[Guidance Overview]
Proposed Regs and Rulings Facilitate 'Longevity Annuities'
"The proposals are designed to make it easier for retirees to manage the risk that they will outlive their retirement savings and to receive their benefits in regular payments for as long as they live. A Treasury fact sheet says the nation's private pension system is shifting from lifetime retirement income to lump-sum cash payments. Just 21% of the $11.2 tril.lion in private pension assets in 2011 was maintained in defined benefit plans; the rest was held in defined contribution plans and IRAs."
(Journal of Accountancy)
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Happy National Employee Benefits Day! [Advert.]
National Employee Benefits Day acknowledges trustees, administrators, corporate benefits practitioners and professional advisors for their dedication to providing quality benefits and the important role they play in their colleagues' well-being. Celebrate the day!
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[Guidance Overview]
DOL Final Disclosure Requirements for Plan Service Providers -- Deadline Looms
"[B]oth covered service providers and responsible plan fiduciaries should be developing appropriate, documented processes and procedures to ensure compliance with their disclosure obligations under the Final Rule and their fiduciary obligations with respect to the selection and retention of service providers, respectively."
(K&L Gates LLP)
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How to Tackle Pension Underfunding Issues
"The solution to the pension plan crisis is different for everyone and changes can be reevaluated down the road if the pension plan is maintained in either an active or frozen state. This will give employers options for future work force issues and strategies."
(Smart Business)
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Home Depot Renovates 401(k) Plans by Cutting Costs
"The purpose is to add value and cut costs. In fact, the Atlanta-based company has cut expenses in half since 2009. There have been 'reductions in record-keeping and investment management fees over time' .... The most recent cost cuts came in February, when Home Depot officials negotiated lower investment management fees [for its] target-date funds."
(Pensions & Investments)
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Should Public Pensions Be Invested in Infrastructure?
"A big-city labor leader, an investment expert and a long-time senior public start talking about public-employee pensions.... They agreed that the first objective in pension investments should be to assure that the money would be there to pay benefit obligations when they come due. But they also agreed that ... pensions should invest in a way to address the enormous infrastructure needs of state and local government and that doing so could, in fact, earn the funds a more than adequate return."
(Governing)
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Planning and Paying for Partner Retirements: Structure Internal Succession Agreements to Make Buyouts Self-Funding
"Owner agreements governing retirement and other forms of buyout payments are more likely to successfully manage a firm's ownership transition if they: Promote an orderly transition of an owner's responsibilities to successors within the firm; Motivate the successors within the firm to assume those responsibilities by creating upside for those successors ...; and Provide for and protect the firm's long-term health and viability by allowing the firm to manage the buyout obligations internally, using the funds already available through the firm's operations."
(Journal of Accountancy)
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Survey Finds Market Uncertainty Has Increased Demand for Variable Annuities
"Consumers and financial advisors, increasingly concerned about meeting retirement goals, are finding that variable annuities ... effectively address financial security concerns, according to a new survey by AllianceBernstein L.P. ... and the Insured Retirement Institute[.]"
(Insured Retirement Institute)
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The 'Qualified Longevity Annuity Contract' and the Fiduciary Standard in the Commercial Pooling of Interest
"One of the fundamental issues the proposed regulation raises is one which is beyond Treasury's control: what is the fiduciary's exposure to the potential future insolvency of an insurer when choosing a QLAC provider? Absent a federal insurance system like the FDIC or the PBGC which ultimately guarantees this risk — which is likely to be a number of years off, if even possible — does this means that it will never be prudent for a fiduciary to purchase a QLAC, or any annuity, under which a single insurance company insures the risk?"
(Business of Benefits)
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Industry Groups Submit New Fiduciary Roadmap to SEC
"In an effort to break a deadlock in the [effort of the SEC] to adopt a uniform fiduciary standard, a group of seven influential consumer groups and industry organizations — including the FPA, NAPFA and CFP Board — have provided the commission with a proposed roadmap for resolving the debate."
(Financial Planning)
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Financial Planning on a Limited Budget
"There are a crop of new resources that let you get financial-planning services on the cheap. For a flat or hourly fee, a certified financial planner can help you develop a savings plan, get your budget in order and pay down debt. But keep in mind that you get what you pay for — so don't expect any of the bells and whistles of a full-service financial-planning or brokerage firm."
