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| February 25, 2009 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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[Official Guidance]
Disaster Relief Announcement 09-03 Relating to PBGC Deadlines in Response to Severe Winter Storms, Landslides, Mudslides and Flooding in Washington
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe winter storms, landslides, mudslides and flooding that occurred on January 6, 2009, in Washington." (Pension Benefit Guaranty Corporation)
[Official Guidance]
Disaster Relief Announcement 09-04 Relating to PBGC Deadlines in Response to Severe Storms and Tornadoes in Oklahoma
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms and tornadoes that occurred on February 10, 2009, in Oklahoma." (Pension Benefit Guaranty Corporation)
[Guidance Overview]
IRS Issues Final Rules on Automatic Contribution Arrangements
Excerpt: "In the final regulations, the IRS addressed a question on whether employers should start rehired employees subject to qualified automatic contribution arrangements at the deferral percentage at which they were deferring when they terminated, or at the minimum deferral percentage under the arrangement. The IRS said that if the employee has been terminated for one year or more, then the plan sponsor can automatically enroll the employee in the plan at the minimum deferral percentage under the arrangement upon rehire." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
DOL Guidance on Annual Funding Notice
Excerpt: "Field Assistance Bulletin 2009-01 provides initial guidance on compliance with the annual pension funding notice requirements under ERISA Section 101(f)." (McDermott Will & Emery)
[Guidance Overview]
New Defined Benefit Plan Funding Notice
Excerpt: "You should discuss with your plan's actuary whether all of the required information is available, and if not, how to assemble it. You should also consider using the model notice to ensure compliance. The model for single employer plans is Appendix A to the FAB, which you can find at http://www.dol.gov/ebsa/pdf/fab2009-1.pdf." (Warner Norcross & Judd LLP)
Full Committee Hearing: Strengthening Worker Retirement Security
Excerpt: "In light of the current financial crisis, on Tuesday, February 24, the House Education and Labor Committee [began] a series of hearings to explore the shortcomings of our nation's retirement system and look at solutions to ensure that Americans can enjoy a safe and secure retirement after a lifetime of hard work. The first hearing [examined] how the current economic crisis has highlighted existing weaknesses in the 401(k) retirement savings system. [Presenting testimony was Dean Baker, Center for Economic and Policy Research; John C. Bogle, Vanguard Group; Alicia Munnell, Boston College Center for Retirement Research; and, Paul Schott Stevens, Investment Company Institute.]" (U.S. House of Representatives Committee on Education & Labor)
House Committee Advised not to Scare Retirement Plan Participants
Excerpt: "While individuals speaking during the U.S. House Education and Labor Committee's hearing on 'Strengthening Worker Retirement Security' described the nation's retirement system as being 'in peril,' lawmakers were warned not to frighten participants away from it." (PLANSPONSOR.com; free registration required)
Credit Balances Are Little Help in Pension Funding Crisis, Actuaries Say
Excerpt: "Contrary to suggestions that pension plan sponsors have substantial credit balances available to help offset enormous 2009 funding obligations, they will generally provide little help, said Mercer's chief retirement actuary Ethan Kra and his counterparts at seven leading actuarial firms in a Feb. 20 letter to Congress." (Mercer)
Ways for Retirement Investment Advisors to Respond to Fiduciary Liability Risks; Revisiting the Business Model (PDF)
9 pages. Excerpt: "[T]he future for advisors is one of fee justification. . . . Few non-specialists realize it, but unreasonable fees are a prohibited transaction. When fees are deemed unreasonable, the damages could include disgorgement and an excise tax. Advisors who charge some clients more than others for the same services may be particularly vulnerable. This applies to ERISA plan advisors who are fiduciaries as well as advisors who are simply a party in interest." (The Center for Due Diligence)
Consumer Survey on Retirement Plans (PDF)
5 pages. Excerpt: "A new study of more than 10,000 Americans shows that men and women alike view automatic 401(k) enrollment and contribution escalation plans positively, particularly those who take advantage of such features. Furthermore, the research indicates that participation in automatic 401(k)s may not only build confidence in investing for retirement but also build loyalty to employers offering automatic 401(k) features. These findings have taken on particular importance in light of the economic uncertainty confronting the country in recent months. [A summary of the survey is at http://www.retirementmadesimpler.org/ResourcesAndResearch/ConsumerStylesStudy.shtml.]" (Retirement Made Simpler)
Is It Possible to Change the Matching Contributions Under a Safe Harbor 401(k) Plan?
