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Retirement Plans Newsletter

April 26, 2010

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This is the first conference designed by ERPAS for ERPAS! A one of a kind program developed from topic suggestions by current and potential ERPAs to provide practical solutions to the issues they face, the ERPA Conference offers up to 10.5 ASPPA, ERPA, JBEA and NIPA CPE credits, Ethics CPE credit, access to top speakers from the IRS, and networking with colleagues and fellow ERPAs.

For more details and registration, visit today!

Sponsored by ASPPA

[Guidance Overview]
Jones v. Harris Associates: Supreme Court Allows for Limited Court Review of Investment Adviser Fees
Excerpt: "Thus, under the standard expressed by the Court, a fee may be determined to be excessive, even if negotiated and approved by the board, but only if evidence establishes that the fee is so disproportionately large that it bears no relationship to the services rendered and could not have been the product of arm's length bargaining."
(Wolters Kluwer)

[Guidance Overview]
Deferential Standard of Review Continues to Apply After Plan Administrator's Initial Interpretation Ruled Unreasonable
Excerpt: "EBIA Comment: The Court's reinforcement of the deferential standard of review under these circumstances is good news for plan administrators. The dissenting opinion, however, expressed concern that the decision will encourage ambiguous plan terms and aggressive, 'employer-favorable' interpretations."
(Employee Benefits Institute of America)

[Guidance Overview]
Supreme Court Affirms Plan Administrators' Interpretations of Plan Document Must Receive Deference
Excerpt: "The Court's broad pronouncement that providing deference to plan administrator interpretation supports ERISA's 'guiding principles,' even after an erroneous interpretation of the same or similar plan terms, should serve to further solidify the correctness of an arbitrary and capricious standard of review where the plan terms grant an administrator the power to interpret a plan's terms."
(McDermott Will & Emery)

Biggest Long-Term Threat to Illinois's Financial Health: The Shortfall of at Least $61 Billion in Pension Funding
Excerpt: "To date, the state has provided only about 54 percent of the money necessary to meet its projected long-term obligations, according to a study by the Pew Center on the States. But economists who have studied the state's figures say Illinois's true obligation to retirees most likely is far larger than official estimates."
(The New York Times; free registration required)

IRS 403(b) Plan Update Phone Forum: April 30, 2010
Excerpt: "The 403(b) presentation will cover the past, present, and near future of 403(b) plans [followed by a brief recap of] the more significant changes brought about by the final regulations including a discussion of the written plan document requirement for 403(b) plans. [There will also be a discussion of] the upcoming Pre-approved Plan program that will, for the first time, allow 403(b) eligible employers to adopt prototype or volume submitter plans that receive an opinion letter or advisory letter, respectively, from the Service."
(U.S. Internal Revenue Service)

Minding the 401k Gaps
Excerpt: "Brooks Hamilton the well-known ERISA attorney, as a result of his decades of work with pension plans, describes three types of gaps or what he calls 'yield disparities'. There are at least 5 other gaps, all of which hurt the opportunity for employees to have meaningful future retirement income."

The Five Illinois State Retirement Systems Are, on Average, Only 38.4 Percent Funded
Excerpt: "A plan to pay down this massive liability passed in 1995, championed by the Republicans who controlled state government at the time. But it's by no means a quick fix. It put the state on a 50-year payment plan that would result in the pension systems being 90 percent funded in 2045."
(Daily Herald)

Mississippi Proposal Would Increase State Worker Contributions to Pensions
Excerpt: "The Jackson Clarion-Ledger reports that under the proposal, government workers would have an additional 1.75% of pay taken from their checks to fund their retirement accounts."

ERISA Class Action Suit Filed Against Publishing House of Evangelical Lutheran Church in America
Excerpt: " 'Plaintiffs allege that the Plan is not a 'church plan' exempted from ERISA and therefore the participants in the Plan should have the same protections ERISA extends to plan participants generally,' . . . ."

