ASPPA

Supervisor Participant Services
for Ascensus in PA

Plan Accounting Manager
for Pension Corporation of America in OH

Conversion Payroll Specialist
for Charles Schwab & Co., Inc. in OH

Director of Sales Support and Implementation
for July Business Services in TX

Plan Services Coordinator
for MidAmerica Administrative & Retirement Solutions, Inc. in FL

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Fiduciary Responsibility: What You Need to Know
Nationwide on November 15, 2012 presented by TRI-AD

What Every Woman Should Know About Retirement Savings and How to Make It Last Forum
in Illinois on July 28, 2012 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Smoking Discrimination in the Workplace: On and Off the Clock
Nationwide on August 15, 2012 presented by Lorman Education Services

The Rising Cost of Commuting: Developing a Transportation Benefits Plan
Nationwide on August 23, 2012 presented by Lorman Education Services

 

[Official Guidance]

Text of PBGC Disaster Relief Announcement Relating To PBGC Deadlines In Response To Tropical Storm Debby In Florida
"The disaster area consists of Baker, Bradford, Clay, Columbia, Duval, Franklin, Hernando, Highlands, Hillsborough, Manatee, Nassau, Pasco, Pinellas Suwannee, Taylor, Union and Wakulla counties. If IRS adds additional areas in connection with those filing extensions, any person responsible for meeting a PBGC deadline that is located in those additional areas will also be a Designated Person." (Pension Benefit Guaranty Corporation)

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Learn from industry specialists! We’ll cover hot topics like Fee Disclosure, TPA Workflow, Multiple Employer Plans and much more! Make sure to drop in on our product specific round table discussions and talk about our products with fellow TPAs.

[Guidance Overview]

GASB Approves New Pension Accounting and Reporting Standards (PDF)
"The GASB's new standards make significant changes to pension accounting and reporting by state and local governments. While the current standards provide a close link between pension accounting and funding measures, the new standards disconnect accounting and funding in several ways ... Overall, these changes will likely make the new pension accounting measures more volatile than the funding measures. It should be noted that the GASB's changes do not affect the actuarial methods and assumptions used to determine the contributions needed to fund the plan." (Gabriel Roeder Smith)

Cash Balance Retirement Plans Double Projected Growth Rate
"Kravitz ... released the 2012 National Cash Balance Research Report, which indicates a 21% annual increase in new Cash Balance Plans, almost double the previous year's 11% growth rate. Cash Balance Plans continue to outpace all other sectors of the retirement plan market, including 401(k) plans, which showed a 1% decline in the same period.... Also known as 'hybrids,' Cash Balance Plans combine the high contribution limits of traditional defined benefit plans with the flexibility and portability of 401(k) plans. Many business owners can double their tax-deferred retirement savings while increasing contributions to employee accounts, strengthening staff retention and recruitment." (Business Wire)

What's Next for Target Date Funds?
"[According to a new report by BrightScope,] some managers have significantly improved the prospectus language describing their funds. For example, some prospectuses now state that their funds are intended for participants expecting to take a lump sum withdrawal at or near the target date, while others state that their funds are intended for those participants intending to begin periodic withdrawals at the target date. Also, some TDF managers are returning to the fundamental objectives of TDFs and focusing on growth only in the earlier years of the life cycle while it is safe to do so. As well, the average institutional expense ratio of all TDFs has dropped to 72 basis points from 80 bps, as of December 2006. However, the report also noted that the trend toward more conservative glidepaths has slowed." (On Wall Street)

U.K. Pensions Ruling Complicates Business Acquisitions
"A recent British High Court ruling has transformed the way would-be buyers evaluate acquisition targets, creating new uncertainties about the transfer of retirement plan liabilities from seller to buyer during business or asset sales. From oil services companies in Aberdeen to builders in Brighton, pension issues are looming larger than ever in dealmaking calculations." (The Deal Pipeline)

DOL May Be Monitoring JPMorgan Stable Value Fund
"The U.S. Department of Labor is looking into whether JPMorgan Chase & Co violated its fiduciary duty under [ERISA] in connection with one of its stable value funds. Stable value funds are used in 80 percent of 401(k) self-directed retirement plans and are meant to be the most conservative choice for employees—liquid and backed by insur.ance. But, the $1.8 bil.lion JPMorgan Stable Asset Income Fund has had as much as 13 percent of its assets invested in private mortgage debt underwritten and rated by the bank itself." (Reuters)

