ASPPA

Regional Director
for The Newport Group in CA

Defined Benefit Plan Administrator
for Chicago Area TPA Firm in IL

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Full Steam Ahead on Health Care Reform
Nationwide on July 12, 2012 presented by Seyfarth Shaw LLP

ERISA Fee Disclosure Symposium
in Texas on October 23, 2012 presented by Roland|Criss Fiduciary Services

 

How to Avoid TPA Partnership Pitfalls (PDF)
"Many defined contribution TPAs partner with other TPA firms that offer defined benefit and cash balance plan design and administration. An emerging partnership area over the past few years has been larger open architecture TPA/recordkeepers partnering with TPAs that do not provide daily valuation recordkeeping in-house. Focusing on the specifics of what a firm does well, rather than trying to be all things to all clients, is what a good partnership arrangement can support. With an effective partnership arrangement, your firm can offer all services to a client without having to perform all services independently." (Simoneaux Consulting Services)

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[Guidance Overview]

Retirement Plan Administrator Could Be Sued for Failure to Respond to Request for Explanation of Individual Benefit Calculations (PDF)
The group of plaintiff-employees sent this request to the plan administrator: "For each employee, please provide the number of years of service credit awarded. For each year in which the credited service totals less than one year, please provide an explanation of why a full year was not credited, as well as the number of hours credited to the employee for that year." The federal district court for the Northern District of Ohio ruled that "Plaintiffs requested information to enable them to understand their rights to benefits under the terms of the Plan" and accordingly the plaintiffs were entitled to the information. (United States District Court for the Northern District of Ohio)

What Do I Do With All These Fee Disclosures From Service Providers?
"By now, a plan fiduciary should have received fee disclosures from all of the plan's covered service providers. Although the obligation to provide the fee disclosures falls on the covered service provider, the plan fiduciary is ultimately responsible for confirming it has received a fee disclosure from each covered service provider and that each disclosure complies with the final regulations under ERISA Section 408(b)(2). Accordingly, it is important that a plan fiduciary take the following steps in response to the DOL regulations: Confirm that it has identified its covered plans; Confirm that it has identified all covered service providers with respect to each plan; Confirm that each covered service provider has made a fee disclosure pursuant to the DOL regulations; and Thoroughly review all disclosures it has received from covered service providers to confirm that they satisfy the requirements of the DOL regulations." (von Briesen & Roper, s.c.)

Video: Seven Things You Need to Know About Retirement Financial Advice
39-minute 2012 Pension Research Council Symposium dinner keynote address given by Harold Evensky. Recorded May 3, 2012 at the University of Pennsylvania in Philadelphia. (Pension Research Council, Wharton School of the University of Pennsylvania)

The Impact of Longevity Improvements on U.S. Corporate Defined Benefit Pension Plans (PDF)
"This paper provides the first empirical assessment of the impact of life expectancy assumptions on the liabilities of private U.S. defined benefit (DB) pension plans. Using detailed actuarial and financial information provided by the U.S. Department of Labor, we construct a longevity variable for each pension plan and then measure the impact of varying life expectancy assumptions across plans and over time on pension plan liabilities. The results indicate that each additional year of life expectancy increases pension liabilities by about 3 to 4 percent. This effect is not only statistically highly significant but also economically: each year of additional life expectancy would increase private U.S. DB pension plan liabilities by as much as $84 bil.lion." (International Monetary Fund)

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Fort Worth City Council Starts Clock Ticking on Pension Changes
"The Fort Worth City Council started the clock ticking Tuesday on major changes to the city's pension plan that would reduce benefits for police and general employees, but potentially bring the city's retirement funding gap into check. The Fort Worth Police Officers Association put up its own proposal, offering to increase its members' contributions to the plan in exchange for retaining key components of the retirement pay formula.... The changes would reduce benefits for future service, but not benefits already accrued, which are protected by state law." (Star-Telegram.com)

6 Ways to Create a Windfall for Your Self-Directed 401(k) Account Due to New Disclosures
"Given the endless stream of surveys reporting how worried Americans are about their retirement security, it seems to me you can do yourself a great favor. Pay attention to the new fee disclosures required of 401(k) plans. Here are a few ways to use the new fee disclosure to boost your retirement balances: 1. Size up what you're paying... 2. Focus on the low-cost options... 3. Keep investing even if it's a fee dog... 4. Look for low-cost index funds... 5. Let H.R. know you're on the case... 6. Get out of old expensive 401(k)s." (Forbes)

