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HR Professionals Lunch-N-Learn
in Maryland on September 18, 2012 presented by New York Life Insurance Company

Collective Bargaining for Health Benefits in Today's Legal Environment (Webinar Recording)
Nationwide on August 17, 2012 presented by Nixon Peabody LLP

ACI’s 5th National Advanced Forum on Defending & Managing ERISA Litigation
in New York on October 29, 2012 presented by American Conference Institute

 

[Guidance Overview]

Hardship: The IRS Definition
"Although the legislative history indicates that Congress wanted the IRS to issue 'objective standards' for granting hardship waivers of the 60-day rollover deadline, the IRS says only that it will consider 'all relevant facts and circumstances,' such as 'death, disability, hospitalization, incarceration, restrictions imposed by a foreign country or postal error;... the use of the amount distributed (for example... whether the check was cashed); and... the time elapsed since the distribution occurred.' More than half of the deadline waivers are granted to individuals who missed the deadline because their financial advisor or financial institution made a mistake." (Morningstar Advisor)

Retirement Plan Professionals: Attend the ASPPA Annual Conference   [Advert.]

Get ready for what lies ahead for the retirement plan industry in 2012 by attending The 46th ASPPA Annual Conference: Attend more than 70 interactive sessions on hot topics shaping the industry & network with over 1,500 retirement plan professionals.

[Guidance Overview]

Congress Finally Passes Pension Funding Stabilization Provisions
"Depending on the funding status and size of their pension plans, plans sponsors may be required to include additional disclosures in their plans' annual funding notices, as required under ERISA Section 101(f), that describe the implications of the MAP-21 provisions.... While applying the new interest rate provisions in the short term will result in lower required contribution amounts in the current rate environment, making lower current contributions can result in future unpleasant developments, such as higher PBGC variable rate premiums and higher minimum required contributions." (Porter Wright Morris & Arthur LLP)

Plan Participants Unsure of Future Retirement Needs
"More than a third of retirement plan participants admitted that they either 'guessed' or 'made up' their estimates for how much income they would need in retirement, according to a new survey, while only 30% said they consulted with a professional for help in setting their goals. The survey ... found that 69% of the 3,370 defined contribution plan participants polled admitted that their DC plan at work was their only or primary retirement account. Despite the fact that the vast majority surveyed were at least middle-aged (68 percent said they were 46 years old or older) with a reasonable income (64% made at least $75,000 annually), more than half (54%) said they had less than $100,000 saved for retirement. What's worse, 37% had less than $50,000 saved. Only 3% said they had saved $1 mil.lion or more." (Employee Benefit News)

Slovakia Follows Peers to Shift Pensions Back to State
"Slovakia became the third country in the European Union's former communist eastern wing to reclaim funds from private sector pensions for the state on Thursday, planning to siphon off 300 mil.lion euros this year and next to help reduce its budget gap.... The change marks a reversal of a reform, introduced in 2005, allowing people to save part of their mandatory state pension contributions with private pension funds rather then just relying on a state system burdened by an ageing population." (Reuters)

How to Find a Lost Pension
"No one tracks how many people have failed to claim pension benefits they have earned—or benefits that have been passed on to a spouse as a survivor benefit. But PBGC ... says more than 38,550 people are owed more than $300 mil.lion—$9,100 on average—from plans it administers.... The Pension Rights Center ... reports that 28 percent of the pension problems it handles are lost pension plan matters." (Reuters)

Mid-Year Review: FINRA's Sanctions in 2012 on Pace to Far Surpass 2011's Totals
"Financial Industry Regulatory Authority (FINRA) fines and disciplinary actions for 2012 are on track to significantly outpace those for 2011 ... [D]uring the first half of 2012, FINRA ordered broker-dealers and associated persons to pay $39.4 mil.lion in fines. 'If fines continue to be assessed at this rate, 2012 will represent a 15% increase from the total fines reported by FINRA in 2011,' said [the author]. 'Essentially, we are looking at a jump from $68 mil.lion in 2011 to projected fines of $78.4 mil.lion in 2012.'" (Sutherland)

Job Demand and Early Retirement
"[This study] examine[s] whether pension eligibility and payouts induce earlier retirement, especially for those with more physically demanding jobs, while accounting for wage differentials, injury history, and underlying health.... [R]results suggest that workers whose jobs have high physical demand retire earlier after accounting for the wage differential and health ... [and] the minority of workers who transition to lower demand jobs, due to previous injury or health issues, are less likely to retire early." (Center for Retirement Research at Boston College)

