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October 30, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Consulting/Enrolled Actuary
for Independent Consulting Firm Located in North Carolina Servicing Clients in the Southeast in NC

Pension Administrator
for Cornerstone Group in RI

Benefit Services Specialist
for Northwestern Benefit Corporation of Georgia in GA

Plan Administrator Support Analyst
for Nationwide Insurance in OH

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CalPERS Sues City of Compton Over Delinquent Pension Contributions
"Compton submitted a payment plan to CalPERS, promising to 'catch up in December.' But the pension fund filed the court case anyway. 'Contributions are required by law and if they're not paid, we do intend to pursue all obligations,' said [a] CalPERS spokeswoman[.]" (Sacramento Bee)


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The Looming Shortfall in Public Pension Funding
"To fully fund current pension benefits, there would need to be an average tax increase of $1,385 per U.S. household. Some states will need to have taxpayers contribute more, such as New York, which would require an additional $2,250 per household over the next 30 years. Even if states continue to invest cautiously and achieve annual returns of 2 percent, assuming the stock market performs well, households will still have to pay taxes that amount to an average of $756 a year." (National Center for Policy Analysis)

PBGC Payments Mailed Ahead of Hurricane Sandy
"Anticipating Hurricane Sandy, the Pension Benefit Guaranty Corporation started mailing benefit checks ahead of schedule this month. Despite this, mail deliveries might still be delayed by the storm. PBGC reminded beneficiaries that their payments can be sent electronically, via direct deposit. If our beneficiaries' checks are more than a day or two late, PBGC's Customer Contact Center (1-800-700-7242) is available to give people more information." (Pension Benefit Guaranty Corporation)

Pressured by Pension Funds, Private Equity Firms Demanding Large Dividend Payments After Leveraged Buyouts
"[B]y far the most important driver of the borrowing binge is that the Bains and Blackstones of the world are under mounting pressure from pension funds and other institutional investors that entrusted billions with them in the past decade but haven't seen much in return. To placate these increasingly impatient investors, LBO shops have taken out 91 cents in dividends for every dollar of capital they've invested this year, according to S&P, compared with just 20 cents per dollar invested last year." (Pensions & Investments)

Is Dollar-Cost Averaging Overrated?
"[D]espite the conventional wisdom that dollar-cost averaging is usually the best way to invest, there is an opportunity cost to be paid for holding money in cash while it waits to be invested in the market. If the market goes up while you're dollar-cost averaging into it, you've lost out on any gains you would have had by investing the entire amount right away. In fact, a recent Vanguard study found that, on average, lump-sum investing resulted in higher returns than dollar-cost averaging about two-thirds of the time." (Morningstar)


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Deadlines Loom for Retirement Plans Covering Puerto Rico Employees (PDF)
"This new tax code brings the Puerto Rico qualified plan rules even closer to the US IRC qualified plan rules, but also requires all U.S.-qualified plans that allow participation by Puerto Rico employees to satisfy the requirements of the PR IRC.... While some plan sponsors may be tempted to simply maintain the status quo, failure to obtain Puerto Rico qualification will likely result in all benefits accrued and contributions made to date that have not already been taxed becoming immediately subject to Puerto Rico income tax. Going forward, employer contributions for Puerto Rico employees would have to be made on a 'post-tax' basis, and additional earnings will be taxed as vested." (Prudential)

Your Boss is Worried About Your Retirement
"Only 21 percent [of employers in a recent survey] feel employees make educated decisions in dealing with retirement savings; A whopping 48 percent expect older employees to delay retirement; A mere 26 percent think employees have an accurate picture of how defined-contribution plans fit into their retirement spending; Nine percent think employees have set goals for retirement income; and Only 15 percent think employees utilize, to any real effect, the planning resources that employers are providing, even as 65 percent of employers believe they provide adequate resources for employee retirement planning." (U.S. News & World Report)

Drinker Biddle Retirement Income Team Newsletter for October, 2012 (PDF)
Articles include: Selecting an Annuity Provider; Mutual Funds and Lifetime Income Guarantees; Use of Longevity Annuity Contracts by Defined Contribution Plans; and Contingent Deferred Annuities: NAIC Update. (Drinker Biddle)

Panels in Rhode Island Address Municipal Pension Crisis and Possible Reforms
"Though Rhode Island's current unfunded municipal pension liability stands at $2.1 billion, it only amounts to a fraction of the $7 trillion liability problem plaguing cities and towns across the country." (The Brown Daily Herald)

Supreme Court Declines to Overrule Third Circuit's Decision to Allow Suit Against John Hancock Life Insurance Company Over Fees
"Without comment, the court let stand an April ruling by the 3rd U.S. Circuit Court of Appeals in Philadelphia that revived part of a case accusing John Hancock Life Insurance Co, a unit of Canada's Manulife Financial Corp, of charging excessive fees on annuity insurance contracts in 401(k) plans. In its appeal, Hancock had warned that letting the lawsuit go forward could discourage employers from setting up retirement plans governed by the Employee Retirement Income Security Act of 1974 by driving up costs to account for litigation." (Chicago Tribune; free registration required)

CapTrust Plan Sponsor Strategic Research Report, Third Quarter 2012 (PDF)
Articles include: MAP-21 Implications for Defined Benefit Funding Strategies; A Three-Step Approach to Nonqualified Plan Financing; Recent Conversations With Plan Participants; Navigating Bonds in Today's Low-rate Environment. (CAPTRUST Financial Advisors)

[Opinion]

Retirement Realism: Massachusetts Pension Plans Should Not Assume Annual Investment Returns of 8% or More
"Massachusetts' 105 public retirement boards currently manage investments for some 500,000 retirees and active public employees. Like many states, Massachusetts faces the problem of how to make sure that returns will be sufficient to meet ... unfunded accrued actuarial liabilities ... That liability currently stands at $92.2 billion, of which about $61 billion is unfunded." (Worcester Telegram & Gazette Corp.)

Benefits in General; Executive Compensation

Share Pledging: An Important But Overlooked Policy Change Proposed by ISS
"One of the proposed changes that many seem to have overlooked is under the section 'Management Say-On-Pay Proposals (U.S.),' one of the 'Key Changes Under Consideration' is: '3. Add pledging of shares as a factor that may lead to negative recommendations under the existing problematic pay practices evaluation.' This addition, without qualifications and exceptions, could result in an unjustified increase in the number of adverse vote recommendations on management say-on-pay proposals. The pledging of shares is not a uniformly deleterious practice that warrants the inclusion on the list of problematic pay practices." (Winston & Strawn LLP)

Report of Ad Hoc Committee to Pawtucket, Rhode Island Mayor on Pension, Health Plan Funding Issues
This news article includes a link to the text of the report, prepared by Rhode Island's former auditor general. Excerpt: "This report presents a non-partisan, non-ideological and fact based analysis of the complex issues related to pensions and OPEB facing the citizens and policy makers. This problem is not unique to the City of Pawtucket. In this report, you will find the definition of the problem, it causes and effects, and a list of potential solutions to put the city on a pathway to success." (WPRI.com)

Press Releases

Barry Max Levy Inaugurated as 44th President of ASPPA
American Society of Pension Professionals & Actuaries (ASPPA)



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