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August 29, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Defined Contribution Analyst
for Milliman in OR

Benefit Services Specialist
for Northwestern Benefit Corporation of Georgia in GA

Client Service Manager
for The Newport Group in FL, NC, WI

Sr. Client Executive
for Diversified in NY, PA

Sales Consultant
for EPIC Advisors, Inc in ANY STATE

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Webcasts and Conferences

2012 SPARK Forum
in Florida on November 4, 2012 presented by SPARK Institute

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[Official Guidance]

Text of PBGC Technical Update 12-1: Effect of MAP-21 on PBGC Premiums
"This Technical Update 12-1 provides PBGC guidance on the effect of the Moving Ahead for Progress in the 21st Century Act (MAP-21) on PBGC premiums. The guidance in this Technical Update supersedes any inconsistent guidance in PBGC's 2012 premium instructions and will be reflected in the 2013 premium instructions." (Pension Benefit Guaranty Corporation)


Learn about Safe Harbor Plans and Earn CE Credit!

Sponsored by ftwilliam.com

Wolters Kluwer Law & Business ftwilliam.com will be hosting a FREE webinar on Wednesday, Sept 26th at 1:00pm CT for a review of the safe harbor plan rules, as well as a discussion on designing safe harbor plans on ftwilliam.com's plan documents.

[Guidance Overview]

IRS Provides Guidance on Notices for Funding-Related Pension Plan Benefit Limitations
"In general, if the funding status of a single-employer pension plan drops below certain levels, causing these limitations to be triggered, the plan's administrator must provide written notice to affected plan participants and beneficiaries ... within 30 days. Notice 2012-46 clarifies the timing and content requirements of a Section 101(j) notice as well as the persons entitled to receive it." (McGuire Woods LLP)

[Guidance Overview]

Pension Funding Relief Brings Increased PBGC Premiums (PDF)
"Changes were made to the PPA's minimum funding rules ... and funding-based benefit restrictions provisions ... to adjust for periods of abnormally low or extremely high interest rates so as to remove the distortions caused by the current low interest rate environment. [It] increases the interest rates at which the minimum funding rules and related actuarial certifications are determined, resulting in much-needed decreases to these liabilities and providing plan sponsors with more flexibility in terms of plan contributions." (Groom Law Group)

California Gov. Brown Says Pension Reform Will Save Billions, But Fails to Get Hybrid, Retiree Health Care
"[P]ension reform advocates said the Democratic proposal fails to address the long-term costs of the state's pension liabilities, largely by leaving benefits for the state's more than 200,000 employees unchanged without contract changes negotiated with unions. The reform deal does not include putting new government workers in a hybrid system that includes a 401(k)-style plan, greater independence for the board that oversees the state's main pension fund, or a reduction in retiree health care costs, which are skyrocketing." (The Washington Post; free registration required)

California Leaders Strike Public Pension Reform Deal
"California Governor Jerry Brown and lawmakers have reached a deal to raise public employees' retirement ages, have them pay more into their pension accounts, and cap retirement payments in a vast overhaul of the state's pension system that he says will save $30 bil.lion. Union leaders panned the deal between Brown and fellow Democrats who control the legislature and hope to drum up support for his tax measure on the November ballot by showing voters they can tackle big challenges." (The New York Times; free registration required)

Public Employees Loud in Criticism of Pension Overhaul by Democratic Allies
"Although lawmakers rejected some of the governor's harshest pension changes, public employee unions on Tuesday denounced the proposed plan and said they would consider going to voters or the courts to overturn some elements. The proposal bypasses collective bargaining and represents the biggest rollback in public pensions in the history of California, according to Dave Low, chairman of Californians for Retirement Security, a coalition representing 1.5 mil.lion public employees and retirees." (Los Angeles Times)


New York Law School Retirement Plan Summit 2012 Sep 28th

Sponsored by Raymond James and New York Law School

Free admission! Earn CE! Please join us for a half-day ERISA conference on retirement plan governance and fiduciary risk management. Presentations by U.S. DOL / IRS / Plan Sponsor Panel / Industry Roundtable / Breakout Sessions

Controversial Pension Deal Struck in California
"Pension experts said the plan, which assumes higher contributions from existing employees and imposes pension caps and raises the retirement age for new workers, falls short of the Democratic governor's own earlier proposal to rein in those costs. It immediately drew fire from a leading pension reform advocate as insufficient to cut billions of dollars in unfunded obligations on governments' books." (Governing)

Deal Set on California Public Worker Pensions
"California Gov. Jerry Brown has agreed with lawmakers on a plan he says will 'take public retiree benefits back to' where they were 30 years ago. The deal provides for higher contributions and smaller pensions for future hires, many of whom will have to wait more years before they can collect maximum pension benefits.... [T]he agreement, which would become effective Jan. 1, ... calls for new employees to contribute half of the normal cost of their pensions, while contribution rates for current workers would be subject to negotiations with employers." (UPI.com)

