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BenefitsLink Retirement Plans Newsletter

June 8, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Conversion Consultant
for ASPire Financial Services in FL

Director - Client Services
for Ameritas Life Insurance Corp in OH

Health Benefits Analyst
for The Segal Company in DC, GA

Participant Counselor - Retirement Services
for Diversified in MA

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Webcasts and Conferences

Western Benefits Conference
in Washington on July 15, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)

Great Lakes Benefits Conference
in Illinois on June 21, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)

Northeast Area Benefits Conference
in Massachusetts on July 9, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)

Northeast Area Benefits Conference
in New York on July 10, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)

Wacky Assets Webcast
Nationwide on June 19, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)

HHS Coverage Examples Calculator Webinar
Nationwide on June 8, 2012 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Creating a Culture of Well-Being: Servant Leadership - LIVE FutureOffice Network Smartcast
Nationwide on June 21, 2012 presented by Davidson Marketing Group -- FutureOffice Network

Global Markets Outlook and Fee Disclosure Next Steps
in California on July 24, 2012 presented by Precept Advisory Group

IRS Guidance on the $2,500 Limit for Health FSAs: Implementation Issues for 2013 and Beyond
Nationwide on June 21, 2012 presented by Thomson Reuters / EBIA

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[Guidance Overview]

Another Question is Answered in the Who's the Employer Q&A Column
How does an open MEP handle Form 5500 filing requirements after the recent Advisory Opinion? (BenefitsLink.com)

Attend the 2012 Western Benefits Conference   [Advert.]

Sponsored by ASPPA & WBC

Designed for retirement, health, welfare & benefits professionals, with particular emphasis on practical issues important to plan sponsors & their advisors. Speak with nationally-renowned speakers & government representatives and more!

GASB Rules Have Pension Execs Prepping Own Accounting Standards
"Sweeping new accounting rules for public pension plans that highlight liabilities have plan executives preparing their own standards to counteract a possible chilling effect on funding.... Public pension plan executives worry that shifting the focus to liabilities will exacerbate fears about a plans' financial conditions and lead to short-sighted funding changes." (Pensions & Investments)

St. Louis Battle Over Firefighter Pensions Mirrors Battles Elsewhere
"[St. Louis] Mayor Francis Slay ... told dozens of local residents that St. Louis can't afford to continue its current firefighters' pension system, which has seen its annual cost skyrocket from $6.4 mil.lion in 2001 to $29.4 mil.lion for the coming year. As it stands, pensions amount to about one-third of the city's firefighters' budget. Slay's administration is proposing a new retirement system that the mayor says would save $9.1 mil.lion a year." (St. Louis Beacon)

Presentations from PRC 2012 Symposium: The Market for Retirement Financial Advice
"Though many people use financial advisers, and many more would probably benefit from financial advice, relatively little is known about the marketplace for such advice. The 2012 Pension Research Council conference at the Wharton School of the University of Pennsylvania offered cutting-edge research and commentary on key aspects of the advice marketplace, types of advice provided, fees and commissions, market and regulatory considerations, and how to evaluate advisers' performance and impact." [Conference materials and presentations available for download at link.] (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)

South Carolina Police, Firefighter Pension Shortfalls Total Nearly $1 Bil.lion
"A new report shows the funding shortfalls of the state's 53 municipal pension plans for police officers and firefighters now total nearly $1 bil.lion. The estimate grew by 28 percent from 2009 to 2010, the latest year for which figures are available, and is nearly double what it was a decade earlier." (Charleston Daily Mail)

Apple's All-ETF 401(k) Plan? Not!
"Reports of Apple moving to an 'all ETF 401k plan' are either imaginary thinking, or really terrible journalism.... So let's just set the record straight. Apple has a completely normal $1.6 bil.lion 401(k) plan, according to their last filing on the subject at the end of 2010. $1.3 bil.lion is in traditional mutual funds. The remainder is in collective trusts, and a small $23 mil.lion brokerage window. So yes, Virginia, there might be a few ETFs in that brokerage window, but that's it." (IndexUniverse)

Did DOL Just Set the Upper Limit on 401(k) Options?
"[The] minimum number of distinct and materially different investment options all 401(k) plans seeking the 404(c) safe harbor provision must have ... is three. But until May 7, 2012, in its FAQ on the new Fee Disclosure Rule, the DOL has never opined on what the maximum number of options in a 401(k) should be. The number may just shock a number of 401(k) plan sponsors, in particular, those administering some of the largest plans." (BenefitsPro)

5 Reasons Why Women Have to Work a Lot Harder at Saving for Retirement
"[W]hile few Americans are superstar retirement savers, women in particular tend to fall short on retirement savings compared to men, saving less than 70% of what men typically save, according to a recent report by the ING Retirement Research Institute. So why is saving such an uphill battle for women? Here are some of the key factors:" (Investing Answers)

