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July 26, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

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Client Service Representative
for ExpertPlan, Inc. in NJ

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Webcasts and Conferences

401(k) Rekon Advisor Symposium - Pleasant Hill
in California on August 21, 2012 presented by 401(k) Rekon

401(k) Rekon Advisor Symposium - Tampa
in Florida on August 23, 2012 presented by 401(k) Rekon

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[Guidance Overview]

Impact on 403(b) Plans of Q&A-15 in DOL Field Assistance Bulletin 2012-2
"One of the more difficult questions that has arisen under the 404a-5 participant disclosure rules is related to those pesky 'old' 403(b) contracts. In the multiple vendor ERISA world, where a number of vendors have been in and out of the plan over decades, the question becomes whether-and to what extent-the 404a-5 disclosures have to be made under those contracts into which deposits could no longer be made.... This means that, for those 'old' 403(b) contracts not excluded under Q2, the 404a-5 disclosures will still need to be made, even though the only act participants can take is to move money from those contracts. This Q15 also makes it clear that the disclosure only needs to be made to those who hold those contracts, if the plan administrator so elects to do so." (Business of Benefits)

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[Guidance Overview]

MAP-21 Authorizes Increase in Multiemployer PBGC Premiums
"MAP-21 increased the multiemployer PBGC premium. The current $9 flat-rate per participant premium will be $12 in 2013 (reflecting a $1 inflation increase and a $2 premium increase). Thereafter, it will be indexed for wage inflation.... The new law extends retiree health transfers (previously scheduled to sunset on December 31, 2013) to December 31, 2021, and adds a new right to transfer surplus assets for purposes of paying group-term life insur.ance premiums for up to $50,000 of coverage for retirees." (The Segal Group, Inc.)

[Guidance Overview]

MAP-21 Provides Pension Funding Stabilization and PBGC Premium Increases
"The new law provides funding interest-rate stabilization for defined benefit (DB) plans, effective for plan years beginning on and after January 1, 2012, and, beginning in 2013, will significantly increase both flat-rate and variable-rate [PBGC] premiums. It also extends the provisions for transferring surplus DB plan assets into retiree health accounts and expands the transfer provisions to include retiree life insur.ance accounts. The law also makes changes to the governance structure of the PBGC." (The Segal Group, Inc.)

[Guidance Overview]

EBSA Regs Revise Mailing Address and Web-Based Submission Procedures for Filing Fee Disclosure Notices with DOL
"The direct final regulations reflect a new mailing address and provide for electronic submission through the DOL's website. For paper notices, a dedicated post office box has been established to replace the original mailing address. In addition, effective September 14, 2012, the DOL is eliminating the email address previously provided in the final regulations." (Wolters Kluwer Law & Business / CCH)

Helping Women Get More Out of Social Security
"Elderly women rely more heavily on Social Security than men, in spite of the fact that what they get is significantly less.... In 2010, for example, 16% of women age 65 and over had no income other than Social Security, compared with 12% of men. Divorce and widowhood played a large role in women's dire retirement-income situation: Their household income fell by 41% after a divorce, almost twice what men experienced. In widowhood, women's household income fell by 37%, while men's fell by 22%[.]" (The Wall Street Journal Health Blog)

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Four In Five People Worldwide Worry About Outliving Retirement Savings
"More than four out of five people (82 percent) are worried about their financial situation after retirement and almost nine in ten people (89 percent) say it is important for them to start saving now, according to a global ... survey of more than 8,000 people from 15 countries. The survey also reveals that more than half (53 percent) of the respondents believe they lack the necessary information to prepare for retirement and the financial capacity (57 percent of respondents) to invest in private pension." (Business Wire via InsuranceNewsNet)

Can.ada Concerned That Investment Fees Can Badly Dent Retirement Funds
"Canadians who participate in their company's pension, group RRSP and deferred profit-sharing plans pay hundreds of millions of dollars in investment fees and embedded advisor compensation each year. These costs are coming under increasing scrutiny given muted investment returns, proposed low-cost investment options for pooled registered pension plans and growing concerns over ethics in the financial services industry. Significant regulatory changes in other countries have also highlighted how Can.ada continues to fall behind in the areas of investment fee and compensation transparency and disclosure." (The Vancouver Sun)

Target Date Retirement Funds Increasing Their Exposure to ETFs
"For ETF providers, this trend could be their ticket into the $3.4 tril.lion 401(k) market. For investors it could mean lower costs and better returns, experts said. ETFs, baskets of securities that trade on exchanges like individual stocks, are cheaper than mutual funds. ETFs come in a number of different flavors covering areas such as equities, fixed income and commodities." (Reuters)

