ASPPA

Qualified Plans Administrator
for Benefit Sources & Solutions in NJ

Account Mgr II - SRS
for The Standard in OH

ERISA Attorney
for United Retirement Plan Consultants in OH

High Net Worth Client Manager
for Vanguard in AZ, PA

Series 7 Licensed High Net Worth Client Service Representative
for Vanguard in NC, PA

Client Services Associate
for McGregor & Associates, Inc. in KY

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[Guidance Overview]

DOL Retreats on Brokerage Window 'Safe Harbor' (PDF)
"The revised FAB addresses the points made by the trade organizations and restores the status quo unless and until an official change is implemented by the DOL through the regulatory process. Although it narrows the scope of the sweeping interpretation that the DOL had asserted in the FAB and defended in conversations and presentations, the new DOL question 39 seems to promise that the issue will be revisited." (Buck Consultants)

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Judge Allows San Diego Pension Overhaul to Proceed
"San Diego Superior Court Judge Luis Vargas noted that a significant majority of voters backed Proposition B. If unions eventually prevail in their legal challenge, he said, previous benefits can be restored. California's Public Employee Relations Board urged the judge to put the measure on hold while it considered complaints of unfair labor practices by San Diego's municipal employee unions. The unions contend state labor law required the city to negotiate with them before putting the measure on the ballot, a claim that the city disputes." (San Francisco Chronicle)

DOL Probes Peregrine's Retirement Plan
"The U.S. Department of Labor has launched an investigation into Peregrine Financial Group's employee retirement plan, according to the bankrup.tcy trustee for the futures brokerage ... A former Peregrine employee told Reuters his 401(k) account had been frozen, and that he had been told the Labor Department opened the investigation into any potential misconduct with the funds after Peregrine's demise. But an owner of the third-party administrator to the Peregrine plan, Paradigm Benefits LLC, told Reuters he felt comfortable that employee money had gone into their accounts and the department was simply verifying that." (Chicago Tribune; free registration required)

Drinker Biddle ERISA Newsletter for Retirement Service Providers (PDF)
"For service providers, these are particularly challenging times, with mandated disclosures to plan fiduciaries and participants and with numerous lawsuits about indirect payments (such as revenue sharing) and unreasonable compensation. The articles in the newsletter touch on those issues. For example, Joe Faucher's article discusses whether service providers need to offset indirect compensation against their direct compensation—which is an issue raised because of the new plan-level disclosure rules under 408(b)(2). Bruce Ashton's and Joan Neri's articles discuss specific issues in the DOL's recent guidance about participant disclosures. Josh Waldbeser's article covers the litigation front by discussing how some service providers earn income, that is, 'float,' on plan money—and the consequences." (Drinker Biddle)

Most CFOs Expect Employees -- Even Those with Traditional Pension Plans -- to Delay Retirement
"Even employees who have traditional pensions will be working longer than they planned -- and their bosses know it. In a recent survey ... about 70% of senior finance executives said they believe their companies' employees will be forced to delay retirement because of insufficient savings.... The 186 finance executives surveyed work at large and midsize companies, all with defined-benefit (DB) pension plans with assets of at least $250 mil.lion. Employers also said that employee benefits are critical to attracting and retaining talent, with three-quarters agreeing that employee satisfaction with benefits is important to the success of their company." (CFO)

DOL Backs Off Controversial Brokerage Window Disclosure Requirements But Issues Remain
"[Fred Reish, partner at Drinker Biddle & Reath] explains that DOL continues to assert that, 'where a plan consists solely of brokerage accounts (i.e., each participant must invest through his or her brokerage account), the fiduciaries may have a duty under ERISA to provide a lineup of designated investment alternatives.' He says that 'there was some objection to that concept in the original Q&A 30 and it is included in virtually the same form in the new Q&A 39' under the revised FAB. What's more, Reish says, the DOL 'continues to say that fiduciaries have a duty to prudently select and monitor the provider of brokerage accounts—in other words, the broker-dealer. That surprised some people[.]'" (Investment Advisor)

Target-Date Funds: Three Things to Know
"The ease of investing in a target-date fund doesn't mean you should just set it and forget it.... [T]hese all-in-one retirement portfolios have a wide variety of strategies, stock bets and costs. So be on the lookout for these three things: 1. You can find yourself taking more risk than you should.... 2. Although there's a variety of investing strategies, you usually get one choice.... 3. High costs can wipe out any edge you get from a pro tinkering with your mix." (CNNMoney.com)

