ASPPA

Defined Benefit and Defined Contribution Specialists
for Los Angeles TPA Firm in CA

Strategic Communications Consultant
for New York Life Retirement Plan Services in MA

Defined Contribution Peer Reviewer and Compliance Resource Specialist
for The Angell Pension Group, Inc. in ANY STATE

Pension Consultant & Daily Valuation Administrator
for M.L.Kerns & Associates, LLC in TX

401(k) Support Administrator
for Malcolm Thompson & Associates in TX

New Business Specialist
for Benetrends, Inc. in PA

Manager of Trust Reporting
for Charles Schwab in TX

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IRA Amendments: Ready, Set, Whoa!
Nationwide on August 8, 2012 presented by Convergent Retirement Plan Solutions, LLC

 

EBSA Resource Page on Proposed Rule for Definition of the Term 'Fiduciary'
This page include extensive resources surrounding the fiduciary definition regs, including transcripts of testimony by and interviews with Asst. Sec. Phyllis Borzi; text of rulemaking data request and responses related to the Oliver Wyman report; public hearing written testimony; 39 requests testify; 202 public comments on the proposed rule; and 114 public comments post-hearing. (Employee Benefits Security Administration)

PPA DC Restatements – What to Expect – Earn FREE CE Credit!   [Advert.]

On Aug 22, learn what's changed with the determination letter process; interim amendment processes and a summary of possible changes to the interim amendment process; and the current state of the 403(b) pre-approval process and remedial amendment period.

US Public Plans Gain a Paltry 1.15% in FY 2012
"The weak performance of US public plans shouldn't surprise anyone, especially after CalPERS and CalSTRS reported paltry returns. The major culprit explaining the paltry results is that unlike corporate plans that are de-risking and investing more in bonds, US public plans are heavily exposed to public equities. The larger the exposure to stocks (like foundations and endowments), the weaker the performance." (Pension Pulse)

U.S. Public Pensions Earn 1.15% -- Worst Showing Since 2009
"It was a reversal after two years of gains for the retirement funds, which have $2.8 tril.lion in assets, according to the U.S. Census Bureau.... Estimates of public-pension funding deficits vary from $757 bil.lion to $4.6 tril.lion, depending on assumptions. To help close the gap, 29 states made changes to their pensions in the calendar year 2011, such as increasing employee contributions, raising the retirement age and revising automatic cost-of-living adjustments." (Bloomberg BusinessWeek)

Retirees Face Tough Choice on Pensions: Lump Sum vs. Lifetime Income
"More and more retirees could soon be facing the choice of accepting a pension buyout or collecting a monthly check, says [a Michigan financial adviser] ... Few companies still offer traditional, defined-benefit pension plans, but millions of retirees are still collecting pensions." (The Wall Street Journal)

PBGC Director Discourages Employers From Offering Lump-Sum Buy-Out to Current Retirees
"Joshua Gotbaum, director of the PBGC, [said] many retirees could be making a bad move if they decide to take the cash. It is one thing, he said, for employers to offer a lump sum to workers who are leaving the company or just retiring. But he maintains that it's a tragedy when employers dump their retirement responsibilities by asking someone already in retirement to give up a pension check in exchange for a one-time payout. 'It's quite another thing to say when you're retired "Why don't you stop being a retiree and start becoming a professional investor?"'[.]" (Detroit Free Press)

Pennsylvania Municipal Pension Crisis Sits at $6 Bil.lion
"New figures show municipalities in Pennsylvania are facing more than $6 bil.lion in unfunded liabilities. That total is actually a slight improvement over where things stood two years ago, but the state and its municipalities have a long way to go.... Pittsburgh's pension system is only 62 percent funded, but that's way better than it was just two years ago.... Philadelphia's funding ratio has improved from 45 percent to 50 percent in the past two years." (EastonPatch)

Legal Constraints on Changes in State and Local Pensions
"Key findings: Most states are legally constrained from reducing future benefits for current workers. These constraints make it difficult to adjust to changing conditions and to share the burdens of reform fairly between new and current participants. The legal boundaries for pension benefits are typically defined under a contracts-based approach rather than a constitutional provision." (Center for State & Local Government Excellence)

How Did the Recession of 2007–2009 Affect the Wealth and Retirement of the Near Retirement Age Population?
"The retirement wealth held by those ages 53 to 58 before the onset of the recession in 2006 declined by a relatively modest 2.8 percentage points by 2010. In more normal times, their wealth would have increased over these four years. Members of older cohorts accumulated an additional 5 percent of wealth over the same age span.... Very few in the population nearing retirement age have experienced multiple adverse events. Although most of the loss in wealth is due to a fall in the net value of housing, because very few in this cohort have found their housing wealth under water, and housing is the one asset this cohort is not likely to cash in for another decade or two, there is time for their losses in housing wealth to recover." (University of Michigan Retirement Research Center)

Court Finds Employer Can Rely on Disclaimer Language to Reduce Pension Amounts Paid in Error (PDF)
A federal district court in Ohio denied a retiree's claims for continued payment of benefit amount in excess of that provided by the plan, when plan recordkeeper's programming error was discovered some months after benefit payments began. The court determined the plan recordkeeper was not acting as a fiduciary, and denied participant's estoppel claims because all benefit calculations provided to participant before payment began included blanket disclaimers stating that plan terms would control in the event of any error. [Stark v. Mars, S.D. Ohio (No. 2:10-cv-642, July 17, 2012)] (U.S. District Court for the Southern District of Ohio)

