Retirement Plans Newsletter |
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| July 31, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Post-Retirement Benefit Not an 'Accrued Benefit' Protected by Anti-Cutback Rule
Excerpt: "A post-retirement increase in benefits is not an 'accrued benefit' for a specific retired participant if it was not provided for in the terms of the plan in effect when the participant was actually employed, the U.S. Court of Appeals in Cincinnati (CA-6) has ruled in Thornton v. Graphic Communications Conference of the International Brotherhood of Teamsters Supplemental Retirement and Disability Fund. Thus, a plan's decision to rescind a benefits increase adopted after the participant's retirement did not violate the anti-cutback rule in Code Sec. 411(d)(6)." (Wolters Kluwer)
[Guidance Overview]
Former 401(k) Plan Participant Who Had Cashed Out His Account Could Pursue Fiduciary Breach Suit
Excerpt: "A former participant in a 401(k) plan could pursue a claim for breach of fiduciary duty under ERISA even though he had withdrawn all of the assets in his plan account. This was the decision of the Ninth Circuit U.S. Court of Appeals in Harris, et al. v. Amgen, Inc., et al. (No. 08-55389)." (Wolters Kluwer)
[Guidance Overview]
Reducing or Eliminating Employer Contributions to Retirement Plans (PDF)
4 pages. Excerpt: "Due to the economic downturn, many employers are seeking ways to control expenses. To that end, employers are looking more closely at reducing or eliminating contributions to their retirement plans. Reducing or eliminating an employer contribution can be done; but needs to be done correctly and with an understanding of the consequences of such reduction or elimination. Furthermore, special rules apply if the employer is a party to a collective bargaining agreement." (McDonald Hopkins LLC)
PBGC Will Develop New Investment Policy
Excerpt: "The Pension Benefit Guaranty Corp. plans to create a new investment policy to replace the one adopted during the Bush administration, PBGC spokesman Jeffrey Speicher said. Speicher declined to speculate on what the new policy would be or when it would be announced. 'We await the board's decision on how our assets will be allocated in the future,' Speicher said in an interview." (Workforce Management; free registration required)
IASB Proposes Move to Corporate Bond-Based Discount Rates in All Markets
Excerpt: "During meetings on July 21, 22 and 23, 2009, the International Accounting Standards Board (IASB) agreed to further develop a proposal that would give companies the option to use high-quality corporate bond-based discount rates to calculate pension accounting liabilities under IAS19 in all countries, including those where the corporate bond market is currently not considered to be deep. This development is of particular interest to companies that sponsor pension plans in Asia, Africa, Latin and South America, as well as some European countries (such as Switzerland, Sweden and Norway)." (Watson Wyatt Worldwide)
The Tripling of the PBGC's Deficit: What Does it Tell Us?
Excerpt: "This paper attempts to put the PBGC's $33 billion deficit in context, by answering the following questions: How sure are we of the $33 billion figure? What made the deficit go up so fast? . . . . What does this mean for the PBGC's financial future? How can we fix the financial problems?" (Brookings Institution)
How Would Target-Date Funds Likely Impact Future 401(k) Accumulations?
Excerpt: "As part of EBRI's 2008 analysis of the likely impact of the Pension Protection Act's safe harbor automatic enrollment and automatic escalation provisions, we developed a stochastic simulation model to project future 401(k) balances as a function of various plan design variables as well as assumptions with respect to various employee behavioral responses. In this paper I report on the results I obtained using the EBRI simulation model to determine how target-date funds (TDFs) would likely impact 401(k) participants assumed to be automatically enrolled. I realize that TDF use in 401(k) plans is not limited to those automatically enrolled; however, based on our simulation results, it appears that this 401(k) auto-enrollment will represent the majority of TDF use in the future and hence I will concentrate my analysis on those results. Results are reported both at the time of retirement as well as at the time of job change for those who are assumed to cash out. Several scenarios are presented in terms of alternative rates of return as well as several different types of target date funds." (Social Science Research Network)
PBGC Would Be Revamped Under Measure in U.S. Congress
Excerpt: "The government agency that guarantees the pensions of more than 44 million Americans would be restructured under legislation introduced in the U.S. Senate. The Pension Benefit Guaranty Corp.'s finances and structure need revamping as 'several of the country's largest automobile and manufacturing companies are teetering on the edge of bankrup.tcy,' Senator Herb Kohl, a Wisconsin Democrat and a sponsor of the measure, said in a statement." (Bloomberg L.P.)
Philadelphia, PA Faces Deep Cuts If No State OK for Pension and Sales Tax Moves
Excerpt: "Without state approval to raise the sales tax and make pension changes, Philadelphia will be forced to eliminate almost 3,000 positions and close all of its libraries and recreation centers, Mayor Michael Nutter said Thursday. . . . State passage of House Bill 1828 and Senate Bill 1058 would enable the city to raise the sales tax from 7 percent to 8 percent and defer a portion of its pension payments for fiscal years 2010 and 2011." (Philadelphia Business Journal via bizjournals.com; free registration required)
[Opinion]
Regulating One Kind of Mutual Fund, Target-Date Funds
Excerpt: "In the current 401(k) system, key choices are made by the sponsor, even though it has no direct stake in the outcome of those choices. The result: There is no market-based solution to the problems presented by TDFs and by fund menu construction generally. It is a mirror image of the problem presented by health care: In health care, the participant spends the sponsor's money. In the 401(k) system, the sponsor spends the participant's money. In either situation, you get a compromised market. The SEC regulatory scheme depends on disclosure to a functioning market. That won't work here." (PLANSPONSOR.com; free registration required)
[Opinion]
Restructuring the Pension Benefit Guaranty Corporation's Board
Excerpt: "One step towards remedying the PBGC's chronic problems would be to increase the effectiveness of its Board of Directors (Board). It currently has a small Board that meets relatively infrequently and lacks certain attributes, such as committee structures, that would make it easier to dive into greater depth on the key issues. Comparisons of the PBGC's Board structure with that of analogous public entities demonstrates that its three-person Board format and sparse meeting schedule is unusual. The remainder of this paper will discuss potential changes that could improve the Board's effectiveness." (Brookings Institution)
University Conference Services (Advert.)
