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December 11, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Paralegal
for Unite Here Health in IL

Account Manager - Employee Benefit Services
for Healthcare Association of New York State in NY

Senior Relationship Manager
for Wilmington Trust - M&T Bank Corporation in AZ

ERISA Plan Document Consultant
for John Hancock in MA

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[Official Guidance]

Text of Proposed DOL Regs and Class Exemption to Facilitate Distribution of Retirement Plan Assets by Chapter 7 Bankruptcy Trustees
"This document contains proposed amendments to three regulations ... that facilitate the termination of, and distribution of benefits from, individual account pension plans that have been abandoned by their sponsoring employers. The principal amendments propose to permit bankruptcy trustees to use the Department's Abandoned Plan Program to terminate and wind up the plans of sponsors in liquidation under chapter 7 of the U.S. Bankruptcy Code. In addition, other technical amendments are proposed to improve the operation of the regulations. If adopted, the amendments would affect employee benefit plans, primarily small defined contribution plans, participants and beneficiaries, service providers, and individuals appointed to serve as trustees under chapter 7 of the U.S. Bankruptcy Code." (Employee Benefits Security Administration)


[Advert.]

2013 Advanced Pension Conference in Orlando

Sponsored by SunGard's Relius Education

Attend this timely event to learn about the latest updates, including: changes to fee disclosures, tax reform, PPA restatements, Washington update, and more. Earn up to 19 hours of CE credits. Register by January 7 and save $150.


Attitudes of Employee Benefits Decision Makers Toward Retirement Plan Tax Proposals (PDF)
"This report presents the results of an online survey conducted by Mathew Greenwald & Associates, Inc., on behalf of the American Benefits Institute to access employer reactions to three proposals for modifying the income tax exclusion of defined contribution (DC) plan contributions: the 20/20 proposal, a 25% tax credit, and a tax exclusion limitation.... DC plans are valuable to employers and employees alike, and the current employee income tax exclusion is a key factor in maintaining that value.... Proposals to modify the income tax exclusion of DC plan contributions are likely to garner opposition from employers." (American Benefits Council)

Hostess Workers' Intended Pension Contributions Were Redirected
"Hostess Brands Inc. said ... it used wages that were supposed to help finance employee pensions for the company's operations as it sank toward bankruptcy. The company [said] it wasn't clear how many workers were affected or how much money never wound up in their pension plans as promised.... After the company said in August 2011 that it would stop making pension contributions, the foregone wages weren't put toward the pension. Nor were they restored." (Kansas City Star)

Bondholders Object to CalPERS' Plans to Sue San Bernardino
"The city's bondholders and the company that insured the bonds filed a 114-page protest in U.S. Bankruptcy Court, objecting to CalPERS' attempts to sue the city.... The bondholders, who are owed millions by the city, said CalPERS is trying to get preferential treatment. CalPERS 'ignores every other entities' interests,' the bondholders said in their court filing." (Sacramento Bee)

GASB Issues Revised Pension Standards for State and Local Governments (PDF)
"The Governmental Accounting Standards Board (GASB) issued a new pension accounting and reporting standard this year that represents a comprehensive reconsideration of its overall pension reporting framework for employers.... [G]overnments participating in defined benefit pension plans must prepare for significant changes." (PricewaterhouseCoopers)


[Advert.]

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Lifetime Income, Longevity and Social Security Progressivity
"Between 1970 and 2009, life expectancy for men at the age of 65 rose about 32 percent in counties around the 10th percentile, or low end, of lifetime income distribution. In contrast, life expectancy for men at the age of 65 rose about 43 percent in counties around the 90th percentile, or high end, of lifetime income distribution. Thus, by 2009, men in high income counties lived 1.1 years longer on average than the men in low income counties." (National Center for Policy Analysis)

Retirement Anxiety Rising Among Older Workers
"Fifty-nine percent of workers aged 50 and up said they may delay their retirement, a jump from 55% a year ago ... Among workers of all ages, the portion who expect to delay retirement rose to 44%, the highest figure in the survey since 2002 -- but the jump was driven entirely by the older workers. Of the younger workers, 37% said they expect to delay retirement, the same portion as said that a year earlier." (MarketWatch.com)

Fiscal Talks May Result in Corporate Pension Funding Relief
"Making the funding stabilization measures permanent could bring in as much as $70 billion in additional tax revenue at a time when Washington is looking for more. The $70 billion figure is based on several estimates by trade groups from the first round of funding relief." (Pensions & Investments)

Prudential Wins in Court, Seals Pension Transfer with Verizon
"Prudential Insurance Co. of America ... closed a deal with Verizon that will shift billions in pension liabilities to the insurer, fresh off a court victory against retirees who sought to block the transaction. The deal, originally announced in October, moves $7.5 billion of close to $30 billion in pension plan obligations to Prudential in exchange for a group annuity. The transaction affects 41,000 nonunion retirees with Verizon Communications Inc., whose future annuity payments will be coming from Prudential starting Jan. 1." (Investment News; free registration required)

Verizon Former Managers Fail to Block Annuitization of DB Plan
"Large corporations thinking about transferring hefty defined benefit plan payouts to insurance companies for them to manage now have judicial support for that approach. A federal judge in Texas has denied a bid by retired Verizon Communications executives to block the company from making a proposed shift off its books of $7.5 billion in pension obligations." (Thompson SmartHR Manager)

Markets Boost Average DC Plan Balance by 4.4%
"The average DC participant's balance grew 12.42% for the nine months ended Sept. 30. Callan's latest quarterly analysis of plans noted that target-date funds continue to attract most of the new money in DC plans 'as they have every quarter since 2006,' said the Callan DC Index report. 'Nearly 70 cents of every dollar that flowed into index asset classes during the third quarter went to target-date funds,' the report said." (Pensions & Investments)

