[Guidance Overview]
New DOL Guidance Amplifies Participant Fee Disclosure Rules
"[A] plan administrator may need to make fee disclosures regarding an investment option that is only available through [a self-directed brokerage account (SDBA)] if a significant number of participants elect to invest in that option. (It is unclear whether the DOL also believes that the plan's fiduciaries must monitor such an SDBA investment option as if they had selected it for the plan's investment fund line-up.) This interpretation came as a surprise to plan administrators and practitioners, because it is inconsistent with prevailing interpretations of prior DOL guidance."
(McDermott Will & Emery)
|
|
|
|
|
|
Experts Sound Off on DOL's Open MEP Advisory Opinion
"Previous to [DOL Advisory Opinion 2012-04A], one of the primary attractions of MEPs for smaller companies was the elimination of the 5500 filing and the removal of the costly audit requirement. These two factors had the dual impact of taking these companies 'off the grid' ... and reducing the cost of operating the plan ... The [Advisory Opinion] caught many industry professionals by surprise since it appears to be a giant step backwards for regulators... [R]ecent legislation in Massachusetts and California as well as a bipartisan bill offered in the Senate this past March all seem to be going in the direction of open MEPs."
(Fiduciary News)
|
Increased Annuity Values Make Pension Risk Transfer More Attractive
"[The] current annuity discount rate [in the Dietrich Pension Risk Transfer Index] (2.89%) is more than double the 10-year U.S. Treasury yield (1.43% as of June 1). This increase in annuity value, relative to treasury and corporate bond yields, more than offsets a down tick in interest rates and pension funding levels."
(PLANSPONSOR.com)
|
French Fund Bets on Wines as Safe-Haven Investments
"[A] French asset management company ... recently toasted the launch of its ... wine fund created to lure investors with a thirst for fine wines and profits.... Investors weary of traditional equity funds have the option of an asset class that has proven resilient despite the current euro zone financial crisis.... The fund is primarily for money managers, pension funds and qualified investors who understand the risks.... While French and most foreign investors can invest directly in the fund, Americans need to invest through a bank outside of the United States."
(The New York Times; free registration required)
|
U.S. Employees Making Progress Toward Retirement Readiness
"Stronger market returns and continued retirement savings behaviors by employees over the past few years have helped U.S. workers make progress in closing the gap between the amount of money they need to meet their financial needs in retirement and what they are on track to accumulate, according to two new research reports ... However, [there is] room for improvement. The average before-tax contribution rate remains nearly unchanged, at 7.2 percent of pay. As a result, less than 30 percent of full-career employees are currently 'on track' to achieve adequate retirement income."
(Aon Hewitt)
|
UK Pension Funds Break the Worst Kind of Records
"The aggregate deficit of pension funds in the United Kingdom has reached its lowest point since records began seven years ago, data has shown. The Pension Protection Fund (PPF), the lifeboat for bankrupt company funds in the UK, said the combined deficit across the industry had ballooned from 216.8 bil.lion [GBP] at the end of April to 312.1 bil.lion at the end of last month. A year earlier the deficit was 24.5 bil.lion."
(aiCIO)
|
Investors Spooked by European Companies' Zombie Pensions
"Many companies in Europe risk scaring off investors unless they can find ways to deal with big pension deficits that threaten to eat into cash piles originally earmarked for capital investments and dividends. Some firms are haunted by 'zombie' pension [plans], so called because their pension liabilities dwarf the market value of the company itself."
(Reuters)
|
Retirement Savers Stay Put When Employers Boost Contributions
"[A recent] study ... found that workers in plans with higher default initial contribution rates are more likely to stay in their plans, increase their contribution rate and personally manage their investment choices. Plans with less than 4 percent default rates experienced a 14 percent opt-out rate, compared with 10 percent for plans with greater than 3 percent default deferrals[.]"
(Reuters)
|
DC Industry Concerned About DOL FAQ on Self-Directed Brokerage Accounts
"Trade group representatives say the DOL action ... will increase fee disclosure compliance costs, fiduciary responsibilities and monitoring of brokerage accounts.... [They say] Labor Department officials should have formally proposed a new rule, asking for public comment and then issuing a final regulation. Otherwise, industry members say, the uncertainty and complexity of the guidance will make sponsors and providers more vulnerable to fiduciary duty lawsuits by participants and beneficiaries."
(Pensions & Investments)
|
Auditor Says Louisiana Public Pension Funds Didn't Follow Investment Process and Best Practices
"[T]he auditor pointed out a lack of documentation that [the Louisiana Municipal Employees' Retirement System (MERS)] or the [Louisiana Firefighters' Retirement System (FRS)] 'completed an asset allocation study and a comprehensive implementation plan for each asset class and investment decision.' The audit also states there was a lack of documentation by MERS and FRS 'to support that the system(s) considered the ability to liquidate each investment.'"
