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| December 26, 2007 |
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Do Proposed Rules for 401(k) Fees Do Enough to Ensure Disclosure?
Excerpt: "Federal officials proposed rules earlier this month to ensure better disclosure of the fees levied to administer 401(k) retirement accounts, but critics have blasted the measures as inadequate." (Sarasota Herald-Tribune)
The Variables in Playing Catch-Up on Your 401(k)
Excerpt: "Once you have taken advantage of any company match, 'it's probably better to contribute to a Roth -- if you have to choose,' says Twila Slesnick, an accountant in Loveland, Colo., and co-author of 'IRAs, 401(k)s & Other Retirement Plans.'" (The Wall Street Journal)
New Law To Expand Reach of 401(k)s -- Way Is Cleared for Default Enrollment
Excerpt: "The provision, part of the Pension Protection Act of 2006, allows companies to invest their employees' retirement savings in one of three types of funds without being held liable for losses. By absolving the companies of any liability should the investments go bad, Labor Department officials expect to clear the way for automatic enrollment. Under the new rules, employees could be enrolled in a company-sponsored retirement program unless they opt out of it." (The Washington Post; free registration required)
Chair of Texas House Pensions & Investments Committee Requests AG Opinion on 403(b) Issue
Excerpt: "Specifically, the requests asks: Whether an educational institution may contract with a third-party administrator that is owned by or otherwise affiliated with a company that sells qualified investment products to the institution's employees?" (Texas Association of School Administrators)
The Impact of Late-Career Health and Employment Shocks on Social Security and Other Wealth (PDF)
47 pages. Excerpt: "Although late-career health and employment shocks often derail retirement savings plans, Social Security's disability insurance, spouse and survivor benefits, and progressive benefit formula provide important protections. In fact, health shocks increase Social Security's lifetime value, primarily because the system's disability insurance allows some disabled workers to collect benefits before age 62. However, if the system's disability insurance program did not exist, the onset of health-related work limitations would substantially reduce Social Security wealth." (Urban Institute)
Implications of Normal Retirement Age Regulations for Governmental Plans (PDF)
3 pages. Excerpt: "In Notice 2007-69, the IRS requested comments on whether normal retirement age under governmental plans may be based on years of service, and whether and how such a plan would satisfy the pre-ERISA vesting rules. It is likely the IRS will issue further guidance in 2008 about the application of these regulations to governmental plans." (Gabriel Roeder Smith & Company)
Opinion: Retirement Security Key Part of American Dream -- Bad Public Policy Now Playing Huge Role in Undermining It
Excerpt: "[The] golden years are disappearing. The conservative 'you're on your own' philosophy -- what we call 'yo-yo economics' -- has accelerated the decline of traditional pension plans, the disappearance of employer-provided healthcare, and, ironically, an erosion of personal savings. Today fewer than 20% of private-sector workers are covered by a traditional pension, and the national savings rate is near zero." (Economic Policy Institute)
How Children Can Provide a Pension for Parents
Excerpt: "For millions of baby boomers, the need for extra help is becoming a familiar situation. More than 50 million people are providing some kind of assistance for aged family members or friends, according to the U.S. Health and Human Services Department." (Bloomberg News)
Overview: DOL Proposed Regs Require Service Providers to Furnish Detailed Fee Disclosures to Plan Fiduciaries
Excerpt: "The Department of Labor's Employee Benefits Security Administration has issued proposed regulations that are designed to provide plan fiduciaries with sufficient information to evaluate the reasonableness of compensation and fees directly and indirectly paid to certain service providers (including affiliates), and assess the potential for conflicts of interest that may affect the performance of a service provider." (Wolters Kluwer Financial Services)
Disclosure Regs May Cut Revenue-Sharing Payments
Excerpt: "Defined contribution plan consultants who pocket revenue-sharing payments from mutual fund companies ultimately might see their fees slashed under a new Department of Labor proposed regulation, experts said. The proposed regulation would force consultants -- typically financial advisers who work for large brokerage firms and insurance companies and service the small- to midsize DC market -- to disclose these payments for the first time. Revenue-sharing payments can run as high as 50 basis points a year, sources said." (Pensions & Investments)
California Pension Fund Shifts Away from Stocks, Bonds
Excerpt: "The California Public Employees' Retirement System will sell more than $20 billion in stocks and bonds as the largest U.S. public pension fund aims for higher returns from venture capital, commodities, real estate and several other investment options." (The Washington Post; free registration required)
The New Swedish DC ITP Plan -- Concept and Impact on Business
Excerpt: "The new ITP, the long-anticipated Swedish pension plan for white collar workers in the private sector, launched on 1 July 2007. This article discusses the fundamentals of the new ITP plan and how it will affect all businesses in Sweden." (Mercer LLC; free registration required)
How Employees Perceive Risks Associated with Retirement and The Implications for Plan Design
Excerpt: "In our second article in the Design for the Future Series, we explore insights from behavioral economists and psychologists on how individuals perceive risks associated with planning for retirement. This article explores straightforward approaches employers can adopt to better engage their employees and the implications for plan designs." (Mercer LLC; free registration required)
China's Evolving Pension Market
Excerpt: "China's explosive economic growth paradoxically has resulted in significant labor shortages, creating workforce challenges for many multinationals (MNCs) doing business there. Consequently, many MNCs have begun to look at their total rewards programs, including their pension plans, as a solution. Using results from Mercer's Total Benefits Trend Survey, we take a look at where retirement plans fit within the total benefits equation." (Mercer LLC; free registration required)
