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September 5, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Sales Support Project Manager
for Verisight, Inc. in CA

Employee Education Consultant
for PNC in MI

Sales Associate
for Verisight, Inc. in ANY STATE

Vested Interest Project Manager
for PNC in PA

Pension Manager
for Hogan Lovells in DC

Retirement Plan Account Manager
for Johnson & Dugan in CA

Associate/Senior Associate
for Buck Consultants in IL

Regional Marketing Director
for John Hancock in TX

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Webcasts and Conferences

"The Ins and Outs of Benefits, Rights, and Features" Web Seminar
Nationwide on September 25, 2012 presented by SunGard Relius

Health Care Reform - How Will It Affect You?
in Ohio on October 16, 2012 presented by Cedar Brook Financial Partners


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Implications of MAP-21 for DB Plan Finance
"[T]his article [projects] MAP-21 interest rates to the end of the decade [and considers] the implications of MAP-21 relief for plan funding and sponsor decisions about the management of plan finance.... If interest rates stay flat, 'typical' DB plan sponsors enjoy declining 'downside' funding protection through 2019 ... For a considerable part of that period the protection (the 'relief') is significant in terms of the size of the 'increase' in valuation interest rates that MAP-21 provides. Even when ... the relief is not very significant, the effect of the 'floor' -- the fact that rates cannot go lower -- is significant. If interest rates go down, the protection will last longer; if rates go up, the protection will phase-out sooner (and, of course, it will be less necessary.)" (October Three)


[Advert.]

Don't Miss the ASPPA Annual Conference 2012

Sponsored by ASPPA

Why pay more to attend the premier retirement plan industry conference? Register by Sept. 7 & save up to $600. Attend targeted sessions for TPAs, plan sponsors, actuaries, attorneys, consultants & more. Earn 25 ASPPA CE credits, 23 ERPA & JBEA CPE credits.


DOL Fines Adviser for Failing to Disclose Marketing Fees
"The U.S. Department of Labor has fined an adviser more than $1 million for failing to disclose fees it received related to 13 pension plans it oversees, a sign the agency is toughening its enforcement of fee disclosure rules ... The size of the penalty is significant, given that most fines over retirement plans range in the thousands of dollars[.]" (Reuters)

Public Employee Plans in Texas Pan Steps on Funding Gaps Taken by Others
"The state's $110.3 billion Teacher Retirement System released a study saying that switching to a 401(k)-style defined-savings plan may cut payments to retirees. The fifth-largest U.S. public pension by assets said Aug. 31 that the change also would widen a $24 billion gap between promised benefits and projected assets to $36 billion. The teacher plan's report and a second study issued yesterday by the $22.1 billion Employee Retirement System of Texas contrast with projected savings and unfunded liability cuts for pensions in Rhode Island, Kansas and Louisiana, which made such changes." (Bloomberg BusinessWeek)

Making a Case for Dividend-Paying Stocks in Retirement Portfolios
"Traditional beliefs that non-dividend-paying growth stocks provide persistently higher returns than dividend-paying stocks may need to be discarded in the face of contradicting statistical evidence. The combination of return from dividends, when combined with price appreciation, has allowed DJIA stocks to outperform the NASDAQ stocks by more than 2% per year on average since 2000." (On Wall Street)

[Guidance Overview]

Navigating Nondiscrimination Testing in Retirement Plans (PDF)
"Changes in the underlying employee population or compensation can result in unexpected testing results, even if the plan parameters have not changed. The effects of these changes can become pronounced over a short period of time, especially if the plan is only tested every third year." (Milliman, Inc.)

San Jose Cops Rush Disability Retirement Bids as Rules Tighten
"The benefit allows the city's public-safety workers to retire in their 30s and 40s after citing injuries and collect pensions partially exempt from state and federal taxes. It also provides a way for former police and fire employees who are already retired to change their pensions to claim the tax break. 'People are trying to get their applications considered under the old system, which is very, very loose,' San Jose Mayor Chuck Reed, 64, said ... 'Anybody who wants it can make the application and it's almost always granted.'" (Bloomberg)

How to Make Your Retirement Savings Last
"Recent calculations from the Employee Benefit Research Institute show that roughly 44% of those born between 1948 and 1978—baby boomers and Generation X—won't have adequate retirement income, and that is assuming interest rates go back up in 2014. But the current environment is weighing even on those heading into retirement with what seems like a tidy sum." (The Wall Street Journal)

Are 401(k) Plans Free? (PDF)
"The 401(k) plan participant-level fee disclosures ... are sure to stir up questions from the participants in your 401(k) book of business.... Many participants are unaware that they have been paying both investment and plan administration fees.... Initially, the fee disclosures are likely to produce more confusion than clarity for participants. To help you prepare for the inevitable participant inquiries, [this article includes] a series of questions and suggested talking points to help participants understand that 401(k) plans are not 'free'." (Victory Capital Management)

