[Guidance Overview]
On 401(k) Plan Brokerage Windows and Participant Fee Disclosures (PDF)
"No doubt these 'last minute' rules have surprised many plan administrators and service providers. As compliant disclosures for brokerage window fees are being finalized, plan administrators and service providers should seek to demonstrate that initial disclosures have been prepared based on a reasonable interpretation of the 404a-5 regulations, consistent with the good faith standard included in FAB 2012-02, Q&A 37."
(Kelly, Hannaford & Battles P.A.)
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IRS Handout for Upcoming Phone Forum on 403(b) Plans (PDF)
"The IRS Employee Plans 403(b) Compliance Planning Group will address frequent questions pertaining to the 403(b) written plan requirements and how the IRS is approaching the written plan requirement under audit. The forum will also address common operational issues identified in 403(b) plans."
(Internal Revenue Service)
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Judge Says Northern Mariana Islands Pension Plan Can't Seek Bankrup.tcy Protection
"The [Commonwealth of the Northern Mariana Islands, a U.S. Territory,] may be small, but this case has ramifications for much larger pension funds all across the U.S. that are facing shortfalls.... The judge wrote that the Northern Mariana Islands Retirement Fund is 'a 'governmental unit' and therefore 'not eligible for relief under Chapter 11 of the Bankrup.tcy Code.'"
(National Public Radio)
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ERPA Renewal Notification for ERPAs with SSN ending in 7, 8, or 9: June 30 Due Date (PDF)
"If you are an ERPA whose Social Security number ends in 7, 8 or 9 your application renewal period ends on June 30, 2012. You will not receive a letter from the IRS prompting you to renew so please remember to renew by the deadline. Until further notice from the IRS, please make a note of when you need to renew. To renew, you must file Form 8554-EP, Application for Renewal of Enrollment to Practice before the Internal Revenue Service as an Enrolled Retirement Plan Agent (ERPA) (revised March 2011), either electronically or by paper by June 30."
(American Institute of Retirement education)
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MetLife Releases Retirement Income Practices Study
"[MetLife] is pleased to introduce the new MetLife Retirement Income Practices Study(sm): Perspectives of Plan Sponsors and Recordkeepers for Qualified Plans. To the best of our knowledge, this study is the first of its kind to examine the relationship between the largest U.S. plan sponsors and recordkeepers with regards to the provision of lifetime income options for qualified plan participants."
(MetLife)
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Participant Advocacy Group Reports Big Success with Investment Education Seminars for Nurses (PDF)
"When we first surveyed more than 900 nurses in 2008, we learned that nurses [many of whom are participants in 403(b) programs sponsored by non-profit hospitals] generally are wary of 'outsiders' and mistrustful of educational seminars in which financial professionals would try to sell them something,' said WISER President Cindy Hounsell. 'But the overwhelming majority—83 percent—indicated they would attend a free, unbiased workshop if it was offered by a professional nursing association." (Women's Institute for a Secure Retirement
(WISER))
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SPARK Institute Releases Version 2 of Best Practices Document for 403(b) Data Sharing Between Sponsors and Vendors (PDF)
"This Best Practices document sets forth certain best practices for the transmission of remittance and census data between employers or employer representatives and vendors, and identifies a basic file layout convention for 403(b) and related retirement plans.... Version 2.0 includes additional data fields, clarifies certain usage issues and includes certain other changes. Version 1.0 will become obsolete on February 1, 2013, the effective date of Version 2.0, and, therefore, it will be necessary for users of the prior version to reprogram their systems."
(The SPARK Institute)
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U.S. Pension Plan Q1 2012 Funding Gains Wiped Out
"The aggregate deficit in pension plans sponsored by S&P 1500 companies grew $80 bil.lion in May to $488 bil.lion, according to new figures from Mercer . This deficit corresponds to an aggregate funded ratio of 76% as of May 31 2012 compared to a funded ratio of 79% as of April 30, 2012, and just barely above the funded ratio from 75% at December 31, 2011. Effectively the funding gains achieved in the first three months of 2012 were wiped out by market trends in April and May."
(Mercer)
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Disappointing Market Performance Leaves Pension Funds Struggling (PDF)
"Pension sponsors suffered a substantial setback in May -- declining stock markets pulled down assets while declining interest rates pushed up liabilities. When the dust settled, gains from the first quarter of 2012 had been wiped out ... In a pattern that is ominously reminiscent of 2011, financial markets started the year strong, only to fade in the spring months. As shown in the graphs below, pension liabilities have spiked over the last two months, due to declining interest rates, while assets have faltered, owing to a difficult stock market[.]"
