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September 10, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

401k Administrator
for TPA located in Auburn Hills, MI in MI

Retirement Plan Consultant
for T. Rowe Price in CO

Daily Valuation Manager
for Fringe Benefits Design in MN

Retirement Planning Advisor
for retirement advisory services corp in PA

Retirement Planning Consultant
for Diversified in SC

Retirement Planning Consultant
for Diversified in IN

Retirement Planning Consultant
for Diversified in VA

Employee Benefits Paralegal
for Trucker Huss, A Professional Corporation in CA

Health & Welfare Associate
for Mid-Size Benefits Boutique Firm in DC

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Webcasts and Conferences

"Real Estate and Other Unusual Investments" Web Seminar
Nationwide on September 11, 2012 presented by SunGard Relius

"Fundamentals 1: Eligibility" Web Seminar
Nationwide on October 1, 2012 presented by SunGard Relius

"Fundamentals 2: Vesting" Web Seminar
Nationwide on October 9, 2012 presented by SunGard Relius

"Fundamentals 3: Identifying HCEs and Key Employees" Web Seminar
Nationwide on October 16, 2012 presented by SunGard Relius

"Fundamentals 4: Coverage Testing" Web Seminar
Nationwide on October 22, 2012 presented by SunGard Relius

"Fundamentals 5: 401(k) Testing - ADP, ACP and Catch-ups" Web Seminar
Nationwide on October 29, 2012 presented by SunGard Relius

"Fundamentals 6: Introduction to Nondiscrimination Testing" Web Seminar
Nationwide on November 5, 2012 presented by SunGard Relius

"Fundamentals 7: Top-heavy Testing" Web Seminar
Nationwide on November 13, 2012 presented by SunGard Relius

"Fundamentals 8: Compensation" Web Seminar
Nationwide on November 27, 2012 presented by SunGard Relius

"Fundamentals 9: 415 Limit and Deductible Contributions" Web Seminar
Nationwide on December 3, 2012 presented by SunGard Relius

"Fundamentals 10: Taxation and Distribution" Web Seminar
Nationwide on December 5, 2012 presented by SunGard Relius

"Fundamentals 11: Controlled Groups" Web Seminar
Nationwide on December 10, 2012 presented by SunGard Relius

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Exercise Caution When Using Multiple Matching Contributions in Safe Harbor Plans
"[A] commonly overlooked aspect of safe harbor plan design is that the requirements for non-safe harbor and safe harbor matching contributions are intertwined, making it critical for practitioners to use great caution when drafting a safe harbor 401(k) plan document. The use of multiple matching contribution sections in a document creates a substantial risk that plan drafters will overlook the requirements and interrelationship between the rules governing safe harbor matching contributions and non-safe harbor matching contribution types, thereby increasing the potential that a plan will fail to comply with the safe harbor rules and be subject to nondiscrimination testing." (Wolters Kluwer Law & Business / ftwilliam.com)


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.

Small Indiana Pension Fund Takes on Big Fight with Wal-Mart
"If Wal-Mart shareholders are successful in suing the retail giant over allegations regarding a suspected bribery scheme in Mexico, it will likely be thanks to a relatively small union pension fund in Indiana. The Indiana Electrical Workers Pension Trust Fund IBEW, which holds a mere $750,000 worth of Wal-Mart Stores' $253 billion in stock, has emerged as a lead plaintiff among investors who believe Wal-Mart's officers and directors breached their fiduciary duty to shareholders by stifling an internal company probe of the alleged bribery operation." (Indy Star)

How Three Contra Costa Cities Avoided the Doomsday of Pension Plans
"If you've kept up with the hand-wringing over public pension plans, you know California is doomed. It someday will break apart from North America and slide to the bottom of the ocean under the weight of unfunded liabilities.... [The] state's pension debt is $257 billion, or $20,700 for every household in the state.... [But] three California cities are operating free of such concerns. They are unencumbered by pension debt, pay for retirement liabilities as they go, and are staffed by seemingly satisfied employees. All three are in Contra Costa County: Lafayette, Danville and Orinda." (Contra Costa Times)

Investors Say Annuities Are Vital Part of Retirement Strategy
"[D]uring the past year, annuities have become more widely accepted as a vital part of a retirement strategy. The new survey of investors and financial advisors released at the IRI 2012 Annual Meeting found that among investors, 73 percent of annuity owners and 17 percent of non-owners agreed that annuities are an important part of one's retirement strategy, compared to 55 percent and eight percent, respectively, in 2011." (Insured Retirement Institute)

California Pension Reform Means One-Third of State Workers Will Contribute More
"Without the usual bargaining with unions, a new [California] pension reform raises the amount roughly a third of state workers pay toward their pensions, an increase of 1 to 3 percent of pay over the next two years. The small bite from worker paychecks ... is for state workers not already paying half the 'normal' cost of their pensions, a new standard set by the bill. There has been little public mention of the increase imposed on current workers and apparently no protests from unions, which tend to view any reduction in pension benefits after the date of hire as a violation of 'vested' rights protected by contract law." (CalPensions)


Learn, Network and Sell at the SPARK Forum Retirement Industry Conference

Sponsored by SPARK

Join the industry's top record keepers, asset managers, TPAs, advisors, marketing and sales executives for unequaled educational and networking opportunities. Gain insights into the latest market trends, business strategies, regulatory and legislative issues, and product developments.

