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Retirement Plans Newsletter

October 21, 2010

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[Guidance Overview]
New ERISA Disclosure Rules for Participant-Directed Retirement Plans (PDF)
15 pages. Excerpt: "The new regulation is 'effective' as of December 20, 2010, but 'applicable' for plan years beginning on or after November 1, 2011. Thus, for calendar year plans, compliance is required on January 1, 2012. The initial disclosures required under the new regulation may be provided to existing participants within 60 days after the plan's applicable date."
(Sutherland Asbill & Brennan LLP)

[Guidance Overview]
Service Provider Fee Disclosure Regulations: Comparison with Schedule C
Excerpt: "Schedule C only applies to large plans, defined as plans with 100 or more participants on the first day of the plan year. Therefore, a small plan does not file Schedule C. Schedule C reporting applies both to pension plans and to welfare plans. In contrast, the new regulations apply both to large plans and to small plans, but only apply to pension plans and not to welfare plans."
(SunGard Relius)

[Guidance Overview]
Amendments to EGTRRA Defined Contribution Plan Documents
This is a one-page chart.
(McKay Hochman Co.)

[Guidance Overview]
DOL's Final Regulations on Participant Fee Disclosures for 401(k) and Other Individual Account Plans (PDF)
3 pages. Excerpt: "Information that Must be Provided Up Front and Annually. Prior to the first day a participant or beneficiary may begin directing the investment of his or her plan account (after the new requirements apply to the plan), and at least annually thereafter, the plan administrator must furnish to the participant or beneficiary certain plan-related information . . . ."
(Drinker Biddle & Reath LLP)

Defined Contribution Plan Participants' Activities, First Half 2010 (PDF)
12 pages. Excerpt: "A . . . report with data on almost 24 mil.lion DC retirement accounts shows that in the first half of 2010, DC plan participants' loan and withdrawal activity rose slightly compared with the same time period a year earlier."
(Investment Company Institute)

The U.S. Retirement Market, Second Quarter 2010 (PDF)
33 pages. Excerpt: "[The report] shows that between March 2010 and June 2010, retirement assets fell 5.1 percent, from $16.5 tril.lion to $15.7 tril.lion."
(Investment Company Institute)

EBSA Needs to Do More to Protect Plan Assets from Conflicts of Interest, According to Inspector General Report
Excerpt: "In its report, the OIG recommended that EBSA: (1) broaden the definition of a fiduciary for investment advisers and (2) develop regulations requiring disclosure of all conflicts of interest and consideration of conflicts of interest in selection of service providers."
(Wolters Kluwer)

How Stable Is Your Stable-Value Fund?
Excerpt: "Question: My 401(k) plan includes a stable-value fund that's currently yielding more than 3%--way more than I can earn on my cash in a money market fund or certificate of deposit. That looks like a good deal, but how do I know if the fund is as safe as it seems?"

Addressing California's Pension Shortfalls (PDF)
30 pages. Excerpt: "To deal with the challenges facing California's pension funds, we suggest making adjustments to the traditional defined-benefit plan by concurrently raising retirement age and increasing employee contributions."
(Milken Institute)

California Pension Promises May Top Taxes by Fivefold, Milken Study Finds
Excerpt: "To keep their promises to retirees, the California Public Employees Retirement System, the biggest plan, the California State Teachers Retirement System, the second-largest, and the University of California Retirement System may have combined liabilities of more than 5.5 times the state's annual tax revenue by fiscal 2012, according to the study released today by the Milken Institute."
(Bloomberg L.P.)

Crackdown on Mutual Fund Fees Sparks Competition
Excerpt: "The SEC's proposal, in its own words, would: protect investors by limiting fund sales charges; improve transparency of fees for investors; encourage retail price competition; and devise fund director oversight duties."

Effects of Financial Crisis on Well-Being of Older Americans: Evidence from the Cognitive Economics Study (PDF)
2 pages. Excerpt: "The CogEcon post-crash survey has a rich set of covariates that help explain why the effects of the financial crisis were so widespread. The paper presents multivariate analysis of the decline in planned consumption following the financial crisis."
(University of Michigan Retirement Research Center)

New Yorkers Pay Outsized Share of Public Pension Cost
Excerpt: "New York taxpayers contributed seven times as much as public employees did to the state's major pension funds in 2009, sharply exceeding the national 2-1 ratio for employer-employee contributions, according to a report released Wednesday by the Citizens Budget Commission."
(Crain Communications Inc.)

