De-Risking U.S. Pensions Through Lump Sum Offers
"What are some of the considerations plan sponsors need to take into account in considering whether to add a lump sum option? ... A plan must be at least 80 percent funded to offer unlimited lump sums.... IRS issued private letter rulings in 2012 clarifying that lump sums could be offered during a defined window period to participants who were already receiving pension payments.... The communications explaining the lump sum option should be as clear as possible.... A plan amendment will be required to implement any window period election, and the plan will need to have sufficient cash to make the lump sum payments."
(Osler, Hoskin & Harcourt LLP)
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Pennsylvania Governor's Plan Would Reduce Pensions by $12 Billion
"Corbett's plan to divert newly hired employees into a 401(k)-style plan would save taxpayers more than $2.5 billion through 2043, compared to the cost of enrolling them in the present, defined-benefit pension plan ... But those savings would be more than offset by proposed limits on the growth of taxpayers' share of pension costs in the next few years, which would push more than $3 billion in new costs into later years."
(San Francisco Chronicle)
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Financial Advisors Up Allocations to Absolute Return Strategies
"When asked about their confidence that in 2013 clients would be better able to stay on the path to retirement, the majority of advisors (54%) said they were 'highly confident' or 'confident'.... When it comes to measuring how their clients are progressing towards financially viable retirement, 79% of advisors said they use investor-stated objectives rather than comparison to a traditional investment benchmark like the S&P 500."
(Transamerica Center for Retirement Studies)
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CalPERS to Boost Allocations to Event-Driven, Macro Funds
"The biggest U.S. pension fund aims to invest 5 percent of its hedge-fund portfolio with event-driven managers, up from zero in its current weighting, and increase investments in global macro funds to 10 percent from 2 percent ... CalPERS, with $254.5 billion in assets, has about 2 percent, or $5 billion, in hedge funds[.]"
(Bloomberg)
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Boeing Engineering Union to Drop Pension Demand
"[Society of Professional Engineering Employees in Aerospace] members already have a 401(k) plan that pays a match up to 6 percent of their annual salary. Boeing's offer would enhance that plan, while cutting out the pension. The union said this change would reduce the value of a worker's compensation by about 40 percent over the span of a career."
(Reuters, via The New York Times; free registration required)
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The 401(k) Concept: Pass or Fail?
"The 401(k) started out as a tax loop hole to supplement workers' savings and has grown to become Americans' main retirement savings tool. But many baby boomers are finding their retirement in tatters and aren't able to leave the workforce due to grossly inadequate savings."
(FoxBusiness.com)
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Auditor Raises Flags About Utah Retirement System
"The audit said URS estimates were based on an average of what six different groups had figured for the URS investment portfolio. However, one of those six groups had estimates that were far above the other five. When that outlier is excluded, auditors said a 6.8 percent return is more likely."
(The Salt Lake Tribune)
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City of Providence Sues Buck Consultants Over Pension Savings Calculations
"The lawsuit accuses Buck of miscalculating $700,000 of savings the city expected this year through pension reform. 'When compounded annually over the next 28 years, the error amounts to $10.8 million in today's dollars,' [Providence Mayor Angel] Taveras said ... The city alleges breach of contract, breach of fiduciary duty, negligence and violation of the Rhode Island False Claims Act. The lawsuit claims Buck admitted the mistakes and said it had made other undisclosed calculation errors that accounted for the lost savings."
(Pensions & Investments)
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Brookings Institution Recommends Shifting Retirement Tax Incentives to Lower-Income Households
"Federal tax subsidies for retirement savings should be redirected to get more people saving for retirement and other purposes, according to the Brookings Institution's Karen Dynan, vice president and co-director of economic studies.... Ms. Dynan also calls for providing more tax incentives for employers to offer retirement savings plans, including a bigger credit for startup costs, and an automatic individual retirement account program for employees."
(Pensions & Investments)
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[Opinion]
ERIC Urges Appeals Court to Affirm District Court Ruling Rejecting Class Certification in Fiduciary Breach Claims
"The brief explains that one of ERISA's most fundamental features is its focus on clear disclosure to participants. The brief contends that both the proposed class definition and the opening brief on appeal make clear that the plaintiffs are attempting to define a class based on the Lockheed Fund's alleged divergence from the performance of a typical 'stable value fund' rather than on any imprudence in the Fund's operations as set forth in its own disclosures."
(The ERISA Industry Committee)
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[Opinion]
The Math Doesn't Work with Proposed National Retirement Plan
"To get anywhere, [U.S. Senator Tom Harkin and] the proponents of this new program have to make the case that the current collection of defined benefit pensions, 401(k)s and other retirement plans have failed miserably. This attempt lacks credibility in the face of the $6 trillion we have all managed to accumulate in a combination of our voluntary 401(k)/403(b) plans and their resulting rollover IRAs. Bemoaning the fact that old-fashioned defined benefit plans have largely gone away, critics of our current system fail to mention that those original plans only benefited employees who rarely changed jobs and who worked for governments or large companies."
(Contra Costa Times)
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[Opinion]
New Jersey Gov. Christie's Deceit About Pension Funding
"New Jersey governor Chris Christie proudly proclaims that his 7/1/13 - 6/30/14 budget 'fully funds the pension contribution' ... What he does not say is that fully funding a contribution amount that you get to make up yourself is not the same as fully funding the plan. That $1.676 billion state contribution is, by law, 3/7ths of the recommended ARC of $3.91 billion. He could have also correctly claimed that his budget 'only' shortchanges the pension by $2.234 billion[.]"
(Burypensions)
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Benefits in General; Executive Compensation
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[Guidance Overview]
Preparing for the 2013 Proxy Season
"Existing regulations require issuers to disclose the role of compensation consultants in determining or recommending the amount or form of executive and director compensation. Issuers must identify the consultants, state who retained the consultants, describe the nature and scope of the assignment and, in certain circumstances, disclose the aggregate fees paid to the consultants. Proxy statements for 2013 annual meetings must now also provide disclosure about any conflict of interest with the compensation consultant, including the nature of the conflict and how it is being addressed."
(Michael Best & Friedrich LLP)
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An Important Company Victory in the Proxy Disclosure Litigation Wars
"A review of the [Superior Court of California] decision ... should give companies substantial comfort that customary CD&A disclosures, absent unusual or bad facts, contain enough information on the material issues relating to executive compensation ... so as not to require more specific and/or insignificant information of the type sought by [this] plaintiff.... The court's decision may not only spell relief for companies in other say-on-pay proxy disclosure lawsuits that are now pending in the courts, but, coupled with recent decisions of other courts refusing to enjoin say-on-pay-votes, the decision could discourage the shareholder-plaintiff's bar from filing additional say-on-pay disclosure suits except in unusual situations." [Gordon v. Symantec Corporation, et al., No. 1-12-CV-231541 (Calif. Sup. Ct., Feb. 22, 2013)]
(The Conference Board)
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Workers' Comp Releases Should Explicitly Release ERISA Claims and ERISA Plan
"Does that workers' compensation settlement agreement release the ERISA disability claim? Probably not, unless the release explicitly mentions ERISA claims and the ERISA Plan.... [According to a federal district court, the] standard language used in a workers' compensation claim release applies only to those claims that are within the scope of the workers' compensation system. [The employer] has the burden of proving its affirmative defense that the release precludes liability for [the employee's] ERISA claim." [Duncan v. Hartford Life and Accident Insurance Company, 2013 WL 506465 (E.D. Cal., Feb. 8, 2013)]
(Lane Powell PC)
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Press Releases
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