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July 24, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Part Time On Call Participant Counselor
for Diversified in AR, CA, DC, GA, HI, MI, NC, NJ, OH, UT

Participant Counselor
for Diversified in CA

Client Services Representative - Consultant
for Ameritas Life Insurance Corp. in OH

Sales Position - Retirement and Investment Advisory Plans
for Benefits Consulting Firm in NY

Account Manager
for Cammack LaRhette Consulting in NY

Sales Team Member - Retirement and Compensation
for Verisight, Inc. in CA

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Webcasts and Conferences

ERISA Basics Preemption: Why You Must Care
Nationwide on September 27, 2012 presented by ABA Joint Committee on Employee Benefits

Experts' Guide to Employee Benefits Research
Nationwide on September 20, 2012 presented by ABA Joint Committee on Employee Benefits

Open MEPs: Life after the DOL Advisory Opinion
Nationwide on September 25, 2012 presented by American Society of Pension Professionals & Actuaries (ASPPA)


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[Official Guidance]

Text of IRS Private Letter Ruling on Refunds of Surplus Annuity Premiums to a Plan Sponsor after Transfer of Pension Liabilities to an Insur.ance Company (PDF)
"After satisfaction of all liabilities with respect to employees and beneficiaries of the trust, the [plan sponsor] has been told by the Insurer that it is entitled to a refund of premiums [as a result] of changes in the plan's participant data that was originally included in the bid specifications provided to the Insurer.... Consequently the revisions in calculations by the Insurer were due to a 'mistake of fact' as contemplated in section 403(c)(2)(A) of ERISA ... [T]he amount in question] is the result of an 'erroneous actuarial computation' as described in section 1.401-2 of the regulations (which arose due to a mistake of fact) and accordingly may be returned to the [plan sponsor] ... and thus the return of [this amount] does not constitute an employer reversion under section 4980 of the Code." (Internal Revenue Service)


2012 Advanced Pension Conference in Chicago   [Advert.]

Sponsored by SunGardís Relius Education

Hot topics: fee disclosure regulations, loans, DOL 5500 correspondence, unique investments, MEPs, preapproved plans, cross-tested plans, plan correction. 19 hours of CE credits. Register by August 6 and save $150. Plus, Just for ERPAs Workshop on September 4.


[Official Guidance]

Text of IRS Private Letter Ruling Allowing Limited Opportunity for Lump Sum Payments to Participants Already Receiving Annuity Payments (PDF)
"The proposed amendment will result in a change in the annuity payment period.... Covered individuals who wish to change their current distribution option will be considered to have a new annuity starting date ... Because the ability to select a lump sum option will only be available during a limited window, the increased benefit payments ... are a permitted benefit increase [and] the minimum distribution requirements of section 401(a)(9) ... would not be violated[.]" (Internal Revenue Service)

[Guidance Overview]

What to Do If You Didn't Receive an ERISA 408(b)(2) Disclosure
"Hopefully, you, the responsible plan fiduciary to an ERISA retirement plan, are happily ensconced in your office, reviewing thorough and compliant ERISA Section 408(b)(2) disclosures from the plan's covered service providers. But what if you didn't receive the disclosure, or if it is inadequate? [DOL] regulations provide that the plan fiduciary must request the missing information in writing from the service provider. Guidance does not dictate a specific timeframe under which the fiduciary must make this request ... Presumably this would be within a reasonable time after the fiduciary determined the disclosure had not been provided or was inadequate. What constitutes a 'reasonable' timeframe may depend on how many disclosures you have to review. Of course, if no disclosure at all was provided, those requests should go out posthaste." (Benefits Bryan Cave)

Setting the Discount Rate for Valuing Pension Liabilities (PDF)
"In compliance with GASB standards, the overwhelming majority of public pension funds base their discount rate on the expected investment returns of the fund. These rates are set through a combination of a model based on the capital market assumptions of investment advisors and a desire to take a long-term view. Assumptions have been declining in recent years and we expect this trend to continue as the rates implied by the capital market assumptions have dropped substantially. This will result in higher contributions in the short term. However, if the investment return assumption is not being reduced in accordance with the capital market assumptions, contributions in future years are likely to be higher than otherwise." (Milliman, Inc.)

It's Never Too Late to Plan for Retirement
"There are various ways to plan and save for retirement, but for some, that advice is about 40 years too late. Even if you're starting late or have faced numerous setbacks, retirement is possible. Here are some tips from industry professionals on how to make your last-minute retirement dreams a reality." (Reuters via FoxBusiness.com)

Grand Jury Tells California's San Mateo County to Get a Grip on Soaring Pension Costs
"In the 2005-2006 fiscal year, the county paid $78 mil.lion in pension costs for current and former employees. Its contribution almost doubled to $146 mil.lion by 2011-2012.... The county's pension contribution likely will increase by an additional $13 mil.lion in 2013-2014 ... because the assumed rate of return on its investments was lowered by the San Mateo County Employees' Retirement Association in May from 7.75 percent to 7.5 percent.... [W]hile workers are supposed to pay part of their retirement costs, the county picks up a higher than required share of some employee groups such as management, attorneys and employees with more than 10 years of service. As a result, the county picked up 78 percent of some employees' pension costs in 2010-11 instead of 75 percent." (Silicon Valley MercuryNews)

