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Ret plans - policy

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[Opinion] 2019 Legislative Proposals to Improve Retirement Security and Saving (PDF)
17 pages. "[The authors offer] a number of observations about policy issues raised by several key proposals that are, or recently have been, under consideration in Congress.... Most of the generally bipartisan retirement proposals evaluated here ... appear to stand a very good chance of enactment.... [In] the aggregate, they are likely to bring about a meaningful net improvement in the retirement landscape ... However, some of these approaches need to be modified and, importantly, should not be seen as a savior for the nation's ongoing retirement challenges." (Martin Neil Baily, Benjamin H. Harris, and J. Mark Iwry, for the Brookings Institution)
[Opinion] The Recapitalization of America: Let's Start a National Pension Bank
"[T]here remains an urgent need for new capital investments to help the economy embark on a true and more predictable growth pattern.... [One solution] would be the formation of a National Pension Bank (NPB) authorized by the federal government and operated by experts from within the pension field.... Every pension plan and IRA in the U.S. (public and private) would be required to invest 20% of its assets into its regional Pension Bank.... The NPB's sole purpose would be to make prudent investments designed to create jobs and wealth.... At the end of each year, the Pension Bank would distribute 50% of the excess earnings above the stated yield formula among all the retirement plans and IRAs." (Peter Preovolos)
U.S. Supreme Court Won't Intervene in San Diego Pension Modification Case
"The U.S. Supreme Court [denial of the petition for certiorari leaves] in place a California Supreme Court ruling that the city skipped a key legal step when the cuts were placed on the ballot in 2012. The decision means state courts will resolve the case, including a decision about how to financially compensate 4,000 city employees who don't have pensions because of the voter-approved measure, which was called Proposition B." [Boling v. Public Employment Relations Bd., No. S242034 (Cal. Aug. 2, 2018); cert. denied Mar. 18, 2019] ] (The San Diego Union-Tribune)
Multistate Private-Sector Retirement Pact Getting Some Serious Attention
"The basic idea is for interested states to be able to tap into programs already built rather than starting from scratch.... So far, seven states -- including some that have already passed secure choice legislation -- are considering legislative language allowing for such partnerships, and many other private-sector retirement bills being considered this year would allow treasurers or other officials to decide whether collaborating with another state program is the most feasible approach." (Pensions & Investments)
[Opinion] Is It Ever a Good Idea to Hold Company Stock in a 401(k)?
"At the portfolio level, heavily weighting single stock -- any stock -- has the potential to make that portfolio more volatile than one that's more diffuse.... Employees who invest heavily in company stock have both their human capital and financial capital riding on the fortunes of a single company ... If you're matched on your 401(k) contribution in the form of company stock, it's a best practice to periodically liquidate those holdings and deploy the cash into better-diversified positions within your plan." (Christine Benz, in Morningstar)
Legislation Giving Participants More Say in MPRA Benefit Cuts Reintroduced in Senate
"The proposed Pension Accountability Act was introduced by Ohio Sens. Rob Portman, a Republican, and Sherrod Brown, a Democrat, both of whom served on last year's Joint Select Committee on Solvency of Multiemployer Pension Plans, which expired before a reform package could be approved. The bill amends the Multiemployer Pension Reform Act by making participant votes binding in all situations and only counting returned ballots." (Pensions & Investments)
[Opinion] How People Might Save for Retirement in the Future
"While not possible under current federal law, one could imagine a low-cost, portable, individual-based system, managed by a third party, that allows workers to automatically contribute to their own retirement account with each paycheck and give employers the option to add to those accounts through a matching contribution. No current initiative fully captures these ideas, but recent actions at the state and federal levels point to a system that could cover more people without relying solely on individual employers to sponsor their own retirement plan." (The Pew Charitable Trusts)
[Guidance Overview] JCT Overview of Deduction for Qualified Business Income: Section 199A