The Role of Pensions in Reducing Elder Economic Hardships
"[R]ates of poverty among older households lacking defined benefit (DB) pension income were approximately nine times greater than the rates among older households with DB pension income in 2010, up from six times greater in 2006 a new study calculates. Older households with lifetime pension income are far less likely to experience food, shelter, and health care hardship, and less reliant on public assistance. The data also indicate that pensions are a factor in preventing middle class Americans from slipping into poverty during retirement." (National Institute on Retirement Security)

2012 Retirement Confidence Survey of the State and Local Government Workforce
"Only 16 percent of teachers and 25 percent of police and firefighters are very confident they are saving the right amount for retirement. A full 57 percent of public sector workers expect to work longer than they would like 72 percent expect to work for pay after retiring. Only 22 percent are very confident that they will have enough money to take care of medical expenses during retirement. Two-thirds are not confident that Medicare will continue to provide benefits of equal value to those provided today." (Center for State & Local Government Excellence and TIAA-CREF)

Taxpayers, Employees Can Probe Financial Health of Public Pensions
"Most public workers covered by defined benefit pension plans—and taxpayers stuck with the tab—don't have to wait years to find out what's happening to their money. They can get quarterly reports from the Top 100 funds representing 89.4 percent of 'financial activity.' Those funds ... send quarterly reports to Census to compile '...national summary data on the revenues, expenditures, and composition of assets of the largest defined benefit public employee retirement systems for state and local governments.'" (State Budget Solutions)

Women Seen Living Retirement in Poverty at Higher Rates Than Men
"Women age 65 and older live in poverty at higher rates than men even as more of them participate in employer-sponsored retirement plans, according to a U.S. Government Accountability Office study. The median income for women in that age group was about 25 percent lower than for men from 1998 to 2009, and they were twice as likely to live in poverty ... Retired women continue to rely on Social Security at higher rates than retired men, with 16 percent of women and 12 percent of men age 65 and older depending on those payments as their only income in 2010[.]" (Bloomberg)

Japan's Government Pension Investment Fund Cutting Back on Japanese Bond Allocation
"The fund needs to raise about 8.87 tril.lion yen this fiscal year to pay pension benefits ... As part of its effort to diversify assets and generate higher returns, [the Government Pension Investment Fund (GPIF)] recently started investing in emerging markets stocks. GPIF is historically one of the biggest buyers of Japanese debt and held 71.9 tril.lion yen, or 63% of its assets, in domestic bonds as of March, according to the fund's financial statement for the 2011 fiscal year. That compares with 13% in domestic stocks, 8.7% in foreign bonds and 11% in overseas equities." (Pensions & Investments)

Fiduciaries Should Monitor Fees for Asset Placement
"[A]sset placement fees ... have come under intense scrutiny because it is an area of significant abuse and because it is easy to detect and quantify the impact of that abuse, making it a logical target for lawsuits.... There are generally four parties that are compensated for their roles in support of an investment product: The money manager who selects the stocks and bonds for the portfolio; The brokerage firm that is executing the trades; The custodian that is holding and safeguarding the securities; and The investment advisor or broker that is servicing the account. The fiduciary should investigate how each of those various service vendors are compensated. In the case of a bundled investment program, such as a wrap fee account, the services and costs should be broken down into those four categories and compared to a la carte alternatives." (fi360 Blog)

Defined Contribution Plan Participants' Activities, First Quarter 2012 (PDF)
"DC plan withdrawal activity in the first quarter of 2012 remained low and was similar to the activity observed in the first quarter a year earlier.... The commitment to contribution activity in 2012: Q1 continued at the high rate observed in 2011 ... Most DC plan participants stayed the course with their asset allocations as stock values rose during the first three months of the year.... DC plan participants' loan activity edged down slightly by March 2012, although it continues to remain elevated compared with four years ago." (Investment Company Institute)

As an Investment Advisor, What Type of Fiduciary Are You? (PDF)
"Due to the important role a fiduciary advisor plays in the success of the plan, the RFP should include a background check along with a detailed analysis of the advisor's experience, skills and knowledge. A plan sponsor fiduciary can ill-afford to retain an unqualified advisor, which is easy to do considering the unreasonably low qualification threshold established by the Securities & Exchange Commission ("SEC"), State Securities Departments and the Financial Industry Regulatory Authority ("FINRA") to license or register an advisor. The need to conduct a formal assessment of an advisor's qualifications cannot be over-emphasized in light of the high demand for fiduciary expertise in today's retirement plan market place." (FRA / Plan Tools)