Are Defined Benefit Retirement Plans Better for Small Businesses?
"While small business owners typically use defined-contribution plans with an elective deferral feature to provide retirement benefits to employees, defined-benefit plans may be ideal for small-business owners over 50 who are interested in saving a substantial amount of money for retirement in a short time period." (AccountingWEB.com)

Retirees in South Korea Find It's No Country for Old Men
"In South Korea, where the average retirement age is a relatively young 58, the golden years are often filled with hard work in coffee shops and small stores that barely provide a living. More than half of the country's 7.1 mil.lion baby boomers ... had made no financial preparations for retirement ... Many of them try to support themselves by opening small businesses on borrowed money. The result is a surge of heavily indebted, self-employed seniors who are at risk of defaulting on debts that average 68.95 mil.lion won ($60,400) per household for those in their 50s." (Chicago Tribune; free registration required)

Public Pension Funds to Face Calls to Set Realistic Targets for Investment Returns and Benefit Promises
"Public pension funds are expected to report poor annual returns in the coming weeks, results that are likely to increase calls for more realistic retirement promises for teachers, police officers and other public workers. At least three of the nation's largest U.S. public pension funds have already announced returns of between 1 percent and 1.8 percent, far below the 8 percent that large funds have typically targeted." (Reuters)

At 2.44%, Oklahoma PERS Tops Benchmark for Fiscal Year
"Oklahoma Public Employees Retirement System, Oklahoma City, returned 2.44% for the fiscal year ended June 30, said Tom Spencer, executive director of the $6.8 bil.lion plan. The retirement system beat its policy benchmark by 30 basis points for the year." (Pensions & Investments)

Can Japan's Government Pension Solve its Funding Problems By Moving Away from Equities?
"Many large Western pension funds, led by pioneers like CalPERS and ABP, have chosen to reach for yield, a choice they know exposes them to big market swings. For some of these funds, the portfolio losses of 2008-09 were near-death experiences (CalPERS's assets plunged 38 percent), pushing their funding ratios down into the red zone. Yet most of these funds are trying to grow their way out by continuing to bet heavily on equities and making ever-larger allocations to private equity, hedge funds, real estate, infrastructure and other illiquid assets. But not the GPIF. At the end of 2011, the Japanese fund had 67.4 percent of its portfolio invested in Japanese bonds, 11.1 percent in Japanese stocks, 8.4 percent in foreign bonds, 10.1 percent in foreign stocks and 3 percent in short-term assets. No exotic long-dated assets anywhere. And fully 80 percent of the portfolio is invested passively." (Institutional Investor)

Target-Date Funds: Prevalent in Plans, Possibly Game-Changing
"[T]he growing prevalence of TDFs—along with other types of professionally managed allocations, such as managed accounts and target-risk funds—is only part of the story. The professionally managed allocation approaches, driven in large part by TDFs, are 'actually reshaping the investment landscape for participants ... It's changed the investment decision for participants because of the portfolio construction that TDFs and similar options offer ... With professionally managed allocations, you're replacing the complex task of portfolio construction and replacing it with a simplified choice,' [said a senior research analyst at Vanguard]." (The Vanguard Group, Inc.)

American Academy of Actuaries Debunks 'The 80% Pension Funding Standard Myth' (PDF)
"An 80% funded ratio often has been cited in recent years as a basis for whether a pension plan is financially or 'actuarially' sound. Left unchallenged, this misinformation can gain undue credibility with the observer, who may accept and in turn rely on it as fact, thereby establishing a mythic standard. This issue brief debunks that myth and clarifies how actuaries view funding levels for pension plans and how the funded ratio relates to the general idea of 'soundness' or the 'health' of a pension plan or system." (Pension Committee of the American Academy of Actuaries)

Advisors Favor Nontraditional Investments
"Financial advisors are increasingly likely to recommend less traditional income-producing assets given the current low yield environment. Favored products include emerging market bond funds and dividend-paying equities for clients ... When asked which investments they were most likely to recommend to clients in today's low interest rate environment, nontraditional approaches to generating income dominated advisor responses. A full 84 percent of advisors are more likely today to recommend dividing-paying equities and more than three-quarters (76 percent) of advisors cited a willingness to recommend emerging market bonds or related bond funds over other asset classes." (Oppenheimer Funds)

IRS Allows Transfers to Inherited IRAs for Beneficiaries of Estate
"Allowing the beneficiaries to distribute the assets over the remaining life expectancy of the decedent is consistent with the provisions of the RMD regulations. Had the assets remained in the name of the estate and the decedent, the same distribution option would apply. Therefore, the IRS' approval of the beneficiaries request does not extend the period over which distributions can be stretched; it simply changed the party that to which distributions would be reported." (RetirementDictionary.com)

[Opinion]