32 presentation slides. "An individual taxpayer, estate, or trust generally may deduct 20% of qualified business income, and 20% of qualified REIT dividends and qualified PTP income The deduction is limited above a threshold amount of taxable income ($157,500, or $315,000 for joint returns, indexed).... Taxable income means without regard to the section 199A deduction, for this purpose ... Effective for taxable years beginning after 2017 and before 2026." (Joint Committee on Taxation [JCT], U.S. Congress)
Bill Would Create Fiduciary Safe Harbor for Annuity Selection
"The Increasing Access to a Secure Retirement Act (H.R. 1439) would provide a fiduciary safe harbor to the selection of an annuity provider. To qualify for the safe harbor, the fiduciary would need to meet several obligations in the consideration and selection of a provider, including that the cost is reasonable and the insurer is financially capable of satisfying the contract's obligations." (Callan)
California Supreme Court Rules No Vested Right to Airtime Purchases; Leaves California Rule Intact
"The Court initially concluded that the Contracts Clause generally does not prohibit the prospective reduction or elimination of statutory terms and conditions of public employment. The Court recognized only two exceptions: [1] when the statute or the circumstances of its enactment clearly evince legislative intent to create a contract right, and [2] when certain benefits of public employees, primarily pension benefits, are protected as an implied contract right." [Cal Fire Local 2881 v. CalPERS, No. S239958 (Cal. Mar. 4, 2019)] (Hanson Bridgett LLP)
Texas Supreme Court Affirms Cuts to Future Public Pension Benefit Accruals
"[T]he court held that the term 'benefits' as used in ... the Texas Constitution did not apply to future benefits, meaning that the formula to calculate future interest under the [deferred retirement option plan (DROP)] was not a protected benefit.... Because the amendment to the plan had no impact on funds deposited before the amendments became effective, no Section 66 violation existed." [Eddington v. Dallas Police and Fire Pension System, No. 17-0058 (Tex. Mar. 8, 2019)] (Husch Blackwell)
California Supreme Court Issues Opinion in Cal Fire Case
"[T]he Court made clear that the March 4 ruling was not intended to alter or affect the continued application of the California Rule.... [A]lthough the Court recognized that a constitutionally protected contractual right (a vested right under the California Rule) may be implied from legislation in appropriated circumstances, it chose not to articulate what the California Rule covers or protects -- rather it explained why the right to purchase airtime was not protected[.]" [Cal Fire Local 2881 v. CalPERS, No. S239958 (Cal. Mar. 4, 2019)] (Best Best & Krieger LLP)
Texas Supreme Court Says Changes to Local Pension Plan Were Constitutional
"The Texas Supreme Court affirmed an earlier state appeals court ruling that changes to the [Deferred Retirement Option Plan(DROP)]interest rate and distribution policy at the Dallas Police & Fire Pension System that were approved in 2014 were constitutional." [Eddington v. Dallas Police and Fire Pension System, No. 17-0058 (Tex. Mar. 8, 2019)] (Pensions & Investments)
MIT 401(k) Plan Participants Not Entitled to Jury Trial of ERISA Breach of Fiduciary Duty Claims
"The court followed the 'great weight of authority' in ruling that there is no right to trial by jury in ERISA actions for breach of fiduciary duty.... The MIT decision is notable because it may seal the small crack plaintiffs made in the wall of cases rejecting a jury-trial right in ERISA fiduciary-breach cases." [Tracey v. Mass. Inst. of Tech., No. 16-11620 (D. Mass. Feb. 28, 2019)] (McDermott Will & Emery)
Retirement Savings Shortfalls Improve
"For 2019, [EBRI's Retirement Security Projection Model (RSPM®)] finds that 40.6 percent of all U.S. households where the head of the household is between 35 and 64, inclusive, are projected to run short of money in retirement. That is down by 1.7 percentage points vs. 2014. The model finds that the aggregate retirement deficit American households in this age cohort face, taking into account current Social Security retirement benefits, is currently estimated to be $3.83 trillion. The similar figure (adjusted for inflation) from 2014 was $4.44 trillion." (Employee Benefit Research Institute [EBRI])
2018 in Review: DOL-Issued Guidance under ERISA
"DOL continued in 2018 a very limited advance guidance program, with an output roughly comparable to that of 2017.... This trend of limited guidance dates to at least 2013 and thus cannot be wholly attributed to the regulatory proclivities (or lack thereof) of the current Administration. For a variety of reasons, DOL has simply become less engaged in delivering advance guidance to the regulated community." (Eversheds Sutherland)
[Opinion] Testimony of American Academy of Actuaries to Senate HELP Subcommittee: Why Congress Must Address the Multiemployer Pension Crisis (PDF)