Largest U.K. Companies Need 5 Bil.lion GBP to Meet Contributions
"The U.K.'s largest companies will need to hike retirement contributions by a combined 5 bil.lion GBP ($7.75 bil.lion) by 2013 as they fight to curb defined benefit plan deficits and as auto enrollment boosts participation in defined contribution plans ... In 2011, FTSE 100 companies contributed a combined 21.4 bil.lion GBP to all retirement plans, about even with the previous two years, a new report from LCP states. About half of the 2011 contributions—11.1 bil.lion GBP—were deficit payments into DB plans." (Pensions & Investments)

Little-Known U.S. Board Stokes Hot Pension Debate
"The feedback was swift and often scathing when a little-known public board signaled its intent to toughen the accounting rules governing state and local pension funds of millions of U.S. public employees, intensifying worries over a shortfall of billions of dollars. The plan by the Governmental Accounting Standards Board (GASB) ... drew praise from the American Institute of Certified Public Accountants and from investors looking for transparency in the $3.7 tril.lion municipal bond markets. ... For some states and municipalities the new rules, taking effect in 2013 and 2014, mean acknowledging that pensions for police, firefighters, teachers and other municipal workers are woefully underfunded liabilities." (Reuters)

Evaluating Retirement Withdrawal Strategies
"[O]ne of the more popular retirement drawdown methods is often the least-efficient way to go to maximize lifetime income for a retiree, while a simple rule used by the Internal Revenue Service works quite well. The report, 'Optimal Withdrawal Strategy for Retirement Income Portfolios,' conducted by Morningstar, measured five different drawdown strategies in various case studies.... [P]lans that dynamically adjust for changes in both market and longevity beat more traditional methods. It also concluded that investors should reevaluate how much to withdraw every year based on these two variables." (Financial Planning)

European Countries Consider Raising Normal Retirement Age
"As countries in Europe and beyond grapple with ballooning deficits and debts, government spending on pensions has become a popular target. The International Monetary Fund has recommended raising retirement ages to ease the financial burden associated with rising life expectancy. More than four-fifths of the countries in the Organization for Economic Cooperation and Development, which represents advanced and emerging economies, are raising retirement ages or planning to do so. Fourteen countries—including several on the front lines of the European financial crisis, such as Italy, Spain, Greece and Ireland—are looking to increase their retirement ages to between 67 and 69 by 2050." (The Washington Post)

IRS Compliance Check Addresses Merged Money Purchase and 401(k) Plans
"A compliance check by the IRS Employee Plans Compliance Unit has determined that most money purchase plans with 401(k) features are merged plans and did not incorrectly add a 401(k) feature to an existing money purchase plan. The stated goal of the IRS in undertaking the 401(k) Money Purchase Pension Plan project was to determine whether employers had mistakenly adopted a money purchase plan with a 401(k) feature after ERISA was enacted, and, if so, to ensure the correction of the error." (Wolters Kluwer Law & Business / CCH)

401(k) Plans in 2010: an Update from the Federal Reserve's 2010 Survey of Consumer Finances
"The release of the Federal Reserve's 2010 Survey of Consumer Finances (SCF) is a great opportunity to assess how conflicting forces—the maturation of the system and the Pension Protection Act of 2006 on the one hand and the devastating effects of the 2008 financial collapse and Great Recession on the other hand—have affected workers' 401(k) accounts." (Center for Retirement Research at Boston College)

Keep the Paycheck, Live the Lifestyle: Working Longer While in 'Pretirement' Mode
"Given the choice between spending more time in the work-a-day world or opting for a less cushy retirement, many people might just choose to downsize their retirement dreams. That's where 'pretirement' comes in. The idea is to get yourself to view those extra years on the job in a different light. Instead of thinking of them as an unrelenting grind, look at them as a chance to get a jump on some of the activities you're looking forward to in retirement: traveling, starting a new hobby, taking adult-ed classes, etc. To help afford these pre-retirement activities, you can skip or cut back on contributions to your retirement accounts." (Fidelity.com)