Stockton Plan Would Cut Pension Bond Payments by $197.5 Mil.lion
"A Stockton bankrup.tcy proposal does not cut pensions, but the city wants to eliminate $197.5 mil.lion in pension bond payments over the next 25 years, a plan opposed by the bond insurer that would be stuck with the tab.... Stockton would continue to make $41.6 mil.lion in pension bond payments from city special funds that are in the black but restricted for uses such as water. These bond payments would be based on special fund employee pension costs. The rationale for eliminating the main general fund payments on the pension bonds, but not on a half dozen smaller bond issues for parks and a number of structures, is that the pension bonds are not secured by leases, buildings or other collateral." (CalPensions)

More State Pension Plans Cutting Assumed Return Rates
"Of the 126 public plans in the National Association of State Retirement Administrators' [NASRA] Public Fund Survey, 43 have reduced their investment return assumptions since fiscal year 2008. The predominant rate is 8%, but that drops to 7.75% when weighted by asset size, with larger plans having lower return assumptions. Long term, the public funds have weathered economic downturns and negative investment returns well enough to exceed their assumed rates of investment return, according to the NASRA survey, which found a median annualized investment return of 8.3% for the 25 years ended Dec. 31, 2011." (Pensions & Investments)

The Impact of the Decline in Interest Rates on DC Plans
"[I]nterest rates have been, generally, the most significant variable affecting DB funding. The effect of interest rates on DC plans is more subtle. Consider this: when an employer converts its DB plan to a DC plan, it transfers the three critical DB funding risks -- interest rates, asset performance and mortality -- off of its books. Clearly the participant picks up asset performance and mortality (aka longevity) risk. What happens to interest rate risk?" (Plan Advisory Services)

Sixth Circuit Holds No Fiduciary Breach in Transfer of Account Balances from Participant-Elected Fund to QDIA
"The U.S. Court of Appeals for the Sixth Circuit upheld the district court reasoning that the safe harbor for qualified default investments applies any time a participant fails to make an election, not just when a participant fails to make an initial election. Thus, because a notice was sent to the participants, and they failed to confirm their elections in the stable value fund, the safe harbor applied." [Bidwell v. Univ. Medical Ctr., Inc., No. 11-5493, 2012 U.S. App. LEXIS 13306 (6th Cir. June 29, 2012)] (Haynes and Boone, LLP)

Cypen & Cypen Newsletter for July 19, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: Who—or What—Killed the Private Sector DB Plan? Switch To DC Really About Cutting Retirement Benefits; Pensions Not Cause of California Bankruptcies; Manager Selection More Important Than Alternative Allocation (for State Plans); Inertia May Be a Good Thing; and Disclosing Public Employee Pay Troubles Some Officials. (Cypen & Cypen)

Better Participant Outcomes Through In-Plan Guaran.teed Retirement Income (PDF)
"One way financial services companies have addressed the challenges faced by employees is to offer in-plan guaran.teed retirement income options. These can be added to a traditional retirement plan to help provide employees with a source of guaran.teed lifetime income.... [This paper details the findings of] two research studies [conducted on 7,000 plans] to determine how in-plan guaran.teed retirement income options have impacted participant behavior: Preparedness for retirement, and Improved retirement outcomes." (Prudential Retirement)

[Opinion]

Advocates in Britain Want Limits on Pension Investment Management Fees
"[While the author applauds] Britain's effort to reduce pension levies and introduce more transparency in pension fees, it's a day late and a dollar short. More importantly, if they truly wanted to make a difference in widespread pension poverty, they would realize that DB plans are much more effective at reducing fees and they perform better than DC plans.... At this writing, the Dow is down 220 points on fears of that Spain and Greece's debt crisis is getting worse. As stocks tank and interest rates fall to new lows, it's hitting workers, savers and pensioners. It's also exacerbating pension deficits, forcing pension funds hungry for yield to invest more into alternative investments." (Pension Pulse)

[Opinion]

Text of Statement of National Conference on Public Employee Retirement Systems on Report of the State Budget Crisis Task Force (PDF)
"The Report of the State Budget Crisis Task Force ... correctly identified state and local governments' failure to keep up with required contributions in recent years as a primary cause of the current dilemma.... [T]he vast majority of public pension plans are solidly funded and are experiencing a robust recovery from the Great Recession. Three-, five-, 10- and 20-year investment returns are all on the rise - and long-term returns are far more indicative of a plan's health than short-term fluctuations.... Unfortunately, the real American retirement crisis was beyond the Task Force's portfolio - and it needs to take center stage in our national policy debate. The primary retirement savings vehicles for private-sector workers—defined contribution plans—are underfunded by over $8 tril.lion ... That means grave uncertainty for the futures of most 401(k) owners." (National Conference on Public Employee Retirement Systems (NCPERS))