12 pages. "The trustees of the plans that are projected to be insolvent face a very difficult situation.... The contribution rate increases needed to achieve recovery are so great that if they were imposed, the employers would be unable to remain in business or would choose to withdraw from the plans. For the plans that are unable to meet the criteria for benefit reductions under MPRA, they have no alternative other than to spend down their assets and wait for insolvency to occur.... Congress faces a dual challenge. Action is need ed to address the looming crisis that will occur when both plans and the PBGC exhaust their resources and reach the point of insolvency." (American Academy of Actuaries)
Retirement Benefits for Millions May Be Slashed Without PBGC Reforms, Says GAO
"The increasing fragile PBGC finances for insuring multiemployer plans in unionized industries such as trucking and baking have long been a concern with a deficit running at $54 billion, but GAO cautions single employer plan insurance could also be at risk as well." (Forbes)
[Opinion] Financial Transaction Tax Would Attack Retirement Savings
"[A]fter years of attacking 401(k) plan fees, the bill's sponsors now want to charge 10 basis points every time a contribution is invested. And then charge another 10 basis points when the account is rebalanced, something that happens regularly with default investments like target-date funds. And then, another 10 basis points when that worker retires and sells some of those investments." (National Association of Plan Advisors [NAPA])
2019 Federal Retirement Security Blueprint (PDF)
"IRI's 2019 Federal Retirement Security Blueprint includes common sense, bipartisan policies to help Americans achieve their retirement goals.... [1] Expand opportunities to save for retirement by enhancing access to, and features of, workplace retirement plans; [2] Extend greater access to lifetime income products in workplace retirement plans; [3] Preserve and improve access to professional financial guidance, education and information; [4] Increase protections to safeguard Americans from financial exploitation and fraud; and [5] Maintain and enhance the current tax treatment of retirement savings." (Insured Retirement Institute [IRI])
2019 State Retirement Security Blueprint (PDF)
"This blueprint describes a number of key steps the states can take to help all Americans achieve their retirement goals.... [1] Adopt a clear, consistent and workable best interest standard of conduct for financial professionals. [2] Maintain the robust private-sector marketplace for retirement savings solutions. [3] Protect seniors and other vulnerable segments of the population against financial fraud and exploitation. [4] Enhance safeguards to protect Americans' personal financial information. [5] Facilitate and encourage improvements to the consumer and advisor experience." (Insured Retirement Institute [IRI])
California Supreme Court Holds That Air Time Is Not a Vested Right, But Passes on Reexamining 'California Rule'
"The California Supreme Court issued a long-awaited decision ... addressing whether the Legislature's elimination of 'air time' as an optional benefit for members of CalPERS unconstitutionally impaired a vested contractual right. Holding that the air time benefit was not entitled to constitutional protection, the Court took a pass on reviewing a much bigger question: Whether the so-called 'California Rule' for modifying pension benefits should remain intact." [Cal Fire Local 2881 v. CalPERS, No. S239958 (Cal. Mar. 4, 2019)] (Liebert Cassidy Whitmore)
[Opinion] The Troubling Decline in Private Sector DB Plan Coverage: Write to Your Senators (PDF)
"The Butch Lewis Act (S. 2147) ... is another proposed federal government rescue program to throw taxpayer dollars at a social problem... [P]rivate sector defined benefit plans pose a much larger set of problems due to the declining pension coverage of private sector employees whose pension benefits are not subject to collective bargaining." (H. C. Foster and Company)
[Opinion] The Phony Retirement Crisis
"Incomes will continue to rise, old-age poverty will fall, and the share of retirees unable to maintain their standard of living will be similar to today. The median retiree born during the Great Depression had an income equal to 109% of his average inflation-adjusted preretirement earnings. For Gen Xers born from 1966 to 1975, the Social Security Administration projects a median replacement rate of 110% of real average preretirement earnings." (The Wall Street Journal; subscription may be required)
DOL Probes Fidelity Over Mutual Fund Fees
"The Labor Department is investigating Fidelity Investments over an obscure and confidential fee it imposes on some mutual funds ... The fee, which appears to have been implemented in 2016, is 'designed to ensure that each Fund Firm meets a minimum required payment to Fidelity.' By marking the charge as an infrastructure fee, the fund firms may be able to avoid disclosing it to investors." (The Wall Street Journal; subscription may be required)