Mutual Fund Industry Defends 401(k) Plans
"Critics say 401(k)s have numerous flaws, including the risk that employees will make poor investment decisions or not save enough. There's also the danger of poor timing: Some people have the misfortune of retiring during or after a severe bear market. Responding to critics who say traditional pensions were better than 401(k)s, [Paul Schott Stevens, chief executive of the Investment Company Institute,] said the older-style plans had their own flaws." (Los Angeles Times)

Labor's Losses Appear to Be Pension Reformers' Gains
"'The pension reform votes in San Jose and San Diego are a powerful wake-up call,' [said California Governor Jerry Brown]. 'I have a 12-point pension reform plan and, after I lock this budget down, people should feel confident that pension reform is next on the agenda.'" (San Jose Mercury News)

San Jose Pension Battle Heads to Court
"The city of San Jose and its police union have filed dueling lawsuits over the cuts in public employee pensions approved by city voters on Tuesday, disputing whether the measure violates the city's contractual obligations to its workers.... The city filed its suit in federal court Tuesday, seeking a ruling that Measure B would be a lawful means of averting a fiscal crisis 'caused in large part by the climbing and unsustainable cost of employee benefit programs.' ... The first legal challenge came Wednesday from the San Jose Police Officers' Association, which went to a state court asking for a ruling that Measure B could not apply to employees who already work for the city." (San Francisco Chronicle)

Unions File Lawsuits Against San Jose's Voter-Approved Pension Reforms
"[A lawsuit has been filed] against the City of San Jose and the Police and Fire Retirement Board on behalf of the San Jose Police Officers' Association. [The] lawsuit alleges numerous violations of the State Constitution and [Association] members' contractual 'Vested' rights. After the lawsuit was filed, a motion for a temporary restraining order was filed. San Jose Fire Fighters' Local 230 also filed a lawsuit against the City of San Jose on behalf of their members.' [Copies of the pleadings available from this site.] (San Jose Police Officers Association)

California Pension Victories Might Catch On Nationwide
"Victories for measures to rein in pension costs in San Diego and San Jose, California's second- and third-largest cities, may show other cash-strapped U.S. municipalities a path to follow, local officials say.... 'If you explain this to the voters, they're going to support you,' San Jose Mayor Chuck Reed said by telephone. 'The voters get it. They understand the connection between having to put huge amounts of money into retirement and cutting services to the people.'" (Bloomberg)

California Set for Fight Over State Employee Pension Reform
"In California, a reliably blue state, the pensions issue is set to trigger a fundamental struggle within the Democratic Party over what needs to be done and how fast -- a struggle that could have national implications as some other states have worse pension funding problems. The result may be that voters have to force any changes they want through the state's initiative process." (The New York Times; free registration required)

COLA Freezes: Public Employee Pension Reform's Third Rail
"The reason public officials are targeting the COLA benefit is that it's one of the most costly enhancements in a pension plan: The actuarial cost includes the lifetime compounding of retirees' annual benefits increases. In states like Rhode Island where COLA benefits were completely out of control at levels that exceeded the CPI (sometimes giving 5 percent or more, perpetually compounding annual increases regardless of actual inflation), the 'COLA' benefit is clearly unsustainable and requires reforms." (Governing)

The Self-Regulatory Organization Debate: Looking Ahead
"As the debate over regulatory reforms in the retail investment adviser sector has resurfaced on Capitol Hill, industry groups on both sides of the issue are making their case to lawmakers and staffers in the hopes of either advancing or derailing legislation that would establish a self-regulatory organization (SRO) to oversee RIAs." (On Wall Street)

Focus of Hearing on Proposed Self-Regulatory Organization Shifts to Regulatory Burden on Small Investment Advisors
"[A Senate Finance Committee hearing on a] proposed self-regulatory organization (SRO) for investment advisers rehashed old arguments by a familiar cast of players. However, unexpected attention to the associated costs for small advisers came into focus for the first time, putting SRO supporters on the defensive, and threatening to throw plans for a June 27 vote off track." (fi360 Blog)

Transamerica's Retirement Readiness Survey 2012: Increasing Awareness by Individuals of Need to Save
"Although the findings confirm the view that concerted and immediate action is required in order to address the general lack of retirement readiness, the good news is that people more than ever recognize the essential role they play personally in their retirement security. This realization has been made all the more clear as a result of the financial crisis that began in 2008 and the subsequent market turmoil that resulted in severely depressed retirement savings." (Transamerica Center for Retirement Studies)

