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August 5, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy

ASPPA (Advert.)

DOL Speaks: The 2009 Employee Benefits Conference –September 14-15,2009 (clickable image)

DOL Speaks: The 2009 Employee Benefits Conference –September 14-15,2009

ASPPA and the U.S. Labor Department EBSA co-sponsor this conference, which focuses exclusively on ERISA Title 1 issues. Get the latest information about ERISA regulatory and legislative issues; DOL audit enforcement, retirement plan and group health-plan issues; fiduciary matters, the fundamentals of managing an ERISA plan and more. There also will be information about the Pension Protection Act. Register now.

Washington Hilton Hotel /1919 Connecticut Street, NW / Washington, DC.



[Guidance Overview]
SEC Proposed Rules to Curtail 'Pay to Play' by Public Plan Advisers

Excerpt: "On August 3, the Securities and Exchange Commission (SEC) published its proposed new rules addressing so-called 'pay to play' practices by investment managers and advisers seeking to manage money for state and local governments, including public pension funds and college savings plans (529 plans). . . . In recent years, federal and state regulators have brought both civil and criminal enforcement cases in connection with pay to play schemes involving public funds in New York, New Mexico, Connecticut, Illinois and Florida. [See the] memo for a summary and further discussion of the proposed rules." (Groom Law Group)


[Guidance Overview]
Qualified Domestic Relations Orders Issues

Excerpt: "Pension and retirement benefits earned during a couple's marriage are of great value. It's not uncommon for couple's that have been married for a long-time to build up significant pension or retirement benefits, which can be worth considerable value in their marital assets. When splitting up these assets a Qualified Domestic Relations Order (QDRO) will be needed to receive all or a portion of qualified plan benefits from an ex-spouse." (Examiner.com)


[Guidance Overview]
State Pensions and Retirement Legislation 2009 as of July 2009

Excerpt: "The principal theme in pensions legislation in 2009 was the need to make future pension costs manageable in the light of states' straitened fiscal circumstances and the enormous losses most retirement trust funds have experienced. Few benefit increases were enacted, and reductions in various forms appeared in a number of states. Some states enacted early retirement incentives with the goals of reducing the size of the state workforce. Some states protected employees who will be subject to mandatory furlough days (required days off without pay) from loss of retirement benefits for those days. A number of states revised benefit packages for future employees to require longer service or higher ages for retirement, discourage early retirement even with reduced benefits, limit future cost-of-living adjustments, and tighten standards for disability retirement. Some states increased employer and employee contribution rates. Such actions were taken within the framework of existing defined-benefit (traditional) pension plans; no state created a new defined contribution plan as its primary retirement package for public employees, or as an option for existing or new employees. Several states created commissions or called for legislative interim committees to study the future of their retirement systems." (National Conference of State Legislatures)


Should Social Security Rely Solely on the Payroll Tax?
Excerpt: "This brief explores the question of the appropriate tax, or combination of taxes, to finance Social Security. Since the need for more revenues gives the question increased currency, the first section briefly describes Social Security's financial outlook. The second section then describes the payroll tax. The third section explores whether the whole cost of the Social Security system - the contributions necessary to generate current benefits and the contributions required to make up for giving early participants benefits far in excess of their contributions - should be financed in the same way. The fourth section concludes that perhaps a portion of Social Security financing could be transferred from the payroll tax to the income tax. It would mean higher income taxes, but the burden of the 'legacy debt' would be borne more broadly." (Center for Retirement Research at Boston College)


Massachusetts Public Pension Panel Recommendations Could Come with a Cost
Excerpt: "Lawmakers have promoted the commission's eventual work product as representing the second phase of pension system reform. The first phase weeded out longstanding loopholes that critics say allowed individuals to unfairly fatten their pensions. While some in the Legislature have expressed hope that a second round of reform will lead to larger savings, the commission's legal directive requires an actuarial analysis of recommendations but does not require the commission to seek cost savings." (The Arlington Advocate via GateHouse Media, Inc.)


More Employers Interested in Exploring Whether Certain Noncash Assets May Be Contributed to Offset the Employer's Plan Contribution Obligation
Excerpt: "ERISA permits purchases and sales between plans and sponsoring employers of certain types of 'employer securities' and 'employer real property,' provided the following conditions are met: the contributed asset qualifies as a 'qualifying employer security' or 'qualifying employer real property' under ERISA rules; the plan may not pay more than 'adequate consideration' for the asset; no commission may be charged in the transaction; and the transaction does not cause the plan's holdings of employer securities and real property to exceed ERISA's limits on the holding of these assets.' (PLANSPONSOR.com; free registration required)


