Retirement Plans Newsletter |
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| October 13, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Claim for Fiduciary Breach Can't Rest on Oral Statements Altering Plan Terms, Appeals Court Rules
Excerpt: "A claim for breach of fiduciary duty cannot be based on oral statements that would alter an ERISA plan document, the US Second Circuit Court of Appeals has ruled (Ladouceur v. Credit Lyonnais). Participants were allegedly told that pension accruals after a company merger would take into account pre-merger service, when in fact accruals were based solely on post-merger service. Since an oral statement cannot change the written terms of an ERISA plan, the court reasoned, 'we see no reason to give the statement effect by re-characterizing it as a breach of fiduciary duty.'" (Mercer LLC)
[Guidance Overview]
Court Finds No ERISA Violation for Cash Balance Plan with Interest Credits Tied to Asset Performance
Excerpt: "Where a cash balance plan's interest credits are based on the plan's actual investment returns, investment policy changes that result in lower returns do not violate ERISA's anti-cutback rules, a federal court in Wisconsin has ruled (Thompson v. Ret. Plan for Employees of S.C. Johnson). The plan credited participants' accounts with interest equal to 75 percent of actual returns (with a 4 percent floor). The court concluded participants have no protected right 'to any particular investment policy decision or particular mix of investments,' so no reduction in accrued benefits occurred." (Mercer LLC)
[Guidance Overview]
Defined Benefit Plans Must Make Required Payments (PDF)
3 pages. Excerpt: "This information applies to sponsors of qualified defined benefit plans, including governmental plans and non-electing church plans. . . . All qualified plans must begin making payments, called Minimum Required Distributions (MRDs), by a participant's required beginning date (RBD). Most defined benefit plans begin making pension payments at a participant's RBD, rather than making just a MRD payment. However, MRD rules do apply and may be most notable when an employee earns additional benefits after reaching his RBD." (Prudential Retirement)
[Guidance Overview]
Court Dismisses Company Stock Suit against Harley-Davidson
Excerpt: "The U.S. District Court for the Eastern District of Wisconsin has dismissed a lawsuit accusing Harley-Davidson and certain of its executives of breaching their fiduciary duties under the Employee Retirement Income Security Act (ERISA) by continuing to offer company stock as an investment option in the company's retirement plans. After first determining that former employee Lisa Bosman had standing to sue even though she had cashed out her retirement plan account, Chief U.S. District Judge C. N. Clevert, Jr. said that 'Stating a valid claim of imprudence under these circumstances requires more than allegations that there were gaps between supply and demand and a corresponding bad quarter.'" (PLANSPONSOR.com; free registration required)
New IRS Retirement Plan Navigator Aims to Help Small Businesses
Excerpt: "The Internal Revenue Service has created a new Web-based tool to help small business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance. The IRS Retirement Plan Navigator is intended to provide employers with an easy-to-use guide that focuses on three areas: choosing a plan, maintaining a plan and correcting a plan." (Internal Revenue Service)
California Governor Signs Two-Tier Pension Law for Orange County, CA
Excerpt: "Gov. Arnold Schwarzenegger signed legislation late Sunday night that paves the way for a new two-tiered pension plan for county employees in Orange County, a move that county officials say will help reign in skyrocketing pension costs here. Under the plan current employees get to decide whether to keep their old benefits, or select a hybrid plan that features a reduced pension but also a defined contribution component, similar to a 401K. New employees will also get to choose between the two plans." (Orange County Register Communications)
Pensions and Corporate Financial Performance Are Intricately Linked (PDF)
20 pages. Excerpt: "To assist companies in navigating through these [financial] issues, Towers Perrin has developed this publication to update our 2003 guidebook, Pensions and Corporate Financial Performance -- Keeping Your Eye on the Ball. This new edition reflects the many changes that have since occurred in the environment of pension plan management. In addition, an upcoming companion publication will delve into more detail in each of the policy areas discussed here, focusing on specific actions that can be taken in these areas to achieve policy goals." (Towers Perrin)
[Opinion]
Investing in an Era of Irrelevant Regulation
Speech by Edward Siedle at Sage Advisory Services 'Perspectives on the Future' conference, Austin, Texas, September 2009. Excerpt: "For decades, the advice investors got from Wall Street was hardly independent and the products marketed were generally high cost, as well as poor performing. This massive transfer of assets to brokers and money managers was good for them; not so good for investors. The investigations my firm has undertaken on behalf of institutional investors over the years reveal that when you scrutinize financial products and services and identify conflicts of interest and hidden financial dealings, you can predict poor performance. We've investigated investment consultants; 401k, 403b and 457 defined contribution plans; variable annuities; hedge funds and funds of funds and funds of funds of funds." (Benchmark Financial Services, Inc.)
