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August 23, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

401(k) Daily Record-Keeping Specialist - Entry-Level
for Primark Benefits in CA

Pension Analyst/Actuarial Student
for Hooker & Holcombe, Inc. in CT

Defined Contrib Analyst III
for The Standard in OH

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[Guidance Overview]

404(a)(5) Fee Disclosure: When 'Participant' Includes Non-Participating Eligible Employees
"One of the trickier parts of [the new fee disclosure regulation] is answering the 'who' question.... In the preamble to the final regulations, the DOL says: ... 'Consistent with the definition of 'participant' under section 3(7) of ERISA, disclosures must be made to all employees that are eligible to participate under the terms of the plan, without regard to whether the participant has actually become enrolled in the plan.'" (The Pension Protection Act Blog)


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[Guidance Overview]

Single-Property Transaction May Not Be Considered a Prohibited Transaction
"[DOL] Advisory Opinion 2012-05A [concludes] that the contribution by a plan sponsor or affiliate of a single parcel of property to a pension fund master trust (or the sale of a single parcel by the trust to the sponsor or affiliate) could qualify for the prohibited transaction exemption in ERISA Section 408(e) ... While the conclusion ... is consistent with previous guidance, it clarifies DOL's limitation of its own previous 'single parcel' guidance." (Schiff Hardin LLP)

Schapiro Raises the White Flag on Money Funds
"The announcement means the fight over how to regulate $2.6 tril.lion in funds used by U.S. households and companies as an alternative to bank accounts probably will move to the Financial Stability Oversight Council, a panel of regulators created by the Dodd-Frank Act. Congress charged FSOC with identifying threats to U.S. financial stability." (Investment News; free registration required)

Practical Effect of the 2012 Segment Rates Under MAP-21
"For most plans, the second and third segment rates are the most important. The change in the first segment rate (0-5 years), while larger, will be less significant overall due to fewer years of compounding. The effect of the new, higher rates on plan valuations will be fact-dependent. For plans with a typical duration (e.g., 12 years), the higher rates will generally reduce the value (for minimum funding) of plan liabilities by 15%-20%." (October Three)

Moody's Says Illinois Pension Reform Inaction Is Credit Negative
"Illinois' failure to improve its sagging public retirement system during a special legislative session last week is a negative credit factor for the state, Moody's Investors Service said. 'Inaction on the state's pension liabilities will further strain this lowest-rated U.S. state's finances,' the credit rating agency said in a report on Thursday. Illinois has an A2 general obligation rating, the lowest among states Moody's rates." (Chicago Tribune; free registration required)


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SEC Cancels Vote on Proposed Tightening of Money Market Fund Regulation
"Mary Schapiro, Chairman of the U.S. Securities and Exchange Commission, canceled a vote on a proposal to tighten money-market fund rules amid opposition from fellow commissioners and a lobbying campaign by fund companies.... The announcement marks a victory for the mutual-fund industry, which has lobbied against the Schapiro proposal. The plan called for funds to abandon their traditional $1 share price, or to adopt capital buffers and redemption restrictions, changes executives said would destroy products that manage $2.6 tril.lion for U.S. companies and households." (Treasury & Risk)

Fourth Circuit Finds No Backloading Problem With Accrual Increases After Normal Retirement Age
"[The Fourth Circuit found that] benefit accrual increases to participants who have reached normal retirement age ... do not run afoul of ERISA's prohibition against 'backloading' accruals in later years of service.... [This] is the first reported Court of Appeals decision to find that ERISA's anti-backloading provisions do not apply to benefit accrual increases for plan participants who have reached normal retirement age." [McCorkle v. Bank of America Corp., 2012 U.S. App. LEXIS 15346 (4th Cir. July 25, 2012)] (Seyfarth Shaw LLP)

Mercer's 2012 Retirement Benchmarking Report
"[This report takes] a closer look at fiscal year-end 2011 financial disclosures to examine the challenges facing plan sponsors and to provide indications of what fiscal year 2012's year end might look like.... [The] analysis uncovered four key findings: The prevalence of 'risky' plans rose during 2011. We saw another year of significant cash contributions for these plans. Pension risk persists. The expected return on asset assumption continues to drift downward." (Mercer; free registration required to download full report)