(Pensions & Investments)
|
Louisiana Retirement System Questions New Cash Balance Plan for State Employees
"The Louisiana State Employees Retirement System [LASERS] ... is looking at who has standing to file a lawsuit challenging the new plan that Gov. Bobby Jindal calls 'a game changer for Louisiana's retirement systems.' 'Do we have a duty as the fiduciary to seek a court opinion before we implement it?' [the LASERS Executive Director] asked.... Before the plan can be implemented ... [an] inquiry must be made to the SSA to determine whether the plan would provide an equivalent benefit to Social Security. Otherwise, affected state employees would have to be enrolled in Social Security with required employee and employer contributions."
(The Advocate)
|
NYC Pension Funds Sue Wal-Mart Execs Over Alleged Bribery
"In early May, the New York City Pension Funds urged shareholders to vote at the company's annual meeting on June 1 against re-electing Duke and four other board members because of the bribery allegations in Mexico. All members kept their seats. But Monday's lawsuit by the New York City Pension Funds comes a week after a final shareholder tally showed discontent rising against key executives and board members ... over the bribery allegations."
(USA TODAY)
|
California Pension Fund Down Almost 5% as Fiscal Year End Looms
"The fund's value declined to $226.1 bil.lion as of June 8, down from $237.5 bil.lion at the start of its fiscal year July 1. As recently as March 31, the fund was up 1.9 percent for the first nine months.... [A]nother loss may make it hard for the fund to meet its assumption of 7.5 percent earnings annually[.]"
(Bloomberg)
|
Foreign Participants Could Not Recover Taxes From U.S. Benefit Plan
"Retired employees, who had never worked or resided in the United States but whose plan benefits were reduced by withholding for U.S. taxes, could not recover monetary damages from their employer, plan administrators, and other plan service providers because Code Sec. 7422 prohibits lawsuits to obtain tax refunds from private tax collectors before filing for refunds with the IRS, according to a U.S. District Court in Illinois."
(Wolters Kluwer Law & Business / CCH)
|
Pensions Under Stress Worldwide
"Because of the financial crisis, as well as the aging of the populations in many of the 34 O.E.C.D. countries, public pension funds are under intense stress. Many countries have changed the terms of their pension systems, including increasing the full retirement age, cutting benefits and giving people more incentives to work longer.... In some countries, however, the changes have already been rolled back under public pressure.... To cover the likely shortfall of public pensions, 13 countries now have mandatory private pension systems, in which workers are required to contribute a portion of their income to privately managed pension funds to supplement their public benefits."
(The New York Times; free registration required)
|
SRO Bill Hearing Is Over; Stay Tuned
"[T]here is still a genuine common concern from both sides regarding the adverse impact that new industry fees and regulation would have on smaller firms." [Article includes links to text of testimony and statements submitted to the House Committee on Financial Services.]
(fi360 Blog)
|
[Opinion]
America's Second Civil War: Public Pension Reforms
"What is that sound we have been hearing since the 2010 Congressional elections and still do today? [The author believes it is] a raging undercurrent of civil unrest among the heretofore silent majority. What is the issue and whom are the silent majority targeting? Public pension costs and the cabal of political and union operatives who have jointly fleeced the American taxpayer for far too long."
(Business Insider)
|
|
Benefits in General; Executive Compensation
|
[Guidance Overview]
Section 409A Basics: When is a Payment Date Close Enough?
"Treasury Regulations contain two special rules that allow some wiggle room (perhaps more than one might think) to an employer in establishing the payment dates or in actually making a payment. These provisions reflect the recognition on the part of the drafters that it may not be possible or practicable to make a payment precisely on the intended date and minor delays in payment will not materially affect the income taxation of the payments."
(Verrill Dana LLP)
|
Section 409A Transitional Relief Deadline Approaching
"The December 31, 2012, deadline is quickly approaching for amending affected deferred compensation arrangements to comply with the Code Section 409A documentation requirements that apply for payments that are contingent on execution (and, where applicable, nonrevocation) of a release of claims. The affected arrangements could potentially include equity, nonqualified retirement, and severance or employment arrangements."
(Morgan, Lewis & Bockius LLP)
|
Two Significant Developments in Limits on Executive Comp
"Last week ... the shareholders of Chesapeake Energy Corporation overwhelmingly rejected the company's shareholder say on pay resolution—by an 80% vote, one of the highest rejection rates to date. Perhaps more significantly, however, the shareholders also voiced their displeasure with compensation (among other) issues by voting against two sitting directors at a level of nearly 75%.... Also last week, the Board of Governors of the Federal Reserve System (the 'Fed'), the Office of the Comptroller of the Currency (OCC), and the [FDIC] jointly issued proposed rules that would require all financial institutions to comply with the complicated and severe bank capital standards known as 'Basel III.'"
(Winston & Strawn LLP)
|
Fox Rothschild 'For Your Benefit' Newsletter - June, 2012
Newsletter on current legal issues impacting employee benefits and executive compensation. This issue includes: COBRA Audits—Another Worry for Employers; What To Do About Those Underfunded Defined Benefit Plans? The Price of Fiduciary Failure—$36.9 Mil.lion; and FSA Cap Update—Limited Relief Announced
(Fox Rothschild LLP)
|
|
Press Releases
|
