Retirement Plans Newsletter |
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| November 12, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
NTSAA (Advert.)
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[Guidance Overview]
Contributions of the Value of Unused Leave Time to Retirement Plans
Excerpt: "Even those employers with no interest in adopting a leave time contribution strategy should nevertheless take this opportunity to review the compensation definitions used by their retirement plans to ensure that they are consistent with current law. For example, permitting elective deferrals from severance amounts paid after the termination of employment is no longer permitted under current regulations. Employers should also periodically verify that their payroll systems are correctly capturing the amounts required by each of the compensation definitions included in their retirement plans. In addition, employers should take this opportunity to confirm that their leave policies are compliant with applicable state law." (Pillsbury Winthrop Shaw Pittman LLP)
[Guidance Overview]
Massachusetts High Court Rules That ERISA Preempts a Claim Based on Unjust Enrichment
Excerpt: "The Court noted [two reasons] for concluding that Hitachi's claim is preempted by ERISA. [The second is that in] enacting ERISA, Congress intended to provide a comprehensive remedial scheme that would serve as the exclusive enforcement mechanism for ERISA disputes. This scheme provides strong evidence that Congress did not intend to authorize the remedies that it simply did not incorporate in the statute. A remedy based on a claim of unjust enrichment-as opposed to certain claims for restitution- is not one of the remedies included in the statute. Having concluded that ERISA preempts Hitachi's claims for two reasons, the Court affirmed the lower court's dismissal of the case." (ERISA Lawyer Blog)
Many Workers Will Outlive Retirement Savings, According to Survey Report
Excerpt: "When it comes to their retirement, 50-somethings seem to be in a state of denial about how long their retirement savings will last, according to a new study. Although the recent economic downturn has forced pre-retirees ages 50 to 59 to consider working years longer than they had hoped, their current rate of savings is unlikely to fund the retirement lifestyles they expect, according to the fifth annual Retirement Fitness Survey from Wells Fargo & Company. Only 23 percent of pre-retirees are saving more for retirement than they were a year ago, the survey found. Fifty-seven percent are saving the same amount, and 20 percent are now saving less. Sixty-seven percent say their expectations for retirement have changed in the past year, and 56 percent now expect to work longer by an average of three additional years. Overall, the financial positions and savings habits of this group are insufficient to last for their expected 20-plus years of retirement." (WebCPA.com via On Wall Street and SourceMedia, Inc.)
Best Buy Finds Social Networking and 401(k)s Can Be a Good Fit
Excerpt: "As employers continue to struggle with getting younger workers interested in saving for retirement, social networking seems like a no-brainer, says George Thomas, a principal who leads the communication practice at Mercer. 'You can feel the momentum,' he says. 'HR is looking at it in terms of how social networking can be used to engage people and as a medium to communicate with them.' That's not to say there aren't significant concerns among employers about offering social networking sites to employees, let alone using them to communicate about retirement savings. A roadblock for many companies is the idea of allowing employees to talk freely in an online forum for all other employees to see, says Sam Templeton, a communications consultant with Watson Wyatt." (Workforce Management; free registration required)
Vanguard's Perspective on Defined Benefit Plans
Excerpt: "Many employers have reacted to the challenging environment for defined benefit (DB) plans by closing or freezing their plans. But Vanguard believes DB plans can be an effective part of an overall retirement plan strategy, especially when thoughtfully combined with a defined contribution (DC) plan. In a new white paper, Vanguard provides insight into creating sustainable DB plans and integrating them into retirement programs that can meet the needs of both employers and employees." (The Vanguard Group, Inc.)