Roth 401(k) Plans: Employer Considerations (PDF)
"This Note gives a general overview of the designated Roth option and explains: The benefits of using a Roth 401(k). The IRC requirements governing designated Roth plans. The treatment of contributions to and distributions from Roth 401(k) plans. In-plan rollovers of distributions from non-Roth accounts to Roth options within an employer's plan. Issues for employers to consider before implementing Roth 401(k) programs." (Groom Law Group)

ERISA Service Provider Disclosures: What Plan Sponsors Need to Do Now (PDF)
"This Bulletin describes the steps that plan sponsors must take to review the disclosures they received, and how to proceed appropriately in cases where the disclosures were not furnished. This is important because, if a plan sponsor fails to engage in a prudent process to evaluate disclosures provided by a service provider, or fails to identify required disclosures that are missing or deficient and take affirmative action, it will have engaged in a breach of fiduciary duty and, possibly, a prohibited transaction." (Drinker Biddle & Reath LLP)

ESOP Restatements and Submissions: Opportunities for Lower Costs, New Designs and Enhancing Employer Protections
"By now, all companies sponsoring ESOPs should be aware that their plan documents must be restated and submitted to the IRS every five years for a letter of determination of their tax qualified status. What they may not realize is that the ESOP restatement process offers potentially unrealized opportunities for cost efficiency, employer protection and creative re-design.... Cycle B filers [will be submitting restated ESOP plan documents to the IRS before January 31, 2013, and thus] are immediately poised to take a closer look at the design potential, for cost savings and fiduciary protection possibilities. Opportunities are also becoming available for those Cycle C, D and E filers that are next up in the process of IRS approval. For every company, the process begins by asking the right questions -- some technical, and some design oriented." (Chang Ruthenberg & Long)

Are You Restating, Modifying or Amending Your ESOP Document or Written Distribution Policies?
"It is a fairly common practice for ESOP plan documents to contain references to distribution 'policies' that are separate from the plan document itself and that are administered, or modified or amended, by plan fiduciaries (committees, trustees or the company).... In order to obtain the IRS's views on the use of such policies, we recently submitted the following questions in connection with a determination letter application: Is a distribution 'policy' considered part of the plan document for purposes of a determination letter request? If so, will the IRS be treating such policies as only amendable by the same party that amends the plan document (e.g., the employer)? If it is a part of the plan document, is it subject to the prohibition on 'discretionary availability' of an alternate form of distribution ...?" (Chang Ruthenberg & Long)

[Opinion]

Teacher Pensions in Illinois: Separate and Increasingly Unequal
"[H]ere's a simplified explanation of the current sticking point on state pension reform: Chicagoans pay twice for teacher pensions: once for local educators, and once for suburban and downstate educators. Other Illinois residents pay once: for suburban and downstate educators. To some this is outrageous. Every district should be responsible for supporting its own teacher retirement program." (Chicago Tribune; free registration required)

[Opinion]

The Tao of Dow: The Five Spiritual Gates of Investing for Retirement
"It takes equal amounts of faith, however, to choose not to play the market and live your financial life off the grid. 1. Determine whether you're an optimist or a pessimist -- and whether it is important for you to be consistent.... 2. Come to terms with thinking you can know the year of your death.... 3. Ask yourself if you define spiritual attainment as being able to put your savings in the hands of forces beyond your control and forgetting about it for 20 years? ... 4. Decide whether trusting financial advice is the same as having faith in the world.... 5. Make a decision about how you want to live your life." (The Huffington Post)

[Opinion]

Could Supreme Court Decision Lead to Mandatory Sponsorship of a Pension Plan, Else Pay a Tax?
"Strange as it may seem, the U.S. Supreme Court ruling upholding the Patient Protection and Affordable Care Act of 2010 could eventually affect private and public pension plans.... Congress could, for example, impose higher corporate income taxes, or a specific pension levy, on employers who do not provide pension plans for their employees, and also on employees who do not participate in such plans. It could go further and replace the current deductibility of pension contributions for companies and individuals with a tax penalty for not having a pension plan and/or not participating in a plan." (Pensions & Investments)

[Opinion]