Retirement 'Savings Gap' May Be Exaggerated
"Here's the dirty little secret of the retirement industry: Experts know that their widespread, dire warnings of a 'retirement savings gap' may be exaggerated. Retirement experts now say there's no way to calculate the true number. Nevertheless, everyone assumes there is a significant gap. After all, Americans generally are lousy at saving, with a rate approaching zero today. The financial crisis undoubtedly made their situation worse. And the risks of assuming that people are saving enough are much worse than the risks of overplaying the problem." (Institutional Investor)

The Worst Retirement Investing Mistake
"You want to end up with a portfolio that matches your liabilities, meaning the amount you'll need to spend in retirement. The rule of thumb ... based on annuity payouts and spending patterns late in life, is that you should save 20 to 25 times your residual living expenses—that is, the yearly shortfall you have to make up after Social Security and any pension. This portfolio should be in safe assets: Treasury Inflation-Protected Securities, annuities, or even short-term bonds." (CNNMoney.com)

Seventh Circuit Finds IRA Owner Liable for Additional Tax for Early Withdrawal from IRA After Rollover from Pension Plan
"The IRA owner argued that it did not make sense that he could take a distribution from his law firm's plan without owing the 10% additional tax, but would have to pay the extra 10% tax if he took a distribution from an IRA after having rolled his law firm's plan benefits to the IRA. The appellate court responded that the Code says that the difference here matters and that many of the provisions in the Code are compromises and are arbitrary. The court noted that the tax deferrals provided for amounts in pension plans and IRAs are expensive to the Treasury and so the Code makes using some tax-deferral opportunities costly. Congress established the boundaries, and the court was not authorized to redraw them." (Wolters Kluwer Law & Business / CCH)

Puerto Rico Qualified Retirement Plans Significantly Impacted by Puerto Rico IRC of 2011: Puerto Rico Treasury Department Issues Guidance on Qualification Process (PDF)
"Intended as an overhaul of the Puerto Rico income tax system, the 2011 PR Code, as amended, also brings the provisions on Puerto Rico qualified retirement plans much closer to those under the US Internal Revenue Code of 1986, as amended." (Groom Law Group)

How Will You and Your Benefits Department Respond When Participants Ask About Their 401(k) Fees?
"Participants are being told to 'challenge the benefits department' to improve their plans.... First and foremost, plan sponsors need to understand their fee arrangements and investment options in order to properly handle participant questions and complaints, which means that they need to have fulfilled their fiduciary responsibilities in selecting vendors, reviewing fees, and reviewing the plan's investment menu ... [M]ore than a few participants can be expected to ask WHAT YOU HAVE DONE to determine that their plan doesn't cost too much." (Osler, Hoskin & Harcourt LLP)

Pension Reform Approved by California Legislature
"The bill will impact retirement systems across the State, including the California Public Employees' Retirement System (CalPERS), pension systems operating under the County Retirement Law of 1937 ... and independent local agency systems. The only retirement systems that appear to have escaped pension reform are those that were created by an agency's charter (e.g., the San Francisco Employees' Retirement System). [This article summarizes] highlights of the bill, known as the California Public Employees' Pension Reform Act of 2013[.]" (Jackson Lewis LLP)

SSI Annual Statistical Report, 2011
"About 8.1 million people received federally administered payments in December 2011. The average monthly payment in December 2011 was $502. Total payments for the year were more than $49 billion, including more than $3 billion in federally administered state supplementation." (U.S. Social Security Administration)

Government 457(b) Primer (PDF)
"[This issue brochure] provides a brief overview of the features and rules applicable to governmental 457(b) plans. It is meant to serve as an introductory foundation to the inner workings of these plans and it may serve as a useful tool for those being exposed to these types of plans for the first time." (NAGDCA)

Employee Ownership Update for September 4, 2012
NCEO Executive Director Loren Rodgers discusses employee ownership in the 2012 Republican Party platform, India's prohibition of selling employee stock options on secondary markets, conducting ESOP feasibility studies under the Workforce Reinvestment Act, and upcoming events in the employee ownership world. (National Center for Employee Ownership)

[Opinion]

Letter to Congress Endorsing Bill to Liberalize Loan Repayment and Hardship Distribution Rules (PDF)
"H.R. 3287, The Savings Enhancement by Alleviating Leakage in 401(k) Savings (SEAL) Act, makes a constructive step in the 401(k) plan loan system by providing flexibility to loan repayment and hardship withdrawal rules regarding 401(k) plans. Every year, workers can lose valuable retirement savings when they lose a job or change jobs if they have an outstanding 401(k) plan loan.... This bill would reduce leakage from 401(k) plans by allowing workers who, through loss of a job, a job change or for any other reason, have terminated their employment and have an outstanding loan from their 401(k) plan to have an extended period of time to roll over the unpaid balance to another savings vehicle. H.R. 3287 extends the current law repayment period from 60 days, to the due date for filing the tax return for the tax year in which the distribution occurred, plus extensions (of the time to file returns). The bill also allows individuals who take a hardship withdrawal to cover a personal emergency to continue to participate in their employer's retirement plan. In today's economy, the current law prohibition on plan participation placed on individuals who take a hardship distribution is inappropriate." (American Benefits Council, ASPPA, 12 Other Trade Associations)

[Opinion]

