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Potential Pension Reform Savings in California: $40 Bil.lion to $60 Bil.lion
"The preliminary CalPERS estimate, which will be refined before the Legislature votes on the plan Friday, expects most savings to come from two cost-cutting strategies used in labor negotiations: lower benefits for new hires and higher employee contributions. Instead of negotiations, the plan simply imposes lower pension formulas on new employees in CalPERS and CalSTRS and authorizes employers, if there is no agreement, to use bargaining impasse to raise employee contributions to half of the 'normal' cost by 2018."
(CalPensions)
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The Global Demise of Pension Plans
"[A]nyone in the western world who's 10-15 years away from collecting their first pension payments, shouldn't expect to get much, if anything, when the time comes.... Here are a few quotes that, when put together, paint the picture pretty accurately; you add up the details and numbers and you get an idea of what's going on. Not necessarily for the faint of heart."
(Business Insider)
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Pension Funds Query Political Giving
"Aetna Inc. and 19 other companies are being urged to disclose their contributions to independent political organizations by investors including unions and state pension funds with $922 bil.lion in assets.... The investors who wrote Aetna include labor unions for auto, transportation and service workers, state pension funds in Illinois and New York, and religious organizations. The New York state fund had 1.4 mil.lion Aetna shares as of July 1 while the UAW trust had 286,000 shares. Aetna had received the letter and will respond to investors directly, said [a company spokeswoman.]"
(Treasury & Risk)
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Unfunded Public Pension Liabilities Account for Half of Total State Debt
"Market-valued unfunded public pension liabilities make up more than half of all state debt, accounting for $2.8 tril.lion of the total. These market-valued pension liabilities provide a realistic view of the money owed to public pension systems as a result of years of skipped payments, borrowed funds, and inaccurate discount rate assumptions."
(State Budget Solutions)
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The Notion That You'll Spend Less In Retirement Is Totally Misguided
"Retirees end up spending even more until they're really old and then they're home-bound. Take a look at some of the factors driving up their costs: The rising costs of healthcare ... Supporting millennial kids ... Funding a grandchild's education ... Taking vacation ... Filling idle time."
(Business Insider)
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'The Economy Stole My Retirement'
"Nearly half of the 799 small-business owners surveyed in August ... expect to retire after age 65, with 38% saying that their planned retirement date is later than they had predicted five years ago. In addition, 56% said most of their retirement nest egg is tied to their business."
(The Wall Street Journal)
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S&P Lowers Illinois Credit Rating Over Pensions
"Continuing pension problems have earned Illinois another reduction in its credit rating.... Only California has a lower rating from S&P, but the service says the outlook for California is positive. Illinois falls into the 'negative outlook' category."
(The New York Times; free registration required)
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Postal Service Offers 3,300 More Early Retirements
"The U.S. Postal Service has offered 3,300 eligible employees voluntary early retirements. The 3,300 employees are managers and administrative staff on the executive and administrative schedule, a pay scale covering approximately 55,000 people. According to the Federal Times, eligible employees have until Nov. 19 to accept the deal and must agree to retire by Dec. 31."
(GovExec.com)
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More Adults Postponing Retirement Indefinitely
"More than a third of adults near retirement age -- 35 percent -- said last year that they simply don't expect to retire. That was up from just 29 percent two years earlier. More than four in 10 of these 'pre-retirees' who don't expect to retire say it is because they are financially unable to do so. They cite the need for extra income and the maintenance of employer benefits as the main reasons for continuing to work."
(The New York Times; free registration required)
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DC Plan Sponsors Should Improve Communications, Employees Say
"When asked to score the risk and return profiles of traditional fund names between one and 10, roughly 30% of the participants consistently responded, 'I'm not sure.' That figure increased to roughly one-half for the subset of participants who had not read or talked about financial matters in the last six months, according to [a recent survey]."
(Employee Benefit News)
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[Opinion]
Flawed 401(k) Plan Structures to Blame for Systemic Failure
"[T]hree broad types of flawed 401(k) plan structures ... are pervasive. Understanding these deficient structures goes a long way toward explaining why the great 401(k) 'experiment' has largely failed to date.... 1. 'Captured' plans: Over 90% of 401(k) plans involve the employer effectively 'outsourcing' the entire administration and management of the plan.... 2. 'Conflicted' plans: Some of the largest plans have been structured with conflicts of interest at their core.... 3. 'Smartest guys in the room' plans: A limited number of large plans I have reviewed suffer as a result of someone at the helm apparently having an inflated sense of investment acumen."