[Opinion]

CalPERS' Bad Year Shows Its Debt Will Not Vanish Magically
"It's time to end the high-risk gamble with taxpayer money at the California Public Employees' Retirement System and local government retirement funds around the state. The announcement last week by the nation's largest pension system that its investment earnings for the past year were a dismal 1 percent should be interpreted with caution; one year's return tells little about the long-term health of the system. But die-hard defenders of the status quo insist that a few years of solid market investments will unburden taxpayers from about $250 bil.lion to $400 bil.lion of statewide debt directly attributable to public-employee pensions—and a year like this shows the folly of funding plans based on irrational exuberance. We have no idea what the future economy and investment markets will look like. So pension systems must stop building their finances around assumptions that the growth of the 1990s will return. And they must stop pretending that even 1990s growth rates would be enough to pull them out of the huge financial hole they've dug." (Silicon Valley MercuryNews.com)

[Opinion]

How to Beat the Retirement Savings 'Action Gap'
"If you have the room to reduce your household budget by five to 10 percent so you can save for retirement, go ahead and save more. Unsure how of much you need to save to have a secure retirement? Don't use that as an excuse to put off saving more—chances are high that you're not saving enough and that you're short by a large margin, so any additional savings is much better than doing nothing." (CBS News)

[Opinion]

CalPERS Fails to Make Money in Commodities
"Nearly five years after it began investing in commodities, the biggest public pension fund in the United States has yet to make any money in the asset class—highlighting the difficulty even the largest and most sophisticated institutions encounter in wringing returns from investments in agriculture, metals and energy derivatives." (Reuters)

[Opinion]

America's 401(k) Nightmare?
"Taking out loans on your 401(k) is obviously not a wise decision but faced with illness, a job loss or other hardship, these people are left with little or no choice. And what happens once they deplete their 401(k) savings? They start collecting food stamps and disability.... America's pensions are under attack. As companies and states switch workers over from defined-benefit to defined-contribution plans, it will only accelerate pension poverty. Of course, there will always be critics claiming we can't afford public pensions, but ... we equally can't afford to starve people, forcing them to deplete their retirement savings and then have them collect food stamps and disability. The social welfare costs of pension poverty and long-term unemployment will break the system and place a huge burden on future taxpayers." (Pension Pulse)

[Opinion]

California Dreaming: One Percent a Year Returns Won't Be Enough to Pay State Pensions
"CalPERS and CalSTRS currently have a combined $383.5 bil.lion in assets, making them the largest public pension system in the country. CalPERS HQ Maybe we could sell the fancy building. That's a lot of money, but thanks to California's legendarily generous and corrupt pension programs, the two funds are on the hook for a lot more than they'll be capable of paying out." (The Weekly Standard)

[Opinion]

CalPERS' Paltry Performance Rings Alarm for Cities
"The financial managers of the California Public Employees' Retirement System who projected a 7.5 percent investment return but only saw the fund grow by 1 percent ought to be fired. When it's someone's job to grow a $234 bil.lion fund and he or she can't even come close, it's time to find someone new. Anyone whose budgeted projections for the end of the recent fiscal year are off by 86 percent needs to have his performance examined at the very least." (San Gabriel Valley Tribune)

[Opinion]

Our Ridiculous Approach to Retirement
"Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day." (The New York Times; free registration required)

[Opinion]

Text of Statement by American Benefits Council Urging DOL to Withdraw Brokerage Window Rule on Fee Disclosure (PDF)
"Field Assistance Bulletin 2012-02 (the "FAB") generally provides helpful interpretive guidance regarding the Department of Labor's final regulations on disclosure of fee and other information to participants. However, Q&A-30 of the FAB raises urgent problems for a large number of plan sponsors.... Q&A-30 creates new rules without notice and the opportunity for public comment, and thus violates requirements contained in the Administrative Procedure Act, OMB's Final Bulletin for Agency Good Guidance Practices, and Executive Order 12866. Because of the procedural violations and the harm that would be caused by Q&A-30, Q&A-30 needs to be withdrawn as soon as possible. In fact, the noted procedural rules were established for situations exactly like this, where new problematic rules are issued because there was not an opportunity for public notice and comment that would have identified the problems before the rules could take effect." (American Benefits Council)