Rhode Island's Pension Scars Will Show Up Throughout the United States
"All over the United States, pension reforms are fast becoming the hot button issue of the day. Bloomberg reports that California debt is beating Illinois bonds by the most in three months as investors choosing between the two lowest-rated states reward efforts to bolster the finances of the nation's biggest pension.... [F]aced with soaring pension costs, and bondholders getting restless, politicians are scrambling to get the situation under control to avoid going into receivership. The problem is they're responding by enacting band-aid reforms instead of adopting a comprehensive ones which include reforming governance at public pension plans." (Pension Pulse)

[Opinion]

The Pension Coverage Problem in the Private Sector
"Only 42 percent of private sector workers age 25-64 have any type of pension coverage in their current job. This coverage gap creates two types of problems: More than a third of households end up at retirement with only Social Security. Workers who move in and out of coverage accumulate only modest amounts in their 401(k)s. Simplifying pension plans has not solved the coverage problem. Recently, both federal and state policymakers have put forth proposals to cover the uncovered. But given the low level of Social Security benefits and modest 401(k) balances, any new tier should be universal." (Center for Retirement Research at Boston College)

[Opinion]

The Underfunding of Corporate Pension Plans
"Unfortunately, the combined effect of both aspects of the new legislation is to penalize corporations that have well-funded pension plans at the expense of corporations whose pension plans are severely underfunded. The former corporations will have to pay higher PBGC premiums although the chances of their using PBGC insurance are minimal. The latter corporations will be able to make much lower contributions to their pension plans although they present a significant default risk to the PBGC." (Brookings)

Behavioral Effects of Social Security Policies on Benefit Claiming, Retirement and Saving
"A retirement model that also includes claiming of Social Security benefits as an outcome is used to inquire about the effects of various proposals to change the Social Security system. Increasing the early entitlement age to 64 increases full-time employment at ages 62 and 63 by approximately 12 percentage points.... Increasing the normal retirement age to 67 for those who had an age 65 normal retirement age increases full time work by substantially less than the increases caused by raising the early entitlement age. Eliminating the payroll tax after the normal retirement age reduces full-time work by between 0.5 and 1 percent between age 60 and age 64 and increases full-time work by between 1 and 2 percent at age 65 and thereafter." (University of Michigan Retirement Research Center)

Benefits in General; Executive Compensation

Cultural Cognition Insights into Judicial Decisionmaking in Employee Benefits Cases: Lessons from Conkright v. Frommert
"Decisionmaking hubris with cognitive origins is present today in many labor and employment law cases in the United States. In two previous law review articles, I explored whether anthropological and psychological explanations of judicial decisionmaking could provide meaningful insights into how U.S. Supreme Court Justices decided some of the more controversial labor and employment law decisions.... I considered potential social science and legal debiasing techniques for ridding these decisions of delegitimizing bias, while simultaneously making them more acceptable to a larger segment of society. This article proposes to investigate how these opinion-writing and institutional debiasing strategies could work in practice [under ERISA]. The hope is that the professionalization of the judicial corps through the establishment of ERISA courts based on the bankruptcy court model might promote opinion-writing debiasing techniques that reduce the amount of cognitive illiberalism in employee benefits law opinions." (Paul M. Secunda of Marquette University Law School)

Seventh Circuit Defines Scope of ERISA 510 Claim of Retaliation (PDF)
"[A]n employee's grievance is within Section 510's scope whether or not the employer solicited information. It does not mean that Section 510 covers trivial bellyaches—the statute requires the retaliation to be 'because' of a protected activity.... Someone must ask a question, and the adverse action must be caused by the question or the response. What's more, the grievance must be a plausible one, though not necessarily one on which the employee is correct. We have held that the anti-retaliation provision of Title VII does not protect employees who make insubstantial complaints." (U.S. Court of Appeals for the Seventh Circuit)

An 'Indefinite Reprieve' of Essential Functions of Job Not a Reasonable Accommodation under the ADA
"[E]mployers generally feel as though they have no clue as to their legal obligations when it comes to providing a leave of absence as a reasonable accommodation under the ADA after an employee's 12 weeks of FMLA leave has been exhausted.... A recent federal appellate court case makes clear that an employee is properly subject to termination when she cannot provide a reasonable estimate regarding when she will be able to resume all essential functions of her position." (FMLA Insights)

Cypen & Cypen Newsletter for August 30, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: Benefit Reductions Still Top Worry for American Workers; County Wellness Program Not in Violation of ADEA; the Lost Decade of the Middle Class; Indianapolis Mayor Okays Domestic Partner Benefits; San Francisco Retirement System Can Tell Grand Jury To Pound Sand; and Individual Retirement Account Balances, Contributions and Rollovers. (Cypen & Cypen)

Access to Paid Leave, 2011
"On average, 59 percent of wage and salary workers had access to paid leave at their main jobs in 2011. The proportion of white workers with access to paid leave (59 percent) was about the same as the average for all workers; Black or African American and Asian workers were about as likely to have access to paid leave (61 percent and 62 percent, respectively). Hispanic workers were less likely than non-Hispanic workers to have access to paid leave." (U.S. Bureau of Labor Statistics)

Press Releases



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