(Forbes)
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[Opinion]
CalPERS Statement on California Conference Committee Pension Reform Proposal
"The bill passed by the Committee proposes significant reforms, and as with most changes of such dramatic size and scope, there will be very few people who will be pleased with all of the bill's details. Some will say it does not go far enough, and others will say it goes too far. CalPERS believes that the proposal includes significant changes that will help to protect and ensure the sustainability of the retirement fund, reduce abuse and add protections, ease administration, and moderate pension costs over time."
(California Public Employees' Retirement System)
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[Opinion]
Testimony Before the ERISA Advisory Council on Beneficiary Designations (PDF)
"[I]t is important to note that new rules should NOT require the plan administrator to actively and affirmatively reach out to plan participants upon the occurrence of certain life events (marriage, divorce, birth of child, etc.). This would place an undue burden on the plan administrator and such a requirement would be fraught with risk due, in part, to the fact the plan administrator often does not learn of the occurrence of the life event in a timely manner."
(American Benefits Council)
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[Opinion]
A Partial Fix for California's Pension Mess
"The measure, which top Democrats will try to rush through the [California] Legislature this week, would do nothing about rapidly rising retiree healthcare costs, and it abandons [Gov. Jerry] Brown's proposal to restructure retirement pay for new employees. Yet it would still make badly needed changes to shore up pension funds, help cities struggling with outsize costs and curb abuses in the system. It's not the whole solution, but it would provide many of the right parts."
(Los Angeles Times)
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Benefits in General; Executive Compensation
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Is Working to Age 70 Really the Answer for Retirement Income Adequacy? (PDF)
"It would be comforting from a public policy standpoint to assume that merely working to age 70 would be a panacea to the significant challenges of assuring retirement income adequacy, but this may be a particularly risky strategy, especially for the vulnerable group of low-income workers." [Article starts at page 10 of linked PDF.]
(EBRI)
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IRS Launches Redesigned Website; Temporarily Takes Down Some Services
"Taxpayers and tax practitioners visiting the IRS online will find a redesigned IRS.gov website, which is scheduled to go live on Aug. 30; however, the IRS also announced that it is taking down several of its online services during the Labor Day weekend.... The IRS is moving its IRS.gov website to a new platform and adding new features and a new navigation structure to the site in an attempt to keep up with the growing demand for online services. The upgrades are part of a planned 10-year, $320 mil.lion overhaul of IRS web services."
(Journal of Accountancy)
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Oklahoma District Court Ruling Calculates Rotational Workweeks Broadly in FMLA case
"[The employer had] argued that FMLA leave calculation should not be based on an 'actual workweek' because if FMLA leave applied to only the weeks that [the individual truck driver] actually would have worked, then [the employer] would be required to hold his job open for twice as long: a total of 24 weeks instead of 12. [The employee] worked an 84-hour workweek schedule—with seven days on and seven days off—for more than four years ... before taking FMLA leave." [Murphy v. John Christner Trucking, LLC (OK Dist. Ct., Aug. 15, 2012)]
(Thompson SmartHR Manager)
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Hodgson Russ Employee Benefits Developments, August 2012
Monthly newsletter; this issue includes the following articles: Basing Matching Contributions to Qualified Plan on Employee Salary Deferrals to 403(b) Plan Subjects 403(b) Plan to ERISA; IRS Clarifies Treatment of Dividends and Dividend Equivalents Paid on Restricted Stock and Restricted Stock Units Under Section 162(m); Medical Plan Preauthorization Language Violates SPD Standards; Sixth Circuit Holds Employer Did Not Breach Fiduciary Duties in Transferring Investments From Stable Value Fund to New Qualified Default Investment Alternative; No Fiduciary Breach Where ESOP Trustee Was Not Acting in His Fiduciary Capacity
(Hodgson Russ LLP)
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Why Employees Stay on the Job
"Despite uncertainty in the job market, the top reasons working Americans say they stay with their current employers are work-life fit and enjoying what they do, according to a recent survey by the American Psychological Association. Fewer employees cited concrete reasons for remaining on the job, such as benefits, pay and a lack of other job opportunities."
(Wolters Kluwer Law & Business)
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