[Guidance Overview]

New Developments on Equity Incentive Plans in China
"Circular 7 does not substantially change the operating procedures stipulated in Circular 78. However, the expansion of application coverage and the provisions on the subsequent reporting requirements reflect the Chinese authorities' intention to strengthen foreign exchange control of the participation in equity incentive schemes of overseas listed companies by domestic individuals. Overseas listed companies offered or planning to offer equity in China should review their public filing schedules to make sure they are in compliance with Circular 7." (Nixon Peabody LLP)

Executives Who Left Company Were Entitled to Payment Under Equity Comp Plan After Wrong Person Decided Claims
"The plans gave an Executive Compensation Committee (ECC) authority to interpret and administer the plans. Two former executives terminated employment when company assets were sold and they declined to accept continued employment at transfer locations. The company's Senior Vice President of Administrative Services, Authorized Representative and Fiduciary to the Benefit Plan Committee, who was not a member of the ECC, determined that the former executives did not terminate employment due to retirement or involuntarily without cause. The Court of Appeals found that the Senior Vice Presidents' decision was not entitled to any deference because the plans gave discretionary authority only to the ECC and the ECC did not decide the claims nor delegate authority to the Senior Vice President." (Haynes and Boone, LLP)

Board of Newly Combined Actors' Unions Pushes to Merge Health and Pension Plans
"Actors have complained in recent years about having their benefits splintered between the two unions, making it harder for them to qualify for health insur.ance. The issue helped fuel support for merging [the Screen Actors Guild and the American Federation of Television and Radio Artists]. However, combining the separate plans is a complex process and must ultimately be approved by trustees of each plan, which is administered by representatives from the unions and from the major Hollywood studios." (Los Angeles Times)

Duped Plaintiff Gets Full Insur.ance Policy's Death Benefit: Fourth Circuit Recognizes Equitable Estoppel and Surcharge as 'Make Whole' Relief Under ERISA
"[T]the Court of Appeals for the Fourth Circuit in McCravy v. Metropolitan Life Insur.ance Company relied on the U.S. Supreme Court's majority opinion in CIGNA Corp v. Amara to expand the relief available under ERISA section 502(a)(3) to include the remedies of surcharge and estoppel. Specifically, the court held on rehearing that, if applicable, these remedies would allow a putative beneficiary of a life insur.ance policy to recover the full amount of the policy proceeds, rather than only a premium refund, where the plan administrator led her to believe inaccurately that she had coverage. In so holding, the Fourth Circuit reversed its own earlier decision in the case, and cast doubt on the continued viability of other decisions both within and outside of the Fourth Circuit, which had construed section 502(a)(3) narrowly to bar "make whole" relief." (Littler Mendelson LLC)

Government Extends Some Benefits to Federal Employees' Same-S.ex Partners
"Same-s.ex domestic partners of feds now are automatically considered an 'insurable interest' for survivor annuities. Federal employees in good health can opt to provide an insurable interest annuity, which is different from a spousal survivor annuity, to certain family members.... Other changes include ... extending to same-s.ex couples child care subsidies available to low-income civil servants. A proposed rule ... would allow the children of a federal employee and same-s.ex partner to receive health benefits under the Federal Employees Health Benefits Program, including dental and vision insur.ance. Same-s.ex partners are not eligible for health care benefits under FEHBP or spousal survivor retirement benefits." (Government Executive)

[Opinion]

It's Time to Keep Public Employee Benefits in Check in Baltimore
"In Baltimore County, the cost of health care alone has escalated to the point where it is rapidly approaching an unsustainable threshold. Consider that for a county employee who selects family coverage, Baltimore County contributes between $15,950 and $20,554 annually, depending upon the selected plan. Baltimore County not only covers the health care of its current employees, but retirees as well. The cost of health care benefits alone for general government, library, community college and school system employees is more than $280 mil.lion a year, roughly 10 percent of the county's total budget. By comparison, the county spends an equivalent amount to fund its entire police and fire operations. Such an expenditure for health care is simply not sustainable." (Baltimore Sun)

Segal Announces Executive Promotions
(The Segal Company)

Segal Rogerscasey Announces Officer Promotions
(Segal Rogerscasey)

United Benefit Advisors Names Thomas Mangan CEO
(United Benefit Advisors)

New Version of BASIC Guru Enables Agents, Brokers, and their Employer Clients to Simplify Compliance with New SBC Requirements
(BASIC Guru)