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August 31, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Retirement Plan Education Specialist
for The Newport Group, Inc. in NC

Account Manager - Employee Benefits
for Corporate Synergies Group in MD

Account Manager
for Northwestern Benefit Corporation of Georgia in GA

Benefits Consultant, Large Group
for Northwestern Benefit Corporation of Georgia in

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Webcasts and Conferences

Voluntary Fiduciary Correction Program Seminar
in Texas on September 20, 2012 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)


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[Official Guidance]

IRS Rev. Proc. 2012-35: IRS Discontinues Letter-Forwarding to Help Locate Retirement Plan Participants (PDF)
"Revenue Procedure 94-22 allowed an individual, company, or organization that controls assets that may be due a taxpayer, including Plan Administrators, sponsors of qualified retirement plans, or QTAs of abandoned plans under the Department of Labor's Abandoned Plan Program attempting to locate missing plan participants, to make a written request to the Service to use its letter forwarding program. Under this revenue procedure, the Service will no longer provide letter-forwarding services to locate a taxpayer that may be owed assets from an individual, company, or organization. The letter-forwarding program is now limited to situations in which a person is trying to locate a taxpayer to convey a message for a humane purpose as defined in Section 4 or in an emergency situation.... Letter-forwarding requests that do not serve a humane purpose, such as requests that merely provide a financial benefit, will not be processed.... This revenue procedure applies to requests postmarked on and after August 31, 2012." (Internal Revenue Service)


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[Guidance Overview]

DOL's Designated Investment Alternative Definition
"After the final [participant disclosure] regulations were released, the DOL received commentary from the retirement plan industry seeking guidance on the application of the definition of a DIA in various situations. Many of these issues about the application of the DIA definition to various real life plan investment scenarios were addressed in FAB 2012-02R." (McKay Hochman Co., Inc.)

[Guidance Overview]

IRS Regulations Expand Availability of Lifetime Income Options in DC Plans
"[T]he number of individuals covered by DB plans has declined, while the number covered by 401(k) and other types of [DC] plans has increased. This shift in the retirement plan landscape has been accompanied by a shift away from lifetime payments provided by DB plans and a surge in lump-sum cash payments (or installments) based on the value of a participant's 401(k) or other DC plan balance.... [T]he Treasury Department and the IRS recently issued two revenue rulings and two proposed regulations that will make it easier for plan sponsors to offer certain lifetime income options (e.g., full and partial lifetime annuities) to 401(k) and other DC plan participants." (McKay Hochman Co., Inc.)

Edwin Johnson, 'Godfather' of 401(k) Retirement Plan, Dies at 82
"Johnson was founder and chief executive officer of the Johnson Cos., a benefits consulting firm in Newtown that played a key, early role in refashioning retirement savings in the 1980s when defined-benefit pension plans declined in popularity. While an employee of his, Ted Benna, became known as the father of the 401(k), Johnson 'was its godfather,' the trade publication Pensions & Investments wrote in a 2001 profile." (Bloomberg BusinessWeek)

Improving Plan Diversification Through Reenrollment in a QDIA
"Reenrollment—through which the plan sponsor defaults participants' assets and future contributions into the plan's designated QDIA, with participants retaining the right to opt out of the transfer—can rapidly and effectively improve plan diversification.... Defaulting participants' assets into a QDIA affords plan sponsors relief from responsibility for investment losses, similar to the relief afforded under ERISA Section 404(c) for active participant investment decisions." (The Vanguard Group, Inc.)

New Disclosures Give Participants a Better Look at 401(k) Fees
"If you've already thrown away the new disclosure document, you'll get another chance to focus on fees in October, when the next phase of new 401(k) rules kicks in. Your quarterly statement will show, in dollars and cents, exactly how much you paid in investment expenses, administrative costs and other fees. That disclosure is likely to get employees' attention, 401(k) consultants say. After a few concerned workers call the human-resources department, the company may start a review to determine whether its fees are reasonable." (STLtoday.com)

401(k) Fee Disclosures: Don't Run to the Exit
"Don't do it. Don't make any rash decisions when you next open your 401(k) statements and see how much you are paying in fees for this and that fund. Don't just sell those funds with high expenses and buy those with low expenses. Instead, experts say you should take a deep breath when you see your 401(k) fee disclosures and consider this an opportunity to review your retirement plan in light of your entire portfolio." (MarketWatch.com)

Converting Texas Teacher Pensions to 401(k) Would Be Costly
"Dropping the guaran.teed pension benefit for Texas' future school employees would be costly, complicated and reduce benefits for retirees, according to a new study by the Teacher Retirement System of Texas. The study, mandated by lawmakers last year, states that the $110 bil.lion teacher fund can pay the benefits it owes through 2075 but will need additional contributions from the state or members to erase a $24 bil.lion long-term funding liability." (The Austin American-Statesman)