Practice Note on Current and Emerging Practices in Selection and Documentation of Mortality Assumptions for Pensions (PDF)
Excerpt: "Measurements of defined benefit pension plan obligations include calculations that assign plan costs to time periods, actuarial present value calculations, and estimates of the magnitude of future plan obligations. This practice note does not apply to individual benefit calculations or individual benefit statement estimates. The application of the information contained herein is intended to cover qualified and non-qualified plans, and governmental and non-governmental plans where the actuary is subject to ASOP No 35. This note may be used when setting assumptions, or providing advice on setting assumptions, for funding (where permitted by law) and for financial accounting." (American Academy of Actuaries)
Practice Note on Selecting and Documenting Other Pension Assumptions (PDF)
Excerpt: "This practice note was prepared by the Pension Committee ('Committee') of the American Academy of Actuaries. It provides information to actuaries on current and emerging practices in the selection and documentation of certain actuarial assumptions for measuring obligations of defined benefit pension plans. . . . Measurements of defined benefit pension plan obligations include calculations that assign plan costs to time periods, actuarial present value calculations, and estimates of the magnitude of future plan obligations. . . . The application of the information contained herein is intended to cover qualified and non-qualified plans, and governmental and nongovernmental plans. This practice note may be used when setting or providing advice on funding, where permitted by law, and financial accounting assumptions." (American Academy of Actuaries)
Updated Summary of Leading Single Employer Funding Relief Proposals (PDF)
35 pages. Excerpt: "On June 24, 2009, the House Education and Labor Committee approved H.R. 2989 (as amended), the 401(k) Fair Disclosure and Pension Security Act of 2009, which was introduced by Representative George Miller (D-CA), Chairman of the Committee. The bill included provisions affecting defined benefit plan funding. On October 27, 2009, Representatives Earl Pomeroy (D-ND) and Pat Tiberi (R-OH), Members of the Ways and Means Committee, introduced a funding relief bill, the Preserve Benefits and Jobs Act of 2009 (H.R. 3936). This bill follows in most respects a discussion draft released by Representative Pomeroy on August 27, 2009. On April 22, 2009, House Minority Leader John Boehner (R-OH) introduced H.R. 2021, which included funding proposals. This chart summarizes the single-employer funding proposals in the bills. The new aspects of the Pomeroy/Tiberi bill, as compared to the Pomeroy discussion draft, are in bold." (American Benefits Council)
Caterpillar Suit Could Result in Lower 401(k) Fees As Company Agrees to Investor-Friendly Changes
Excerpt: "In the war over hidden and excessive 401(k) fees, investors may have won a battle in Illinois. Caterpillar . . . has agreed to settle a class action alleging that employees and retirees in its 401(k) plans were overcharged by potentially millions of dollars. If a federal judge and independent fiduciary approve the deal the parties struck, Caterpillar will pay $16.5 million to settle the case. More importantly, it has agreed to make changes to its 401(k) plan that could potentially save employees millions of dollars. More important still, it may set a precedent for other companies to follow." (Forbes)
Best Practices for Retirement Plan Investment Fiduciaries (PDF)
20 pages. Excerpt: "This paper outlines six 'Best Practices' for plan sponsors of allocated defined contribution plans as they seek to meet their fiduciary responsibilities concerning investments." (Securian Retirement)
Double Dippers May Cost Utah Public Retirement System $900 Million in Coming Decade
Excerpt: "A state audit recommends the Legislature do away with double dipping by public employees, a practice in which retired workers go back to work and collect their salary and pension. Auditors reported Wednesday that the practice would cost the pension fund covering public employees nearly $900 million over the coming decade. 'It seems the Legislature has opened these doors,' said House Speaker David Clark, R-Santa Clara. 'I don't know that we should be surprised when we create that significant financial incentive that people are taking advantage of it. ...There needs to be and should be significant changes.' Auditors recommended legislators change Utah's law to suspend the pension of any retiree who returns to work for the state or municipal work force until the employee ultimately retires. But it's unclear if the state can change the rules for those who already have retired and been rehired into the system." (The Salt Lake Tribune)
Colorado Public Employees' Retirement Association Officials Disclose Plan to Fix Pension Fund
Excerpt: "Employees, employers and retirees of the Colorado Public Employees' Retirement Association will be required to make financial concessions as part of a plan being recommended to the lawmakers as a way to help fix the ailing pension program. . . . The recommendation, approved by the PERA board in October, will require a gradual increase in employee and employer contributions over a four-year period. It also will put a cap on the cost-of-living adjustment for all retirees, members and inactive members. The plan, being dubbed '2/2/2 Plus' will be presented to the Legislature for its consideration during the upcoming session." (The Pueblo Chieftain)
Legislation May Nudge Plan Sponsors to Reconsider Annuities, but What About Participants?