Half of Americans Die with Almost No Money
"While 46% of retirees have just $10,000 in savings when they die ... When net worth is measured -- including savings, home equity, the value of Social Security and pension benefits, and more -- retirees' financial picture around the time of death looks less bleak. Single people had average assets of about $142,000, those whose spouse had died previously had average assets of $253,000, and couples where the surveyed retiree had died but the other spouse was still living had average assets of $692,000[.]" (MarketWatch.com)

Seventh Circuit Weighs in on Interest Assumption for Withdrawal Liability Purposes
"The Court questioned the trustees' decision directing the actuary to use a formula that produced the higher interest rate for purposes of determining the withdrawal liability [than for the annual contribution], because ERISA requires that the computation of withdrawal liability be based on the actuary's best estimate and reasonable assumptions. The Court also found it significant that the plan trustees directed the actuary to use the lower interest rate (producing higher withdrawal liability), beginning in 2004, in an apparent attempt to 'extract higher exit prices from employers who withdrew' from the plan." [Chicago Truck Drivers Helpers and Warehouse Workers Union (Independent) Pension Fund v. CPC Logistics Inc. (7th Cir. No. 11-3034, August 20, 2012)] (Seyfarth Shaw LLP)

Two SEC Commissioners Fault Chairman Schapiro
"Two U.S. Securities and Exchange Commission members faulted chairman Mary Schapiro's handling of discussions over rules governing money-market funds, saying she misrepresented other commissioners' dissents after proposing regulations that could 'severely compromise' the industry.... 'The Chairman's statement creates the misimpression that three Commissioners -- a majority of the Commission -- are not concerned with, or are somehow dismissive of, the goal of strengthening money-market funds,' [two Commissioners] said. 'This is wholly inaccurate.'" (Treasury & Risk)

Reformed Pensions Systems in Central and Eastern Europe: Challenges to Future Safe Pension Benefits
"The initial pension reform implementation made expectations for significant benefits such as increased labor participation, higher saving rates and faster capital market development. However, these benefits are not visible for the time being.... Calculated reduction in the replacement rates in this paper shows that the reform is not going to create adequate pension benefits." (Dimche Lazarevski of University American College Skopje (UACS), Jadranka Mrsik)

Americans Switching to Roth Accounts, Saving More for Retirement
"[I]nvestors have added to their IRAs as the markets steadily recovered, but ... they have also taken advantage of tax tools. Overall, nearly 63 percent of all IRA contributions have gone to Roth accounts, which allow assets to grow tax-free rather than tax-deferred, as is the case with traditional IRAs. Investors in their 20s took advantage of the Roth IRA, with 84 percent of contributions going toward the tax-free accounts." (San Diego Source)

Illinois Governor's Gambling Veto Could Set Up Post-Election Horse Trading on Pensions
"'Illinois cannot gamble its way out of our fiscal challenges,' [Gov. Pat] Quinn wrote. 'Even a casino on every street corner cannot repair the state's $83 bil.lion unfunded pension liability.'" (Chicago Tribune; free registration required)

No Exclusion for Former Spouse from Assignment of Disability Income
"The Tax Court recently clarified that disability retirement benefits assigned to a former spouse under a divorce agreement are ineligible for exclusion from income, even though the benefits would qualify for exclusion as compensation for personal injury had the other ex-spouse received them." [Fernandez, 138 T.C. No. 20 (5/14/12)] (Journal of Accountancy)

Withdrawal Liabilities, Corporate Sponsors and Union Members
"The large and long-lived costs associated with offering ERISA plans continue to dominate the discussions in numerous corporate corridors. Besides having to infuse cash (sometimes billions of dollars), company plan sponsors may be in danger of ratings downgrades." (Pension Risk Matters)

2012 Enacted State Pension Legislation, Updated August 31, 2012
"So far in 2012 eight states have made major structural changes in state retirement plans. Kansas, Louisiana and Virginia replaced defined benefit plans with cash balance or hybrid plans for new employees. Michigan has added an optional defined contribution plan for public school employees." (National Conference of State Legislatures)

Baby Boomers, Gen Xers View Retirement Through Rose-Colored Glasses
"The majority of Baby Boomers and Generation Xers appear to be looking at their retirement years through rose-colored glasses. More than three in four feel confident they will have enough money to live comfortably in retirement, even though nearly 40% of Baby Boomers and about two-thirds of Gen Xers have less than $100,000 in retirement savings. Moreover, a worrisome percentage -- 21.7% of Baby Boomers and 27.8% of Gen Xers -- has no retirement savings at all." (Financial Planning)

Is a Secure Retirement Slipping Away from Boomers & Gen-Xers?
"[A] financially secure retirement could be slipping away from significant numbers of Baby Boomers and Generation Xers.... [S]ignificant portions of these demographic groups have insufficient savings, lack investment knowledge, and have not taken important retirement planning steps such as calculating a retirement savings goal or consulting with a financial professional." (Insured Retirement Institute)

Wisconsin District Court Orders Cash Balance Plan to Pay $18 Mil.lion for Improper Benefit Calculation
"A cash balance pension plan must pay a certified class of plan participants $18,677,671 in additional plan benefits and prejudgment interest as a result of its failure to use a whipsaw calculation in determining lump-sum distributions of participants who terminated employment before their normal retirement age[.]" [Ruppert v. Alliant Energy Cash Balance Pension Plan (W.D. Wis., No. 3:08-cv-00127-BBC, 8/24/12)] (Bloomberg BNA)