More Americans May Be Willing to Consider Putting Some 401(k) Assets in a Retirement-Income Product at Retirement
Excerpt: "Now, Congress may give them a nudge to go ahead with it. Support for tax advantages for annuities, previously proposed in 2005 by Rep. Earl Pomeroy (D-North Dakota), seems low this year, given the government's other current financial demands. However, several other ideas appear to have potential traction, and they speak to the logistical and psychological reasons that many see at the heart of 401(k) participants' continued aversion to retirement-income products -- the overall inertia, concerns about the complexity and cost of choosing an annuity on the open market, the fear of losing money to unstable financial institutions, and the impression that a series of small payments made over time has less value than one big lump-sum payment." (PLANSPONSOR.com; free registration required)


Big Fund Firms Should Follow Putnam and Cut Expenses
Excerpt: "Putnam Investments is lowering costs for its mutual funds by reducing management fees. Some expense ratios are being cut, others will be tied to performance; pricing breakpoints are being adjusted and, in general, the firm is moving towards a structure that industry observers believe is ideal. The move raises two big questions: What took so long and why hasn't every big fund company done this?" (MarketWatch)


CBO Cost Estimate: H.R. 2989, The 401(k) Fair Disclosure and Pension Security Act of 2009 (PDF)
7 pages. Excerpt: "CBO and the Joint Committee on Taxation (JCT) estimate that enacting H.R. 2989 would increase federal revenues by $7.2 billion over the 2009-2019 period. CBO estimates the bill would reduce direct spending by $2.8 billion over the same period. On balance, those changes would reduce deficits by $10.0 billion through 2019. In addition, CBO estimates that implementing the bill would require additional discretionary funding with a total cost of $55 million over the 2010-2019 period, assuming appropriation of the necessary amounts." (U.S. Congressional Budget Office)


New Hampshire State Retirees Sue Over Pension Deduction for Insurance
Excerpt: "Retired state employees plan to file suit against the state today, claiming that a provision of the new state budget requiring young retirees to pay $65 a month for their formerly free, state-provided health care is unconstitutional. The heart of the complaint centers on the way the state is taking the insurance premium, rather than the premium itself: Starting last week, a charge of $65 per single retiree or $130 per couple was deducted directly from the pension checks of hundreds of retired state employees who are under the age of 65. The retirees claim that the deduction is an 'illegal 'encumbrance' and 'diversion' ' because the retirees' rights to a full pension payment is 'contractually vested,' according to a draft version of the lawsuit provided to the Monitor. State and federal constitutions 'forbid legislation that impairs vested rights,' the lawsuit reads." (Concord Monitor)


Public Pensions Draw Scrutiny Amid California Crisis
Excerpt: "California's rapid economic decline has prompted Gov. Arnold Schwarzenegger to propose what once was unthinkable -- rolling back generous pensions in a state heavily influenced by public employee unions. The Republican governor said he's motivated by the need to save money. California has at least $63 billion in unfunded pension liabilities, an amount equal to roughly two-thirds of all annual general fund spending. The concern is shared across the country, as local and state governments wrestle with hundreds of billions of dollars in unfunded public employee pension and retiree health care costs." (AP via The New York Times; free registration required)



National Institute of Pension Administrators (NIPA) (Advert.)

Register for NIPA’s Webcast on August 20 – EFAST2 and Form 5500 Changes (clickable image)

Register for NIPA’s Webcast on August 20 – EFAST2 and Form 5500 Changes

Join NIPA for its next live Webcast, Is Your Firm Prepared to Manage EFAST2 and the 2009 Form 5500 Changes?, presented by Janice M. Wegesin, CPC, on Thursday, August 20 from 11:00 a.m. – 12:40 p.m. CT. Participants are eligible to receive two (2) CE credits and qualify for two (2) hours of ERPA CE. Visit NIPA’s Web site for more information, to register and to view a list of upcoming Webcasts.

Links to Items on Executive Comp, Benefits in General

[Guidance Overview]
New FASB Accounting Standards' Ripple Effects on M&A

Excerpt: "The new Statement of Financial Accounting Standards 141R, 'Business Combinations,' and 160, 'Noncontrolling Interests in Consolidated Financial Statements,' might have fallen below the radar screen of many corporate dealmakers so far, but they have significantly changed the way costs for M&A deals must be managed and reported. While driven by the desire to increase transparency of accounting for deal costs, the new rules are also likely to have significant implications for HR's management of staff reduction and other integration issues." (Watson Wyatt Worldwide)


[Guidance Overview]
Red Flags Rules' Compliance Date Delayed Due to Confusion Over Scope of Coverage (PDF)

2 pages. Excerpt: "Entities that are not generally required to comply with FTC rules in other contexts may be subject to the Red Flags Rules. This is because the FTC deems the term 'creditor' to include not just entities that arrange for the extension, renewal or continuation of credit, but also those that regularly permit deferred payments for goods or services. Thus, entities such as investment advisers, financial planners and other professionals that offer or maintain covered accounts and that invoice their customers would be subject to the Red Flags Rules. 'Covered accounts' are defined as accounts used primarily for personal, family or household purposes and designed to permit multiple transactions, as well as accounts for which there is a foreseeable risk of identity theft." (Thompson Hine LLP)