Choosing the Form of Your Pension Benefit: Beware Crafty Insur.ance Agents
"If you're one of those lucky people who will receive a lifetime monthly income from your employer's defined benefit pension plan, you have an important decision to make when you retire: Do you choose a pension that continues the monthly income to your spouse after you die by selecting a 'joint-and-survivor' annuity, or do you elect a higher monthly paycheck by choosing a 'life-only' annuity that stops after your death?" (CBS News)

[Opinion]

When Will U.S. Pension Plans Look Past the Myths and Confront Reality?
"It's about time US public pensions wake up and stop perpetuating the myth of 8%! A while back I wrote a comment, warning what if 8% is really 0%. The ugly truth is if US pensions were using the same discount rate large Canadian public pensions use, the majority of them would be insolvent. Another myth I wanted to bring to your attention is one that the American Academy of Actuaries discusses in a recent paper, 'The 80% Pension Funding Standard Myth' ... It's clear from the myth of 8% assumed rate of return to the 80% pension funding standard myth, US public pensions need to get a grip on reality." (Pension Pulse)

[Opinion]

The Best Investment Advice 401(k) Investors Will Ever Receive: Focus on the Goal, Not the Newspaper Headlines
"Rather than bypassing return, the best advice 401k investors will ever receive will allow them to not just embrace the concept of return requirement, but attack it in the form of identifying a specific Goal-Oriented Target. Good advisers help 401k investors keep their eyes on the ball—their desired retirement lifestyle—and not on the latest investment fads of the strategy de jour." (Fiduciary News)

[Opinion]

Why 401(k) Plans Finally Work
"After years of frustrating trial and error, there is good news to report about 401(k)s. The savings system is beginning to work effectively. Most employees are now tucking substantial amounts into their accounts and the portfolios are properly diversified. The improvements are too late to help many older workers who have inadequate savings to support their retirements. But recent changes should go a long way toward ensuring retirement security for people in their 20s and 30s." (TheStreet.com)

[Opinion]

Pension Fund Activism Threatens Public Employees' Retirement Security -- and Taxpayers
"While the underfunding of union pensions cannot be ascribed to any one cause, there is one that is troubling because it is so avoidable: pension fund activism. This involves pension funds, acting as shareholders, introducing resolutions at corporate shareholder meetings that have little, if anything, to do with increasing shareholder value. This runs counter to [ERISA], which requires pension fund managers to work solely to increase shareholder returns in order to secure workers' retirement security." (OpenMarket.org)

[Opinion]

Our 'Ridiculous' Retirement System Is Crumbling, Expert Says
"Our 401(k)s, for those of us fortunate enough to have one, are tied to an unpredictable and often volatile stock market. (Some employers did away with their 401(k)s at the height of the recession to save money or stay afloat.) If the recession has taught us anything, we now know that retiring in a down market with lost income—despite years of scrimping and saving, of choosing investments and allocations wisely—will diminish our lifestyle permanently. And that's when we get it 'right' and save for 40 years or more." (AARP)

[Opinion]

Text of Letter from American Benefits Council to DOL Regarding Q&A-30 on Brokerage Window Investments in FAB 2012-02 (PDF)
"Q&A-30 of the FAB would, for the first time, require plan fiduciaries to examine all brokerage window investments in which a significant number of participants and beneficiaries have invested and determine whether plan disclosures should be provided with respect to one or more of such investments. This position is in effect a new rule because there is no basis for Q&A-30 in the participant disclosure regulations or in any other legal authority. The Department has had numerous formal and informal opportunities over many years to articulate the Q&A-30 position, but has not done so; in fact, the new position is contrary to existing authorities." (American Benefits Council)

Benefits in General; Executive Compensation

New Jersey Supreme Court Rules Judges Don't Have to Pay More Into Pensions, Health Benefits
"The court's majority wrote Tuesday that the issue is solely whether the law violates the state constitution, and not whether justices and judges should contribute to their pension and health care insur.ance plans or whether any future judicial pay raise can be used to offset increased pension and health care contributions. 'We conclude that it does' violate the constitution, the court wrote. 'No court of last resort—including the United States Supreme Court—has upheld the constitutionality of legislation of this kind.'" (The Republic)

Employer Best Practices for Analyzing Whether Leave Beyond FMLA is an 'Undue Hardship' under the ADA
[W]when an employee requests additional leave after FMLA leave has expired, it is critical that the employer review and document how the employee's request for leave impacts their business and operations and whether continued leave poses an undue hardship. Employers tend to invite EEOC scrutiny when they give undue hardship no thought." (FMLA Insights)

Court Tosses PPACA Lactation Rights Claim But Agrees FLSA Barred Employer Retaliation
"A federal district court in Iowa ... held that while the Patient Protection and Affordable Care Act amended the Fair Labor Standards Act to require employers to provide reasonable break time for employees to express breast milk for nursing children, PPACA did not create a private right of action against an employer that violates the requirements ... [The court] refused to dismiss Salz's claim that she was constructively discharged for complaining about the employer's failure to accommodate her request." [Salz v. Casey's Mktg. Co., N.D. Iowa, No. 11-cv-3055, 7/19/12] (Bloomberg BNA)

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