Proposed Legislation Threatens Florida Retirement System
See item #6. Excerpt: "[The defined benefit plan] is in serious jeopardy if the Florida Legislature makes changes that would make FRS participants 'gamblers' in the stock market without the requisite knowledge and skills to maximize their investments."
(Cypen & Cypen)

Discussion on Retirement Savings' Accumulation, Decumulation, and Distribution
Excerpt: "In the early-2000s, the financial industry was slow to address the growth potential of the transition from accumulation to decumulation. Consensus naming conventions reflect this slowness of adaptation. Accumulation is a consensus naming convention, so are the words: investment management, investment management professional, investment advisor, and asset allocation. On the other hand, decumulation and distribution do not feel like consensus naming conventions because research shows that many retirees are net savers and the word 'distribution' can be confused for what the sales channels do."
(Research Magazine)

Conkright v. Frommert: The Justices Make Mistakes
Excerpt: "Lost in our jurisprudence is what the Chief Justice apparently thinks is ERISA's secondary purpose: making sure participants receive the benefits that they are promised or, I would add, the benefits which they reasonably understood they were promised. That's why plans are supposed to be in writing and summarized fairly in SPDs."
(Pension & Benefits Blog)

Target-Date Fund Glide Paths: Dissecting the 'To Versus Through' Debate
Excerpt: "'A critical factor in glide path design is recognizing that most pre-retirees and recent retirees still have the ability to alter their retirement plans -- though far less than younger investors -- if absolutely necessary. And even after the age of 72, investors should still have modest exposure to equities in their target-date funds to diversify their portfolios and help them realize their long-term goals,' . . . ."
(The Vanguard Group, Inc.)

Now that we’re emerging from the economic downturn, it’s time to look back at how American companies managed 401(k) plans and retirement investing. We believe this year’s survey will uncover trends for the future and provide a collective set of lessons based on how we managed through this tumultuous past year.

To participate in this online survey, click here. The deadline for responses is May 7, 2010. All responses will remain confidential and won’t be associated with you in any way.

Executive Compensation; Benefits in General

[Guidance Overview]
2010 ERISA Expanded Reporting and Disclosure Requirements Calendar
27 pages. Excerpt: "The [calendar] provides who-what-when-where reporting and disclosure information for single-employer pension and welfare plans under ERISA. Plan administrators can access concise instructions for filing reports with the Department of Labor, IRS and Pension Benefit Guaranty Corporation, and for disclosing tax and benefit information . . . ."
(Towers Watson)

What a Difference a Day Makes, or Does It? Work/Family Balance and the Four-Day Work Week
Excerpt: "This Article considers the growing reliance that four-day work week advocates have placed on work/family claims. It begins by analyzing whether a compressed work schedule may alleviate work/family conflicts, and more importantly, for whom such benefits are most likely to accrue. While studies consistently find that many workers experience lower levels of work/family conflict when working a compressed schedule, the research also suggests that workers with the most acute work/family conflicts may be the least likely either to obtain or to benefit from a four-day work week design."
(Social Science Research Network)

No Mere Perk: Flex-Work as a Strategic Tool
Excerpt: "Researchers say flexibility is a critical but overlooked factor in making work work. An award program seeks to recognize firms who achieve strategic results with the use of flexible work."
(Workforce Management; free registration required)

Incentive Plans Are of Continued Importance, According to Survey
Excerpt: "Over the past decade, incentive plan designs have become more consistent within organizations. As more companies offer a single annual plan for both executives and other employees: More companies are altering their eligibility requirements. Executive-only incentive plans are now in the minority. The most common eligibility factor is salary grade or band -- not position title, reporting relationship or officer status as in the past."
(Towers Watson)

Webcasts and Conferences

8th Annual Employee Benefits Symposium: The Future of Employer Provided Health Benefits
in Illinois on April 29, 2010
presented by The Center for Tax Law and Employee Benefits at The John Marshall Law School in Chicago

DOL Correction Programs
Nationwide on May 26, 2010
presented by National Institute of Pension Administrators

Pension Tour Live Seminar
Nationwide on May 3, 2010
presented by Executive Benefits Design Group

Your Service May Be A Commodity. That Doesn't Make Your Business One
Nationwide on May 20, 2010
presented by National Institute of Pension Administrators

Press Releases

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