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August 17, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Retirement Planning Consultant
for Diversified in MI

Retirement Plan Administrator
for Caras & Shulman, PC - Certified Public Accountants - Business Advisors in MA

Business Consultant
for MassMutual Financial Group in MA

Retirement Services Analyst
for Insperity in TX

Retirement Planning Consultant
for Diversified in IL

Retirement Planning Consultant
for Diversified in IN

Director of Benefits
for Arnold & Porter LLP in DC

ERISA Attorney
for Integrated Retirement in ANY STATE

Senior Consultant, Retirement and Employee Benefits
for Integrated Retirement in MN

Pension Analyst
for Pentegra Services Inc. in NY

Customer Service Manager (Benefits Processing)
for General Board of Pension and Health Benefits in IL

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Webcasts and Conferences

401(k) Rekon Advisor Symposium - Costa Mesa
in California on September 11, 2012 presented by 401(k) Rekon


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[Official Guidance]

Text of IRS Notice 2012-55: 25-Year Average Segment Rates and Adjusted 24-Month Average Segment Rates for Pension Funding Under MAP-21 Changes (PDF)
Provides guidance on the 25-year average segment rates that are applied to adjust the otherwise applicable 24-month average segment rates that are used to compute the funding target and other items under section 430 of the Internal Revenue Code and section 303 of ERISA. The guidance reflects the changes made to the Code and ERISA by the Moving Ahead for Progress in the 21st Century Act (MAP-21), Pub. L. No.112-141. (Internal Revenue Service)


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

Sponsored by ASPPA

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]

MAP-21: Pension Funding Relief—and Much More
"The MAP-21 funding relief should be substantial, particularly for the 2012 and 2013 plan years. This is because 90% (for 2012) or 85% (for 2013) of each of the 25-year averages should still be substantially higher than the 24-month average. In fact, some have estimated that 2012 minimum funding requirements could be reduced by as much as 10 to 25%." [Editor's Note: This article was published shortly before the issuance of Notice 2012-55.] (Spencer Fane)

Annuities in DC Retirement Plans: What to Expect From D.C.
"Despite a flurry of recent activity in Washington, policymakers appear reluctant to aggressively promote annuities and other retirement income products in defined contribution (DC) plans, according to Vanguard Principals Steve Utkus and Jamey Delaplane.... Mr. Delaplane expects to see more regulatory action soon. He said the U.S. Department of Labor could issue proposed guidance as early as this fall on providing retirement income illustrations on participant benefit statements. The illustrations would show participants their expected monthly benefit at retirement given their current account balance, estimates of future investment returns, and possibly future salary increases and contributions." (The Vanguard Group, Inc.)

Got Pension Questions? Get Free Help
"The U.S. Administration on Aging Pension Counseling and Information Program ... runs the free pension counseling projects program offered by nonprofit groups in 30 states, in conjunction with the Pension Rights Center in Washington, D.C. The counselors can answer questions you have about retirement benefits laws; facilitate communication with a recalcitrant pension plan administrator; verify retirement benefit calculations; explain your pension rights in a divorce and even help you appeal adverse decisions concerning your retirement plan." (Next Avenue)

Illinois Governor Closes Pension Loophole for Ex-Lawmakers
"The measure was instigated by Tribune and WGN-TV stories that disclosed the sweet deal given to former Rep. Robert Molaro, D-Chicago. He landed a $12,000, one-month job with 14th Ward Ald. Edward Burke, chairman of the City Council Finance Committee. That brief stint allowed Molaro to take the $12,000 figure and multiply it times 12 for an annual $144,000 salary he could use to calculate his overall state retirement check. His yearly pension nearly doubled to more than $110,000." (Chicago Tribune; free registration required)

Illinois Lawmakers Unlikely to Fix Pension Mess at Friday Session
"Illinois lawmakers, meeting during a special session on Friday in a bid to fix the state's ailing public pension programs, are unlikely to produce an overhaul of the nation's most underfunded state retirement system, lawmakers and lobbyists said.... Democrats, who hold the governor posts and legislative majorities ... are between a rock and a hard place. Voters are demanding curbs on pension abuses and skyrocketing costs, while change is fiercely resisted by public sector unions, the traditional paymasters of the Democratic party." (The New York Times; free registration required)

New Accounting Rules Expose Bigger Funding Gaps for Public Pensions
"The accounting changes themselves will not force policymakers to alter how they fund pensions. But finance experts say that by simply highlighting greater funding gaps, the rules will intensify pressure on state and local governments to allocate more of taxpayers' dollars to their pension funds. More likely, public workers may have to contribute more to their retirements or see promised benefits curtailed, measures that have already been implemented in more than 40 states." (The Washington Post; free registration required)

Cerulli Forecasts Custom Target-Date Fund Strategies
"Custom strategies will hold 22% of 401(k) target-date fund assets by 2016, or $218 bil.lion, according to research from Cerulli Associates. That will be a nearly four-fold increase from the 2011 asset level of $46.4 bil.lion." (Employee Benefit News)

Cash-Strapped U.S. Pension Funds Ditch Stocks for Alternatives
"Faced with growing obligations and shrinking returns, many of the largest U.S. public pensions have raised their exposure to alternative investments to record levels this year, despite ongoing criticism of the risks and costs. Public pension fund managers have poured billions of dollars into alternative investments, ranging from Polish energy facilities to catastrophe bonds, as lackluster stock market returns and historically low interest rates have made it difficult for pensions to earn enough." (Reuters)

