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August 3, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Senior Consultant
for Segal/Sibson Consulting in NJ

Executive Director
for Taft-Hartley Benefit Funds in NY

Client Service Team Manager
for Charles Schwab in AZ

ERISA Consultant
for Retirement Plan Consulting Firm in MO

Retirement Plan Administration, Senior Manager
for Jones & Roth, PC in OR

Implementation Project Manager
for The Newport Group in FL

Regional Sales Director
for July Business Services in IL

401(k) Administrator/ Consultant
for Southfield based TPA Company in MI

Daily Recordkeeping Manager
for A TPA Firm in Arlington, TX in TX

Retirement Plan Administrator
for Third Party Administrator in Southern New Jersey in NJ

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Webcasts and Conferences

NAGDCA - 403(b) Pre-Conference Workshop
in California on September 30, 2012 presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)

NAGDCA Annual Conference
in California on September 29, 2012 presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)

ERISA Advisory Council Public Meeting
in District of Columbia on August 28, 2012 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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[Official Guidance]

Text of New GASB Standards for Public Employee Pension Plans
"The Governmental Accounting Standards Board (GASB) today published standards intended to improve the accounting and financial reporting of public employee pensions by state and local governments. The two pronouncements, which were approved on June 25, are available to download at no charge on the GASB website. Statement No. 67, Financial Reporting for Pension Plans, revises existing guidance for the financial reports of most pension plans. Statement No. 68, Accounting and Financial Reporting for Pensions, revises and establishes new financial reporting requirements for most governments that provide their employees with pension benefits." (Governmental Accounting Standards Board)

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[Official Guidance]

Text of DOL Advisory Opinion 2012-05A on 'Employer Real Property' Contributed To, or Sold By, the Employer's Defined Benefit Plan
"The purpose of requiring that a substantial number of the parcels of employer real property held by a plan be dispersed geographically is to prevent adverse economic conditions peculiar to one area from significantly affecting the economic status of the plan as a whole.... Whether a substantial number of parcels of employer real property are geographically dispersed for this purpose is an inherently factual determination upon which the Department will not opine. However, it is the view of the Department that whether any one parcel of employer real property ... satisfies the requirements of section 407(d)(4)(A) of ERISA is determined by considering the plan's holdings in employer real property immediately after the transaction involving the parcel. Otherwise, a plan could never acquire or sell any single parcel of employer real property even if the other QERP requirements of section 407 of ERISA, besides section 407(d)(4)(A), would be met for the plan's holdings after the acquisition or sale." (Employee Benefits Security Administration)

[Guidance Overview]

Reopening the Windows: DOL Revises Controversial Position on Fee Disclosure for Brokerage Window Investments
"While continuing to maintain that adding a brokerage window to a plan is subject to ERISA's fiduciary duties, the DOL withdraws the "1% of participants"(1% of participants if the plan has more than 500 participants. For smaller plans, the requirement would have applied to investments held by 5 or more participants) test that conceivably could have required plan fiduciaries to "look through" plan brokerage windows and treat any investments held by a certain number of plan participants as a "designated investment alternative" of the plan." (Jenner & Block)

Bond Insurer Blasts Stockton, California, for Favoring Pensions Over Other Debtors
"Wall Street lenders say they're getting a raw deal in Stockton's bankrup.tcy, losing millions while the city continues to fund pricey employee pensions.... [Bond insurer Assured Guaranty's] broadside raises new questions about a topic once thought to be out of bounds: whether governments can tamper with retirement plans. While some corporations have used bankrup.tcy to cut their obligations to retirees, public-sector pensions generally have been considered sacred: Once workers go on the payroll, their retirement can't be touched. Responding to Assured's claim, CalPERS said pension obligations take precedence over lenders under California law." (Sacramento Bee)

