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July 16, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Sr. Plan Administrator, Insurance Benefit Plans
for The Newport Group in FL

Sales Director
for MassMutual Financial Group in ANY STATE

Implementation Mgr I
for The Standard in OR

Proposal Analyst I
for The Standard in OR

Director of Client Services
for JULY Business Services in TX

ERISA Paralegal/Plan Document Specialist
for Milliman in TX

VP, Investment Operations
for Prudential in PA

Participant Education and Enrollment Specialist
for MBM Advisors, Inc. in TX

Employee Benefits Associate / Attorney
for Atlanta Law Firm in GA

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2012 Orlando Mid-Sized Retirement & Healthcare Plan Management Conference
Nationwide on October 14, 2012 presented by University Conference Services


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[Official Guidance]

Text of Amendment to Regs Under Section 408(b)(2): Filing Notice with DOL of Inadequate Service Provider Fee Disclosures (PDF)
"This document revises the mailing address and web-based submission procedures for filing certain notices under the ... Employee Benefits Security Administration's fiduciary-level fee disclosure regulation under section 408(b)(2) of [ERISA]. Responsible plan fiduciaries of employee pension benefit plans must file these notices with the Department to obtain relief from ERISA's prohibited transaction provisions that otherwise may apply when a covered service provider to the plan fails to disclose information in accordance with the regulation's requirements." (Employee Benefits Security Administration)


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[Guidance Overview]

Pension Plan Funding Stabilization Finally Here under MAP-21 Law
"There are several choices that employers will need to make under the new law. Some decisions may be influenced by future IRS guidance. The decisions will include: Whether to use the new rates for 2012 or 2013.... Whether to begin using the segment rates if the plan previously used the 'yield curve' rate for funding.... Whether also to use the new rates for calculating benefit restrictions under Section 436 of the Internal Revenue Code for 2012, if applicable.... The required annual funding notice to plan participants must include a comparison of old-law and new-law funding information, along with other disclosures." (McGuire Woods LLP)

[Guidance Overview]

Recently Enacted Highway Bill Includes Pension Plan Funding Stabilization, PBGC Premium Increases and Other Pension-Related Provisions
"MAP-21 adopts a number of [PBGC] governance changes including, for example, the establishment of a plan sponsor and participant advocate, quality control requirements (including peer review of its insur.ance modeling system), changes to the board of directors and other improvements." (Proskauer Rose LLP)

[Guidance Overview]

Due Date to File Annual Returns and Fee Disclosures for Puerto Rico Plans
"[This article] discusses the following reminders and requirements affecting Puerto Rico plans: Due Date to Comply with PR Treasury Annual Filing Requirement for Trusts Funding Calendar Year Puerto Rico Tax Qualified Plans is July 31st - Automatic Extension is Available Puerto Rico Plans Must Also File IRS Forms 5500 and 8955-SSA Puerto Rico Plans are Subject to ERISA's Fee Disclosure Notice Requirements" (Groom Law Group)

U.K. Labour Party Seeks Lower Fees for Private Pension Plans
"Britain's opposition Labour Party called for lower fees on private pension plans, saying consumers are losing money through concealed charges and penalties for changing providers. 'Right now, a worst-case scenario could see a pensions saver lose up to half of their pension thanks to hidden costs and charges,' Labour's spokesman on pensions, Liam Byrne, said in an e-mailed statement. 'We're determined to make sure savers are served by every pensions company playing to the standards of the best.'" (Bloomberg)

Public-Sector Pensions Facing More Changes
"A recent press story highlighted proposed pension cuts in San Diego and San Jose, California as pioneering efforts to rein in pension costs. These cuts were deemed newsworthy because they reduced future benefits for current participants, an action which at the beginning of the financial crisis was thought to have been impossible under most state laws. In fact, the San Diego and San Jose actions are consistent with developments in a number of other states where sponsors have recognized that they need the freedom to adjust future benefits to solve their pension funding problems." (SmartMoney Encore)

LIMRA Survey Finds Clients Working with Advisors Are Better Prepared for Retirement
"LIMRA's study found that 61% of consumers who worked with an advisor contributed to a retirement plan or an IRA, while only 38% of people who weren't working with an advisor were contributing to their retirement savings. Even controlling for income, consumers who work with a financial professional are more likely to be contributing to a defined contribution plan or IRA." (Financial Planning)