California Governor Signs Major Pension Reform
Excerpt: "Under the reforms, an expansion of benefits approved in 1999 will be rolled back for new hires. Retirement rates will now be based on the highest consecutive three-year average salary rather than the current single year. In addition, there will be greater transparency in the establishment of pension payouts by the California Public Employees' Retirement System."
(United Press International, Inc.)

OPM Tackles Retirement Claims Processing Again
Excerpt: "[Along with other actions, OPM] has separated the responsibilities of addressing retirement claims from health and other employee benefits. The change could cause other services to suffer, but through automation and process changes the agency will be able to reduce the backlog and eventually scale back the number of employees working on it . . . ."
(Government Executive)

Labor Department to Update Definition of a Fiduciary Under Federal Retirement Law
Excerpt: "The agency could promulgate the rule as early as this week, according to Phyllis Borzi, assistant Labor secretary for the Employee Benefits Security Administration. The regulation will apply to investment advisers who counsel retirement plans and their participants."
(Investment News; free registration required)

U.S. Pension System Ranks Low, According to Mercer Study
Excerpt: "A new report comparing pension systems in 14 countries, ranks the U.S. a lowly 10th, behind the Netherlands, Switzerland, Sweden, Australia, (Can.ada), the United Kingdom, Chile, Brazil and Singapore. It leads France, Germany, Japan and China."

Republican Representative's Social Security Plan Would Cut Benefits for High Earners
Excerpt: "The plan, by Rep. Paul Ryan (R-Wis.), would reduce benefits by gradually raising the retirement age and gradually trimming benefits for the top 70 percent of earners."
(The Washington Post; free registration required)

Faulty Analysis is Unhelpful to State and Local Pension Sustainability Efforts (PDF)
2 pages. Excerpt: "Authors of a new paper, The Crisis in Local Government Pensions in the United States, would be more constructive, as well as provide more accurate municipal pension information, if their assumptions were based on historical experience and their methodology appropriate for the government sector."
(National Association of State Retirement Administrators)

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Benefits in General; Executive Compensation

[Guidance Overview]
Why No Severance Package for Laid-Off Worker?
Excerpt: "A New Jersey consultant's employer offered him and his colleagues 'displacement benefits' when it sold the company they worked for -- so long as they weren't hired by the buyer. He and some of his co-workers were hired by the buyer -- but for only 10 hours. Denied benefits, he sued."
(Business & Legal Reports, Inc.)

[Guidance Overview]
An Overview of State Laws Allowing Employees Time Off to Vote
Excerpt: "The key questions that must be addressed and that employers must be prepared to answer are: whether employees are eligible for time off, how much time off employees are permitted, whether employees will be paid for time off, whether employees may be required to provide advance notice of their intention to vote, and whether employees may be disciplined for taking time off."
(Littler Mendelson P.C.)

New Jersey Toll-Road Managers to Slash Employee Perks
Excerpt: "New Jersey toll-road managers said they would eliminate perks, bonuses, payouts, and free employee E-ZPass trips after an audit released Tuesday found the New Jersey Turnpike Authority had wasted about $50 mil.lion since 2007."
(The Philadelphia Inquirer)

Webcasts and Conferences

Changes to Cafeteria Plans: What You Need to Know to Prepare
Nationwide on November 19, 2010
presented by Lorman Education Services

Recent Developments in Employer Liability for 401(k) Investments
Nationwide on November 3, 2010
presented by Lorman Education Services

ROTH Mathematics: Deal or No Deal? - Free Webcast
Nationwide on October 27, 2010
presented by Wolters Kluwer Law & Business

Press Releases

PBGC Assumes FormTech Industries LLC Pension Plan
Pension Benefit Guaranty Corporation (PBGC)

Faulty Analysis Found Behind Doomsday Projections For Public Pensions
National Association of State Retirement Administrators

'Overpaid Federal Employees' a Myth Not Grounded in Reality
American Federation of Government Employees (AFGE)

Newly Posted Employee Benefits Jobs

Pension Administrator
for Associated Pension Consultants
in CA

Development Analyst
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in MA

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