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BenefitsLink Retirement Plans Newsletter

November 13, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Retirement Plan Administrator
for Noble-Davis Consulting, Inc. in OH

Distribution Services Supervisor
for Associated Pension Consultants in CA

Benefits Health and Welfare Advisor/Senior Advisor
for ConocoPhillips in TX

Relationship Manager
for MassMutual Financial Group in ANY STATE, AL, GA, MS, NC, SC, TN

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Webcasts and Conferences

Qualified Plan Essentials Plus Series
Nationwide on November 15, 2012 presented by McKay Hochman Co., Inc.

Participant Loans
Nationwide on November 15, 2012 presented by McKay Hochman Co., Inc.

"Plan Corrections: When Good Plans Go Bad" - 19 cities, January - February 2013
Nationwide on January 9, 2013 presented by SunGard Relius

Required Minimum Distributions
Nationwide on November 30, 2012 presented by McKay Hochman Co., Inc.

10th Annual Taft-Hartley Benefit Fund Summit
in Nevada on February 10, 2013 presented by Financial Research Associates

Distribution Retirement Planning
Nationwide on December 29, 2012 presented by McKay Hochman Co., Inc.

Controlled Groups
Nationwide on December 7, 2012 presented by McKay Hochman Co., Inc.


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DOL Recovers $220 Million for Madoff Victims
"The U.S. Department of Labor [on Tuesday, Nov. 13] announced a settlement that includes the payment of nearly $220 million to compensate employee benefit plans and other investors that suffered losses through investments in Bernard L. Madoff's Ponzi scheme. The settlement is pending approval by the U.S. District Court for the Southern District of New York and resolves department litigation, actions brought by New York's attorney general, and several private lawsuits and class actions brought on behalf of plans and other investors that invested with Madoff. The settlement was reached with Ivy Asset Management LLC, J.P. Jeanneret Associates Inc., Beacon Associates Management Corp., Andover Associates Management Corp., and their current and former owners and officers." (Employee Benefits Security Administration)


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Retirement Savings by Baby Boomers Blunt Effectiveness of Federal Reserve Board's Easing
"Federal Reserve officials say they're concerned that retirees like the Rodwicks are blunting the impact of record easing aimed at creating jobs. The reason: Older people are more likely to forgo purchases of houses, cars and other big-ticket items that the Fed is trying to encourage with near-zero interest rates. And their numbers are growing, making the Fed's task ever harder." (Bloomberg)

PBGC Changes Enforcement Policy Under ERISA Section 4062(e)
"No action will be taken against creditworthy companies or small pension plans; no financial guarantees will be required for approximately 92% of applicable employer-plan sponsors." (Morgan, Lewis & Bockius LLP)

Many Investors Expect Social Security to Be Major Source of Retirement Income
"More than a third of Baby Boomers surveyed said they expect Social Security to be a 'major source of income in retirement.' Yet only one in four have confidence the system will have money to pay benefits throughout their retirement; nearly 40 percent were not at all confident, according to [a recent survey].... [M]ost investors recognized the importance of personal savings and investments in funding their retirements, ranking it higher than all other sources cited. Yet Baby Boomers, who at the median are only 8 years away from retirement, have very little saved for retirement; only 12 percent of respondents had $1 million or more saved in retirement accounts, and the median balance was $314,000." (Fidelity via BusinessWire)

New Planning Possibilities for Private Equity Funds to Protect Against Unfunded Pension Liabilities of Portfolio Companies
"[Private equity, or 'PE'] funds should evaluate their operations and contractual relationships to determine if such operations and relationships are comparable to those outlined by the court in the Sun Capital Partners case. In addition, PE funds may wish, when possible, to structure future investments across multiple funds with each fund owning less than 80 percent of the portfolio company in order to minimize risk of pension liability." [Sun Capital Partners III L.P. v. New England Teamsters and Trucking Industry Pension Fund, D. Mass., No. 1:10-cv-10921-DPW, 10/18/12] (McDermott Will & Emery)


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Form 5500 Reporting Update - December 4

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District Court Says Investment Funds Do Not Share Their Portfolio Companies' ERISA Liability
"This is only one district court decision, and it should be noted that the PBGC was not a party to this suit, since it does not collect withdrawal liability under the statutory scheme. Nor is there any indication that PBGC filed an amicus brief related to this case. While the decision is not technically binding outside the district of Massachusetts, it is a well-reasoned decision that may well be followed by other federal courts and cited in response to multi-employer funds and the PBGC." [Sun Capital Partners v. New England Teamsters and Trucking Industry Pension Fund, Civ. Action No. 10-10921-DPW, 2012 U.S. Dist. Mass.] (Osler, Hoskin & Harcourt LLP)

How Investor Behavior is Redefining Investment Managers' Performance (PDF)
"What are the forces that will shape the future of the investment management industry over the next decade? That was the question we sent out to answer when we began this research effort.... [H]ow are investors acting? Why are they behaving that way? ... [For example, when] retail investors [were asked] what steps they need to take over the next 10 years in order to be prepared for retirement, the No. 1 response (40 percent) was to become 'more aggressive'.... However, when ... their asset allocations [were analyzed], ... cash was the No. 1 allocation, and the amount of the allocation was significant -- an average of 31 percent." (State Street Center for Applied Research)

How To Invest Using the Total Return Method or the Assigned Asset Method
"The individual fiduciary or investor usually has two options with regard to making the projections (although the trust document may sometimes specifically imply which option a fiduciary must use).... Deciding which option should be used depends on the nature of and the priority of the beneficiary's collection of goals." (Fiduciary News)