[Official Guidance] ERISA Advisory Council to Meet April 10
"[T]he 195th open meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) will be held on April 10, 2019. The meeting will take place ... from 9:00 a .m. to noon and from 1:00 p.m. to approximately 3:30 p.m. The purpose of the open meeting is to set the topics to be addressed by the Council in 2019. Also, the Council members will receive an update from leadership of [EBSA]." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Open MEPs Will Be a Retirement Plan Market Disruptor
"[F]or employers, it will be a matter of how much control they will have and whether they can avoid some fiduciary duties. If a recordkeeper decides to sponsor an MEP, the businesses of [TPAs] and advisers may be impacted. Each employer may use its own adviser, but will the MEP offer one adviser? Likewise, will it use just one TPA or no TPA at all? If a broker/dealer or adviser decides to sponsor an MEP, who will it use for recordkeeping and TPA services or as an investment provider or adviser?" (The Retirement Advantage)
[Opinion] Jason Zweig's Proposal to Scrap 401(k)s
"Accumulating a nest egg is an essential first step, but there remains a second: how to convert the assets into income, with safety? One approach is to receive professional help, but for retirees who would prefer another path, today's 401(k)s are deficient. They offer few solutions save for the occasional calculator. They are of little help to investors who wish to make their own income decisions." (Morningstar Advisor)
Democrats and Republicans United in Concern About U.S. Retirement Crisis
"Americans see government playing an important role in helping workers prepare for retirement, but lawmakers in Washington aren't delivering results -- and the new tax law has not helped. Only 34 percent say the tax overhaul passed last year is helping on the retirement front, 84 percent say leaders in Washington have no idea how hard it is to prepare for retirement, and 80 percent say government should ease the way for employers to offer pensions." (National Institute on Retirement Security [NIRS])
New Jersey Moves Toward State-Sponsored Savings Program for Private-Sector Workers
"[E]mployers with 25 or more employees that have been in business at least two years and don't offer a retirement savings plan would be required to automatically enroll employees in an individual retirement account at 3% of pay.... The employees would be able to opt out or change their savings rate. Employers aren't allowed to contribute to the accounts and aren't considered fiduciaries[.]" (The Wall Street Journal; subscription may be required)
[Opinion] American Academy of Actuaries Comments on Report of the Commission on Retirement Security and Personal Savings (PDF)
28 pages. "Since the release of the [2016 Report of the Commission on Retirement Security and Personal Savings], the public policy discussions about retirement security have continued to gain momentum, highlighted by a [GAO] report calling for a comprehensive evaluation of the U.S. retirement system issued in December 2017. The Academy Committees have reviewed the Report in detail and offer comments on the recommendations." (American Academy of Actuaries)
Estimating the Effects of the Required Minimum Distribution Rules on Withdrawals from IRAs
23 pages. "In each year, approximately 20 percent of 60-year-old IRA holders took distributions. For each year this percentage increased linearly until age 70 ... There was a sharp increase at age 70-1/2 ... In 2008 and 2010 -- years in which required minimum distribution rules were in place -- roughly 95 percent of those age 70-1/2 to 85 took distributions. This substantial increase relative to younger ages is evidence of the effect of these rules." [JCX-5-2019, Feb. 22, 2019] (Joint Committee on Taxation [JCT], U.S. Congress)
[Opinion] Pity the Poor Congresspeople -- Someone Is Trying to Take Away Their Pensions!
"There's a bill out there to get rid of U.S. Congressional pensions.... [T]he point [may be] to make Congress like the private sector ... but they are not like union employees or some such. It makes absolutely no sense to give something that gets only more valuable the longer they sit around." (STUMP)
[Opinion] Corporate Giveaways and the Funding of Public Pensions
"Public pensions are proven economic engines, generating $1.2 trillion in economic output in 2016 and supporting 7.5 million jobs.... In Kentucky, [a] state with a long history of underfunding public pension plans, the state actually gives away more each year through tax expenditures than it collects in tax revenue. [The] annual cost of funding pensions in Kentucky is only two-thirds of the cost of those corporate giveaways." (National Public Pension Coalition)
Are Congressional Hearings a Harbinger of Pension Reform?
