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December 6, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Retirement Services Consultant
for CUNA Mutual Group in WI

Plan Administrator
for Chemung Canal Trust Company in NY

Sr. Retirement Services Consultant
for CUNA Mutual Group in WI

Sr. 401(k)/DC Plan Admin Specialist
for CUNA Mutual Group in WI

Sr Account Executive - Retirement Services
for Principal Financial Group in MA

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

Daily Valuation Administrator
for Heritage Pension Advisors, LLC in MA

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

Senior Account Manager/Employee Benefits
for Beneflex Insurance Services, Inc. in CA

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Webcasts and Conferences

Health Care Reform After the Election
in California on December 11, 2012 presented by Seyfarth Shaw LLP

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Government Might Avoid Fiscal Cliff by Pushing 401(k) Plans Over It
"As the government reaches for more revenue to avert the fiscal cliff, new limits on tax expenditures currently under discussion could have the effect of reducing potential 401(k) contributions by 65%.... Under a proposal dubbed the 20-20 cap now under consideration, employees would be able to contribute the lesser of $20,000 or 20% of their pay ... [which could] would reduce the contributions of an employee over 50 earning $50,000 a year and aggressively saving for retirement by 65.21%[.]" (Advisor One)


[Advert.]

Learn the definition of business success at NIPA's 2013BMC

Sponsored by NIPA (National Institute of Pension Administrators)

NIPA's 2013 Business Management Conference (BMC) will provide insight into the evolution of successful TPA business management. This one-of-a-kind event is an open forum for TPA business owners to examine industry developments and challenges.


401(k) Deferrals Show Steady Increase Over Past Four Years
"[E]xamining plans with auto-enrollment versus those without it over four years through Dec. 31, 2011, plans employing this feature achieved 93% participation in the first year of auto-enrollment and 87% after four years. By contrast, plans without auto-enrollment generated a participation rate of 37% in year one and 56% in year four. Additionally, in plans with auto-enrollment, the average participant deferral rate was 4.65% the first year and grew to 6.1% in year four. In plans without this auto feature, deferrals started high, at 7.29% in the first year, but declined to 6.77%." (New York Life Retirement Plan Services)

DC Recordkeeping Fees Fall to Record Low
"Recordkeeping fees have fallen 22% since 2006, with half of the decline in recordkeeping fees occurring in the last 15 months alone. Four-of-five of the most prevalent recordkeepers in the survey have changed the way they approach fees, and vendor searches in 2011 resulted in savings, on average, of 40% on recordkeeping fees." (PLANADVISER.com)

Corporate Pension Plan Funding Status Holds Steady in November
"The funded status of S&P 1500 companies' DB plans remained relatively flat at 72% in aggregate, as studied by Mercer, while funding for the typical corporate DB plan increased 0.8 percentage points to 74.4%, according to BNY Mellon. According to BNY Mellon, assets increased 0.7% in November as U.S. equity markets returned 0.8% and international developed markets gained 2.4%, while liabilities decreased 0.3% as the discount rate increased four basis points to 3.76%." (Pensions & Investments)

Rule 23(b)(2) Certification -- Seventh Circuit Strikes Again, This Time in the ERISA Defined Benefit Context
"In Johnson v. Meriter Health Services Employee Retirement Plan ... the Seventh Circuit affirmed the certification of an ERISA class action under Fed. R. Civ. P. 23(b)(2).... [T]he district court certified a class of more than 4,000 participants, consisting of current and former participants in the Meriter Health Services defined benefit cash balance pension plan, who claimed they were not credited with the benefits to which they were entitled over the course of a 23-year period. The class members raised varying claims depending upon their employment status and the nature and form of the benefits they received, or expected to receive, including interest credit 'whipsaw,' 'cut-back' and 'wear-away' claims.... [The case] evidences the Seventh Circuit's willingness to certify a class under Rule 23(b)(2) despite the possibility of individualized damage issues." (Seyfarth Shaw LLP)

Is Your Safe Harbor 401(k) Plan in Compliance? (PDF)
"This year the IRS unofficially stated that, based on the results of the IRS' 2010 401(k) Compliance Questionnaire, it has begun a focused examination project of Section 401(k) safe harbor plans.... In particular the IRS is looking at plans that have failed to make the required safe harbor employer matching or nonelective contributions." (ING)

Continued Success of U.S. Retirement System Likely Despite Shift from DB to DC Plans (PDF)
"The U.S. retirement system has successfully provided adequate retirement resources to generations of Americans....The shift in private-sector retirement plans from predominantly defined benefit (DB) plans to predominantly defined contribution (DC) plans is unlikely to reduce retirement preparedness.... Rather than the traditional three-legged stool analogy, a pyramid is a more accurate depiction of the resources Americans rely on in retirement." (Investment Company Institute)

6 Ways for Financial Advisors to Prove Worth to Plan Sponsors
"[The year-end meeting is] 'a great time, especially in this era of fee disclosures and fiduciary concerns, to ask a sponsor, 'Do you have any concerns?' And it's better to have that discussion up front, rather than having a client say 'I wish you would have told me about that' at a later date.' Most importantly, it's an opportunity to manage expectations, so that plan sponsors don't expect too much, or too little, over the course of a year of advisory work. Here, then, are six suggestions on how to use that meeting to open a dialog[.]" (BenefitsPro)

State and Local Governments Modifying, Not Dropping, Defined Benefit Plans
"Since the Washington-based [National Institute on Retirement Security] last looked at trends in public-sector pension plans in 2008, 45 states have modified their defined benefit programs. The most common modifications include increasing employee contributions, reducing benefits for new hires and trimming cost-of-living adjustments.... There is strong evidence that it is less costly to adjust benefits than to shift to DC plans." (Pensions & Investments)