Massachusetts Pension Fund Employees to Receive Bonuses of Up to 40 Percent of Pay
"The Massachusetts state pension agency is set to give a huge $815,000 performance bonus package to most of its 25-member staff, including a nearly $100,000 payout to its executive director, despite the fact that the fund sputtered through a fiscal year that ended with a slight loss in value.... The bonuses will kick in automatically, according to a 2007 plan that ... [allows] pension fund employees [to] collect bonuses amounting to 30 to 40 percent of their salaries if they meet or exceed the benchmarks that are based on a rolling three-year period. Because the fund's investments, particularly its stock assets, have strongly rebounded since the market crash in 2009, the bonuses continue to kick in this year, despite a small loss." (Boston.com)

Pension Bill Up for Debate Not a Full Solution for Illinois Funding Woes
"In relative terms, this bill doesn't do much. It would only reduce by about 10 percent the roughly $310 bil.lion that the state currently is scheduled to pay into its pension system by 2045. Worse, it would only reduce by some $4 bil.lion the unfunded obligation—now $83 bil.lion and growing—that hangs like the sword of Damocles over Illinois and its taxpayers." (Chicago Tribune; free registration required)

Massachusetts State Employee Pension Fund Seeks to Lower Assumption to 8%
"While a lower rate of return may better reflect current market trends, the change may stir controversy. It can increase the Massachusetts system's unfunded liability, or the difference between projected assets and amounts owed to beneficiaries, pegged at about $19 bil.lion in January 2011. A lower return assumption can also force higher contributions from the state, cities and workers to meet funding commitments." (Bloomberg BusinessWeek)

The Unspoken Fear of Every 401(k) Plan Sponsor
"Just as society learned to stop worrying if not love the bomb, this same Dr. Strangelove-like condition exists in the minds of many 401(k) plan sponsors. The notion of their fiduciary duties seems so terrifying, they chose to ignore it, pretending it's not even there.... [N]o single handbook exists—nor can it ever exist—that explains in a simple bullet list what fiduciary duties they will be held to.... Unfortunately, the 401(k) plan sponsor is held liable for the actions of every vendor, and—here's the really difficult part—it's hard to know what fiduciary rules (if any) apply to which service providers. That's because at least three different fiduciary standards exist: the traditional trust law variety; the ever-evolving SEC form; and, the much-maligned ERISA version." (BenefitsPro)

Bond Insurers Contest Stockton Bankrup.tcy Over City's Decision to Protect Pensions
"Two bond insurers challenged the eligibility of Stockton, California, for bankrup.tcy, arguing that the city can cut pension benefits, a move that could have profound implications for the state. The court filings set a roadmap for a battle, in or out of bankrup.tcy court, in which Wall Street takes on the largest public U.S. pension fund, the California Public Employees' Retirement System (CalPERS), as troubled cities and counties watch closely." (Reuters)

Pension Giant CalPERS Poised to Back Off Venture Funds
"Venture capital has wallowed through nearly a decade of difficult returns and sluggish fundraising. The decision by CalPERS, which as of April 30 had $237 bil.lion under management, to largely abandon new commitments to venture funds will likely prolong the fundraising agony. Over time, however, less money flowing into the asset class could reduce start-up valuations and boost returns." (Reuters)

China's Brewing Pension Crisis
"China's pension program is becoming unsustainable. According to a recent report by economists at Deutsche Bank (DB) and the Bank of China, the projected shortfall for future pension payments will reach 18.3 tril.lion yuan by next year. People older than 60 already make up 13 percent of China's population, and by 2050, the World Bank estimates that they will account for 34 percent." (Bloomberg BusinessWeek)

Annual Survey of Public Pensions: State-Administered Defined Benefit Data
"The Annual Survey of Public Pensions: State-Administered Defined Benefit Data provides revenues, expenditures, financial assets, membership, and liabilities information for defined benefit public pension systems. Data are shown by state, for the state-administered systems. There are 222 state-administered defined benefit public pension systems, all of which are represented here." (U.S. Census Bureau)