401(k) Participants Pay Dearly for Predictable Crime of Underperformance by Active Investment Managers
"[A] 401(k) plan that has any actively managed funds as investment options reflects negligence by both those advising the plan and the plan sponsors who blindly accept this flawed advice... Over a ten year period, only 30 percent of actively managed funds outperform. That percentage falls to 20 percent over a 20 year period. Even those numbers are deceptive. In their seminal analysis of luck versus skill in mutual fund returns, Eugene F. Fama and Kenneth R. French evaluated 819 actively managed funds over 22 years and found that 97 percent could not be expected to beat a risk-appropriate benchmark." (The Huffington Post)

[Opinion]

Text of Letter from Financial Services Institute to House Education & Workforce Committee About DOL's Pending Fiduciary Rule (PDF)
"As you can see FSI did in fact respond and provide data for the Department's data request. We continue to believe that requesting 10 years' worth of detailed data on every investment, investor, and recommendation in every context is unreasonable on its face. As a result, we were surprised at Assistant Secretary Borzi's letter expressing disappointment in light of the facts surrounding the data request because her depiction of events stands in stark contrast to the facts.... Despite the Secretary's assertions to the contrary, we remain concerned that there is a lack of meaningful coordination between the Department and the SEC—despite the fact the SEC is engaged in a parallel project. This lack of coordination is particularly concerning because the SEC's project is driven by a statutory directive in the Dodd-Frank Act, while the Department's is not." (Financial Services Institute)

Compensation Clawback Provisions Figure Prominently in Record GlaxoSmithKline Settlement Over Healthcare Fraud
"[The] U.S. Department of Justice announced the largest health care fraud settlement in U.S. history, an agreement with GlaxoSmithKline to plead guilty and pay $3 bil.lion to resolve fraud allegations and failure to report safety data. As part of the settlement, GSK executed a five-year, 123 page Corporate Integrity Agreement (CIA) with the Department of Health and Human Services, Office of Inspector General (HHS-OIG). One of the most significant features of the CIA is the Executive Financial Recoupment Program. Under the Executive Financial Recoupment Program, GSK will establish and maintain a financial recoupment program that puts at risk of forfeiture and recoupment an amount equivalent to up to three years of annual performance pay (i.e., annual bonus, plus long term incentives) for an executive who is discovered to have been involved in any significant misconduct." (Winston & Strawn LLP)

Agreements Containing Release-of-Claims Provisions Could Require Section 409A Amendments Before Year-End
"Employment agreements commonly condition severance payments upon an employee's execution of a release of claims.... [T]he IRS has indicated that the typical way these release provisions are drafted does not comply with Section 409A and that covered agreements affected by this problem that have been in existence since Dec. 31, 2010 must be amended before the end of 2012 in order to avoid significant tax problems for employees and employers." (McGuire Woods LLP)

San Bernardino, Calif., Seeks Bankrup.tcy Protection
"The city's fiscal crisis has been years in the making, compounded by the nation's crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento's raid on redevelopment funds and a city reserve that is tapped out, officials said.... Filing for municipal bankrup.tcy protection will allow San Bernardino to renegotiate contracts, including those with employees ... Current employee pension obligations, one of the contributors to the city's financial straits, will not be affected, officials said." (Los Angeles Times)

[Opinion]

Unfunded Legacy Costs = Big Trouble for Local Governments
"Too many local units of government in Michigan fail to fund in their current operating budgets' pension and retiree health-care (e.g. legacy) costs, as recommended by an actuary. Often, the refusal to fund arises as a concession to employee groups seeking to avoid an impact today that can be pushed into a future year's budget. But the future is now and legacy funding has become a staggering financial burden on many local governments. These costs are no longer merely the elephant in the room; they are a giant mammoth that threatens even core services.... The future of Detroit's next generation has been mortgaged." (mLive.com)

Buck Consultants Opens Office in Sao Paulo, Brazil
(Buck Consultants)

ING U.S. Chosen as Service Provider for Serco Inc. Retirement Savings Program
(ING Retirement)

Forrest Wilson Joins ASPire Financial Services
(ASPire Financial Services)

Krames StayWell’s Self Care Decision Tool Helps Consumers Make Better Choices about Treatment
(Krames StayWell)

Employers Respond to Supreme Court Decision on Health Care
(The Chelko Consulting Group)

New Video, Website Help Health Plan Sponsors, Patients and Policy Makers Maximize Prescription Drug Benefits, Reduce Wasteful Spending
(National Community Pharmacists Association (NCPA))