The National Financial Education Network Database Web Site
Excerpt: "{The] site was developed by the National Association of Government Defined Contribution Administrators (NAGDCA) in consultation with the Financial Literacy and Education Commission's National Financial Education Network (Network). The Web site is comprised of materials submitted by the members of the Network to provide resources on financial literacy to the general public. . . . The database provides links to resources which are hosted on other organization's Web sites." (U.S. Financial Literacy and Education Commission)
San Diego Fund's Correction Plan Includes Some Benefit Halts
Excerpt: "The board of the city of San Diego City Employees' Retirement System (SDCERS) has adopted a 14-point plan negotiated with the Internal Revenue Service (IRS) to bring it into compliance with federal tax law.' (PLANSPONSOR.com; free registration required)
Pension Landscape: The Risk-Free Road
Excerpt: "Recently, pension plan sponsors have been looking hard at the risks that they carry and how to mitigate them. New solutions and players in the market have expanded dramatically. This article puts the markers back on the map to help you achieve a risk-free pension plan." (Mercer LLC; free registration required)
Tax Considerations in a Universal Pension System (UPS)
Excerpt: "The inadequacy of the current U.S. public and private pension systems may warrant the establishment of a universal pension system (UPS), which would cover all workers -- full-time and part-time -- and require them to contribute at a level that can help provide them with adequate incomes when they retire. This paper develops options for a system of individual accounts to which, starting in 2007, each employee or self-employed worker would be required to contribute 3 percent of covered payroll (i.e., 3 percent of up to $97,500 in 2007). The UPS we describe would raise the total 'replacement rate' for average wage men to 49.0 percent of final wages -- provided Social Security is fixed -- or 39.8 percent if not[.]" (Urban Institute and Brookings Institution)
Evolving U.S. Inflation Dynamics: Explanations and Investment Implications
Excerpt: "[T]he paper examines whether a stable inflation environment is likely to persist and discusses the potential implications for future short-term interest rates, long-term bonds, and inflation-hedging instruments." (Vanguard Investment Counseling & Research)
The Theory and Implications of Expanding Traditional Portfolios
Excerpt: "[T]he paper: Explores why an investor may consider expanding a traditional portfolio. Analyzes how including nontraditional asset classes and strategies can work. Examines the implementation risks for nontraditional asset classes and strategies. Offers best practices for investors looking beyond the three traditional asset classes." (Vanguard Investment Counseling & Research)
Links to Items on Executive Comp, Benefits in General
New Informational Series Focuses on Public Employee Benefit Plan Studies
Excerpt: "The Center for State and Local Government Excellence has issued the first in a series of briefs, primers and data sheets studying public pension plans, retiree health care and financial planning. The series continues through May 2009 as part of a $1.5 million grant to the Center for Retirement Research at Boston College." (Workforce Management; free registration required)
Overview: SEC Adopts Significant Changes to Rules 144 and 145 (PDF)
Excerpt: "In a nutshell, these amendments . . . reduce to six months the minimum holding period for resales of 'restricted securities' of 'reporting companies' (non-reporting companies will continue to be subject to a one-year minimum holding period) and, after the applicable holding period, non-affiliates will be able to resell without concern for virtually any of the requirements currently imposed on sellers of restricted securities. Although contemplated when the Amendments were proposed, the SEC did not reintroduce 'tolling' of the Rule 144 holding period for hedged positions." (Winston & Strawn LLP)
U.S. Incentive Plans, EU Employees and Conflicts of Law (PDF)
4 pages. Excerpt: "This [newletter] summarises important new incentives and employment law developments affecting US employers with operations in Europe." (Paul, Hastings, Janofsky & Walker LLP)
Section 409A Operational Error Relief: Hewitt Summary and Comments (PDF)
11 pages. Excerpt: "Hewitt has prepared a summary of, and commentary on, IRS Notice 2007-100, which provides guidance on the correction of operational errors in a nonqualified deferred compensation plan to comply with Internal Revenue Code section 409A." (Hewitt Associates)
Summary of FASB Statement 123R on Share-Based Payment, Revised December 18, 2007 (PDF)
Excerpt: "Statement 123R creates a more 'level playing field' for equity incentive design that is expected to result in the increased prevalence of full-value and performance-vesting awards, and a corresponding decline in plain-vanilla, tax qualified, and reload stock options, and employee stock purchase plans. The remainder of this paper summarizes the most pertinent provisions of Statement 123R and related staff guidance provided by the FASB and the Securities and Exchange Commission (SEC)." (Frederic R. Cook)
IRS Says FedEx Misclassified Some 13,000 Workers
Excerpt: "According to a filing with the Securities and Exchange Commission (SEC), FedEx said the IRS has tentatively concluded, subject to further discussion with the firm, that FedEx Ground's pick-up-and-delivery owner-operators should be reclassified as employees for federal employment tax purposes.' (PLANSPONSOR.com; free registration required)
Newly Posted Events
Living to 100: Survival to Advanced Ages International Symposium
in Florida on January 7, 2008
presented by Society of Actuaries
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Senior Pension Administrator
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Second Vice President, DC Administration
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in MA
Writer
for The Capital Group Companies
in CA
University Director of Retirement Program Services
for Indiana University
in IN
Conversion Administrator
for PensionTrend, Inc
in MI
Employee Benefits Manager
for Michigan Catholic Conference
in MI
Manager, Employee Wellness Programs
for PepsiCo, Inc.
in NY
Benefits Project Manager
for Publix Super Markets, Inc.
in FL
Defined Contribution Analyst I
for Standard Retirement Services
in PA
Mid-Level Pension Actuary
for McCready and Keene, Inc.
in IN
401(k) Senior Account Representative
for Paychex, Inc.
in NY
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