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August 20, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Taft Harley Relationship Manager
for New York Life Retirement Plan Services in MA

Part Time Retirement Planning Consultant
for Diversified in MD

Client Service Specialist
for Charles Schwab in OH

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Webcasts and Conferences

Controlled Groups
in Minnesota on September 18, 2012 presented by ASPPA ABC Greater Twin Cities

Seven Steps for Creating and Maintaining an Effective Corporate Wellness Program
Nationwide on September 13, 2012 presented by Thompson Publishing Group

Mastering Health Reform’s Taxation and Reporting Issues for Employers: A Two-Part Webinar Series
Nationwide on September 20, 2012 presented by Thompson Publishing Group

Consumer-Directed Health Care: A Strategy for Making Plans More Cost-effective
Nationwide on August 22, 2012 presented by Thompson Publishing Group

Taxation Under Health Reform: What Employers Need to Know
Nationwide on September 20, 2012 presented by Thompson Publishing Group

Tackling the Top Reporting Concerns Under Health Reform: A Guide for Employers
Nationwide on September 27, 2012 presented by Thompson Publishing Group

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - Boston
in Massachusetts on September 20, 2012 presented by SunGard Relius

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - Minneapolis
in Minnesota on September 20, 2012 presented by SunGard Relius

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - Kansas City
in Missouri on September 21, 2012 presented by SunGard Relius

"Cross-Tested/Safe Harbor 401(k) Plan Design and Troubleshooting" Workshop - Pittsburgh
in Pennsylvania on September 21, 2012 presented by SunGard Relius


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[Guidance Overview]

2012 Pension Plan Funding Stabilization Rates Released (PDF)
"Adjusting the segment rates to reflect the 25-year average presented a challenge to the IRS and Department of the Treasury because actual rate information for significant periods of time in the averaging period is not readily available. Economists at the Treasury were given the task of 'filling in the blanks' so that the IRS could release information on the precise averages plan actuaries would use for their calculations." (Buck Consultants)


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CalPERS Defends Pensions in Fight Over Creditor Priority in Municipal Bankruptcies
"In an Aug. 2 statement responding to insurer Assured Guaranty (AGO)'s objections to Stockton's bankrup.tcy filing, CalPERS general counsel Peter Mixon argued that the interests of pensioners should trump those of other creditors.... Even as it defends its standing in the Stockton case, CalPERS is working to counter the notion that pension costs are a significant factor in current and potential municipal bankruptcies." (Bloomberg)

Moody's Says More California Cities at Risk of Bankrup.tcy
"The municipal bond market has long been characterized by low default rates and relatively stable finances, Moody's said, but that outlook is beginning to change as bankrup.tcy becomes a tool for cash-strapped cities. As a result, the agency will reassess the financial position of all cities in California, which issues about 20 percent of the municipal bond volume nationwide, 'to reflect the new fiscal realities and the governmental practices.'" (Associated Press)

Growing Retirement Responsibilities Affect Job Market for Teachers
"[The] Michigan Legislature [recently] debated and approved changes requiring public school employees to pay more for their pensions and ending fully paid-for, state-provided health coverage in retirement for new hires. Some lawmakers seek further legislation that would end pensions for new teachers and push them into a 401(k)-style retirement plan.... Critics say the changes put too much on the backs of incoming and current educators, and fear they will discourage potential employees from looking for jobs in Michigan -- or pursuing a teaching job at all." (The Detroit News)

Annuities and Your Nest Egg: Reforms to Promote Optimal Annuitization of Retirement Capital (PDF)
"In Can.ada, roughly half of private pensions received by retired Canadians in 2008 likely incorporated some form of mortality protection ... Very few of those without workplace DB coverage currently choose to annuitize at least part of their lump-sum savings in retirement ... A review of prior research suggests that a higher proportion of individuals should be opting to receive at least part of their income in the form of an annuity payment guaran.teed for life. While people in the lowest income brackets already do receive most of their retirement income from government sources (which are a form of annuity), most individuals with middle incomes and higher would likely benefit from placing a portion of their private savings into a life annuity product." (C.D. Howe Institute)

CalPERS Launches IPO Boycott Plan
"The California Public Employees' Retirement System, the U.S.'s largest pension fund with $237 bil.lion in assets under management, is drawing up new corporate governance criteria under which it will campaign to remove dual class, classified or plurality voting structures and not invest in initial public offerings which use them. One in eight of this year's 98 U.S. IPOs listed in the year to August 16 had more than two classes of shares[.]" (FoxBusiness.com)

How Cautious Target-Date Funds Navigated the Debt-Ceiling Crisis
"As the debt-ceiling crisis unnerved markets last summer, target-date funds sank. During the third quarter of 2011, funds with maturity dates of 2016 to 2020 lost 9.6 percent ... But not every fund suffered.... While the average fund in the 2020 category keeps half its assets in cash and bonds, the cautious funds have most of their portfolios in fixed income." (Institutional Investor)

Can CalPERS Investments Do Well by Doing Good?
"Responding to legislation, the CalPERS board last week approved a five-year plan for a program that has given $10 bil.lion to 300 new 'emerging' investment managers with limited experience, yielding mixed results during the last two decades.... CalPERS has another $3 bil.lion managed by 80 firms owned by women and minorities.... A staff report noted that state agencies are prohibited ... from considering race, gender and ethnicity in employment and contracts. 'Women and minority managers are more likely to be emerging managers,' said the report. 'As a result, an ancillary benefit of our EM (emerging manager) strategies may be the increased diversification of CalPERS external fund managers.'" (CalPensions)