(The Washington Post; free registration required)
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More Changes to Retirement Plans of Some Florida State Employees Could Be Coming
"On the last day of the 2012 session, state lawmakers voted to reduce contributions to the retirement accounts of 100,000 public employees, many of whom work in higher education or law enforcement. The bill ... passed both chambers by wide margins with little discussion and will soon reach Gov. Rick Scott, who said he has not decided whether to sign it."
(Tampa Bay Times)
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Public Pension Plan Assets Decline for First Time Since 2009
"The country's 100 largest public employee retirement systems in 2011 experienced their first year-over-year decrease in total assets since 2009, according to the Census Bureau.... Assets totaled $2.61 tril.lion in the fourth quarter of 2011, up 3.2% from the previous quarter, but down 1.1% from a year earlier."
(Pensions & Investments)
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Does Danger Loom for Multiemployer Pension Plans?
"Under fair-value calculations, multiemployer plans ... are currently underfunded by $369 bil.lion ... Excessively low funding levels could lead to hikes in employers' contributions as well as in withdrawal liabilities ... It might also give would-be suitors reason to pause before buying smaller businesses that offer multiemployer plans[.]"
(CFO)
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Converging Trends Drive Sponsors to Change Plan Lineups
"Why do more defined contribution (DC) plan sponsors seem to be changing their plan investment lineups? ... [A]t least part of the cause [is attributed] to the convergence of three trends: sponsor reaction to the 2008-2009 financial crisis, a growing interest in target-date strategies, and a growing sensitivity to cost."
(Vanguard)
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401(k) Fee Disclosure Does Not Go Far Enough
"At best, the rules give participants and plan sponsors a tiny window into costs. At worst, they provide just enough information to thoroughly confuse participants and employers. What is needed is for the industry to shine a bright light on the labyrinth of fees, investments and revenue sharing that make up the hidden world of the 401(k) industry."
(Investment News)
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BP Workers Can't Sue Retirement Plan Over Spill Loss
"[The judge threw out] eight employee lawsuits that sought to recover millions of dollars in losses that BP's employee retirement plans allegedly suffered from the largest offshore oil spill in U.S. history. The suits questioned plan managers' investments in BP's shares."
(Bloomberg)
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[Opinion]
Louisiana's Current Retirement Model Unsustainable; Phased-In Changes Needed
"[According to a State Representative,] Louisiana is facing a crisis. The problems arise in the form of $18.5 bil.lion dollars in unfunded accrued liabilities in the retirement plans of our state as a result of under-performing returns, bad investments, poor planning, inaccurate formulas and fiscal irresponsibility."
(shreveporttimes.com)
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[Opinion]
Pennsylvania Should Tax Pensions
"Pennsylvania is the only state in the nation with an income tax that does not tax any pension income.... There is no reason under the sun that working families struggling with multiple jobs to make ends meet should pay a 3 percent state tax on all their income while affluent pensioners pay none."
(Post-Gazette.com)
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Benefits in General; Executive Compensation
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[Official Guidance]
Text of Final EEOC Regs: Disparate Impact and Reasonable Factors Other Than Age Under ADEA
"The EEOC's proposed rule was designed to conform existing regulations to recent Supreme Court decisions and to provide guidance about the application of the [reasonable factors other than age, or 'RFOA'] affirmative defense. It was not intended to impose unwarranted burdens on employers ... [T]he Commission has revised the rule to clarify that the factors are not required elements or duties, but considerations that are manifestly relevant to determining whether an employer demonstrates the RFOA defense."
(U.S. Equal Employment Opportunity Commission)
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EEOC Issues Final Rule under ADEA
"The rule responds to two Supreme Court decisions in which the Court criticized one part of the Commission's existing ADEA regulations. The Court upheld EEOC's longstanding position that the ADEA prohibits policies and practices that have the effect of harming older individuals more than younger individuals, even if the harm was not intentional. However, it disagreed with the part of the regulations that said if an employee proved in court that an employment practice disproportionately harmed older workers, the employer had to justify it as a 'business necessity.'"
(PLANSPONSOR.com)
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Press Releases
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