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Retirement Plans Newsletter

September 2, 2010

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Sponsored by SunGard

[Guidance Overview]
SEC's Proposed Revisions to Mutual Fund Distribution Fees and Disclosure (PDF)
7 pages. Excerpt: "The Proposal has widespread implications not only for mutual funds and their boards of directors and investment advisers, but also for broker-dealers and other financial intermediaries that sell fund shares or service fund shareholder accounts."
(Morgan, Lewis & Bockius LLP)

[Guidance Overview]
Fee Disclosure Regulation: DOL Provides Leverage for Plan Sponsors
Excerpt: "The Regulation thus shifts the balance of power between the plan fiduciary who is charged with understanding fees that its plans will pay and the service providers that generate those fees. Although a plan fiduciary retains responsibility if it uses plan assets to pay unreasonable fees, the Regulation enhances the fiduciary's ability to obtain the information it needs to determine reasonableness."
(Jones Day)

[Guidance Overview]
IRS Guidance for Employers Sponsoring Pre-Approved DC Plans That Missed EGTRRA Plan Document Deadlines
Excerpt: "The IRS explained that employers that adopt a restated plan document after April 30, 2010 may submit an application under the Voluntary Correction Program . . ., a component of the Employee Plans Compliance Resolution System . . . ."
(Wolters Kluwer)

[Guidance Overview]
SEC's New Rules to Facilitate Rights of Shareholders to Nominate Directors
Excerpt: "Some companies may challenge the SEC regarding these rules. Other companies may want to follow these challenges as they proceed through the legal process to determine if they should consider making amendments to their bylaws or formation documents regarding director nominations by shareholders and shareholder proxy access."
(Haynes and Boone, LLP)

[Guidance Overview]
Funding Relief for Single Employer Pension Plans (PDF)
Pages 1-3 of 6 pages.
(Trucker Huss)

[Guidance Overview]
New Retirement Plan Fee Disclosures: Getting Ahead of the July 16, 2011, Deadline
Excerpt: "Although the Schedule C fee reporting rules and the new fee disclosure regulations are similar, the disclosure and reporting requirements imposed by the fee disclosure regulations place significant new burdens on service providers to disclose the fees they expect to receive from retirement plans. In addition, plan sponsors must confirm that proper disclosures are made. Accordingly, both retirement plan sponsors and retirement plan service providers need to be prepared to identify, track and properly disclose compensation paid for services provided to retirement plans."
(Thompson Hine LLP)

[Guidance Overview]
GASB's Proposed Changes to Pension Accounting and Financial Reporting by Employers (PDF)
Pages 1, 3 of 4 pages.
(National Council on Teacher Retirement)

PSCA's 401(k) Day 2010
Excerpt: "PSCA's 2010 401(k) Day is an exceptional education campaign that will help plan sponsors and participants learn more about the benefits of saving for retirement in a 401(k) plan. Each component of the campaign features a series of valuable education and communication tools that can be customized with your own company name and logo."
(Profit Sharing / 401k Council of America)

Washington Mutual to Settle Stock Drop Suits for $49M
Excerpt: "[L]aw firm Keller Rohrback said the proposed settlement provides for a payment of $49 million, minus expenses including court-approved attorneys' fees and expenses and service awards to the plaintiffs who brought the lawsuit, taxes and other costs, to be allocated to class members whose 401(k) accounts suffered losses as a result of investing in Washington Mutual common stock."

State Pension Fund Faces Shortfall, Candidate for State Comptroller Says
Excerpt: "When the state takes its snapshot of the fund, he says, it makes several mistakes, including two big ones. First, it counts money that is not in the fund -- hoped-for investment gains that may or may not appear and future contributions from workers and taxpayers. Second, it does not take into account that the state pensions are worth more than other such promised money because they come with a constitutional guarantee."
(The New York Times; free registration required)

Industry Groups Weigh In -- Heavily -- on Fiduciary Provision
Excerpt: "Monday marked the last day the public could offer comments on whether the SEC should adopt a universal fiduciary standard for both investment advisers and broker-dealers -- a highly controversial proposition for those in the financial advice business."
(Investment News; free registration required)

2010 University of Michigan Retirement Research Center Conference Papers
'Retirement, Planning, and Social Security in Interesting Times."
(University of Michigan Retirement Research Center)

Top Vernon, California, City Attorneys Get Generous 'Public Safety' Pensions
Excerpt: "Vernon's top city attorneys, already among the highest-paid public employees in the state, have received an unusual pension deal under which they would get the same enhanced benefits as police officers and firefighters."
(Los Angeles Times)

What Matters Most? An Analysis of Investment Committee Hire/Fire Decisions
Excerpt: "Hiring investment managers is harder than firing them, according to Vanguard's second annual survey of investment committee members. At the same time, committees that find manager evaluation more difficult also have a significantly lower rate of manager turnover which, in turn, can reduce investment management costs."
(The Vanguard Group, Inc.)