Retirement Plan Sponsors Not Obligated to Red-Flag Unwise Investment Choices by Participants
"[A] plan sponsor should not substitute their own opinions with respect to appropriate retirement investing for the choices made by participants. Fiduciaries have to operate on the assumption that participants have made an election based on their own goals and objectives. The best that a fiduciary can do is limit the investment options in a plan to those strategies that meet the acceptable diversification criteria outlined in ERISA." (Employee Benefit News)

Unilateral Transfer of Participant Assets from Stable Value Fund Complied with Plan Terms and QDIA Rules
"The sponsor of 403(b) plans did not breach its fiduciary duty to properly implement participant investment instructions when it transferred participants' standing investments in stable value accounts into an asset allocation fund, in compliance with Labor Department regulations governing qualified default investment alternatives, the Sixth Circuit Court of Appeals ... has ruled. The plan sponsor effectuated the transfer only after notifying the participants of the change and providing them with an opportunity to retain their prior investment. The fact that the participants did not actually receive the notice was not determinative." (Wolters Kluwer Law & Business / CCH)

Funded Status of U.S. Corporate Pensions Falls to Lowest Recorded Level in July (PDF)
"The funded status of the typical U.S. corporate pension plan in July fell 2.9 percentage points to 68.7 percent, the lowest level since BNY Mellon began tracking this information in December 2007. The decrease was driven by a sharp spike in liabilities, which increased 5.5 percent, outpacing a 1.2 percent gain in assets at the typical corporate plan ... The funded status of the typical plan has now fallen 3.7 percentage points during 2012." (BNY Mellon)

Pension 'Savings' in Transportation Bill Could Be Costly to Taxpayers in Long Run
"The transportation bill that Congress passed this summer is financed, in part, with a budget gimmick: Lawmakers changed the funding rules for corporate pension plans. These changes help the federal budget in the short term by reducing the tax deductions that corporations take for contributing to these plans -- thereby reportedly increasing their taxable income. These changes, however, encourage companies to contribute less to pensions, which raises the long-term risk that a governmental insurer will need to step in to pay benefits. Under the new funding rules, the required pension contributions for public U.S. companies could drop in one year from $58 bil.lion to approximately $33 bil.lion[.]" (The Washington Post; free registration required)

Union Questions Baltimore County's Decision to Borrow $25 Mil.lion from Pension Fund for Recycling Facility
"Baltimore County plans to borrow $25 mil.lion from its pension system to upgrade recycling facilities, a move some County Council members and union leaders are questioning.... The county plans to borrow the money at an interest rate of 7.875 percent and repay it within 15 years. But the Fraternal Order of Police Lodge No. 4 questioned the legality of the move, union president Cole Weston said. ...'The employee pension system has an obligation and responsibility to the people in the plan,' said Weston, who served on the pension system's board for more than a decade until his June retirement. 'And pension systems are not to be used as banks.'" (Baltimore Sun)

Pension Debt Overwhelms Bankrupt San Bernardino, California
"San Bernardino, the third California city to seek bankrup.tcy protection since June, is saddled with huge pension debt and will produce details of those unfunded obligations within 15 days, its mayor said on Thursday. The city filed for bankrup.tcy protection on Wednesday, citing over $1 bil.lion in estimated liabilities and up to 25,000 creditors, many of whom are the city's own employees.... Patrick J. Morris, San Bernardino's mayor, said ... that the bulk of the city's debt was due to 'unfunded liabilities related to pension and benefits' for the city's employees, and 'obligations to employee groups in labor contracts.'" (Reuters)

Indiana's Pension Plan Drops Return Assumption to 6.75%—Perhaps Lowest in Country
"The Indiana Public Retirement System (INPRS) adopted what may be the most conservative public pension investment return assumption in the nation. In June, the system's board reduced the rate to 6.75% from 7%. INPRS is now the lowest among the 126 public systems monitored by the annual Public Fund Survey ... It is the only one below 7%." (PLANSPONSOR.com)

