Retirement Plans Newsletter |
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| August 20, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
ASPPA (Advert.)
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]
EFAST2 Developer's Conference: Information for 5500 Preparers
Excerpt: "In our continuing series of FAQs on EFAST2, we are addressing the issues and procedures with which 5500 preparers and plan sponsors will need to familiarize themselves to make the transition to electronic filing. On August 12th, the DOL, the IRS, and Vangent (the private contractor developing EFAST2) presented an EFAST2 developer's conference. Although much of the discussion centered on issues for software developers, the DOL, the IRS and Vangent shared some important information regarding EFAST2 that we thought we would pass on to 5500 preparers." (SunGard)
Coalition of U.S. State Pension Funds Supports Private Equity Industry's Opposition to New Rules on Takeovers of Troubled Lenders
Excerpt: "The measures would have 'a chilling effect on private capital participation in the acquisition of failed banks,' the state pension funds said in a letter to the U.S. Federal Deposit Insurance Corporation, according to the paper. The warning by funds from states including New York, New Jersey and Oregon is expected to strengthen the buy-out industry's lobbying against the proposed measures, the paper said. The FDIC will meet next week to vote on a proposed policy that would force private equity groups to maintain high capital levels and put a large amount of their own money at stake when investing in failed banks." (Reuters via The New York Times; free registration required)
Goal-Based Investing Gains Traction in Retirement Planning
Excerpt: "As defined benefit plans fade into history, more American workers are confronting the fact that they will need to be much more active in deciding how to marshal their retirement savings than their parents had to be. But how best to line up what you have now with what you'll need later? That's where goal-based investing, or what some people call liability-driven investing, comes in. This increasingly popular approach is yet another example of the retail investing world borrowing a page from institutional investors' playbook -- trying to manage people's assets so they better match their liabilities, which has long been a focus of pension funds." (BusinessWeek)
Pittsburgh Mayor Opposes Proposed State Takeover of the City's Ailing Pension
Excerpt: "In an Aug. 5 letter obtained today by the Post-Gazette, the mayor outlined his position against the legislation, which would require that pension funds that are less than half-funded be folded into a state-controlled investment pool and subjected to new rules. The letter has been circulated to city council members and to Harrisburg officials by the city's lobbyist. 'The legislation would immediately increase Pittsburgh's pension payment by $28 million to $73 million,' the mayor wrote in the letter." (Pittsburgh Post-Gazette)
403(b) Group Updates Best Practices
Excerpt: "The SPARK Institute has been developing and updating a set of best practices to serve as a standard industry guide, but keeping all the changes current has been a dynamic, constantly evolving process, said Larry Goldbrum, general counsel of the Spark Institute. Goldbrum said his group is coordinating the updates, with help from fund companies and plan sponsors. He characterizes the newest version as v. 1.04. 'The general consensus is that we have to set a standard,' he said. 'We wanted to create best practices that are flexible, so that service providers and aggregators can provide the services they want to.'" (Financial Planning)
New Evidence on 401(k) Borrowing and Household Balance Sheets (PDF)
34 pages. Excerpt: "[w]e find that many loan-eligible households carry relatively expensive consumer debt that could be more economically financed via 401(k) borrowing. In the aggregate, we estimate that such households could have saved as much as $5 billion in 2007 by shifting expensive consumer debt to 401(k) loans. This would translate into annual savings of about $275 per household -- roughly 20 percent of their overall interest costs -- with larger reductions for households that carry consumer debt at high interest rates or who hold larger 401(k) balances. We posit that households might utilize 401(k) loans less than expected due to risk-aversion, self-control problems, and confusion about the potential gains, and suggest better financial education that clarifies the conditions under which 401(k) borrowing is advantageous. Finally, we note that allowing households to repay 401(k) loans gradually even after separation from their employers could improve household welfare by reducing the risks of 401(k) borrowing." (Federal Reserve Board)
Retirement Benefits Are the Last to Be Cut by Employers, According to Survey
Excerpt: "The 10th Annual Transamerica Retirement Survey found that while nearly half of U.S. employers surveyed had undertaken cost-cutting measures such as layoffs and salary freezes, relatively few had changed retirement benefits. Only 10% of employers surveyed indicated they reduced or eliminated retirement benefits in the past 12 months, compared to 39% that have implemented layoffs or downsizing, 23% that reported frozen salaries, and 20% that eliminated bonuses, according to a press release." (PLANSPONSOR.com; free registration required)
Use of Asset Allocation Funds Helps Participants Diversify, According to Vanguard Data
Excerpt: "The fact that 20% of participants in defined contribution plans administered by The Vanguard Group invested their entire nest eggs in an asset allocation fund at year-end 2008 helped shield the participants from the market's turmoil during the year, new Vanguard research indicated." (PLANSPONSOR.com; free registration required)
A Report on Vanguard 2008 Defined Contribution Plan Data (PDF)
84 pages. Excerpt: "In this annual publication, we update our analysis of defined contribution plans and participant behavior based on 2008 Vanguard recordkeeping data. In 2008, the U.S. stock market experienced its largest calendar-year decline since the 1930s, and investors were subjected to exceptional market volatility throughout the year. We are pleased to report that overwhelmingly participants 'stayed the course' in 2008. By and large, Vanguard participants did not abandon their equity holdings and they continued to save for their retirement." (The Vanguard Group, Inc.)