"Despite the frequent -- and sometimes bitter -- disagreements that seem to permeate lawmaking on Capitol Hill, there is widespread bipartisan support for pension reform. This was evident from the witness testimony and from the senators' and representatives' comments and questions during the hearings. While there remains disagreement about the depth of the retirement savings crisis and about the best remedies, both Democrats and Republicans substantially agree on many matters." (Ascensus)
Supreme Court Reaffirms States Cannot Discriminate Against Federal Retirees
"The Supreme Court ... issued a ruling with potentially far-reaching impacts for former federal employees, finding they should not face disparate tax treatment compared to their state counterparts.... West Virginia violated the law and the related intergovernmental tax immunity precedent, the court ruled ... in making the annuities of certain state law enforcement officers tax free but not granting the same benefit to [a U.S. Marshals Service] retiree." [Dawson v. Steager, No. 17-419 (U.S. Feb. 20, 2019)] (Government Executive)
[Opinion] Professor Ghilarducci Worries About De Facto Poverty in Future Retirement
"The most important academic contribution has been to shift the focus away from badly-behaved savers to a poorly designed retirement system.... [P]oorly-designed 401k plans hurt workers because they lack automatic enrollment, favor predatory and high-fee investment choices, prohibit rollovers, and do not require employer contributions.... [T]ax deductions for retirement savings create inequality as the majority of tax breaks go to high earners.... [A]cademics have shown that active management is far worse for savers than index funds." (Fiduciary News)
GAO Report: Federal Action Needed to Clarify Tax Treatment of Unclaimed 401(k) Plan Savings Transferred to States
"[1] The IRS Commissioner should ... consider clarifying if transfers of unclaimed savings from employer-based plans (such as 401(k) plans) to states are distributions, what, if any, tax reporting and withholding requirements apply, and when they apply.... [2] The IRS Commissioner should ... consider adding retirement savings transferred to states from terminating DC plans to the list of permitted reasons for rolling over savings after the 60-day rollover period, in a form consistent with the rules adopted on the taxation of transfers of unclaimed retirement savings.... [3] The Secretary of Labor should specify the circumstances, if any, under which uncashed distribution checks from active plans can be transferred to the states." [GAO-19-88, published Jan. 18, 2019, released Feb. 19, 2019] (U.S. Government Accountability Office [GAO])
Under Attack: The California Rule on Right to Future Benefit Accruals
"[The California Supreme Court] justices did not ask about the heart of the California Rule; whether alternative benefits must be provided whenever a vested right is impaired. Given the other cases pending before the Supreme Court and the nature of the justices' questions in [Cal Fire Local 2881 v. CalPERS], the court appeared to signal that it will likely issue a narrow ruling related to airtime itself, allowing major components of the California Rule to be argued in later cases." (Liebert Cassidy Whitmore)
Could Home Equity Be Key to Solving the Country's Looming Retirement Crisis?
"Pensions have dwindled, Social Security is insufficient, health care costs are rising and people are living longer than ever before, carrying little resources with them into retirement. But many older Americans do have one major source of wealth at their disposal: their house.... [S]ome experts are insisting that reverse mortgages -- which allow older homeowners to access their home equity and remain in their homes -- are an important public policy that must be preserved for future generations." (HousingWire)
Feasibility and Reliability of Automated Coding of Occupation in the Health and Retirement Study
"[The NIOSH Industry and Occupation Computerized Coding System (NIOCCS)] does reasonably well compared to coding results from a highly-trained, professional occupation and industry coder, with ... agreement rates on broader codes of around 80 percent. The main weakness of NIOCCS appears to be its failure to produce codes in many cases. Code rates for NIOCCS for the datasets tested ranged from 60 to 72 percent, as compared to a professional coder's ability to code those same datasets that ranged from 95 to 100 percent." (Michigan Retirement and Disability Research Center, Univ. of Michigan)
[Opinion] Pritzker's Plan for Illinois Pensions: 'Clever' Tricks
"The big problem with the 'pay more later' idea -- which is 'we can't pay much more right now, but because of growth/inflation/whatever, we'll be able to pay more later' in longer form -- is that it doesn't necessarily become easier to pay more in the future. Ask Detroit and Puerto Rico, which saw substantial population drops in small periods of time, in a vicious cycle that lead to more-and-more unaffordable debt payments." (STUMP)
[Guidance Overview] Answers for Employers About California's State-Mandated Retirement Plan
"What is CalSavers? ... Which employers must participate? ... When is it effective? ... What are the advantages of participating in the CalSavers program? ... What are the drawbacks of the CalSavers law? ... How does an employer participate in CalSavers? ... What are the penalties for failing to comply with CalSavers? ... What is the status of CalSavers? ... Do any other states or cities have similar laws?" (Jackson Lewis P.C.)