Federal Case Moves Forward Over Obligation of Retirement Plan Administrator to Provide Benefit Calculation Details
"[An Ohio District Court judge] has determined that retirement plan participants have a right to sue a plan sponsor that does not provide details used for benefits calculations. Thirty-one former employees of Whirlpool Corporation sued the company after repeated requests for a breakdown of hours awarded for each year and an explanation of why some years were credited as less than one were denied.... [The judge denied Whirlpool's motion to dismiss, saying] the information disclosure provisions of ERISA are intended to be broad[.]" (PLANSPONSOR.com)

GM Pension Underfunding Up 15.4% in 12 Months
"General Motors Co.'s underfunding of its worldwide pension plans increased to $24 bil.lion as of June 30, down slightly from $24.5 bil.lion on March 31 but up 15.4% from $20.8 bil.lion a year earlier ... GM's U.S. pension plans were underfunded by $12.8 bil.lion as of June 30, down slightly from $12.9 bil.lion March 31 but 18.5% higher than the $10.8 bil.lion the previous June 30." (Pensions & Investments)

Options for Providing Women With a More Secure Retirement
"Median income for women over the age of 65 was about 25 percent lower than men's over the last decade, and the poverty rate for women in this age group was nearly two times higher than men's in 2010, according to [a recent GAO] study. Women—particularly widows and those over 80 years old—were also more likely to depend on Social Security benefits for a larger percentage of their income than men. The G.A.O. compiled several potential options that, while they would be available to everyone, may especially benefit women planning for retirement. [They include:] Automatic IRA ... Expand the Saver's Credit ... Caregiver I.R.A. contributions ... Expand catch-up contributions[.]" (The New York Times; free registration required)

NYC Obligated to Provide Continued Pension Accruals for Police in Military Using an Assumed Rate of Pay, Government Contends
"New York City was sued by the U.S. government on Thursday over allegations it unlawfully reduced pension benefits for police officers who have served in the military since the September 11, 2001, attacks. The class action accused the city of using only police officers' base pay to calculate benefits. Under the law, an employer must take into account the compensation that the service member would likely have earned had he or she not been performing military service, the lawsuit said." (The New York Times; free registration required)

'But I Didn't Want to Wait Until Age 59-1/2'—When IRA Rollovers Go Wrong
"For early withdrawals from a qualified plan, there's an exception for withdrawals taken after you've reached age 55 if you have also separated from service.... [But] there is no age-55 exception for early withdrawals from an IRA. That's because the list of qualified retirement plan exceptions to the 10% early withdrawal penalty is not exactly the same as the list of IRA exceptions to the 10% early withdrawal penalty. That makes no sense, but our beloved Internal Revenue Code is riddled with rules that make no sense." (Fidelity.com)

How to Properly Mitigate Risk for Plan Fiduciaries
"In cases where a plan sponsor wishes to off-load fiduciary responsibility (and potential related liability) for the selection, monitoring, and replacement of a plan's investment options, it can do so by delegating same to a named fiduciary ..., to a discretionary trustee ..., or to an investment manager ... But in all such cases, the delegating fiduciary will retain a monitoring duty to ensure that the initial selection of the delegatee was prudent and that retention of the delegatee continues to be prudent.... Rather than delegating such duties to some committee of the BOD and have the committee itself make decisions concerning the plan's investment options, instead give the committee the authority to hire, for example, an investment manager(s) that would itself then select the menu of investment options. That legally protects the delegating fiduciary such as a named fiduciary ... from potential liability for imprudent investment decisions made by the investment manager." (Morningstar Advisor)

October Three Pension Finance Update (PDF)
"July was a month of mixed signals in the financial markets but generally bad news for pension sponsors. Treasury rates declined—over the past few years, this has generally been a sign of financial distress and a flight to quality. However, yields on high-quality corporate bonds dropped even more, reaching record low yields around 4%. This can be seen, optimistically, as a vote of confidence in corporate America or, worryingly, as a scramble for shrinking yields among investors. Meanwhile, stock markets shrugged their way through what, in the end, was an uneventful month. Overall, sponsors saw declines of 2%-6% in pension funded status during July, driven by record low corporate bond yields." (October Three)