(October Three LLC)
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Second Look at Headline-Grabbing 401(k) Fee Survey Reveals Major Questions
"Several of the articles ... despite the grave headlines, began to isolate some of the cracks in the analysis. The Demos report referenced data from both the Investment Company Institute, a national trade association located in Washington D.C. that represents mutual funds and other registered funds and which regularly surveys 401k plans using mutual funds, and BrightScope, Inc., a 401k rating firm located in San Diego. Both groups took exception to the report's use of their data."
(Fiduciary News)
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Assurance From DOL Would Be Helpful, Practitioner Says at IRS Hearing on QLACs
"[Drew Carrington, testifying on behalf of the Defined Contribution Institutional Investment Association,] said it probably is unrealistic to expect DOL to issue safe-harbor guidance under [ERISA] as an incentive for employers to offer qualified longevity annuity contracts (QLACs) as described in [a recent proposed IRS regulation]. However, he added, 'any additional guidance that the adoption of in-plan annuity solutions, such as QLACs, does not entail plan sponsors' taking on some new and dangerous form of fiduciary responsibilities would be very helpful in encouraging them to move forward, with the support of their ERISA counsel.'"
(Bloomberg BNA)
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One Way Out: Raise the Retirement Age to 80?
"Greece, where the average life expectancy is 81.3 years, has an effective retirement age of 59.6, among the lowest in Europe, according to data compiled by Bloomberg. French President Francois Hollande, the Socialist who was sworn in last month, has pledged to cut the retirement age to 60 from 62 while increasing corporate and bank taxes and introducing a 75 percent levy on earnings of more than 1 mil.lion euros ($1.2 mil.lion)."
(Pension Pulse)
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Congressional Budget Office Releases 2012 Long-Term Budget Outlook
"The explosive path of federal debt under the alternative fiscal scenario—which maintains what might be deemed current policies—underscores the need for large and timely policy changes to put the federal government on a sustainable fiscal course."
(U.S. Congressional Budget Office)
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Chrysler CEO Says 'No Need' for Pension Buyouts
"'There's no need for us to do it,' CEO Sergio Marchionne said of the [Ford and GM] buyouts ... on Monday. He did not expand on his comments. A growing concern for decades as U.S. automakers lost market share to foreign-based automakers in their home country, pension costs became an albatross for the U.S. industry with the sector's downturn five years ago."
(Chicago Tribune)
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Deficit of S&P 1500 Company Pension Plans Increases to Almost Half-Tril.lion Dollars
"Pension plans sponsored by S&P 1500 companies saw their deficits grow to $488 bil.lion by the end of May, wiping out the positive performance they had achieved in the first quarter, according to New York-based consulting firm Mercer.... U.S. equity markets fell 6% during May as measured by the S&P 500 total return index. Plan sponsors who hedged their liability by holding a higher allocation in long duration bonds would have seen better asset performance during the month, according to Mercer."
(On Wall Street)
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Will San Jose, San Diego Lead Public Employee Pension Reform?
"One reason San Jose and San Diego will vote on widely watched pension reforms Tuesday: Retirement costs are eating up about 20 percent of their general fund budgets, well above the old norm.... [California's] second largest city, San Diego, and it's third largest city, San Jose, have made cuts in police, fire and other services that are painfully clear to residents, and rising retirement costs are getting much of the blame."
(CalPensions)
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IRS Employee Plans Compliance Unit Finds Errors in SEP Plans
"The Employee Plans Compliance Unit's SEP Plan Compliance Check project found errors made by both SEP plan sponsors and the financial institutions filing the SEP-IRA contribution information. ... Responses showed that SEP plan sponsors are exceeding annual contribution limits [and] excluding eligible employees, including those of controlled groups. Responses also showed that financial institutions aren't properly completing Form 5498, IRA Contribution Information ... for SEP-IRAs."
(Internal Revenue Service)
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Illinois Pension Reform Faces Uncertain Path Forward
"After a short break, lawmakers are poised to start meeting again, trying to find a compromise that again is likely to include scenarios that cost suburban schools more. They'll do it over the heavy protests of unions that represent teachers and state workers ... A proposal to cut a yearly increase in pension benefits for working and retired teachers, university employees, state workers and lawmakers was embraced by at least some Republican and Democratic lawmakers, providing some common ground in the debate."
(Chicago Daily Herald)
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[Opinion]
Pension Reform in New Hampshire: Some Myth-Busters To Follow The Stalemate
"People assume DC plans are cheaper than DB plans for employers, and therefore for taxpayers—when it comes to public pensions. But that's not actually true. Economists agree that defined benefit plans are more efficient than defined contribution plans. There are three reasons."