Trustee Pulls Corporate Strings with Weight of New York State Pension Fund
"As [New York's] state comptroller, Tom DiNapoli is not a member of Albany's exclusive three-men-in-a-room club. But inside the board rooms of some of the world's largest corporations, DiNapoli has come to be a recognized name of influence. His calling card? He is the sole trustee of the $150 bil.lion state pension fund and where that money is invested. That makes him a player on Wall Street." (Buffalo News)

Matching Contributions and Savings Outcomes: A Behavioral Economics Perspective
"Including a matching contribution increases savings plan participation and contributions, although the impact is less significant than the impact of nonfinancial approaches.... a higher match rate has only a small effect on savings plan contributions [but] the match threshold has a substantial impact ... Other behavioral approaches to changing savings plan outcomes—including automatic enrollment, simplification, planning aids, reminders, and commitment features—potentially have a much greater impact on savings outcomes than do financial incentives, often at a much lower cost." (National Bureau of Economic Research)

San Bernardino (Calif.) Bankrup.tcy Driven by Pension Costs?
"A sharp spike in pension costs is not the reason an alarmed San Bernardino city council voted last week to authorize filing for bankrup.tcy ... The city's pension payments climbed steadily from a little over $5 mil.lion in 2000 to about $23 mil.lion in 2008. But the payments have remained at roughly $23 mil.lion since then, and increases forecast in the next few years are gradual.... '[R]etirement costs' were 9 percent of the general fund in fiscal 2006–7, grew to 13 percent last year and are expected to be 15 percent in fiscal 2015–16. Retirement costs in Stockton, which filed for bankrup.tcy on June 28, are about 17.5 percent of the general fund. Retirement costs in San Jose and San Diego, where voters approved major pension cuts last month, are 20 percent of the general fund." (CalPensions)

QDIA Safe Harbor Applies to Fiduciary's Transfer of Participant Accounts
"The fundamental issue addressed in this appeal was not whether the plan had complied with the safe harbor requirements, but whether the safe harbor even applied in this particular situation. The participants, based on the outcome in the trial court, may have chosen to focus on that angle in the appeal since it appeared that the fiduciary's actions met the safe harbor requirements. In any event, this case underscores the importance of adhering to prudent procedures—and documenting those procedures—when carrying out fiduciary functions." [Bidwell v. Univ. Med. Ctr., Inc., 2012 WL 2477588 (6th Cir. 2012)] (Thomson Reuters / EBIA)

Bankrup.tcy Choices Highlight Fiscal Pain of Cities Nationwide
"The decision by three California cities to seek bankrup.tcy protection in the space of two weeks is unlikely to presage a wave of copycat filings. But it does underscore the mounting financial pressure facing local governments around the country.... Tax receipts in some locales have shrunk more than 20 percent over the last three years, and soaring pension costs exceed funding levels by as much as $3 tril.lion nationwide.... All that has fed fears that American cities are lined up to fall like so many dominoes. But municipal bankrup.tcy filings are likely to remain rare for a variety of legal and political reasons. What's clear is that the fiscal pain experienced by U.S. cities is widespread and shows no sign of easing." (Sacramento Bee)

California State Teachers' Retirement System Returns 1.8% in Fiscal Year
"CalSTRS returned 1.8% for the fiscal year ended June 30, said Christopher Ailman, chief investment officer, at a meeting Thursday of the $146.8 bil.lion system's investment committee. The small return is a blow for the California State Teachers' Retirement System, West Sacramento, which has a 7.5% assumed rate of return. It also is still recovering from the deep financial blow sustained in the 2008-'09 fiscal year, when it lost 25% of its assets." (Pensions & Investments)

For Michigan's School Employees, a Higher Cost to Retire?
"School districts crushed by surging retirement costs could save as much as $250 mil.lion this school year under a contentious bill that would make retirement benefits more expensive for public school employees but give districts millions they could use to decrease class size, restore cut programs or squirrel away more money for emergencies.... [T]he state Senate is expected to take up the bill—backed by Gov. Rick Snyder—that would require current and retired school employees to dig deeper into their pockets to keep their benefits. Some employees would get reduced benefits." (Detroit Free Press)