California Lawmakers Look to Approve Sweeping Pension Reform
"Public employee unions panned the agreement, complaining that Democrats who are routinely their legislative allies had sold them out by agreeing to the proposal. But others said the changes do not go far enough, noting they do not include Brown's proposal for 'hybrid' pensions combining features of traditional pensions and 401(k)-style retirement accounts." (FoxBusiness.com)

Japan Public Pension Fund Hit by $26 Bil.lion Investment Loss in Second Quarter
"The Government Pension Investment Fund (GPIF), under pressure to raise returns to cope with a rapidly ageing population, is closely watched by global markets given the size of its $1.37 tril.lion portfolio, which is equivalent to the economy of Australia, the world's 13th-largest. The GPIF posted a negative return of 1.85 percent in April-June, a sharp reversal from a positive return of 5.11 percent for the previous quarter." (Reuters)

Social Security's Woes Are Worse Than You Think
"The Social Security gap looks small, though, only in relation to Medicare. On any other scale, it's pretty big.... In 1983, the financing gap over the next 75 years amounted to 1.8 percent of payroll. [Charles Blahous, a Social Security trustee,] estimates that the gap today, measured using the same standards as in 1983, is 3.5 percent: almost double what it was then." (Bloomberg)

Greek Budget Cuts Focus on Pension Curbs to Gain Troika Approval
"Greek Finance Minister Yannis Stournaras has drafted an 11.7 bil.lion-euro ($14.7 bil.lion) package of spending cuts that will mean about a third of savings will come from reduced spending on pensions. The two-year package ... provides for 3.5 bil.lion euros in savings from reduced pensions, lower lump-sum payments and an increase in the number of days worked required to qualify for the minimum pension[.]" (Bloomberg BusinessWeek)

California Widens Audit of Pension Spiking
"California Controller John Chiang has expanded his audit of the California State Teachers' Retirement System's efforts to curb so-called pension spiking ... The review to determine whether educators improperly received late-career raises to boost their pensions has widened from the second-largest pension itself, known as CalSTRS, to also include five school districts[.]" (Bloomberg)

Battle Over Pension Debt Looms in San Bernardino Bankrup.tcy
"A high-stakes showdown pitting California's public employee pension fund against Wall Street bond firms in bankrupt San Bernardino, California, could be further complicated by wildly disparate estimates of how much the city owes for its retirees. San Bernardino ... has listed [CalPERS] as its largest creditor, with unfunded pension obligations totaling $143.3 mil.lion. But CalPERS, in response to an inquiry from Reuters, pegged the debt at $319.5 mil.lion." (The New York Times; free registration required)

Working Longer No Lock for Comfortable Retirement
"In the past, most workers figured they'd be able to retire at the age of 65. But following 2008's financial crisis, the idea of working a few more years to recoup lost savings became commonplace. Data from the Employee Benefit Research Institute, however, shows that delaying retirement doesn't always help solve income shortfalls for those who are at risk. Among those in the highest income quartile, 90% have only a 50% chance of having enough to retire by 70." (Investment News; free registration required)

Continued Decline in Plan Funding Suggests More Companies Will Back Away from Pensions
"Mercer calculates the aggregate deficit of defined-benefit pension plans operated by S&P 1500 companies totaled $689 bil.lion at the end of July, up almost $200 bil.lion from the shortfall at the end of last year. It estimates the plans' aggregate funded ratio has fallen to 70%, down from 75% at the end of 2011 and 81% at the end of 2010." (Treasury & Risk)

[Opinion]

California 'Pension Reform Lite' Won't Work
"On Friday, legislators will vote on the complex bills that include the details. Most lawmakers will have no idea what's in them. It's an abhorrent way to conduct business, especially when purporting to solve such a critical issue." (Daily Democrat)

Benefits in General; Executive Compensation

Health Care Peer Group Assessment: The New 'Best Practice' in Performance and Pay Alignment
"[S]ome health care organizations are finding value in defining a targeted group of comparable organizations, typically 15 to 25, that form a performance group into which a 'deep dive' can be taken to understand pay, performance, and their relationship. These peer groups are a product of the results-driven environment the health care industry finds itself in, and take the process of performance assessment and compensation design to the next level." (Aon Hewitt)

Hospital Employee Benefits Insights from the 2012 Benefits Benchmarking Study
"A dynamic employee benefit landscape is prompting organizations in all industries to review their employee and retiree benefit strategies. Hospitals in particular have a unique opportunity to manage benefit costs effectively while meeting their critical employee attraction and retention objectives. However, [Towers Watson] research shows many are not yet taking full advantage of these opportunities." (Towers Watson)

Press Releases



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