[Guidance Overview]
TARP Issues: Corporate Criminal Pitfalls Associated with Receiving Federal 'Bailout' Funds (PDF)

8 pages. Article starts in the middle of page 1. Excerpt: "This article discusses the various TARP programs Treasury is using to attempt to stabilize the economy and certain enforcement mechanisms that federal law enforcement agencies have at their disposal to combat fraud in the receipt and use of TARP funds. Given the heightened scrutiny of the financial sector and the public outcry over Treasury's distribution and recipients' use of TARP funds, it is likely that we will see vigorous enforcement of fraud related to those 'bailout' funds." (American Bar Association via Morgan, Lewis & Bockius LLP)


[Guidance Overview]
Summary of SEC's Proposed Rules on Enhanced Executive Compensation Disclosure, with Comments (PDF)

Excerpt: "[The] requirement to discuss [the] role of risk in compensation plans will force compensation committees to consider how risk may play a role in incentive compensation, and to consider company-wide compensation plans, both of which have until now generally been considered outside the scope of compensation committees. . . . [They] are a clear example of how the executive compensation proxy disclosure rules have moved beyond disclosure and into shaping compensation policy." (Charles C. Shulman; reproduced with permission from Pension & Benefits Daily published by the Bureau of National Affairs)


House Approves Executive Pay Bill
Excerpt: "The House . . . passed legislation (HR 3269) that would require an annual nonbinding shareholder 'say-on-pay' vote and independent compensation committees for public companies, including a ban on compensation committees' hiring of non-independent advisers based on rules to be developed by the SEC. The bill would also prohibit payment by financial institutions of incentives that encourage 'inappropriate risk' and expand their disclosure of incentive pay plans. The measure faces an uncertain future in the Senate, although separate say-on-pay legislation could gain traction there in the fall." (Mercer LLC)


Flexible Hours for Nonexempt Workers May Be Next on Lobbyists' Agenda
Excerpt: "Flexible work arrangements traditionally have been the domain of exempt, salaried employees, but now more companies are using them for nonexempt, hourly workers, experts say." (Workforce Management; free registration required)


FTC Clarification of Status of 401(k) Accounts and Health FSAs Under Red Flag Identity Theft Rule
Excerpt: "Pension and benefit plan sponsors and service providers have questioned whether offering or administering 401(k) plan loans or health care flexible spending accounts makes them 'creditors' or 'financial institutions' subject to the Red Flag Rule. The FTC, in a series of frequently-asked questions [at http://www.ftc.gov/bcp/edu/microsites/redflagsrule/faqs.shtm], has clarified these issues; see Section B Questions 12, 13 and 14. To give creditors and financial institutions more time to review this guidance and develop and implement written Identity Theft Prevention Programs, the FTC has announced that it will delay enforcement of the rule from August 1, 2009 until November 1, 2009." (International Foundation of Employee Benefit Plans)


Special Report on Employee Relocation
Excerpt: "The situation Consolidated Container faces and the actions it is taking mirror what's happening throughout the country as businesses large and small come to grips with the financial effects of the real estate bust and recession. Nationwide, fewer employees are willing to move for a job. Of 179 companies in a 2009 survey by relocation outsourcer Cartus, 79 percent said employees' resistance to moving increased somewhat or a great deal over the past year. For 94 percent of those, worries over selling an existing home were the main reason." (Workforce Management; free registration required)


Employee Ownership Update for August 4, 2009
NCEO Executive Director Corey Rosen discusses ESOP valuations in the downturn; how 11 of the 35 Winning Workplaces Awards finalists are NCEO members; statements in a new papal encyclical that could relate to employee ownership; whether it is taxable if employees monetize stock options with call options; and a new ESPP survey showing few changes to plans. (National Center for Employee Ownership)



Webcasts and Conferences

Compliance Assistance and Information Workshop
in Nevada on August 25, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Compliance Assistance and Information Workshop
in Nevada on August 26, 2009
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

(Click to post your webcast or conference)

Press Releases

ERIC Expresses Support for Chairman Frank's Statement that Proposed CFPA Would Have No Regulatory Authority over Retirement Plans
ERIC (ERISA Industry Committee)

NCQA's Quality Compass 2009 Details Performance Data for 415 Commercial Health Plans Serving Over 94 Million Americans
National Committee for Quality Assurance (NCQA)

(Click to post your press release)

Employee Benefits Jobs

Technical Compliance Manager/ERISA Attorney
for Pension Specialists, Inc.
in CA

Regional Consulting Manager
for BPAS
in TX

(Click to post your job opening | View all jobs | RSS feed for jobs RSS feed of all jobs )


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