Excerpt: "One of the most frequently asked questions (and most misunderstood options) involves whether it is permissible to reduce or suspend the employer safe harbor matching contributions, during a plan year, under a safe harbor 401(k) plan." (planadvisor)
New York City's Pension System Collapsing Under Pension Cost of More Than 10,000 Retired Cops Under the Age of 50
Excerpt: "They represent a staggering 25 percent of the city's police-pension liability - which is expected to help push the total bill for retirees to $7.8 billion in four years, almost six times the amount paid in 1997. 'Right now, we are paying full retirement benefits to people in their 40s,' Mayor Bloomberg cautioned. 'As people are living longer, we simply can't afford to do it forever." (New York Post)
Failure to Include Funding Relief in Stimulus Bill a Missed Opportunity, According to ERIC
Excerpt: "The failure to include pension funding relief for defined benefit plans in the economic stimulus bill that passed Congress on February 13, 2009 (The American Recovery and Reinvestment Act of 2009, H.R. 1) was a 'missed opportunity,' according to the ERISA Industry Committee (ERIC)." (Wolters Kluwer)
Market Downturn Has Increased Gap Between Savings and Retirement Need
Excerpt: "While participants realize their retirement savings has taken a hit with the market downturn of the past year, they may not know just what that hit means for their retirement income goals. A new Hewitt Associates analysis indicates the gap between what employees are saving and what they need to be saving is even greater following the market downturn. According to a news release, in July 2008, Hewitt predicted that employees needed to replace, on average, 126% of their final pay at retirement, after factoring in inflation and increases in medical costs, and most workers were on track to replace just 85% of their income. After factoring in the effects of the recent market downfall - where average 401(k) accounts decreased 18% during 2008 - a new Hewitt analysis shows that most workers are now on track to replace just 81% of their income." (PLANSPONSOR.com; free registration required)
Business Groups Renew Opposition to Connecticut 401(k) Bill
Excerpt: "A representative of several business groups testified before a state legislative committee Tuesday to oppose a proposal for the state of Connecticut to sponsor a 401(k) plan for small businesses. ASPPA Executive Director and Chief Executive Officer Brian Graff testified before the state Senate Commerce Committee on behalf of the American Society of Pension Professionals & Actuaries (ASPPA), the Council of Independent 401(k) Recordkeepers (CIKR), and the Small Business Council of America (SBCA). According to a news release, the three organizations opposed a similar bill last year . . . ." (planadvisor)
[Opinion]
Statement for the Record: Hearing on 'Strengthening Worker Retirement Security' (PDF)
8 pages. Submitted to the U.S. House of Representatives Committee on Education and Labor, February 24, 2009. Excerpt: "401(k) plan participants, working in partnership with employers, can successfully manage normal market risks and cycles and accumulate ample assets for retirement. However, they cannot succeed without efficient and transparent capital markets. The drop in 401(k) account balances in 2008 was not caused by a defect in the 401(k) system or by ignorant participants. These plans are caught in the same financial crisis that has paralyzed business and financial organizations throughout the world. 401(k) participants have suffered along with everyone else. Inadequate enforcement, misguided policy, reckless conduct, and unethical behavior in the capital markets are the problem, not 401(k) plans." (Profit Sharing/401k Council of America)
[Opinion]
Statement for the Record: Hearing on 'Strengthening Worker Retirement Security' (PDF)
6 pages. Comments submitted to the U.S. House of Representatives Committee on Education and Labor, February 24, 2009. Excerpt: "In response to the current economic and financial markets crisis, 401(k) plans have come under fire. However, you can't blame the drought on the well. 401(k) plans are savings vehicles, and blaming the vehicle itself for the investment losses within the plan is unfair and unjustified. In fact, 401(k) plans work as savings vehicles and they are the only effective way we have ever gotten working Americans to save. That being said, the reality is that for most working Americans the 401(k) plan has become their sole and primary retirement plan. The drop in values of 401(k) plan accounts has many Americans worried about their financial security in retirement - especially those who are just a few years away from retirement. We stand ready to work with this Committee to strengthen the rules governing 401(k) plans to ensure that all Americans are secure in retirement." (American Society of Pension Professionals & Actuaries/Council of Independent 401 (k) Recordkeepers)
[Opinion]
Written Statement for the Hearing Record: Hearing on 'Strengthening Worker Retirement Security' (PDF)