Low Interest Rates Forcing One in Three Investors to Delay Retirement
"Overall U.S. investor optimism fell to +24, down from +40 recorded in February, according to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index. The decline was driven by increased investor pessimism about the future course of the overall economy. The optimism of retired respondents fell to +17, down from +38 recorded in February, a drop of 21 points and down from +61 a year ago.... One in three investors (33%) say low interest rates will cause them to 'delay' retirement." (Wells Fargo)

Cypen & Cypen Newsletter for June 7, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: the thriving Illinois Municipal Retirement Fund; 401(k) fees - the Demos Report and ASPPA's response; and other public employee pension plan news. (Cypen & Cypen)

Determining the Net Pension Liability and Pension Expense (PDF)
"As a result of the GASB's likely changes in public pension accounting and financial reporting, questions have been raised about the procedures needed to calculate the new measures. This research memorandum summarizes the key steps." (Gabriel Roeder Smith & Company)

Pension Plan Governance Enables Risk Management and Compliance
"As multinationals expand around the world and more companies become players in the global economy, managing retirement and other benefit plans is becoming riskier and more challenging. In each country where a company operates, local laws, regulations, customs and tax systems complicate plan governance. A strong governance framework can help employers effectively manage risks and compliance[.]" (Towers Watson)


Your Broker (Not You) Will Retire on Your Retirement Plan
"The conclusion of the authors of [the Demos] study is compelling. They believe 'wholesale reform' of the retirement system is needed if we want to ensure a comfortable retirement for American employees. They set forth core principles of a new system which include universal coverage and a steady lifetime stream of retirement income adequate to fund a retirement with dignity." (U.S. News & World Report)


The Wisconsin Union Smackdown, Coming to a Town Near You
"There's nothing wrong with unions when everybody feels like they're getting ahead. But there's a big problem when the people vulnerable to the cruel vicissitudes of a turbulent economy are funding benefits for others more insulated from them. That means there will probably be many more Wisconsins." (U.S.News & World Report)


Why the 401(k) Has Been a Flop
"[Even if] stocks do rebound, the truth is that most 401(k) holders will never accumulate enough money in these accounts for a secure retirement. Few workers and their employers contribute at the level needed to build up a serious nest egg, and the median balance in a 401(k) for people approaching 65 is under $100,000, according to a recent study ... Experts on retirement forecast that millions of middle class baby boomers will fall into poverty, or near poverty, in old age ... Why has the 401(k) been such a flop? Five reasons stand out." (The Huffington Post)

Benefits in General; Executive Compensation

Michigan Budget Czar: Go Slow on Teacher Retirement Changes
"Michigan lawmakers should pass a bill next week that ends state-provided health care coverage in retirement for new teachers but without language that would force them into a 401(k)-style retirement plan, the state budget director said ... [T]eachers hired since 2010 are under a hybrid pension plan largely paid for by the teachers themselves. Switching to a defined contribution plan would double the amount the state has to contribute to new teachers' retirement benefits ... he said." (The Examiner)

Low Interest Rates Crimp Plans to Retire, Survey Finds
"Rising pessimism about the course of the economy, along with low interest rates and increasing health care costs, are squeezing Americans' retirement plans, a new survey finds. A third of the investors surveyed said low interest rates would cause them to delay retirement.... 45 percent of nonretirees and about a third of retirees said they feared that the low rates might result in them outliving their money in retirement ... 29 percent of nonretirees surveyed said that rising health care costs had reduced their ability to save for retirement, and about 12 percent said that was a factor in delaying their retirement." (The New York Times; free registration required)

Domestic Partner and Same-S.ex Marriage Laws in Washington State: Marriage Equality Act and Employee Benefits
"[I]f Washington voters approve the Marriage Equality Act in November, employee benefit plans and procedures will need to be in compliance. Therefore, in the interim, employers should consider the potential impact of the Marriage Equality Act on their employee benefit plans and procedures (which should already have been reviewed and revised to ensure compliance with the 'everything but marriage' law). This advisory revisits the employee benefits compliance issues that arose from 'everything but marriage,' and addresses additional benefits issues arising from the Marriage Equality Act, assuming that it becomes law later this year." (Davis Wright Tremaine LLP)

Labor and Employment Issues in Corporate Transactions Strategic Considerations and Hidden Liabilities (PDF)
"This article helps buyers and their counsel evaluate the labor and employment implications of a potential deal by: Providing an overview of the strategic considerations relating to labor and employment issues that should be assessed in a merger or acquisition. Discussing common hidden liabilities and specific labor and employment issues that can have a significant impact on the transaction, but that are sometimes overlooked in the due diligence process.' [Includes detailed discussion of retirement plan, multiemployer plan, and other ERISA and benefits issues.] (Morgan, Lewis & Bockius LLP)

Press Releases

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Lois Baker, J.D., President
Holly Horton, Business Manager

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