Excerpt: "The market's recent plunge likely frightened more Americans into a willingness to consider putting at least some of their 401(k) assets in a retirement-income product at retirement. 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)
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Links to Items on Executive Comp, Benefits in General
[Guidance Overview]California Supreme Court Upholds Forfeiture of Incentive Compensation (PDF)
4 pages. Excerpt: "In a closely watched case involving the Smith Barney Capital Accumulation Plan, the California Supreme Court has ruled unanimously that state law does not prohibit an employer from forfeiting an employee's incentive compensation when the employee quits or is terminated for cause before the date that the compensation vests. Schachter v. Citigroup, Inc., No. S1611385, 2009 Cal. LEXIS 11056 (Nov. 2, 2009). But in dicta, the court suggested an exception to its ruling: If an employee is terminated without cause, then the employee still may be entitled to a pro rata share of the compensation at issue. The court did not elaborate on what would constitute 'cause' in this context, whether the reason for the termination would make a difference, or whether an express provision in the incentive-compensation plan would eliminate the potential exposure. It therefore is unclear how far this exception may go." (Paul, Hastings, Janofsky & Walker LLP)
[Guidance Overview]
Contractual Basis of Incentive Compensation Re-Emphasized: Restricted Stock in Lieu of Cash Wages Can Be Forfeited by Resignation in California
Excerpt: "In Schachter v. Citigroup, Inc., the California Supreme Court rejected claims that an incentive plan that conditioned the earning of restricted stock based on continued service was unlawful where the employee voluntarily elected to participate in the plan, and the employee quit before the date on which the incentive was earned. The plan was lawful even though the incentive plan was funded from wages that the employee would have otherwise received in cash. With this decision, the California Supreme Court joined the courts of six other states that had concluded the Citigroup Capital Accumulation Plan complied with each state's respective wage payment laws." (Littler Mendelson P.C.)
Performance-Based SERPs: An Alternative Approach to Executive Benefits
Excerpt: "Simply stated, a performance-based SERP places one or more performance conditions on an executive's accrual of benefits. SERPs are extremely flexible; there are many ways to design such a plan and various performance conditions that can be appropriate. Described [in the target document] are some plan design features that an employer may wish to consider for a performance-based SERP." (Hay Group)
Work Ability and the Social Insurance Safety Net in the Years Prior to Retirement
Excerpt: "A patchwork of public programs -- primarily Social Security Disability Insurance (DI), workers' compensation, Supplemental Security Income (SSI), and veterans' benefits -- provides income supports to people unable to work. Yet, questions persist about the effectiveness of these programs. This report examines the economic consequences of disability for a sample of Americans observed from age 51 to 64. The results underscore the precarious financial state for most people approaching traditional retirement age with disabilities." (Center for Retirement Research at Boston College)
Webcasts and Conferences
Annual Legal Updatein Illinois on December 2, 2009
presented by WEB - Chicago Downtown
New Roth Conversion and Portability
Nationwide on December 9, 2009
presented by McKay Hochman Co.
(Click to post your webcast or conference)
Press Releases
Lincoln Financial Joins Benefit Advisors Network's Alliance PartnershipBenefit Advisors Network
Great-West Retirement Services Appoints Two To Regional Sales Director Positions In New Jersey
Great-West Retirement Services
Safeway and Health Action Council Ohio Honored by NBCH for Value-Based Purchasing Leadership
National Business Coalition on Health
Group Health Cooperative and UnitedHealthcare Recognized by NBCH for Programs that Improve Health and Health Care
National Business Coalition on Health
The Vitality Group Adds Fitbug Fitness Measurement to Vitality™ Program
The Vitality Group
(Click to post your press release)
Employee Benefits Jobs
Director Of Operationsfor National Leader in the Employee Benefits Management Industry
in AZ
Group Retirement Wholesaler
for Ohio National Financial Services
in CA, TX
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EmployeeBenefitsJobs.com (Sponsor)
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