U.K. Tax on Pensions for 'Fat Cats' May Hurt Middle Earners
"The amount workers can put in their pension pot before it gets taxed has been reduced to 40,000 pounds a year from 50,000, and the total a worker can accumulate tax-free throughout their lifetime now stands at 1.25 million pounds.... Because of the way that pensions under "defined benefit" pension schemes -- which promise staff a pension based on their final salaries -- are valued, many middle-earning members could be penalised." (The New York Times; free registration required)

Financial Literacy and Retirement Planning in Australia
"[A]ggregate levels of financial literacy [in Australia are] similar to comparable countries with the young, least educated, unemployed and those not in the labor force most at risk. However, unlike the international norm, we find that financial skills increase with age. The role played by the Australia's mandatory private retirement arrangements, system of defaults, and interactions with the means-tested safety net pension at older ages remain open questions." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)

[Opinion]

Rhode Island's Pension Cuts: Necessary and Legal
"From Athens to Rome to Providence, Rhode Island, the painful truth about pensions is the same: Unfunded liabilities need to be reformed, and unions don't like it. The difference: Europeans go to the streets when they are unhappy, and Americans go to the courts. In Rhode Island, a pension-reform plan hailed as a national model is being challenged as unconstitutional. Striking down reform would be a disastrous move -- not only for budgets but also for constitutional governance itself." (Bloomberg)

[Opinion]

401(k) Tax Breaks in Lawmakers' Gunsights
"As the fiscal-cliff debate staggers on, some in the retirement industry have come out swinging against the possibility of lawmakers slashing tax benefits for 401(k)s and similar retirement plans. But do 401(k)s need protection? That is, are lawmakers really gunning for the billions of dollars of uncollected tax revenue sitting in retirement plans? The answer is a qualified maybe.... [I]f broad tax reform is taken off the table ... look for lawmakers to raise revenue by trimming the maximum-contribution amount and other means, with an effective date of 2014 at the earliest." (MarketWatch.com)

[Opinion]

High Time for Citizen-Initiated Public Pension Reform in Oregon
"Oregonians should discuss PERS-reform options that they, as citizen legislators, can enact.... Why not think beyond the incremental changes to which the Legislature is best suited and consider creating a pure defined-contribution plan for new PERS members? ... Present-day Oregonians may find themselves stuck with a cripplingly expensive pension plan whose costs they have virtually no ability to control. The least we can do in that case is spare the next generation or two from the same fate." (The Oregonian)

[Opinion]

Comments by Plan Sponsors and Representatives to Congress Urging Further Analysis of PBGC Premiums (PDF)
"Because of the $9 billion increase in PBGC single-employer plan premiums that was enacted during the summer, PBGC premiums will, on a national basis, be raised by an average of almost 50%. For some employers, the increase will be far more than 50% and can be many millions of dollars annually.... [P]lan sponsors are exploring various approaches that eliminate risk to the companies themselves and the PBGC. This can lead to employers leaving the pension system, which is a very adverse result for retirement security and for the PBGC." (American Benefits Council and 38 other corporations, plan representatives and employer organizations)

Benefits in General; Executive Compensation

Accelerating Incentive Pay From 2013 to December 2012 -- Executive Compensation Planning for the Fiscal Cliff
"[Accelerating] payments of incentive compensation into 2012, rather than pay them in 2013 ... may sound tempting to executives given all of the headlines of the fiscal cliff and potentially higher tax rates on high-wage earners. Still, a lot can happen between now and December 31st. To determine the appropriate tax planning strategy, employers should take the following steps: (1) Have a Discussion With Key Executives ... (2) Consider Plan Documentation and Code Section 409A Challenges ... (3) Determine When to Act ... Public Company Employers Probably Should Not Accelerate Payments." (Porter Wright Morris & Arthur LLP)

New Company Benefit? Consider Matching Contributions to a Section 529 College Savings Plan
"Dun & Bradstreet Credibility Corp. ... announced this week a 'multiple match' program for employees who contribute to a 529 college savings plan. The company will match dollar for dollar up to $2,500 per year in total contributions made by salaried employees and up to $1,000 per year for hourly workers, beginning with any contributions made in 2012. (The 529 matching payments are taxable, but the company says it will contribute enough additional money to cover the taxes itself, so that employees wind up with the full dollar-for-dollar value.)" (MarketWatch)

IRS Issues Proposed Regs on High-Earners' Additional Medicare Tax
"Unlike Social Security, the amount of compensation subject to the 1.45 percent Medicare FICA tax is uncapped.... The additional tax differs from the standard Medicare tax in that there is no employer portion to correspond to the additional amount owed by the employee.... The proposed rules clarify that calculating wages for purposes of withholding the additional Medicare tax is no different than calculating wages for FICA generally." (Society for Human Resource Management)

Mercer Workplace Survey, 2012 (PDF)
"Facing an unconvincing economic recovery, workers are nonetheless extending their new commitment to retirement savings both inside and outside their workplace retirement plans. 401(k) and other retirement savings are on the way up again. Feeling vulnerable and out of time, older workers especially are funding their 401(k)s more generously.... Participants are also finding the overall benefits landscape more difficult to navigate this year than last with perceived complexity up and quality of information down, a striking reversal of historic experience. At the same time, this insured population of workers is ever more skeptical of national health care reform and what it will mean to them and their personal circumstances." (Mercer)

Press Releases

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