Japan to Issue Bridging Bonds to Cover Pension Payment Shortfall
"Prime Minister Yoshihiko Noda is grappling with the world's largest public debt as an aging population drives up spending on pensions and social welfare. The national debt is predicted by the Organisation for Economic Co-operation and Development to reach 223 percent of gross domestic product next year. The government needs to sell bridging bonds this and next fiscal years until the sales tax is raised and revenues increase, according to a government statement released today. The bonds will be paid back from future revenues generated by the higher consumption levy, it said." (Bloomberg)

Income Disparities Lead to Retirement Income Shortfall for Women
"[W]hile women have made tremendous strides in closing the income gap over the last three decades, income disparities have translated into a 25 to 30 percent retirement savings shortfall compared to their ma.le cohorts. Compounding the problem, women are more likely than men to be caregivers—resulting in lost or decreased wages. This time out of the work force combined with income disparities, decreases Social Security and employer-provided retirement benefits. The result is that women have less retirement savings and less retirement income from traditional resources, which are required to cover longer average retirement spans and higher lifetime health care costs." (Insured Retirement Institute)

Hybrid Pension Plans Attracting More States, Cities
"There's a public pension crisis out there. Defined-benefit (DB) plans—the stalwart of public pension systems—are in trouble, both financially and politically.... To address the growing problem, [some] jurisdictions ... are revising the defined-benefit plan itself—raising the retirement age or suspending cost-of-living adjustments. Some are looking at a more radical approach: doing away with the defined-benefit plan for new hires and offering them a defined-contribution plan only. But the middle ground—and a trend that seems to be growing—is to have a little of both: a defined-contribution plan backed up by a lower-level defined-benefit plan. Alternatively, some are opting for a cash balance program that combines aspects of both defined-benefit and defined-contribution approaches." (Governing)

Managing Service Provider Disclosures Received—or Not—Under ERISA Section 408(b)(2) (PDF)
"For plan fiduciaries, receiving a Section 408(b)(2) disclosure is only the first step in a process, and not a goal in and of itself. Plan fiduciaries must review these disclosures to determine if the services being delivered are necessary for administration of the plan and if fees are reasonable in relation to comparable third-party arrangements. And because many fiduciaries are receiving this level of detail for the first time, they should also ensure that these agreements reflect their understanding of plan services and costs." (Buck Consultants)

MAP-21 Gives Defined Benefit Plan Sponsors Welcome Funding Relief
"Because employer funding obligations under these rules depend heavily upon interest and other investment performance used to calculate funding levels, employer funding obligations tend to spike during economic depressions or slowdowns, resulting in sharp increases in funding obligations for employers at a time when the tight economy already makes finances tight.... MAP-21 provides immediate defined benefit plan funding relief by changing how the interest rates that employers must use to calculate their current defined benefit plan funding obligations are calculated." (Solutions Law Press)

State Hybrid Retirement Plans: Shared-Risk Arrangements (PDF)
"Hybrid plans have been in place for employees of state and local government for decades. This plan design currently is receiving increased attention as states find that closing a traditional defined benefit pension plan to new employees could increase—rather than reduce—costs, and that providing only a 401(k)-type plan does not meet retirement security, human resource, or fiscal objectives." (National Association of State Retirement Administrators)

[Opinion]

What to Make of DOL's Backtrack After John Kerry, Fidelity Investments and the Rest of the Riled 401(k) Industry Cried Foul
"It all came down to the Department of Labor's willfulness versus the full force and fury of the 401(k) industry—and some its powerful allies—and guess who won? (Hint: The winners are at a higher pay scale and deal with real investors.) In May, the 401(k) industry was angered after its members believe they were blindsided by an eleventh-hour move by the DOL requesting that some self-directed brokerage accounts receive the same level of monitoring as other investments in 401(k) plans.... Now, it appears that the DOL has come around to the viewpoint of these record keepers and discount brokers. The rule maker for 401(k) plans announced on Monday that it will resume the policy position of allowing plan participants to pick and choose their own investments at their own peril and not require plan sponsors to monitor them in the same way as they would other investments." (RIABiz)

[Opinion]

What Small Businesses Should Look for in a 401(k) Plan
"Business owners, and especially small business owners who don't have the same leverage that larger companies have when dealing with 401(k) plan administrators, still need to ask more questions about exactly where each dollar goes. That means digging into expense ratios, the fees that you pay for mutual funds. Who gets each dollar your employees pay? And what about the share class? Even if the mutual fund being offered is a good one, there might be a cheaper version of it in a different share class." (About.com)