Navigating the ACA's 2013 Investment Taxes
"Roth IRA conversions and traditional individual retirement account distributions aren't considered investment income, yet they can trigger the surtax. Raising modified adjusted gross income via IRA distributions and Roth conversions can push a client above the applicable threshold amount, causing them to be subject to the 3.8% surtax.... How can you help clients minimize the surtax bite? In the retirement-planning area, persuade working clients to maximize deductible contributions to 401(k)s, simplified employee pension plans, profit-sharing plans and so on. Business owners and professionals might want to consider defined-benefit plans[.]" (Investment News; free registration required)

Should You Take Your Pension as a Lump Sum?
"While the idea of suddenly having a large sum of money is appealing, this is a decision that you will have to live with for the rest of your life. Any retiree who accepts the lump sum offer will immediately lose the benefits of a lifetime income and will be responsible for taking care of their own investments and making sure they last as long as you do. Most experts would say that, for most retirees, a guaran.teed stream of income for life is a better option than a lump sum. The only situations in which a lump sum should be seriously considered are if you are in poor health, you don't expect to live long, and you will not have a surviving spouse who will need lifetime income; or if you already have a substantial nest egg or other secure source of adequate income, such as a spouse's pension. Here are some questions to consider[.]" (Pension Rights Center)

Explaining Risk to Clients: An Advisory Perspective
"To illustrate how advisors explain risk to clients, [the authors] map [their] view of current advisory practice, with particular emphasis on risk management, to [their] view of the current mosaic of planning paradigms. [They] then apply that information to identify questions for further discussion and research [and] conclude there has been an evolution in advisory practice from a focus on product, to policy, and now increasingly to process, with communication about risk remaining central throughout." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)

Late Retirement and Required Minimum Distributions
"Normally minimum required distributions start at age 70-1/2, but for some people in some retirement plans, the 'required beginning date' for minimum distributions doesn't arrive until retirement. Here are some recent questions from [Natalie Choate's] readers about that 'special deal.'" (Morningstar Advisor)

[Opinion]

How the Administration Can Help Financially Strapped Local Governments: Eliminate the IRS-Imposed Snag Over Employee Elective Contributions
"In 2009, Orange County came up with the single smartest way we've seen to get out of the crisis caused by unaffordable pensions. Under the proposal, which was supported by unions, public employees would have the option of receiving much less lucrative pensions in return for more take-home pay. This amounted to an acknowledgment that if pensions were to be fully funded and public employees were to pay their fair share toward long-term pension costs, they'd lose a big chunk of their pay. But this win-win way out has been stalled by the IRS for three years, which has refused to give its needed blessing to allowing this option—despite requests from Orange County politicians of both parties." (San Diego Union-Tribune)

[Opinion]

Another Fee Article, Another Distortion
"The July 12 issue of Fortune includes an article 'Is your 401(k) ripping you off?' As has been the case with 401(k) fee reporting over the years in this article 401(k) plan fees are presented as if the fees at small companies are representative of 401(k) fees generally instead of reporting that for most 401(k) participants low fees are one of the advantages of investing in a 401(k) plans." (Plan Sponsor Council of America)

[Opinion]

The Pension Benefit Guaranty Corporation: Who Will Guaran.tee This Guarantor?
"Defined-benefit pension plans are very difficult to finance successfully: That is why so many of them, both private and public, are deeply underfunded. It is also why they are a disappearing financial species.... [H]ere was a 'big idea' of a half century ago: Let's have the government guaran.tee these pension plans! ... Politically, it was a brilliant idea, especially if you wanted to negotiate pensions which companies could not afford. Financially, it was a less good idea ... the law requires that the PBGC 'be self-financing.' So far, the PBGC has 'self-financed' itself into a $26 bil.lion hole." (The American Magazine)

[Opinion]