California Governor Wants to Revamp Battered Public-Worker Pension Programs
Excerpt: "Gov. Arnold Schwarzenegger is taking aim at what he calls California's next great fiscal problem: the state's battered pension system. Reviving an idea he floated during budget negotiations in June, Schwarzenegger wants legislation creating a two-tier system that would deliver lower benefits to newly hired public employees - not only state workers but firefighters, police officers, teachers, and other local-government employees. Along with proposed cutbacks in retiree health benefits, Schwarzenegger says, the plan would save $90 billion over the next 30 years." (The Sacramento Bee)
Plan Sponsors Find Wrap Capacity for Stable-Value Funds Has Evaporated
Excerpt: "'The marketplace for wrap coverage has completely dried up,' said Edward Lilly, executive director of the $7.9 billion, Albany-based New York State Deferred Compensation Plan, at a conference in New York late last month. Lilly, who was not available for an interview, noted the plan had recently hired a new stable-value manager but was still negotiating with wrap providers. 'It's very difficult to get wrap capacity right now,' he said, 'and it's more difficult than in the past to bring a new manager on.'" (Workforce Management; free registration required)
Some N.Y. Lawmakers Take Pensions on Top of Pay
Excerpt: "Most people who have a traditional pension put in years or decades of work at a job, then retire, leave the job and begin collecting monthly pension payments. Some companies do allow double dipping, though the practice has most likely declined during the recession and federal rules impose more restrictions on corporate pension funds. In Albany, veteran lawmakers can 'retire' at 65 from their jobs and start collecting pensions, but without actually leaving their jobs, giving up their salaries or even telling their constituents. Four legislators took advantage of the rule last year." (The New York Times; free registration required)
The DB(k): The Pension of the Future
Excerpt: "An attractive new option for employer sponsored retirement plans becomes available next year. The 'DB(k)' offers businesses with 500 or fewer employees an opportunity to provide a strong retirement plan for their employees with fewer hassles and less financial drain than a traditional pension plan. The DB(k) melds a 401(k) savings plan with a small guaranteed income stream. 'You take the best of the defined benefit concept and put it together with a 401(k) plan,' says Lynn Dudley, senior vice president for policy with the American Benefits Council." (The Kiplinger Washington Editors)
DATAIR Employee Benefit Systems, Inc. (Advert.)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]Corporate Governance Reform: Top 10 Suggestions to Help You Prepare for the 2010 Proxy Season
Excerpt: "The NYSE has already made changes to its broker discretionary voting rules. The SEC has proposed rules addressing proxy access, executive compensation and corporate governance disclosures. Congress also has one bill that was introduced in the Senate and two bills in the U.S. House, one of which has already passed and been sent to the Senate that deals with corporate governance topics. In the next few months, companies should start thinking about how they will respond to these various proposals if they become law. [The target page presents a] top 10 list of what you can do now to begin preparing for the 2010 proxy season." (McGuireWoods LLP)
Risk in Executive Compensation (PDF)
4 pages. Excerpt: "In the past, the management of risk generally was lodged in the audit committee or the full board. As a result of the current focus on the impact of incentives on behavior, compensation committees will need to evaluate executive compensation in a new light and address the age-old linkage between risk and reward." (Hay Group)
10th Annual Transamerica Retirement Survey (PDF)
134 pages. Excerpt: "Relative Importance of Various Employee Benefits[:] Employers believe health insurance is the most important benefit to employees, followed by employee-funded retirement plans, life insurance, and disability insurance. Long-term care insurance is less likely to be seen as important. Most benefits are more likely to be considered important to employees by large employers than by small employers. The exceptions are health insurance and company-funded pension plans which hold equal importance between large and small employers. Consistent with previous years, two-thirds of all employers believe pension plans are important to employees. However, since 2007 fewer large employers feel pension plans are important to their employees. Additionally, there is an increase in the percentage of large employers who are unsure of the importance of these plans." (Transamerica Center for Retirement Studies)
Webcasts and Conferences
Driving New Product Innovation in Health Plans WebcastNationwide on September 15, 2009
presented by Global Media Dynamics
Severance Plans Regulated by ERISA and Section 409A Webcast
Nationwide on September 1, 2009
presented by Trucker Huss
(Click to post your webcast or conference)
Press Releases
PBGC Protects IndyMac Bank F.S.B. Pension PlanPension Benefit Guaranty Corporation (PBGC)
AmeriBen Utilizing Benefit Informatics Online Services for Client Health Plan Analysis and Reporting
Benefit Informatics
(Click to post your press release)
Employee Benefits Jobs
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