For Many Discouraged Boomers, 'Retirement Age' Is a Moving Target
"Boomers cruising toward a traditional retirement suffered a financial comeuppance in the prolonged economic slump that began in late 2007. The downturn sapped jobs, stock and housing values, and interest on savings. Many were also caught in the shift from defined-benefit pension plans to 401(k) plans that required workers to contribute toward their own retirement savings. Some didn't, a choice that will leave them short financially. Small wonder that, according to the Pew Research Center, boomers are the gloomiest of all age groups about the health and future of their finances." (Kansas City Star)

Retirement Costs Soon Will Take a Larger Share of Los Angeles Budget, Estimates Show
"Taxpayers in Los Angeles will see retirement costs for police officers and firefighters climb by 56% over the next four years, even after voters approved a March 2011 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)

Unintended Consequences of Individual Benefit Discussions
"Although the court acknowledged that plans or employers may sometimes be required to provide benefits that are not contemplated under the terms of the plan (if participants are given incorrect promises about those benefits), it found that the former employee in this case had failed to prove that she had justifiably relied to her detriment on the incorrect benefit estimate. Prominent disclaimers on the website and in the letter from Mars, along with the frequent use of the term 'estimate' in the communications with the former employee, were persuasive to the court." [Stark v. Mars, Inc. (S.D. Ohio July 17, 2012)] (Spencer Fane)

Should You Have a Formal ERISA Compliance Program? (PDF)
"[W]hile many ... providers [of financial services to ERISA plans] have extensive written procedures to assure compliance with the myriad of state and federal securities laws and regulations that apply to them, very few have detailed written procedures on compliance with ERISA and the Code. The purpose of this article is to advise readers on some of the key ERISA and Code provisions to which advisers, brokers and other providers may be subject to by providing services to ERISA-governed plans ... and IRAs and to provide a framework for the establishment of an ERISA and Code compliance program and manual, which include such procedures." (Alston + Bird LLP)

One Way to Boost Social Security Benefits: a Do-Over
"Can someone who collects reduced retirement benefits early—say, at 62—suspend his or her benefits later and still earn delayed retirement credits? The answer is yes. This may be an appropriate strategy [for someone] who collected benefits early just because he could and now regrets his decision.... [R]etirees can change their minds once and repay their benefits, but it must be done within 12 months of claiming them. However, retirees still can voluntarily suspend Social Security benefits at any time. And they still can earn delayed retirement credits, which are worth 8% for every year that they don't collect benefits between their full retirement age and 70." (Investment News; free registration required)

[Opinion]

Earnest Fiduciaries Prove Their Prudence
"Employers that fail to engage professionals for assistance because of concerns over cost are begging for more expensive future problems. The cost of non-compliance will always be much higher than what compliance would have cost in the first place. When ... going through an audit with a regulatory agency, it is hard to justify problems with a plan by explaining how the employer did not want to pay for expert guidance in the first place." (Employee Benefit News)

[Opinion]

Looking at the Whole Picture: Women of Color and Retirement
"Retirement security, and particularly women's retirement security, has been in the news a lot lately.... However, women of color face additional challenges and are also much more likely to live in poverty in their elder years. This part of the story gets glossed over when we talk about women as a whole." (Women's Institute for a Secure Retirement (WISER))

Benefits in General; Executive Compensation

Year-End Amendment Deadline Under Code Section 409A
"[Any] deferred compensation arrangement under which payments subject to Section 409A are contingent on the execution of a release of claims must be amended by December 31, 2012, to comply with the requirements of Section 409A (by adopting one of ... two alternative provisions ...). Of course, only arrangements that are subject to Section 409A (and for which no exemption applies) are affected by these requirements. There is thus no need to modify arrangements for the payment of amounts that are exempt from Section 409A under either the 'short-term deferral' rule ... or the 'severance pay. exception[.]" (Spencer Fane)

The Importance of State Anti-Discrimination Laws on Employer Accommodation and the Movement of Their Employees Onto Social Security Disability Insur.ance
"The rate of application for Social Security Disability Insur.ance (SSDI) benefits, as well as the number of beneficiaries has been increasing for the past several decades, threatening the solvency of the SSDI program.... Using the Health and Retirement Study data linked to Social Security administrative records and a state fixed effects model, [this study finds] that the provision of workplace accommodation reduces the probability of application for SSDI following disability onset. We estimate that receipt of an accommodation reduces a worker's probability of applying for SSDI by 30 percent over five years and 21 percent over 10 years." (University of Michigan Retirement Research Center)

Murder Victim's Mother May Rely on Post-Amara Equitable Remedies
"Here we have the latest episode in the sprawling saga of equitable remedies under ERISA. The question, as always, is whether a participant is entitled to something for which the plan document does not expressly provide. This time, the answer appears to be 'yes.' ... [In a recent case, McCravy v. Metropolitan Life Insur.ance Company, the] Fourth Circuit reversed its earlier decision (on surcharge and all of Ms. McCravy's other equitable theories) and remanded the entire case to the trial court.... [T]he trial-court judge has already made clear how he would decide these issues absent the restrictions on equitable remedies that applied before Amara." (Spencer Fane)



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