Familiar Retirement Reforms Already in Play in New Congress
"RESA 2019, whose primary sponsors are Rep. Ron Kind (D-WI) and Mike Kelly (R-PA), would make many changes to the retirement saving landscape.... Allow pooled employer plans to encourage offering workplace saving options ... Lifetime income investments -- a solution to outliving retirement savings? ... Will tax incentives motivate employers and savers? ... Proposal to eliminate life expectancy payments to nonspouse beneficiaries remains." (Ascensus)
Senate Committee Fields Suggestions for Promoting Savings
"Hearing witnesses discussed conducting a comprehensive review of the American retirement system, allowing for open multiple employer plans (MEPs), and changing certain [DC] plan rules to facilitate greater savings[.]" (planadviser)
[Opinion] Forget the 401(k) -- Let's Invent a New Retirement Plan
"The reimagined plan ... would blend the stable income for life of old-fashioned defined-benefit pension plans with the favorable tax treatment of the contemporary 401(k). But unlike those plans, this one would follow participants wherever they work and be universally available, while accommodating the needs of different kinds of savers and protecting participants from their own worst impulses." (Jason Zweig, in The Wall Street Journal; subscription may be required)
[Opinion] Open MEPs Will Be a Retirement Plan Market Disruptor
"Each employer may use its own adviser, but will the MEP offer one adviser? Likewise, will it use just one TPA or no TPA at all? If a broker/dealer or adviser decides to sponsor an MEP, who will it use for recordkeeping and TPA services or as an investment provider or adviser?" (PLANSPONSOR)
Court Overturns Arizona Law Which Prohibited Municipal Employee Benefits Ordinances
"The ruling reinstates a portion of a 2006 law that permits Arizona municipalities to pass local ordinances requiring employers to provide employment benefits more favorable than those provided under statewide laws. However, federal law, such as [ERISA], still imposes limits on how much these local ordinances may compel employers to do." [Meyer v. Arizona, No. 18-0031 (Ariz. Ct. App. Feb. 5, 2019)] (Ogletree Deakins)
Multiemployer Solvency Crisis: An Analysis of Proposed Adjustments to the PBGC's Benefit Guarantee
"[I]ncreasing the PBGC's benefit guarantee to $70 per year of service leads to a $44 billion increase in the projected present value of PBGC assistance payments. Freezing the plan five years before projected insolvency and cutting benefits to their guaranteed levels under current law leads to a $33 billion reduction in projected PBGC assistance payments. If implemented together, [these two provisions] lead to a $34 billion increase in projected PBGC assistance payments." (The Pension Analytics Group)
Improving Retirement Security for America's Workers
Feb. 6, 2019, hearing. Statements from Chairman Richard Neal (D-MA) and Ranking Member Kevin Brady (R-TX), along with written testimony of witnesses: [1] Diane Oakley, National Institute on Retirement Security; [2] Nancy J. Altman, Social Security Works; [3] Cynthia McDaniel, Missouri-Kansas City Committee to Protect Pensions; [4] Roger W. Crandall, MassMutual; [5] Luke Huffstutter, Annastasia Salon; [6] Robin Diamonte, United Technologies Corporation; and [7] Andrew G. Biggs, American Enterprise Institute. (Ways and Means Committee, U.S. House of Representatives)
Financial Security in Retirement: Innovations and Best Practices to Promote Savings
Video of Feb. 6, 2019, hearing, along with statements from Committee Chair Susan M. Collins (R-ME) and Ranking Member Bob Casey (D-PA), and written testimony from witnesses: [1] The Hon. Gene L. Dodaro, U.S. Comptroller General; [2] John Scott, PEW Charitable Trusts; [3] Denis St. Peter, CES, Inc.; [4] Linda K. Stone, Women's Institute for a Secure Retirement. (Special Committee on Aging, U.S. Senate)
[Opinion] GAO Testimony: The Nation's Retirement System -- A Comprehensive Re-Evaluation Is Needed to Better Promote Future Retirement Security (PDF)
45 pages. "It has been nearly 40 years since a federal commission has conducted a comprehensive evaluation of the nation's approach to financing retirement. Without a more comprehensive re-evaluation of the challenges across all three pillars of the system, it may be difficult to identify effective, enduring solutions. Unless timely action is taken, many older Americans risk not having sufficient means for a secure and dignified retirement." [GAO-19-342T, Feb. 6, 2019] (U.S. Government Accountability Office [GAO])
[Opinion] House Multiemployer Bill Emulates Single-Employer DB Risk Strategies -- With a Twist