Public Safety Pension Costs Steadily Growing in Los Angeles
"Taxpayers in Los Angeles will see retirement costs for police officers and firefighters climb by 56% over the next four years, even after passage of a ballot measure that trimmed the pension benefits paid to new hires, according to projections released by city budget officials. Pensions and retiree healthcare costs for sworn employees are projected to consume $789 mil.lion of the city's general fund budget in 2016, up from $506 mil.lion this year[.]" (Los Angeles Times)

Brazil's President Rousseff Said to Set Retirement Age to Cap Spending
"Brazilian President Dilma Rousseff plans to set a minimum retirement age for private sector employees to limit its future pensions deficit ... at 65 years for men and 60 years for women. The rule would apply to future, not current, contributors to the government's social security institute, or INSS ... Currently, workers can retire once they contribute a minimum of 35 years for a full pension or 15 years for a partial pension, in the case of men." (Bloomberg)

CalPERS Commits $530 Mil.lion to Asia Real Estate Funds
"ARA's Long Term Hold Fund will target investments in high quality office buildings in central business districts and retail malls in well-located, densely populated suburbs in the first and second tier cities in China and Hong Kong. The Dragon Fund will primarily focus on retail, office and residential property investment in key cities of China, Singapore Hong Kong, and Malaysia." (California Public Employees' Retirement System)

401(k) Fees: What to Look For
"More tremor than earthquake, the guidelines will give fresh ammunition to employees already active in monitoring their accounts, analysts say. The impact on more passive investors is less clear. Industry experts believe fewer than 5% of employees in workplace savings plans make a concerted effort to manage their 401(k) accounts." (Fidelity.com)

[Opinion]

Pension Troubles Possibly Ahead for Baby Boomers Employed by State and Local Governments
"[M]any states and local governments have now taken action. Between 2009 and 2011, 43 states trimmed pension benefits, increased employee contributions or both, according to the National Conference of State Legislatures. But a major mystery remains: How much more must be done to bridge the chasm between what these governments owe and the assets they have set aside to make pension benefit payments?" (Politico)

[Opinion]

Deficit, Tax Reform Put 401(k) Deductions in the Spotlight
"With the need to rein in the expanding federal budget deficit, limits on the deductibility of defined contribution (DC) plan contributions are among the topics expected to be discussed when Congress begins to debate spending and tax priorities. These plans represent a tempting target for legislators because the lost tax revenue associated with incentives for saving in DC plans is estimated to be roughly $75 bil.lion dollars annually." (The Vanguard Group, Inc.)

Benefits in General; Executive Compensation

Bill Clinton Tried to Limit Executive Pay. Here's Why It Didn't Work
"[T]he big flaw in 162(m) was its broad exemption of 'performance-based' pay. The $1 mil.lion cap only applied to traditional salaries, bonuses and grants of company stock. Stock options (that is, stock grants that take time to vest and are meant to provide a performance incentive to workers) and other performance incentives are considered performance-based pay and are deductible even in excess of $1 mil.lion. So, unsurprisingly, businesses starting paying executives more in the form of stock options, such that fully 55 percent of deductible executive pay was 'performance pay' between 2007 and 2010." (The Washington Post; free registration required)

Czech Upper House Upsets Government With Tax, Pension Vetoes
"The upper house of Czech parliament vetoed bills on tax hikes and pension reform on Thursday, posing a threat to the centre-right cabinet's objectives to cut the deficit next year and boost savings for retirement.... The tax bill would ... cancel caps on health insur.ance paid by employees ... The pension reform bill is only a technical measure allowing the government to push ahead with a plan to allow Czechs to send part of their social insur.ance payments into private retirement funds instead of to the government which redistributes the money immediately to current pensioners." (The New York Times; free registration required)

Can the Government Incentivize the Purchase of Private Long-Term Care Insur.ance?
"[T]he literature to date has little empirical evidence on whether the government has been successful in expanding the private long-term care insur.ance market.... [S]tate adoption of these programs increased the incidence of having long-term care insur.ance by 3 percent and decreased Medicaid use among respondents by 18 percent. [There is also] an increase in private long-term care insur.ance policies that provide nursing home care and a decrease in plans that provide in-home care." (Center for Retirement Research at Boston College)

Excess Pension Assets May Now Be Used to Purchase Life Insur.ance Benefits
"[MAP-21] allows transfers of excess pension assets to a life insur.ance account, under the same rules that apply to retiree health accounts. The life insur.ance account is used to cover current retiree liabilities based on life insur.ance premiums and must be separate from a retiree health account.... Although only one transfer of excess pension assets may be made in any tax year of the employer, a transfer from a plan to both a health benefits account and a life insur.ance account in the same tax year is treated as a single transfer." (Bloomberg BNA)

Access To and Use Of Paid and Unpaid Leave (PDF)
"In 2011, 90 percent of wage and salary workers had access to paid or unpaid leave at their main jobs, the U.S. Bureau of Labor Statistics reported today. Twenty-one percent of wage and salary workers took paid or unpaid leave during an average week. Workers who took leave during an average week took an average of 15.6 hours of leave. Fifty-six percent of wage and salary workers were able to adjust their work schedules or location instead of taking leave or because they did not have access to leave in 2011. Seven percent of workers made such an adjustment in an average week." (U.S. Bureau of Labor Statistics)

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