[Opinion]
Did a Unanimous Supreme Court Misread ERISA, Misread the Court's Precedents, Undermine Basic ERISA Principles, and Encourage Benefits Litigation?
Excerpt: "In Kennedy v. Plan Administrator of the DuPont Savings and Investment Plan (the 'Kennedy Decision'), a unanimous Supreme Court appeared to proclaim a 'bright-line rule' that plan documents determine benefit distribution rights. However, by misreading ERISA and its own precedents, the Supreme Court needlessly undermined basic ERISA principles with respect to the determination and the protection of ERISA benefit entitlements, the coverage of the prohibition on the alienation of pension benefits (the 'Alienation Prohibition') and the rules pertaining to QDROs." (Social Science Research Network)
ASPPA (Advert.)
Attention all Retirement Plan Professionals! The 2009 ASPPA Annual Conference (November 1 – 4) is bigger and better than ever. Join 1,600 of your peers at the exquisite Gaylord National Resort and Conference Center on the historic Potomac River. Take advantage of over 60 interactive workshops presented by nationally renowned experts and top practitioners from all facets of the retirement plan industry, including representatives from the IRS and DOL. Advance your knowledge. Enhance your credibility. Expand your network of like-minded professionals! This is the industry’s top venue for all retirement plan professionals - - with up to 24 hours of ASPPA CE credit, ERPA CPE credit and core/non-core JBEA credit hours for Enrolled Actuaries, including professionalism credits. In this rapidly changing environment, it’s never been more important to attend. Register today and stay at the top of your game! |
Links to Items on Executive Comp, Benefits in General
Executive Pay Reform: Beyond the Corporate and Financial Institution Compensation Fairness Act of 2009Excerpt: "Compensation committees serving public companies are facing unprecedented scrutiny as they react to recent executive pay reform efforts led by federal lawmakers and agencies, institutional shareholders and corporate governance watchdogs. Most recently, leaders of the G-20 endorsed reforms that, among other things, would curb bonuses at financial firms and grant regulators greater power over those firms' compensation practices. In this Q&A, Pillsbury Executive Compensation & Benefits partner Scott Landau explores the issues Compensation Committees of public companies must consider under the rapidly evolving landscape of compensation design and implementation." (Pillsbury Winthrop Shaw Pittman LLP)
DOL Rejects Bush Administration LM-2 Union Reporting Changes
Excerpt: "In a generally anticipated move, the U.S. Department of Labor's Office of Labor-Management Standards (OLMS) will publish a rule [today] rescinding the Bush administration's most recent changes to the LM-2 union report filed under the Labor-Management Reporting and Disclosure Act (LMRDA). This development confirms the Obama administration's interest in reducing the administrative burden on unions, and may signal the beginning of a focus shift to certain aspects of employer reporting under the LMRDA. In particular, many believe that OLMS will soon enhance scrutiny on employer and consultant reporting of so-called 'persuader' activity." (Morgan, Lewis & Bockius LLP)
Aligning Public Employee Benefits' Costs with the Fiscal Reality
Excerpt: "The boom days of the millennium decade's early years are over, but the now unsustainable benefits packages negotiated by California state and local governments and their employees remain - some representing as much as 40 percent of overall budget costs. Our discussions with local government managers and their advisors suggest a tremendous amount of confusion and misinformation about their ability to align employee benefits costs with their fiscal realities. This article discusses one source of much of the confusion - interpretations by California courts of the Constitutional prohibition against impairment of contracts - and why local governments have more latitude than they think." (Chang, Ruthenberg & Long PC)
Webcasts and Conferences
Aggregation Aggravation with Derrin Watson, Esq., APMin Ohio on October 20, 2009
presented by ASPPA Benefits Council of Cleveland
(Click to post your webcast or conference)
Press Releases
New IRS Retirement Plan Navigator Aims to Help Small BusinessesInternal Revenue Service (IRS)
Veteran Advisory Team Joins CAPTRUST Financial Advisors
CAPTRUST Financial Advisors
(Click to post your press release)
Employee Benefits Jobs
Benefits Managerfor Precision Castparts Corp.
in OR
ESOP Administrator-Nationwide
for Blue Ridge ESOP Associates
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Finance and Operations Manager
for City of Seattle
in WA
Consultant
for Boyce & Associates, Inc.
in AZ
Sales & Marketing; 401(k) / Qualified Plans Consulting / Fiduciary Oversight Services
for Fiduciary First
in FL
Plan Administrator
for The Newport Group
in FL
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