Stay the Course on Contribution Levels Despite MAP-21 Segment Rates, Milliman Says
"Milliman is recommending that most of its clients use the rates to calculate their minimum funding obligation for 2012 but to contribute at about the same level they did in 2011.... With that strategy, employers can avoid a 'bulge' in pension underfunding after 2013 when the positive effects of the new rates begin to phrase out[.]" (Retirement Town Hall)

Second Circuit Allows Employer to Withdraw from Multiemployer Plan in Critical Status
"The Pension Protection Act (PPA) does not bar an employer from withdrawing from a multi-employer pension plan that is in critical status [according to the Second Circuit, which] noted that about this issue, the PPA itself is silent, so it turned to the question of 'congressional intent.'" (PLANSPONSOR.com)

10 Common Myths That Could Be Hurting Your Retirement Planning
"1. It's too early to start saving for retirement.... 2. I'll need about 80% of my current income in retirement.... 3. I won't see a dime from Social Security.... 4. If I contribute to a retirement plan, my money will be all tied up.... 5. I should automatically roll my retirement plans into an IRA when I leave a company." [Article contains 5 more.]" (Forbes)

New 401(k) Expense Reports Greeted with Yawns
"Details of the new reports were hammered out in seemingly endless discussions overseen by the U.S. Labor Department. Finally, however, their final form was adopted and the clock ticked forward. The future of consumer disclosure has arrived.... The only problem with the new reports, alas, is that all those tens of millions of 401(k) participants may not notice or care about them." (U.S. News & World Report)

Plan Sponsors Should Give Roth 401(k)s Another Chance
"Consider a Roth 401(k) plan for your company. As the name implies, this setup combines elements of 401(k) plans and Roth IRAs. Why are Roth 401(k)s back in the public eye? Uncle Sam just announced they're approved for millions of federal government workers. Private employers may be intrigued." (Business Management Daily; free registration required)

Bogle, Volcker Look to Get Fiduciary Duty Regs Back on Track
"Former Federal Reserve Chairman Paul Volcker, mutual fund pioneer John Bogle and former Securities and Exchange Commission Chairman Arthur Levitt will be among those lending their signatures to an effort to revive stalled federal regulations that would strengthen investment-advice rules. On Sept. 11, the Institute for the Fiduciary Standard will present a 'Fiduciary Declaration' to SEC Chairman Mary Schapiro urging the agency to move forward with a rule that would impose universal fiduciary duty on retail investment advice." (Investment News; free registration required)

[Opinion]

Statement of SEC Chairman Mary L. Schapiro Advocating Reform of Money Market Funds But Cancelling Commissioners' Vote (PDF)
"Three Commissioners, constituting a majority of the Commission, have informed me that they will not support a staff proposal to reform the structure of money market funds. The proposed structural reforms were intended to reduce their susceptibility to runs, protect retail investors and lessen the need for future taxpayer bailouts. I—together with many other regulators and commentators from both political parties and various political philosophies—consider the structural reform of money markets one of the pieces of unfinished business from the financial crisis." (Securities and Exchange Commission, via The SPARK Institute)

[Opinion]

Will the Federal Government Bail Out State Pensions?
"State-run pension systems across the country are underfunded to the tune of $2.5 tril.lion—equivalent to one-sixth of the American economy. Maryland, for instance, does not have the money to pay for 60 percent of its actual pension liabilities ... Other states face even more dire straits. Pension systems in Illinois, Louisiana and Connecticut are on course to run out of money entirely by 2020. All this prompts concerns that the era of big bailouts may not be over." (Baltimore Sun)

[Opinion]

Why Canadian Pension Funds Are So Comfortable Investing in Private Market Assets in Britain
"Canadian pension funds are global trendsetters and many global funds can learn a lot from them. The same can be said about Dutch and Danish pension funds. Their superior governance model is the main reason why they're able to attract top talent to their funds, pay them properly and focus on what is in the best interests of all their stakeholders. To do this, they keep politics out of investment decisions." (Pension Pulse)

[Opinion]