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Links to Items on Executive Comp, Benefits in General
[Official Guidance]DOL Seeks Nominees for ERISA Advisory Council
Excerpt: "The terms of five members of the Council expire on November 14, 2009. The groups or fields they represent are as follows: (1) Employee organizations; (2) employers; (3) actuarial counseling; (4) investment counseling; and (5) the general public." (Employee Benefits Security Administration, U.S. Department of Labor)
[Guidance Overview]
A Summary of Judge Sotomayor's ERISA Decisions at the Second Circuit Court of Appeals (PDF)
5 pages. Excerpt: "As a general proposition, there is nothing talismanic in Judge Sotomayor's ERISA decisions. They tend to follow existing law, rather than create it. Her opinions are clear, intelligent and thoughtful. They tend to reflect a thorough research of precedent, a comprehensive study of the record and a methodical examination and analysis of the arguments of the parties. . . . While on the Second Circuit Court of Appeals, Judge Sotomayor was a member of the panel deciding approximately twenty ERISA related cases. We will briefly discuss the five cases in which she has written the opinion for the Court." (Reish & Reicher)
The Bank Bonus Culture: No Rhyme or Reason (PDF)
22 pages. Excerpt: "As one would expect, in describing their compensation programs, most banks emphasize the importance of tying pay to performance. Indeed, one senior bank executive noted recently that individual compensation should hot be set without taking into strong consideration the performance of the business unit and the overall firm. As this executive put it, 'employees should share in the upside when overall performance is strong and they should all share in the downside when overall performance is weak.' But despite such claims, one thing is clear from this investigation to date: there is no clear rhyme or reason to the way banks compensate and reward their employees. In many ways, the past three years have provided a virtual laboratory in which to test the hypothesis that compensation in the financial industry was performance-based. But even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from the banks' financial performance." (State of New York, Attorney General via U.S. House of Representatives Committee on Oversight and Government Reform)
Rep. Towns' Letter to New York State Attorney General Andrew Cuomo on Executive Pay Practices (PDF)
2 pages. Excerpt: "Chairman Towns, who is conducting an investigation into the financial bailout and lack of oversight of TARP recipients, concurs with Attorney General Cuomo's conclusion that executive pay last year at bailed-out firms had no relation to executive performance, no relation to managing risk, and no relation to company performance. In addition, through their separate investigations into the financial bailout, Chairman Towns and Attorney General Cuomo have determined that the executive compensation model on Wall Street was a major driver of risky decisions that led directly to the current economic crisis. . . . In [this] letter to Attorney General Cuomo, Chairman Towns announced that he intends to hold a hearing after the August recess to examine the Obama administration's reforms to rein in executive pay practices at companies receiving TARP funding." (U.S. House of Representatives Committee on Oversight and Government Reform)
Webcasts and Conferences
Changes to Cafeteria Plans: What You Need to Know to PrepareNationwide on October 19, 2009
presented by Lorman Education Services
Form 5500 Reporting Update
Nationwide on September 16, 2009
presented by Lorman Education Services
Meeting Your Fiduciary Responsibilities Under ERISA
Nationwide on September 29, 2009
presented by Lorman Education Services
Pitfalls of Participant Loans in Retirement Plans
Nationwide on August 11, 2009
presented by Lorman Education Services
Providing Investment Advice to Retirement Plan Participants Without Triggering Liability
Nationwide on August 26, 2009
presented by Lorman Education Services
SPARK Accredited Retirement Plan Consultant (ARPC) Training and Designation Program
in Massachusetts on September 24, 2009
presented by SPARK -- Society of Professional Asset-Managers and Record Keepers
Wellness Programs: Legal Developments, Requirements and Risks
Nationwide on October 5, 2009
presented by Lorman Education Services
(Click to post your webcast or conference)
Press Releases
PBGC Moves to Protect Pensions at Metaldyne Corp.Pension Benefit Guaranty Corporation (PBGC)
'Stable Value' Investment Options in 401(k) Plans Can Be Risky Too
Securian Retirement Services
U.S. Labor Department Solicits Nominations for 2010 ERISA Advisory Council
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
IFLC Endorses Fiduciary Committee
Investment Fiduciary Leadership Council (IFLC)
Inspira Adds Regional Director of Institutional Sales
Inspira
(Click to post your press release)
Employee Benefits Jobs
401(k) Plan Salesfor Ingham Retirement Group
in FL
VP, Benefits
for Selective Insurance Company of America
in NJ
Mental Health Case Manager
for The Standard
in OR
Actuarial Analyst
for New York Life Retirement Plan Services
in MA
(Click to post your job opening | View all jobs |
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EmployeeBenefitsJobs.com (Sponsor)
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