Save Now, Play Later: Gen Y's Retirement Savings Behaviors (PDF)
"Members of Generation Y face a daunting challenge: They are likely to be the first generation to pay for the majority of their retirement on their own.... Those who have found the elusive steady job are rising to the challenge of saving for retirement, with the help of their employers.... It is abundantly clear that employers are setting the stage in helping these young people to start saving early; however, there is more sponsors can do to keep Generation Y on track." (Fidelity Investments)

How Financial Advisers and Defined Contribution Plan Providers Educate Clients and Participants about Social Security
"American workers have demonstrated relatively low levels of knowledge of how Social Security works. Most claim benefits at age 62, far earlier than many experts believe is optimal.... Through a survey and in-depth interviews information was collected on how advisors and plan providers counsel clients and participants on Social Security. The results indicate steps that could increase the effectiveness of these channels to provide effective education and advice on Social Security and claiming." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)

Pension Deficits Increase Again Among Large United Kingdom Employers
"[T]he accounting deficit of defined benefit pension schemes in the UK increased over the month of July. According to Mercer's latest data, the estimated aggregate IAS19 deficit for the defined benefit schemes of the FTSE350 companies stood at 75bn GBP (equivalent to a funding ratio of 87%) at 31 July 2012. This compares to a deficit figure of 70bn GBP at the end of June (funding ratio of 88%) and a figure of 61bn GBP at the end of December 2011 (funding ratio of 89%)." (Mercer)

Harmonizing the Regulation of Financial Advisers
"In many cases, brokers and advisers perform similar functions but they are regulated differently under laws enacted during the Great Depression.... This paper discusses the debate over harmonization and explains how the U.S. Securities and Exchange Commission, the courts, and Congress have responded. The paper concludes with insights into considerations that will likely determine how the harmonization debate will be resolved." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)

U.S. Corporate Pension Plans' Funding Deficit Reaches All-Time High
"The aggregate deficit in pension plans sponsored by S&P 1500 companies grew $146 bil.lion during July, to a record high $689 bil.lion ... This deficit corresponds to a record low aggregate funded ratio of 70% as of July 31, 2012, compared to a funded ratio of 74% as of June 30, 2012, at which point the aggregate deficit was $543 bil.lion. Although US equity markets rose 1.4% during July, discount rates fell another 30 to 55 basis points resulting in liability increases ranging from 3% to 11% during the month. The continued fall in US Treasury yields and the narrowing of corporate bond credit spreads led to discount rates hitting a new all-time low for the third consecutive month." (Mercer)

Public Employee Unions Are Indirectly Some of Wall Street's Biggest Customers
"On June 30, 2011, the Maryland State Retirement and Pension System ('the System') reported net assets of $37.6 bil.lion.... During the fiscal year ending June 30, 2011, the System spent $221 mil.lion on Wall Street money management fees, though fund management appears to have yielded subpar results. There is substantial evidence that Wall Street managers are unable to beat passive equity index funds that cost much less in fees.... The ratio of the System's Wall Street fees equaled 0.693 percent in FY 2011, above the 0.409 percent of similar state systems nationwide." (Maryland Public Policy Institute and Maryland Tax Education Foundation)

Changes for Upcoming Proxy Season: Shareholder Say-on-Pay Begins to Apply to Smaller Reporting Companies
"[B]eginning for the 2013 proxy season, the transition rule exception for Smaller Reporting Companies will expire and the Shareholder Say on Pay [SSOP] provision of the Dodd-Frank Act will begin to apply to those companies. Under the SEC's final rule, Smaller Reporting Companies become subject to the SSOP requirements, including frequency of SSOP, as of the first annual or other meeting of shareholders at which directors will be elected occurring on or after January 21, 2013." (Winston & Strawn LLP)

City College of San Francisco Spends 92 Percent of Budget on Salaries, Benefits
"[W]hile higher education observers say many community college districts have scaled back benefits for retirees in the last 20 years, City College has not, for the most part.... [O]n average, these costs eat up roughly 85 percent of spending at community college districts in California. But ... it's an issue of local control that the chancellor's office doesn't manage." (The Huffington Post)

Benefits Groups Plead to Keep ERISA Discretionary Authority to Interpret Ambiguous Plan Provisions
"Four groups—the ERISA Industry Committee, the American Benefits Council, the U.S. Chamber of Commerce and the Business Roundtable—filed an amicus brief July 26 to urge 2nd Circuit judges to support the principle of deference to plan administrators' decisions over benefit plans.... The plaintiffs (joined by the U.S. Department of Labor) argued that the plan's discretion can be overturned when it ignores participants' reasonable reading of ambiguous plan provisions." [Conkright v. Frommmert, 2nd Cir. 12-0067-CV] (Thompson SmartHR Manager)

Cypen & Cypen Newsletter, August 2, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: The Role of Defined Benefit Pensions in Reducing Elder Economic Hardships; 2012 Retirement Confidence Survey of State and Local Government Workforce; Women Still Face Retirement Security Challenges; Most Worry About Outliving Retirement Money; Defined Contribution Plans Will Not Save Maryland Taxpayer Dollars; In State Pension Reform, Did New Workers Pay for Past Mistakes?; Workers With Paid Sick Leave Are Healthier. (Cypen & Cypen)