learn From Can.ada?
"All US funds should be asking what if 8% is really 0%? And there is no doubt that American funds can learn a lot from Canadian funds.... The [Healthcare of Ontario Pension Plan (HOOPP)] earned a 12.2-per-cent return on its assets in 2011, and reported a 103-per-cent surplus as of Dec. 31. That means HOOPP had assets equal to 103 per cent of its estimated long-term liability for providing pensions to its members.... To 'de-risk' HOOPP's portfolio, [its CEO] embraced an investment philosophy dubbed LDI -- liability-driven investment strategy[.]" (Pension Pulse)

Benefits in General; Executive Compensation

More Shareholders Are Just Saying No on Executive Pay
"One important reason investors are looking at pay more closely is that the question is being presented to them more directly. For the second year, shareholders in 2012 had a 'say on pay,' a nonbinding vote on executive compensation, as required by the Dodd-Frank financial-reform law. The key word here is nonbinding. Even a 100 percent vote against a pay plan imposes no obligation on the company's board of directors to make changes. Four companies whose shareholders rejected a pay plan in 2011 got a second no vote this year." (Bloomberg)

One Surefire Way to Sabotage a Retiree's Financial Plan
"[O]ne of the hottest topics in today's marketplace is how to plan for healthcare expenses. Yet the majority of financial advisers shy away from the topic because they don't know how to do it. Talk about the elephant in the room! Health-related expenses are the second largest component in the budgets of most older Americans after housing-related expenses—and the costs tend to rise with age[.]" (Investment News; free registration required)

2012 ESOP Legal Update
This issue brief, written by a group of well-known practitioners, summarizes judicial and regulatory developments in 2011 affecting ESOPs and 401(k) plans that invest in employer stock. Cases analyzed include the Supreme Court's decision in CIGNA v. Amara, a number of stock drop cases, several fiduciary breach claims, and other ESOP-related cases. The section on regulatory developments analyzes IRS guidance affecting ESOPs and addresses the Department of Labor's proposed regulation expanding the definition of a "fiduciary" under ERISA. (National Center for Employee Ownership)

Press Releases

Sentinel Investments Added to CPI Retirement Platform
(CPI Qualified Plan Consultants, Inc.)



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