Senators: Don't Tamper with Retirement Savings Plans
"Retirement industry groups late last week rallied around a proposal championed by Sen. Richard Blumenthal, D-Conn., and Sen. Johnny Isakson, R-Ga., to protect the tax incentives of saving in retirement plans.... Mr. Blumenthal and Mr. Isakson said $4.7 trillion is held in 401(k), 403(b), 457 and other defined-contribution plans, while another $2.3 trillion is currently in private defined-benefit plans. Individual retirement accounts hold nearly $5 trillion, with much of that amount coming from rollovers from workplace retirement plans." (Investment News; free registration required)

Retirement Plan Investments in Employer Stock Often 'Stock-Dropping' the Fiduciaries and Sponsors Into Hot Water
"The filing of stock drop cases tends to rise and fall in reflection to the economic times. Following the economic downturn in 2002, federal courts saw a surge in stop drop case challenges as well as Labor Department enforcement actions. The number of these cases dropped as the economy improved later in the decade only to rise again between 2010 and the present in response to the current economic crisis." (Solutions Law Press)

Fiduciary Rule Re-Proposal Still 'Months and Months' Away, Borzi Says
"[EBSA Assistant Secretary of Labor Phyllis] Borzi said the re-proposal will include 'a very robust economic analysis' and amendments to prohibited transaction exemptions in response to requests for clarification in the individual retirement account or rollover context and for revenue-sharing scenarios. 'We have to be able to find that allowing these conflicted practices is ultimately in the best interest of participants and beneficiaries and, if we can't make that finding, we're not going to issue the exemption,' Borzi said." (Bloomberg BNA)

[Opinion]

401(k) Fee Disclosure: What Six Months Tells Us
"The wire services were buzzing with 401k fee stories in the months leading up to the implementation date of July 1, 2012. Now that we've lived with the DOL's new 408(b)(2) Fee Disclosure Rule for nearly six months, that buzz has ebbed to barely a hum. Do preliminary indications suggest it was much ado about nothing? Have plan sponsors really saved money as reports imply? And, when it is all said and done, is this really the priority when it comes to employees who have access to 401k plans?" (Fiduciary News)

[Opinion]

Promoting Greater Transparency for 403(b) Plan Fees
"[W]e have an opportunity to be visionaries by moving to where the best retirement standards are going to be and not by maintaining the status quo. Plan sponsors should offer a best-in-class investment menu for the non profit world in the form of a single vendor retirement plan solution and put the flawed multi-vendor retirement platform behind us." (The Agbay Group)

[Opinion]

Challenges Facing Advisors in Retirement Planning
"The statistics concerning how respondents view their own ability to save for retirement may signal potential problems down the road. Another contributing factor is the possibility that the government reduces the amount that can be contributed into a tax-deferred retirement plan ... There is a troubling precedent for this set by the major overhaul in 1986, which is blamed for limiting tax-deferred savings and causing pension plans to be terminated.... Congress should be cautious when instituting reforms that impact retirement savings, lest they try to solve one problem by making another problem, the retirement readiness of American workers, worse." (fi360 Blog)

[Opinion]

Taking Less Risk As You Age: Just the Right Idea for Target-Date Funds
"[T]here's a growing stream of criticism flowing from financial service providers whose business depends on convincing the world that straightforward, transparent, and low-cost approaches in many TDFs are somehow 'less effective' than other 'more sophisticated' approaches. A recent example of this criticism involves the use of long-term historical return data to argue that investors should reconsider a fundamental principle of TDFs: that risk in these funds should decline as one approaches retirement." (The Vanguard Group, Inc.)

Benefits in General; Executive Compensation

[Guidance Overview]

ISS Clarifies 2013 Policy Updates (PDF)
"ISS' peer group selection methodology will use a company's disclosed self-selected peer group as a key input for selecting ISS peers. In an effort to ensure current groups for 2012 pay determinations are used, a web-based tool is available for companies to submit changes to their peer groups so long as the updated peer groups will be disclosed in the 2013 proxies. This tool will be available for use until December 21[.]" (Frederic W. Cook & Co., Inc.)

Many Corporations Announcing Special Year-End Dividends; Consider Impact on Stock Compensation Accounting
"Over the last few weeks there have been some high-profile reports of companies announcing special one-time cash dividends that will be made before the end of the year. The main motivation is anticipation of higher dividend tax rates come 2013.... In connection with a special dividend, companies commonly make adjustments to employee stock awards to keep the holder whole. This [article] discusses potential accounting issues to consider when modifying stock compensation awards due to a special one-time dividend." (PricewaterhouseCoopers)

Employer Costs for Employee Compensation, September 2012 (PDF)
"Employer costs for employee compensation averaged $30.80 per hour worked in September 2012, the U.S. Bureau of Labor Statistics reported ... Wages and salaries averaged $21.32 per hour worked and accounted for 69.2 percent of these costs, while benefits averaged $9.48 and accounted for the remaining 30.8 percent. Total employer compensation costs for private industry workers averaged $28.95 per hour worked in September 2012." (U.S. Bureau of Labor Statistics)

FMLA Leave for Same-Gender Couples to be Clarified by Supreme Court's DOMA Decision?
"Many states have adopted broader versions of the FMLA so as to provide leave to care for a same-gender spouse or civil partner. The problem for employers in these states, however, is that leave that is not FMLA qualified cannot be counted against an employee's FMLA entitlement." (FMLA Insights)

Press Releases

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