Retirement Security: Women Still Face Challenges
"For women approaching or in retirement, becoming divorced, widowed or unemployed had detrimental effects on their income security. Moreover, divorce and widowhood had more pronounced effects for women than for men. For example, women's household income, on average, fell by 41 percent with divorce, almost twice the size of the decline that men experienced. For widowhood, women's household income fell by 37 percent -- while men's declined by only 22 percent. Unemployment also had a detrimental effect on income security, though the effects were similar for women and men; household assets and income fell by 7 to 9 percent." (U.S. Government Accountability Office)

Retirement Security: Older Women Remain at Risk
"Despite women's greater likelihood of having an employer that offered a pension plan, they were slightly less likely to be eligible for and to participate in those plans.... Of those who were eligible to participate in their employer's pension plan, women had lower rates of participation than men.... Women who were eligible to participate in a defined contribution plan were less likely to participate for a variety of reasons, including that they made less money, on average, were more likely to work part-time, and were more likely to be single parents. Finally, women who participated in a defined contribution plan contributed to their plans at lower levels than men. Women age 65 and over consistently had less retirement income on average and had higher rates of poverty when compared to men despite the fact that the composition of their income did not vary greatly over time." (U.S. Government Accountability Office)


Can the World's Largest Pension Plan Solve Its Funding Problems?
"[It is] interesting that so much power is concentrated in such few hands at the world's largest pension fund [namely, Japan's GPIF,] but they seem to be doing just fine. Investing in [Japan Government Bonds (JGBs)] shielded them from serious market downturns. But now there are increasing calls to start looking outside to realize the target return they require, and investing in JGBs won't cut it. Keep an eye on this giant pension as it may slowly morph into another global pension powerhouse that invests in traditional and alternative assets." (Pension Pulse)


Comments by ASPPA and NTSAA to IRS on Definition of Governmental Plan Status
"[ASPPA and NTSAA] would like to commend the Treasury Department and IRS for their continuing efforts to provide comprehensive guidance to the industry and plan sponsors regarding the definition of 'governmental plans'. However, [the authors] are concerned that the Proposed Rules' facts and circumstances test to determine agency would adversely impact an important sector of the 403(b) marketplace, the public charter schools ('Charter Schools') and their retirement programs. ASPPA and NTSAA recommend that the Treasury Department and IRS: (a) establish an exemption specific to Charter Schools that are created and maintained pursuant to state statutes; and (b) create an express category in the description of agency to include Charter Schools." (American Society of Pension Professionals & Actuaries and National Tax Sheltered Accounts Association)

Benefits in General; Executive Compensation

IRS Contends Altera Corp. Wrongly Booked Employee Stock-Based Compensation Attributable to Offshore Unit
"The IRS, seeking $27 mil.lion in tax payments, contends that from 2004 through 2007 Altera wrongly booked expenses for employee stock-based compensation in the United States where the expenses were tax deductible, according to court records. The agency says Altera should split its employee costs between its U.S. parent and its Cayman Islands unit. Under this treatment, Altera would lose the U.S. tax deductibility of employee costs allocated to the Caymans." (Employee Benefit News)

No End to Exorbitant CEO Exit Packages
"While shareholders can often justify severance and pension payments, what really makes headlines is compensation in the form of separation agreements and payouts determined at the end of a CEO's tenure. In fact, only 13 percent of CEOs of Fortune 500 companies who left—either voluntarily or involuntarily—from 1993 to 2007 had a specific severance contract in place before they decided to leave, according to a 2010 study ... On the other hand, 47 percent received some kind of bonus at their departure." (Human Resource Executive Online)

Text of Statements before Senate Special Committee on Aging Hearing: Enhancing Women's Retirement Security
Panel Statements by Barbara Bovbjerg, Director, Director, Education, Workforce and Income Security Issues, Government Accountability Office; LaTina Burse Green, Assistant Deputy Commissioner, Retirement and Disability Policy, Social Security Administration; Kelly O'Donnell, Vice President, Financial Engines; Sabrina Schaeffer, Executive Director, Independent Women's Forum; and Joan Entmacher, Vice President and Director, Family Economic Security, National Women's Law Center. (U.S. Senate, Special Committee on Aging)

What Are Job Benefits Worth?
"Benefits certainly do add value to any job position. The problem is that it's not easy to quantify how much benefits are worth." (The Christian Science Monitor)

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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