(National Public Radio)
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[Opinion]
Text of Request by ASPPA and ACOPA to IRS for Updated Guidance on Automatic Approval of Funding Method Changes
"ASPPA COPA recommends that automatic approval be provided for the following changes in funding methods: I. Changes in asset valuation method from fair market value to smoothed or smoothed to fair market value. II. Changes in valuation date for small plans which have discretion regarding the choice of such date. III. Changes in the actuarial organization performing the valuation and changes in valuation software. IV. Changes in the valuation interest rate set from segment rates to the full yield curve, or the reverse, as well as changes in the look-back period for determining the interest rates."
(American Society of Pension Professionals & Actuaries, and ASPPA College of Pension Actuaries)
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[Opinion]
Text of Comments by ASPPA and ACOPA to Actuarial Standards Board on Proposed Introductory Actuarial Standard of Practice
"While the addition of the 'Terms of Construction' section may add clarity to the meaning of future ASOPs, the addition of the 'Terms of Construction' potentially changes the meaning of all existing ASOPs without providing actuaries an opportunity to comment on those changes. Because these terms were not explicitly defined previously in the ASOPs, an actuary during ASOP comment periods and then while applying the ASOPs would have read these terms using a common sense meaning instead of the meaning the Introductory ASOP currently assigns to them."
(American Society of Pension Professionals & Actuaries, and ASPPA College of Pension Actuaries)
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[Opinion]
ERIC Testifies Before IRS on Proposals to Expand Lifetime Income Options
"ERIC supports efforts to modify existing minimum required distribution rules to better accommodate deferred annuities, but urges the agency to revise the proposed penalty for setting aside more than the maximum amount in a qualified longevity annuity contract (QLAC).... under the proposed regulations, if one requirement is not satisfied, the entire deferred annuity is disqualified and must be taken into account for purposes of minimum required distribution calculations. '[ERIC believes] this result is draconian and will be difficult to administer. No matter how hard we try, mistakes will inevitably occur[.]'"
(The ERISA Industry Committee)
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[Opinion]
GM and Ford's Pensions Jubilee?
"When it comes to pensions, when it rains, it pours. These 'landmark' deals are all about shifting pension risk from companies to employees and they are setting a dangerous precedent, one that will bring about widespread pension poverty."
(Pension Pulse)
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[Opinion]
Testimony of American Benefits Council to IRS at Hearing on Longevity Annuity Contracts (PDF)
"[T]he Council urges Treasury to (1) develop a correction program through which inadvertent errors can be appropriately corrected without loss of the benefits offered by qualified longevity annuity contracts or QLACs.... (2) [modify the proposal] to permit employer plan participants to purchase a QLAC as an IRA annuity rollover, without forcing them to roll over their entire plan account balance to do so.... [and] (3) clarify that [under certain circumstances a] change in annuity service providers would not be an impermissible forfeiture under Code Section 411 or a violation of the anti-cutback rules of Code Section 411(d)(6)."
(American Benefits Council)
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[Opinion]
Text of Comments by Pension Finance Task Force on Proposed Revisions to ASOP No. 4, 'Measuring Pension Obligations and Determining Pension Plan Costs or Contributions' (PDF)
"[The Pension Finance Task Force applauds] the inclusion of a definition for 'market consistent present value' in the exposure draft and [believes] that the Actuarial Standards Board has defined it well. The definition addresses the essence of market consistency while also recognizing that no single approach is best in all situations. Many factors affect the determination of market-consistent values in any specific case, and it would not have been possible to anticipate all possibilities in a more prescriptive definition. The proposed principle-based definition can remain relevant even as the pension plan environment evolves. Market-consistent values are of critical importance."
(Pension Finance Task Force, sponsored jointly by the Society of Actuaries and the American Academy of Actuaries)
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[Opinion]
Text of ASPPA Comments to IRS on 2012-2013 Guidance Priority List
"[ASPPA believes] that guidance for each of the items listed [in this Comment Letter, in priority order] ... (1) Will resolve significant issues relevant to many retirement plan sponsors and practitioners (not just a small group); (2) Will promote sound tax administration by helping plan sponsors and practitioners to maintain retirement plans in compliance with tax code qualification rules; and (3) Can be drafted in a manner that can be easily understood and applied by plan sponsors and practitioners."
(American Society of Pension Professionals & Actuaries)
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Benefits in General; Executive Compensation
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DOL Seeking Nominations for ERISA Advisory Council
"The terms of five members of the Council expire this year. The groups or fields they represent are as follows: (1) Employee organizations; (2) employers; (3) investment counseling; (4) actuarial counseling; and (5) the general public. The Department of Labor is committed to equal opportunity in the workplace and seeks a broad-based and diverse Council."
(U.S. Department of Labor)
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Press Releases
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