"[T]he Rehabilitation for Multiemployer Pensions Act (RMPA) recently introduced in the House by Representative Richard Neal (D-MA) ... proposes to address multiemployer DB risk using two strategies single-employer plans have been increasingly implemented over the past decade: [1] Purchasing annuities to transfer risk permanently to an insurance company. [2] Hedging interest rate risk using liability driven investing (LDI) strategies featuring high quality, duration matched bonds.... Putting the uncertainty of the PRA loan repayments aside, the bill protects retiree pensions better than anything else being proposed." (The Principal Blog)
Background Data Relating to Retirement Income
19 pages. "This document ... provides background data relating to retirement income.... [I]ndividuals may derive the resources to support their living needs from one or more of three sources: [1] income from pension benefits accumulated during their working years under employer pension plans or individual retirement arrangements; [2] benefits received under Social Security ... and [3] other assets. The tables that follow provide data related to the extent to which current retirees use these sources and data indicative of the extent to which the next generation of retirees may draw upon these same sources." (Joint Committee on Taxation [JCT], U.S. Congress)
Senators Collins, Warner Introduce Legislation to Boost Retirement Saving Plans
"The SIMPLE Plan Modernization Act would: [1] Raise the contribution limit for SIMPLE plans from $12,500 to $16,000 ... for the smallest businesses (1 to 25 employees) ... [2] Give businesses with 26 to 100 employees the option of the higher contribution limits, and, in order to continue to encourage them to transition to 401(k)s ... increase their SIMPLE plan mandatory employer contribution requirements ... if they elect the higher limits.... [3] Make the limit increases unavailable if the employer has had another defined contribution plan within the past three years (to encourage businesses that already have qualified plans to retain them)." (United States Senate)
Cybersecurity 'Patchwork' Leaves Retirement Industry Vulnerable
"No federal regulation comprehensively governs cybersecurity for retirement plans or service providers ... And while some retirement service providers are covered by federal rules based on their industry, they often cross several different industries, complicating which rules it must follow." (Pensions & Investments)
Multiemployer Pension Reform Efforts Continue After Demise of Congressional Joint Select Committee, Part 2
"Eligible plans could apply for a loan in an amount needed to fund the plan's obligations for the benefits of participants and beneficiaries in pay status at the time the loan is made. Plans that receive a loan would then be required to fund the plan's obligations to those in pay status in one of the following ways: [1] purchasing annuity contracts from an insurance company ... [2] investing the loan proceeds in a cash or fixed income (bond) portfolio designed to match the specific benefit liabilities ... [3] invest in some other portfolio prescribed by the Secretary of the Treasury in regulations." (Morgan Lewis)
Repealing the Michigan Tax on Pensions Might Be Tough
"[The Michigan] Treasury Department is saying repeal of the tax on pensions, which took effect in 2012, would cost the state $320 million a year.... The 2011 legislation pushed by former Gov. Rick Snyder didn't create a new tax, but it removed total and partial tax exemptions for income from public and private pensions, respectively." (Detroit Free Press)
Could the Government Take the Bite Out of RMDs?
"[T]he executive and legislative branches have been floating ideas to reduce the RMD bite ... The changes that are the most likely to happen are the least likely to be meaningful enough for retirees to even notice. However, a legislative proposal from Sen. Rob Portman and Sen. Ben Cardin would dramatically change RMDs for retirees over the next decade, although it might also lead to future RMD shocks." (Morningstar Advisor)
[Guidance Overview] Compensation for MEP Sponsors, Part 1 (PDF)
"[T]here is a growing interest in the TPA and advisory communities about the sponsorship and administration of both open and 'Association' MEPs. However, there are complex issues about the payment of compensation and expenses for those services, including: [1] Can MEP sponsors make a profit, or would that be a prohibited transaction? [2] Can they be reimbursed for costs? [3] Can the compensation or reimbursements be paid from plan assets? " (Fred Reish, Bruce Ashton and Josh Waldbeser, via Plan Consultant)
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