Twenty Percent of Proposed San Mateo County, California, Tax Hike Needed to Fund County Pensions
"[San Mateo] county employee pension costs will rise by $13 mil.lion in 2013-14, one fiscal year from now. If the sales tax hike is approved by the electorate, it would provide an anticipated extra $60 mil.lion in available revenues on an annual basis. Which means ... the boost in pension requirements would eat up just over 20 percent of the projected new dollars right out of the gate ... Once again, the long-term impact of generous public employee pension costs, not to mention retiree health benefits, remain among the most vexing fiscal realities confronting every taxpayer and public official in the county, and in the state." (Silicon Valley MercuryNews)


Lifetime Income Contracts at Retirement: Participants Will See the Need If Employers Provide Financial Education
"[P]lan sponsors continue to be leery/reluctant to offer [Guaran.teed Lifetime Income (GLI)] as an investment alternative or distribution option. [This reluctance is] aided and abetted by an ever-expanding and burdensome regulatory environment, a continuing weak economy making plan sponsors less inclined to consider enhancements and low interest rates which increases the cost to purchase GLI products. Couple the foregoing with costly compliance concerns and the dreaded 'F' word that plan sponsors can avoid by steering clear, it's not at all surprising that ... a reasonable time horizon prognostication for widespread acceptance and use of in-plan guaran.teed lifetime income strategies now doesn't seem anywhere in sight." (Business of Benefits)


Text of Comments by American Academy of Actuaries to Treasury Department Requesting Speedy Guidance on MAP-21 Pension Provisions (PDF)
"Speed of publication is important to provide sponsors the time to evaluate and deal with the various issues that relate to the implementation of MAP-21. Delaying publication of the rates in order to make modest refinements to the calculation of an average of rates that were not previously published would unnecessarily place plan sponsors trying to assess the impact of MAP-21 in a burdensome situation which would temporarily freeze their ability to make critical business decisions." (American Academy of Actuaries)

Benefits in General; Executive Compensation

More Disclosure Requirements Coming for Executive Compensation
"In a move that further weakens executives' influence over the setting of their compensation, public companies will soon face new requirements that they disclose any conflicts of interest involving their compensation consultants in their proxy statements.... Robin Ferracone, CEO of the executive compensation consultancy Farient Advisors, says the new standards are no surprise. 'The SEC didn't depart much from what the Dodd-Frank Financial Reform Act called for so my sense is that most of this has already been taken into account by public company boards.'" (Treasury & Risk)

Montana Court Says Obesity Is a Disability Per Se
"[The Montana] supreme court decided that obesity can be a qualifying disability, even without an underlying physiological cause—a departure from most federal appellate courts' interpretations of the Americans with Disabilities Act.... [T]he court turned to the U.S. Equal Employment Opportunity Commission's ADA compliance manual for guidance. While the commission notes that being overweight, in and of itself, is generally not an impairment, 'severe obesity, which has been defined as body weight more than 100 percent over the norm . . . is clearly an impairment.' If an individual's weight meets that threshold, 'there is no explicit requirement that the obesity be based on a physiological impairment,' the court explained." [BNSF Railway Co. v. Feit (Mont. July 6, 2012)] (Thompson SmartHR Manager)

Executives on Maternity Leave May Have Fewer Protections
"Because of the potential hardship on companies whose top-level executives are absent for several weeks, Congress adopted a 'key employee' exception to FMLA that permits an employer to deny top dogs their old jobs back if restoration would cause 'substantial and grievous economic injury' to the company. The average employee, on the other hand (that is, the eligible employee), is entitled to 12 weeks of job-protected, unpaid leave for the birth of a child.... [However,] California workers who contribute to the State Disability Insur.ance fund are entitled to six weeks of partial pay each year while taking time off from work to: (1) bond with a newborn baby, adopted or foster child; and (2) care for a seriously ill parent, child, spouse or registered domestic partner." (Thompson SmartHR Manager)

Press Releases

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