Time for Government Employees in California to Share the Pain
"The California economy is in the doldrums, two mil.lion workers are unemployed and looming over everything is a $500 bil.lion pension debt that is growing by the day -- a debt, by the way, that must be made good by taxpayers. The response from the unions representing California government employees, who are the highest paid in all 50 states, is to demand unconditional surrender from taxpayers. No compromise, no step back on their part. The union bosses want taxpayers to continue to labor like indentured servants, delaying their own retirement and paying higher taxes so that their government employees can retire young enough to start a second career with pensions approaching full pay. (It should be noted that benefits for government employees who retired prior to 1999 are much more modest.)" (Howard Jarvis Taxpayers Association)

[Opinion]

Own Company Stock in Your Self-Directed 401(k) Account? Sell It All!
"Today, nearly 50% of all 401(k) plans offer participants company stock and of those participants, 28% held more than 20% and 5% held more than 80% of their 401(k) money in company stock. Nearly 66% of large companies offer company stock to employees. If you own company stock in your 401(k), take some sage advice—sell it. Not some of it, but sell every single share." (MarketWatch.com)

[Opinion]

The Market for Financial Advisers
"Because many people are not financially sophisticated, the quality of financial advice is a retirement policy concern. Financial advisers provide a valuable service, and many provide unbiased advice.... Financial advisers, however, provide many types of services, sometimes have conflicts of interest, and do not always have a fiduciary duty to provide advice in the best interest of the client. Some financial advisers engage in 'hat switching,' interacting with the same clients as a fiduciary for some transactions, but without fiduciary responsibility for other transactions. Understanding the adviser's sources of compensation, including third party compensation, will help identify conflicts of interest that may affect the quality of advice clients receive." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)

[Opinion]

Public Pensions Under Attack in America?
"Cutting public pensions and shifting everyone to 'low-cost' defined-contribution plans isn't a solution to the pension crisis. It's actually stupid public policy because it will drastically raise social welfare costs, imposing a heavy tax bill on future generations. But again, unless the jobs crisis in America, Europe and elsewhere is addressed in a meaningful way, all the discussion on fixing pensions is meaningless. Without good solid jobs, there will be no pensions to talk about, only the distant sound of tumbrils." (Pension Pulse)

Benefits in General; Executive Compensation

IRS Issues Guidance on Treatment of Dividends Related to Restricted Stock
"A publicly held corporation may deduct compensation paid to employees, but that deduction is limited to $1 mil.lion in the case of payments of 'applicable employee remuneration' made to 'covered employees' ... Compensation is excluded from this definition ... if it is paid on account of attainment of performance goals that meet certain conditions. The IRS concluded that grants of dividends (or equivalents) are separate and apart from the related restricted stock or RSUs, and so the dividend grants must separately satisfy the above conditions in order to be excluded from applicable remuneration." (Wolters Kluwer Law & Business / CCH)

Government Report Shows Wide Disparity Between Benefits for Public Employees Compared to Private Sector
"It's no secret that public employees tend to get better benefits than their private-sector counterparts. But a new report from the Labor Department this week is still striking in just how wide the gap is. As of March of this year, 89% of state and local government employees get offered some sort of retirement benefit, compared to 65% in private industry. 79% of public workers can get life insur.ance through work, versus 57% of private workers. 89% of government workers get paid sick leave, versus 61% in the private sector. The starkest contrast, though, is in health care. 73% of state and local government workers—including 83% of full-time workers—receive health benefits through their jobs. In the private sector, barely over half, 51%, of all workers get health benefits, and just under two-thirds, 64%, of full-time workers do." (The Wall Street Journal Health Blog)

Efforts to Tackle Global Obesity Shaping a New Investment Megatrend
"Increasing efforts to tackle obesity over the coming decades will form an important new investment theme for fund managers ... BofA Merrill Lynch has identified a Global Fighting Obesity Exposure Stocklist-50+ centering on four areas: Pharmaceuticals and Healthcare; Food; Commercial Weight Loss, Diet Management and Nutrition; and Sports Apparel and Equipment. ... Medical costs for treating obese patients are 40 percent higher than for non-obese patients. Treating obese patients comes at a higher premium than treating smokers. Obesity adds 50 percent to annual medical costs, while smoking adds 20 percent.... As happened with smoking, it is likely that the growing cost burden of obesity on governments, corporates and wider society will spur collective action and greater regulation." (Bank of America Merrill Lynch)



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