How Did DB Pension Liabilities Become So Huge?
"According to actuarial consulting firm Milliman Inc., the 100 largest defined-benefit corporate pension plans were underfunded by $453 billion at the end of September, a 30% increase from a year earlier. And with the Federal Reserve expected to keep interest rates low until at least 2015, few are expecting the pension deficits to close soon.... While potentially painful in the short-term, moves to address their pension shortfalls, such as shifting billions of dollars of obligations to insurance companies ... or offering lump-sum payments to retirees ... could help companies in the long term." (The Wall Street Journal)

Target-Date Funds Predicted to Gain Further Market Share
"[T]arget-date portfolios take a larger share than target-risk portfolios, at 70% of defined contribution assets. Target-date portfolios also boast a much higher average balance than target-risk portfolios: $12 million compared with $2 million." (Advisor One)

Boomers Count on Social Security But Say They're Skeptical Over Long-Term
"While more than a third of Baby Boomers said they expect Social Security to be a major source of income in retirement, nearly 40% were not confident that the system will have money to pay benefits throughout their retirement, according to a recent survey ... 'The survey findings point out a big disconnect between what investors say they plan to live on in retirement, and what they actually can count on for that income,' said [a spokesman]." (Financial Planning)

401(k) Plans Beef Up Matching Contributions
"In the wake of the 2008 economic crisis, many companies with defined contribution pension plans stopped matching employee savings. Now that employers have resumed this important incentive to save for retirement, they're trying to help participants recover lost ground." (Institutional Investor)

No Remedy Under ERISA Against Employer for Failure to Put Employee's Contributions Into Plan
"A Massachusetts district court recently validated the long-standing view that ERISA provides limited remedies, and that some wrongs are simply and intentionally under the terms of the statute not actionable.... [The] court found that although the employer breached its fiduciary duties by failing to timely remit the employee's individual retirement account contributions to the plan, the participant lacked any remedy under ERISA." [Altshuler v. Animal Hospitals Ltd., No. 1:11-cv-10901-RGS (D. Mass. Oct. 31, 2012)] (Seyfarth Shaw LLP)

Web Site Enables Fiduciaries to Notify DOL of Deficiencies in Service-Provider Fee Disclosures
"The website of the Department of Labor ... now offers a way for benefit plan fiduciaries to notify the DOL online of any covered service provider's failure to satisfy the fee disclosure requirements of the DOL's regulations under Section 408(b)(2) of ERISA. Such notification is one of the steps a fiduciary must take in the event of such a failure, in order to avoid engaging in a prohibited transaction by continuing to use such a provider's services." (McGuire Woods LLP)

Investment Fee Disclosures Spur Very Few Plan Participants Into Action
"Among [a recent] survey's findings: Almost 96 percent of plan sponsors responding found no change in participant behavior as a result of the disclosure of fee information. An average of 1.4 percent of participants asked questions about the fee disclosures they received from their plan sponsor. The majority of respondents, in all plan sizes up to 5,000 participants, said they received no questions from participants on disclosure. Just over 15 percent of sponsors sent out a request for proposal or request for information because of the fee disclosures." (Thompson SmartHR Manager)

[Opinion]

Upcoming Jump in PBGC Deficit Will Be Non-Event (PDF)
"The dramatic drop in interest rates over the last 12 months will have the temporary effect of making PGGC's liabilities as of September 30, 2012 appear far greater than they were last year and greater than they really are, thus creating [a] record deficit.... Almost 80% of the PBGC's deficit is directly attributable to the decline in interest rates since September 30, 2008.... The remaining 20% ... is attributable to the fact that PBGC uses an interest rate that is materially lower than interest rates required by [FASB], [IASB], and the Pension Protection Act of 2006." (American Benefits Council)

Benefits in General; Executive Compensation

Wisconsin Public Collective Bargaining Restriction Saves $366M in Benefit Costs Statewide
"The [Wisconsin] state law that eliminated most collective bargaining rights for school employees reduced benefit costs for the Elmbrook School District by about $5.3 million last school year ... Statewide, school districts reduced benefit costs by $366 million this year ... Because employees can no longer bargain over benefits under Act 10, many school districts increased health insurance co-payments, required higher cost sharing by employees or changed health insurance providers to reduce costs." (Patch.com)

The Fiscal Cliff, the Taxation of Health Insurance, and the Retirement Crisis
"Part of the problem is that, for budgeting purposes, Congress treats the retirement contribution tax benefit as revenue lost, which is not completely accurate. Unlike the tax exclusion for employer-provided health insurance (which is lost revenue), the government does receive the revenue from retirement contributions, just many years down the road." (Benefits Bryan Cave)

2012 Year-End 'To Do' Lists for Retirement, Health & Welfare, and Executive Comp Plans
Seven 'to do' lists that may require you to take action before the end of 2012 or in early 2013: (1) All Qualified Plans; (2) Section 401(k) Plans List; (3) Defined Contribution Plans (Other Than Section 401(k) Plans); (4) Defined Benefit Plans; (5) Section 403(b) Plans; (6) Health and Welfare Plans; and (7) Executive Compensation. (Snell & Wilmer L.L.P.)

Sandy Triggers New Policies for Federal Employees on Health Insurance, Leave-Sharing
"The government is continuing to expand benefits policies in the wake of Hurricane Sandy, clearing the way for certain emergency relief employees to be eligible for federal health insurance and soliciting donations of leave for affected federal workers." (The Washington Post; free registration required)

State Voter Referendums on Same-Gender Marriage Have Implications for Employee Benefit Plans
"Voters in Maine, Maryland and Washington approved the legalization of [same-gender] marriage in their states. In addition, voters in Minnesota rejected a state constitutional amendment to define marriage as an [opposite-gender] union. ... Employers should take note of these recent developments in order to determine how to respond to increased requests for spousal benefits from employees who enter into [same-gender] marriages in one of these states." (McDermott Will & Emery)

Press Releases



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