The Towers Watson Retirement Attitudes Survey (PDF)
6 pages. Excerpt: "The survey found that: More than half of employees across all ages report significant declines in their savings over the last two years. Employee confidence in having enough savings to live comfortably in retirement has recovered from February 2009 levels, but remains well below pre crisis levels. While confidence is higher for those who participate in a defined benefit (DB) plan rather than a defined contribution (DC) plan, such as a 401(k), more younger employees are beginning to express concerns about their DB plans."
(Towers Watson)

SEC's Cease-and-Desist Order Against State of New Jersey Relating to Disclosure Regarding Pension Plan Obligations
Excerpt: "This alert focuses on lessons and concerns for state and municipal issuers arising from the Order."
(Nixon Peabody LLP)

A Blueprint for Monitoring and Managing Your Plan Investments
Excerpt: "The plan sponsor drafts the investment policy usually with the help of an attorney, a consultant, or a plan provider. There are no specific guidelines in place for what is required to be included in the policy. The recommended approach is to provide an investment strategy and practice understandable to a third party that is flexible enough that it can be implemented in a complex financial environment but not so detailed that it requires constant revisions and updates."
(National Association of Government Defined Contribution Administrators)

Testimony: Disparities for Women and Minorities in Retirement Saving before Advisory Council on Employee Welfare and Pension Benefit Plans
Excerpt: "It would be far better policy to eliminate the implicit tax on retirement saving in these programs by mandating that retirement accounts such as 401(k)s and IRAs be disregarded for eligibility and benefit determinations in federal and state means-tested programs. Changing the law to exempt retirement accounts from being considered in means-tested programs would treat retirement savings fairly and consistently and would send an important signal to families that rely or might need to rely on means-tested programs in the future: you will not be penalized for saving for retirement."
(The Brookings Institution)

Public Sector Pensions: One of the Greatest Ponzi Schemes of all Times
Excerpt: "Public sector pension plans take a series of liberties that create an unrealistic financial scenario that can only be described as one of the greatest Ponzi schemes of all times. These include underestimating the raises that government workers may earn until they retire and overestimating the interest assumptions for funding. This collection of bogus assumptions is hidden away in 'off-the-balance-sheet' accounting practices . . . ."
(The Free Enterprise Nation)

Vanguard CEO Comments on Target-Date Fund Proposals on Fund Names and Marketing (PDF)
7 pages. Excerpt: "In particular, we support the use of charts and graphs to help investors better understand a fund's current target asset allocation, a fund's projected asset allocation upon reaching the target date, and a fund's projected final asset allocation. At the same time, we believe that the SEC could achieve its objectives more effectively by taking a more streamlined and tailored approach to improving disclosure in TDF marketing materials."
(The Vanguard Group, Inc.)

Cash Balance Plans Can Hold Hidden Risks for Plan Sponsors
Excerpt: "Plan sponsors who move to a cash balance plan from a traditional defined benefit (DB) plan may not always realize they are trading interest rate risk for investment risk, Vanguard's chief actuary maintains."
(The Vanguard Group, Inc.)

Valued by every practitioner and recommended for every ERPA candidate, The ERISA Outline Book, 2010 Edition by Sal L. Tripodi, J.D., L.L.M. offers six volumes of vital information on everything you need to know, including over 100 new rulings, guidances and regulations affecting retirement plans.

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Sponsored by ASPPA

Benefits in General; Executive Compensation

Book Review: How Companies Can Turn an Ageing Workforce to Their Advantage
Excerpt: "By carefully examining statistical evidence, the authors conclude that 'on virtually every dimension that is relevant to employers, older workers come out ahead of their younger colleagues'. These include in areas such as knowledge, skills, abilities, problem-solving and adaptability."
(Singapore Management University and the Wharton School of the University of Pennsylvania)

Perks/Alternative 'Rewards' Substitute for Fatter Paychecks
Excerpt: "Flextime -- allowing individuals to alter their working hours -- can be an attractive reward for hard-working employees. . . . Another option is getting employers to pay for courses, seminars and conferences, or membership to professional groups . . . ."
(Columbia Daily Tribune)

Corporate Lawyers Warn of 'Logistical Nightmare' Requirement That Companies Disclose Ratio Between CEO Pay Package and That of Typical Employee
Excerpt: "The lawyers say that the ratio would be unfairly complex to calculate and could encourage false comparisons. But the real problem is that C.E.O.'s and corporate boards would have to justify -- to shareholders, employees and the public -- what are sure to be some very large gaps between pay at the top and pay for everyone else.'
(The New York Times; free registration required)

Webcasts and Conferences

New Appeals and External Review Rules for Self-Funded Plans: Health Care Reform Drill Down
Nationwide on September 23, 2010
presented by EBIA / Thomson Reuters

The Dodd-Frank Act on Executive Compensation and Corporate Governance Webinar
Nationwide on September 15, 2010
presented by Ballard Spahr LLP

Webinar: Why Sponsor Independent Financial Education?
Nationwide on October 6, 2010
presented by Financial Topics 101

Press Releases

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Newly Posted Employee Benefits Jobs

DB/DC Pension Analyst
for Boyce & Associates, Inc.
in AZ

On-Site Pension Actuary
for Boyce & Associates, Inc.
in AZ

"Producing" 401k Pension Plan Administrator - Full or Part-time
for Crown Benefits, Inc.
in AK, AZ, CA, HI, NV, OR, TX, WA

Client Consultant
for Prudential
in IA

Director, Marketing Management
for Prudential
in CT

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