[Opinion]

Text of Statement of American Benefits Council on Revised FAB 2012-02
"The revised FAB effectively eliminates several significant fiduciary requirements that were not provided under current law but had been included under Question-and-Answer No. 30 of the FAB as originally drafted, including requirements that a plan must have 'a manageable number of investment alternatives,' monitor for 'significant investment through a brokerage window' and provide participant disclosures for any investment selected through a brokerage window by at least one percent of participants to qualify for the safe harbor test." (American Benefits Council)

[Opinion]

ERIC Urges Appeals Court to Uphold District Court Ruling on Judicial Deference Under ERISA Plan
"The case before the Second Circuit involves an offset under the Xerox pension plan for former employees who return to work at Xerox and who previously received a lump-sum distribution of their benefit under the pension plan. The offset reflects the time value of the prior distribution.... The brief argues that the plan administrator is entitled to deference in its determination regarding the calculation of an offset under the Xerox pension plan (so long as the interpretation is reasonable and there has been no abuse of discretion by the administrator). In addition, the fact that Xerox sponsors the plan and some of its employees administer it does not create a conflict, on its own, that should defeat deference, otherwise, most plan administrators would not be entitled to deference in most situations, the brief contends." (The ERISA Industry Committee)

[Opinion]

Text of Comments from American Academy of Actuaries to Sen. Orrin Hatch on State and Local Government Defined Benefit Pension Plans (PDF)
"In general, we support the four essential goals you identify for public pension reform: affordability and transparency, generational equity, retirement income security, and state and local funding.... Some pension plans may have taken on more risk than they can sustain or have other governance issues, but this does not imply that all defined benefit plans are unsuitable for state and local governments. These plans can be effectively maintained by state and local governments. Improving the funding and governance of many public plans will not be easy, but the benefits of doing so are substantial for both plan participants and taxpayers." (American Academy of Actuaries)

Nursing Rule Gives a Private Room but No Standing to Sue
"Employees were given new rights to a secure and private place in which to express breast milk under a 2010 amendment to the Fair Labor Standards Act; however, that amendment does not give those employees a private right to sue their employers for failing to provide such a space. Instead, said the U.S. District Court for the Northern District of Iowa, employees who are denied their right to express breast milk must contact the U.S. Department of Labor, which is then authorized to investigate and take further action. (Salz v. Casey's Mktg. Co., No. 11-cv-3055 (N.D. Iowa July 19, 2012))" (Thompson SmartHR Manager)

Risks and Process of Retirement: Longevity (PDF)
"The 2011 Risks and Process of Retirement Survey asked respondents about their view of longevity risk. As in 2005, when these questions were last asked, there is more tendency to underestimate rather than overestimate longevity. While some Americans appear to have a moderate grasp of life expectancy in general, many fail to understand the potential consequences of living beyond their own planned life expectancy. This study shows many people are not focused on risk management, and making assets last for the rest of their lives is not their highest priority." (Society of Actuaries)

Hodgson Russ Employee Benefits Developments, July 2012
Monthly newsletter; this issue includes the following articles: Agencies Issue New FAQs Regarding Summary of Benefits and Coverage; IRS Notice Provides Guidance on the Health FSA Salary Reduction Limit; 2013 Inflation-Adjusted Limits for Health Savings Accounts; Proposed Section 83 Regulations Provide Clarifications; IRS Issues Final Regulations Regarding Affordable Care Act's Premium Tax Credit; Withdrawal Liability Exemption Under Asset Sale More Difficult in Second Circuit; and Employer Has Successor Liability for Retiree Medical Benefits (Hodgson Russ LLP)

From the Bureau of Labor Statistics: The Availability of Employee Benefits in the United States, March 2012 (PDF)
"Access, or availability of a benefit, was 57 percent for medical care benefits in small establishments (those with fewer than 100 employees), compared with 89 percent in large establishments (those with 500 employees or more). In private industry, retirement benefits were available to 50 percent of workers in small establishments, 79 percent of workers in medium size establishments (those employing between 100 and 499 workers), and 86 percent of workers in large establishments." (U.S. Bureau of Labor Statistics)

TIAA-CREF Paul A. Samuelson Award: Submissions Being Accepted
(TIAA-CREF Institute)