Paying Lump Sums to Current Retirees May Reduce Volatility Risk in Pension Plans
"Plan sponsors should evaluate the tax, financing and other legal aspects of implementing a lump sum payment option. These issues include: Plan funded status and future funding requirements ... Accounting implications ... Plan liquidity ... The impact of adverse selection ... PBGC premiums and plan communications ... [and more.]" (PricewaterhouseCoopers)

Financial Pros Notch Win in Money Market Fund Tussle
"Over the course of the debate, [the Association had] argued that changes to MMF rules would greatly reduce investors' interest in utilizing MMFs as a cash management and investment tool, whether applied to all investors or just institutional investors. " (Association for Financial Professionals)

2012 Survey of Governmental Defined Contribution Plans
"As of March 31, 2012, 53 responding governmental 457 plans had assets valued at nearly $71 bil.lion. Twenty-six state 457 plans held approximately $50 bil.lion of this total, while 24 local plans, 2 education and 1 transportation district 457 plans held the remaining $21 bil.lion." (NAGDCA)


Text of Statement on the Regulation of Money Market Funds by SEC Commissioners Daniel M. Gallagher and Troy A. Paredes, on August 28, 2012
"We were dismayed by the Chairman's August 22, 2012, statement on the proposal she advanced to restructure money market funds. The current discourse about the Commission's regulation of money market funds is rife with misunderstandings and misconceptions. This joint statement is intended as one step in setting the record straight." (Securities and Exchange Commission)


CalPERS Statement on California Legislature's Progress on Pension Reform Legislation
"[M]any of the elements of the legislation announced today, including anti-spiking legislation, a strong definition of pay rate, and prohibitions against retroactive pension enhancements, will go a long way to ensure sustainability of the retirement fund, reduce abuse and add protections, ease administration, and reduce pension costs over time." (California Public Employees' Retirement System)

Benefits in General; Executive Compensation

Caterpillar Sued Over Alleged Asset Waste
"Caterpillar Inc. ... [has been] sued by investors who allege directors wasted corporate assets by not ensuring that executive-incentive plans were tax-deductible. Board members also wrongly enriched themselves by taking compensation that couldn't be deducted, and the company made insufficient disclosures to stockholders, [according to suits filed by] a Philadelphia asbestos workers' pension fund and the Lansing, Michigan, Police and Fire Retirement System ... The pension funds also challenged ... the cash value, including stock options, senior officials could potentially receive -- as much as $87.2 mil.lion each under a long-term incentive plan." (Treasury & Risk)

Transition Relief for 'Section 409A Release Timing Errors' Expires on December 31, 2012
"In order to allow sufficient time to correct such errors before the transition relief expires, employers should take the following steps: [1] Review and revise documents. [2] Obtain any necessary consents from employees to document amendments. [3] If necessary, have Board of Directors or Compensation Committee take action to adopt any necessary amendments." (Cooley LLP)

Executive Compensation: Inaction on Policy Front Puts Focus on Investors, Proxy Advisors
"The media continues to focus on executive compensation as a driver in the inequality debate, but with legislative and regulatory movement at a standstill, companies have shifted their focus to engaging institutional investors on pay for performance, changing proxy advisory firm policies, and preparing for the policy debates to come." (HR Policy Association)

Recent Survey Results Put Compensation Clawbacks Back in the News
"One commentator opined that because 'only 17%' of financial institutions clawed back compensation, 'the results may suggest that the regulators are not achieving the objectives of their persistent call for banks to implement clawback policies.' ... [T]he fact that 17% of financial institutions clawed back compensation in one calendar year -- a year in which the Dodd-Frank compensation clawbacks were not yet legally required -- is remarkable." (Winston & Strawn LLP)

Seattle Paid Leave Rule Could Have Nationwide Implications
"'While it is not often that a local ordinance can have nationwide effects, the Seattle [Paid Sick and Safe Time law] ... might be just such an ordinance,' says [a labor attorney]. 'For instance, a small manufacturer in Maine whose West Coast sales representative calls on Seattle customers would be required to allow the salesperson to accrue, use, and carry over paid time off based on the time the sales representative was calling on his/her Seattle customers.'" (Employee Benefit News)

Employee Review Near FMLA Leave Time: A Slippery Slope
"[T]he Family and Medical Leave Act does not require an employer to adjust its performance standards for the time an employee is actually on the job. Employers, however, would be wise to adjust their performance standards to avoid penalizing an employee for being absent during FMLA-protected leave." (Thompson SmartHR Manager)


Testimony Before the ERISA Advisory Council on Managing Disability Risks (PDF)
"The American Benefits Council supports regulatory clarification that [disability] insur.ance can be provided under a [retirement] plan without adverse tax consequences.... On the other hand, what individuals do not need, is credit insur.ance against disability and death on 401(k) loans. [The Council is] very supportive of broad disability insur.ance offered through the workplace but question the value of credit insur.ance on 401(k) plans loans relative to the cost." (American Benefits Council)

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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