Changes in Labor Force Participation of Older Americans and Their Pension Structures: A Policy Perspective
"[This paper investigates] how the shift in private pension coverage from defined benefit (DB) to defined contribution (DC) retirement plans since the 1980s has contributed to the substantial rise in labor force participation of older Americans.... [T]he timing of the exit from the labor force is closely tied to wealth accrual in DB plans, while wealth accrual in DC plans does not provide similar incentives for the timing of retirement.... The results illustrate the potential significance of the rise in employer-sponsored DC pensions in explaining the increase in labor force participation of older Americans.... [T]he shift from DB to DC pension coverage increased the labor force participation rate of workers age 60 to 64 by 4.9 percentage points (1.7 points for ages 65-69)." (Center for Retirement Research at Boston College)

Energy Future Holdings to Offer Lump Sum-Annuity Choice
"About 2,000 employees will have 30 days to accept the lump sum or receive annuity payments from an insur.ance company, which has not been selected yet ... The offer applies only to certain employees of Energy Future Holdings Corp. and its Luminant and TXU Energy subsidiaries. Energy Future Holdings officials are negotiating with an additional 1,000 union employees that would be eligible for the offer as well." (Pensions & Investments)

Public Pension Assets, Obligations Rose in 2011
"State retirement systems continued to rebound in 2011, with cash and investment holdings rising 14.6 percent to $2.5 tril.lion, the U.S. Census reported on Thursday. 'The 2011 earnings reached pre-market downturn levels, showing a 2.1 percent increase from 2007,' the Census found, noting it was the second consecutive year of gains. The increase from 2010, however, is likely not enough to substantially narrow states' yawning pension gaps." (The New York Times; free registration required)

[Opinion]

Tax Reform Is Going to Be Really, Really Hard
"if you are going to seriously lower rates—not to mention raise any revenue—you're talking about cutting or eliminating the deduction for home-mortgage interest, charitable contributions, state and local taxes and employer-provided health insur.ance. These are, by and large, regressive, but they are also widely used by the middle class, and exceedingly popular." (The Washington Post; free registration required)

[Opinion]

GM, Ford Pension Strategy Is Not the Rule of Thumb
"GM and Ford's settlements come at a time of historically low interest rates, meaning companies that offer lump sum payouts or buy group annuities to resolve pension obligations end up paying a high price for risk management." (Retirement Town Hall)

Bankrupt Law Firm Protecting Some Partners From Liability, Retirees Say
"Bankrupt Dewey & LeBoeuf LLP is 'rushing' to implement a plan that would largely free select partners from liability for mismanagement while imposing burdens on others at the firm, including retired partners, a group of retirees said. They [asked] a federal court ... for a trustee or an examiner to look into the 'gross mismanagement' that continues after the bankrup.tcy, eroding assets, they said. Assigning an examiner to probe and pursue or settle clawback or other claims related to the conduct of Dewey and its executives also would be beneficial, they said." (Bloomberg)

Effective Delegation of ERISA Plan Administrator Duties and Standard of Review
"[A]n ERISA Plan that fails to properly delegate administrative duties to another party may lose discretionary review. But does the delegation of authority have to be in writing? Maybe not, so long as the Plan allows for delegation.... [The Seventh Circuit recently held that:] '[D]elegation does not depend on an express grant; instead it is permissible unless it would be "contrary to the public policy or the terms of a promise." ... There is no reason why an employer cannot make a summary plan description be part of the plan itself and thus reduce the length of the paperwork and the potential for disagreement between the summary and the full plan ... Nothing in this plan forbids delegation [to Aetna].'" [Aschermann v. Aetna Insur.ance Company (7th Cir. July 31, 2012)] (Lane Powell PC)

Nearly Half of Retirees, Pre-retirees Underestimate Life Expectancy
"[According to a recent study by the Society of Actuaries,] approximately four in 10 respondents (43% of retirees and 38% of pre-retirees) underestimate average life expectancy by five year or more ... Another two in 10 underestimate it by two to four years. Four in 10 retirees (42%) and pre-retirees (41%) correctly respond that about half of 65-year-old men and women can expect to live until median life expectancy (age 83 for men and age 86 for women). Two in 10 (21% of retirees and 20% of pre-retirees), believe that fewer than half will live at least until that age, while approximately one-third (31%) and 36%, respectively) believe about 75% or more will live until then." (LifeHealth Pro)

NFP Executive Benefits Launches Deferred Compensation Mobile App
(National Financial Partners Corp. (NFP))