The Canadian Pensioners Who Own Britain
"In less than ten years, a handful of the country's biggest funds have bought outright or own stakes in some of the UK's most prized infrastructure.... [It] is hard to imagine such a land grab unfolding without dissent if the buyers were perceived to pose any political threat." (The Telegraph)

[Opinion]

Six Steps to Your 'Personal Pension'
"[I]n the age of disappearing pensions and empty promises, you need to set aside part of your retirement savings into a 'personal pension plan.' ... [H]ere are the six most important steps to securing your retirement income: Diversify your income streams.... Guaran.tee your income.... Inflation-proof your income.... Make responsible withdrawals from your stock account.... Watch fees that can eat into your income plan.... Set reasonable goals." (U.S. News & World Report)

[Opinion]

California Pension Reform Gaining Traction
"Last year, government watchdogs warned that California faced an unprecedented crisis in funding public pensions, which have been growing more lucrative as pensioners leave the workforce earlier. Today, state and local pension plans across California are an estimated $250 bil.lion in debt, more than $20,000 for every household in the state, according to the San Jose Mercury News. It's clearly a problem that's not going away." (Santa Cruz Sentinel)

[Opinion]

Are Public Pensions at Risk in Bankrup.tcy?
"Bankrup.tcy law v. pension fund law is shaping up to be a ruthless fight. Wall Street lawyers don't care about voter opinion polls, whether retirement funds are burning through money that could go to schools or if CalPERS' assets are $30 bil.lion shy of its obligations—or $300 bil.lion." (Sacramento Bee)

[Opinion]

CalPERS: Where the Benefits Come From
"The current defined benefit pensions mean that employers—ultimately the taxpayers—bear the entire risk for investment losses. That's compared to private sector IRA and 401(k) plans—defined contribution plans—where the employee takes all the investment risk.... [C]urrently CalPERS funds retirement benefits largely with return on its nearly $240 bil.lion investment fund. Employer and employee contributions account for less than a quarter of CalPERS' income." (The Santa Clara Weekly)

[Opinion]

California Coalition Encourages Legislators to Support Governor's Pension Reform Proposal
"The reforms included in Governor Brown's plan include raising the retirement age, calculating benefits based on the last three years of service instead of just the final year to reduce 'pension spiking,' and moving to a hybrid pension system in which workers would also contribute to a 401k-like defined contribution investment program, which is common in the private sector." (CalChamber)

[Opinion]

Pension Spiking Must Be Stopped
"State and local lawmakers must put an end to public employees' huge accumulations of unused leave time. The tens, perhaps hundreds, of millions of dollars worth of unclaimed vacation, sick, personal and comp time just in Bay Area governments create financial liabilities that erode future budgets when those workers retire." (Contra Costa Times)

[Opinion]

Time for Employees to Demand the 401(k) Plans They Deserve: Here's a Model
"Workers, it seems, have accepted that their 2008 losses were either unavoidable, i.e., due to unforeseen market forces, or unrecoverable (both of which may not be true), and have lowered their expectations regarding the extent to which these flawed plans will provide retirement security. In summary, nobody's happy but little attention is being paid to the problem at this time." (Forbes)

[Opinion]

Summary of Meeting by Plan Sponsor Representatives With Treasury and IRS to Discuss Hybrid Plan Regulations (PDF)
"On August 15, representatives of [four industry groups met] with Treasury and the IRS to discuss the proposed hybrid plan regulations. The topics addressed were suggested by Treasury and the IRS based on questions that had arisen in the context of their work on the regulations. [The organizations] reiterated the importance of other issues that were not on their list, but were included in the joint trade association September 7, 2011 submission ... Treasury and the IRS were very clear that they continue to use that submission as a reference in their consideration of the regulatory issues." (American Benefits Council, Business Roundtable, Coalition to Preserve the Defined Benefit System, and ERIC)

Benefits in General; Executive Compensation

17% of Banks 'Clawed Back' Compensation in 2011
"New survey data ... shows that 14% of global banking organizations have 'clawed back' compensation payments made to employees while a further 3% of organizations have reclaimed the payments but have yet to receive the pay back. This recent data comes from Mercer's Financial Services Executive Compensation Snapshot Survey which looks at compensation structures in 63 global financial services companies, including banks and insur.ance firms." (Mercer)



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