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Retirement Plans Newsletter

May 5, 2010

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[Guidance Overview]
Title IV Basics: The Plan Termination Insurance Program (PDF)
7 pages. Excerpt: "Title IV of [ERISA] describes the plan termination insurance program that covers defined benefit pension plans. [This article] outlines the basics of plan termination and liability . . . including liability for the PBGC termination premium."
(Groom Law Group)

Is More Funding Relief on the Way for DB Plans?
Excerpt: "[T]here are those on Capitol Hill who wouldn't be surprised if the House passed . . . funding relief by late spring."
(The Vanguard Group, Inc.)

Retirement Income: Challenges for Ensuring Income Throughout Retirement
Excerpt: "One key decision for many retirees is to choose between continuing to manage self-directed investment balances and using all or a part of the balance to purchase an annuity that would provide income for the remainder of their lives."
(U.S. Government Accountability Office)

Current Retirement Income Options Have Drawbacks, According to GAO
Excerpt: "Following the deadline for responses to the Department of Labor and Treasury Department's Request for Information on lifetime income options in retirement plans, the Government Accountability Office has issued a letter detailing its findings on options outside of retirement plans."
(PLANSPONSOR.com)

2010 ERISA Advisory Council to Study Audit Requirement and Financial Reporting Model Contained in ERISA §§ 103 and 104 (PDF)
5 pages. Excerpt: "The objective of this study is to identify what actions, if any, the Secretary of Labor may take with respect to ERISA's audit requirement and financial reporting model to improve the Department of Labor's oversight . . . ."
(U.S. Employee Benefits Security Administration)

PBGC's 2009 Annual Report (PDF)
83 pages. Excerpt: "PBGC's financial condition declined by $10.8 billion, due largely to an increase in plan terminations and an unfavorable change in interest factors used to value PBGC's liabilities. The Corporation reported a year-end deficit of $21.9 billion, as compared with the $11.2 billion deficit reported at the close of FY 2008."
(Pension Benefit Guaranty Corporation)

Pension Fund Cleared to Sue Ratings Firms
Excerpt: "[The California Public Employees' Retirement System] sued Standard & Poor's, Moody's Investors Service and Fitch Ratings, saying that their faulty risk assessments on structured investment vehicles caused $1 billion in losses."
(Bloomberg via The New York Times; free registration required)

401(k)s Won't Fully Fund Worker Retirement, According to Survey
Excerpt: "Only 19 percent of employers have a top priority of providing employees with the financial ability to retire. Just 10 percent of the employers in the survey project each employee's retirement income and compare it to their expected retirement needs."
(U.S. News & World Report)

Many Alternatives to Annuities, Advisers Say
Excerpt: "Jeffrey G. Cribbs, president of Chicago Wealth Management Inc. . . . championed the use of a long-term, simple moving average to decide when to increase or decrease allocation to the markets to help dodge large losses."
(Investment News; free registration required)

U.S. House Republicans Warn Against Altering 401(k) Tax Breaks
Excerpt: "Republican lawmakers are concerned that implementation of 'guaranteed retirement accounts' could mean favorable tax breaks designed for 401(k)-type plans would be eliminated, and those funds would in turn be used to offset costs associated with the creation of GRAs."
(Dow Jones & Company, Inc.)

GOP Group Opposes Administration Proposals for Retirement Plans
Excerpt: "The House GOP Savings Recovery Solutions Group . . . oppose[s] proposals that would affect private-sector defined contribution retirement plans [and took issue with] the creation of so-called 'Guaranteed Retirement Accounts, (GRAs)' which would provide for protection from 'inflation and market risk' and potentially 'guarantee a specified real return above the rate of inflation' - presumably at taxpayer expense."
(PLANSPONSOR.com)

15.7 Times Final Pay Needed for Retirement Readiness, According to Hewitt Study
Excerpt: "A Hewitt news release said Social Security is expected to provide 4.7 times final pay, leaving employees responsible for accumulating the remaining 11 times final pay from other sources such as company-provided plans and personal savings."
(PLANSPONSOR.com)

[Opinion]
401(k) Fees That Shouldn't Matter
Excerpt: "The DOL's draft Investment Advice Rule . . . states investment advice should emphasize fees over past investment performance. Unfortunately, the draft does not distinguish between fees that matter and fees that shouldn't matter."
(Pandamensional Solutions, Inc.)

[Opinion]
American Academy of Actuaries Responds to DOL/Treasury Request for Information on Lifetime Income Options (PDF)
21 pages. Excerpt: "[W]e have limited our responses to those where we believe that the actuarial profession provides a unique perspective or has particular knowledge related to a specific topic addressed in the RFI."
(American Academy of Actuaries)

[Opinion]
American Benefits Council/ACLI/ICI Comment Letter to DOL/EBSA on Proposed Investment Advice Regulations (PDF)
6 pages.
(American Benefits Council, American Council of Life Insurers, and the Investment Company Institute)

[Opinion]
MetLife's Comments on Request for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans (PDF)
41 pages. MetLife's response includes policy recommendations to encourage employers to offer guaranteed lifetime income in defined contribution plan and encourage individuals to choose lifetime income products. It also proposes recommended tax law changes to further facilitate annuitization. Finally, the response suggests ways to facilitate the use of in-plan accumulation annuities.
(MetLife)

[Opinion]
SPARK Institute's Comments on Request for Information Regarding Lifetime Income Options (PDF)
38 pages; presents very useful, focused answers to the particular questions poised by the agencies in their request for information.
(The SPARK Institute, Inc.)




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Webcasts and Conferences

What Health Reform Means For Plan Sponsors and Businesses
Nationwide on May 19, 2010
presented by National Institute of Pension Administrators


Press Releases

ASPPA Issues Comment on Lifetime Income Options
American Society of Pension Professionals & Actuaries (ASPPA)

ASPPA Responds to DOL Investment Advice Regulations
American Society of Pension Professionals & Actuaries (ASPPA)


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