10 pages. Submitted to House of Representatives Committee on Education and Labor, February 24, 2009. Excerpt: "An additional area in which reform would be particularly constructive is increasing the number of Americans who have access to a defined contribution or other workplace retirement plan. The American Benefits Council will soon issue a set of policy recommendations as to how this goal of expanded coverage can be achieved. We believe coverage can best be expanded through adoption of a multi-faceted set of reforms that will build on the successful employer-sponsored retirement system and encourage more employers to facilitate workplace savings by their employees. This multi-faceted agenda will include improvements to the current rules governing defined contribution and defined benefit plans, expansion of default systems such as automatic enrollment and automatic escalation, new simplified retirement plan designs, expanded retirement tax incentives for individuals and employers, greater use of workplace IRA arrangements (such as SIMPLE IRAs and discretionary payroll deduction IRAs), more effective promotion of existing retirement plan options, and efforts to enhance Americans' financial literacy." (American Benefits Council)
[Opinion]
Statement for the Record: Five Steps to Restoring Trust in the 401(k) System (PDF)
10 pages. Submitted to the Committee on Education and Labor, U.S. House of Representatives, February 24, 2009. Excerpt: "The 401(k) concept is excellent. It has always had great potential, but that potential was sacrificed on Wall Street's altar of greed, corruption, and the 401(k) industry's harmful business model. It is not too late for the 401(k), but that will require a complete and unequivocal shift in public thinking. In other words, the public -- including elected representatives, and regulators -- must cast off the marketing-induced stupor that has befallen them." (Matthew D. Hutcheson via 401khelpcenter.com)
[Opinion]
In the Aftermath of Madoff, Congress Should Expand - Not Diminish - Fiduciary Duty
Excerpt: "Investment management professionals should work to ensure that the fallout from the Madoff case does not result in legislative or regulatory reforms that do more harm than good. There are at least three specific areas that could harm investment advisers and the clients they serve: (1) restructuring the SEC in such a way that its essential missions are compromised or diminished; (2) subjecting investment advisers to broker-dealer rules (including substituting a broker's suitability standard for an adviser's fiduciary obligation); and (3) establishing FINRA as the self-regulatory organization for investment advisers." (Pensions & Investments)
[Opinion]
In Defense of the 401(k)
Excerpt: "Headlines and rhetoric aside, well-designed DC plans, including the popular 401(k) plan, have served American workers well for the past three decades -- despite occasional and inevitable stock and bond market turmoil. Indeed, DC plans have been broadly embraced by American businesses and their employees. There are some 65 million active participants in DC plans holding nearly $3 trillion in assets. [Published February 9, 2009.]" (Ann Combs via Pensions & Investments)
ASPPA (Sponsor)
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Make an appointment for yourself March 22-24 to attend The ASPPA 401(k) SUMMIT. Join the experts in San Diego and attend sessions that will highlight:
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Links to Items on Executive Comp, Benefits in General
Rep. Hilda Solis (D-California) Confirmed as Secretary of Labor
Excerpt: "Solis, 51, had come under fire from Senate Republicans, who thought she was unresponsive to many of their questions during her confirmation hearing, a situation that was compounded by her work as treasurer for American Rights at Work, a pro-labor group." (PLANSPONSOR.com; free registration required)
Newly Posted Events
Automatic Enrollment & QDIAs - New Rules, New Opportunities Recorded Webcast
Nationwide on February 25, 2009
presented by National Institute of Pension Administrators
Distinguished Lecture Series in Employee Benefits Law
in Illinois on March 3, 2009
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago
Fiduciary Lessons Learned from Scoundrels and Thieves
Nationwide on March 5, 2009
presented by Fiduciary360 (fi360)
PPA: One Year Later Recorded Webcast
Nationwide on February 25, 2009
presented by National Institute of Pension Administrators
Quarterly Participant Statements and Other Employee Notices Under PPA Recorded Webcast
Nationwide on February 25, 2009
presented by National Institute of Pension Administrators
The Final Roth Distribution Regulations Recorded Webcast
Nationwide on February 25, 2009
presented by National Institute of Pension Administrators
VEBAs and Pre-Funding Retiree Health Benefits Webcast Presented By Benefits Expert, Lance Wallach
Nationwide on March 18, 2009
presented by Financial Research Associates
Newly Posted Press Releases
MassMutual Retirement Services 2008 Plan Data Shows Participants 'Staying the Course'
MassMutual Retirement Services
U.S. Department of Labor Sues Former Officer of SCT Yarns For Violating ERISA Rules
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Defined Contribution Plan System Must Be Preserved
American Benefits Council
Employers Support Non-Payment for Hospital-Acquired Infections
Midwest Business Group on Health
Newly Posted or Renewed Job Openings
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Handy Links:
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