Cypen & Cypen Newsletter for September 6, 2012
"Government Pension Offset and Windfall Elimination Provision may cause your or your spouse's or your widow's or your widower's benefits to be reduced. Here, in the words of the Social Security Administration itself, is how they work." (Cypen & Cypen)

Using a Longevity Policy to Build Your Own Monthly Pension
"Unless you're in the public sector, your workplace retirement options are probably limited to a company 401(k)-type plan, which lays the responsibility for retirement squarely on you.... The solution, experts say, is to build a 'personal pension' with a portion of your assets. To encourage people to do just that, the federal government recently proposed a host of regulatory changes to help Americans convert 401(k) assets into monthly checks." (AARP)

Modern Risk Management Strategies for Fiduciaries
"[Here are a few suggestions for] how fiduciaries can shore up their defenses and improve their governance practices.... 1. Appoint an individual or committee as plan administrator.... 2. Carefully review the principal policy provisions of fiduciary liability insurance you have/are considering.... 3. Be aware of the scope of indemnification coverage.... 4. Make sure investment responsibility has been properly delegated. ... 5. Understand that selection of service providers is a fiduciary decision.... 6. Assume your plan will be audited." (The Retirement Plan Blog)

The Golden Age of Pension Reform?
"Is the golden age of pension reform upon us? Alicia Munnell recently argued that it is, or something close to it. Munnell is the director of the Center for Retirement Research at Boston College, and one of the leading experts on retirement policy in America. In a column published in mid-July, she directed naysayers to regard the many recent examples of public pension systems that have increased contribution rates for current employees or reduced their benefits. These three images from a presentation by the National Conference of State Legislatures show that the former has been much more common than the latter." (Public Sector Inc.)

The Pension Coverage Problem in the Private Sector (PDF)
"Pension discussions in the last few years have focused primarily on the financial health of state/local plans or on the shift from defined benefit to 401(k) plans in the private sector. Often forgotten is that while coverage at the state/local level is virtually universal, only 42 percent of private sector workers age 25-64 have any pension coverage in their current job. As a result, more than one third of households end up with no coverage at all during their entire worklives and others, who move in and out of coverage, end up with inadequate 401(k) balances." (Center for Retirement Research at Boston College)

Most Financial Advisors Don't Understand Fiduciary Best Practices
"Among the questions respondents were asked was whether they acknowledged fiduciary responsibility in writing. Of the advisors who say they acknowledge a fiduciary status for all clients, 35% got a 'C' or less for their overall fiduciary index grade. Of the advisors who say they acknowledge fiduciary status for some clients, 68% got a 'C' or less. And of the advisors (brokers) who say they do not acknowledge fiduciary status, 90% got a 'C' or less. 'There's a disconnect between principles and practices,' says [one of the survey's authors,] noting the survey reveals that a number of advisors believe they're acting in principle to a fiduciary standard but in reality don't understand the practices." (Financial Advisor)

Matching 401(k) Contributions on the Rise
"After leaving employees to fend for themselves with retirement-savings plans in the 2008 financial crisis, companies are now giving workers extra money to stash away for their futures in 401(k) plans. Companies have been restoring 401(k) matches abolished amid frantic cost-cutting during the Great Recession." (The Philadelphia Inquirer)

Keep Illinois Pension Crisis on Radar
"The state retirement systems are underfunded by at least $83 billion. Conservatives say even that's a rosy estimate. Further delays in payment and potential downgrades by rating services—read: higher interest rates—could drive that number as high as $140 billion. Debt service is hammering the state and will, if left unchecked, account for nearly a third of annual spending. And despite an income tax increase of 67 percent last year, very little progress has been made. Illinois continues to slide into the financial abyss." (The Souther Illinoisan)

You Built It; Now How Do You Live Off Your 401(k)?
"For just over 30 years, millions of Americans have been socking away money in 401(k) plans. With most traditional employee pension plans going by the wayside and the future of Social Security in question, 401(k)s have become a popular and powerful way to save for retirement. Historically, the majority of education around the 401(k) plan has been focused on how much you should be putting away and how you should be investing your account for the future. But now, the 401(k) has finally matured; that future has materialized. With so many baby boomers entering their retirement years, people are starting to say, 'Well, now what do I do? How do I live off my 401(k) savings and make sure they last for the rest of my life?'" (PennLive.com)

Long-Term Impact of Fees on Retirement Savings Calls for Push from Retail to Institutional Funds (PDF)
"[D]ifference in fees between retail and institutional mutual fund shares versus non-40 Act investment funds materially affect income replaced in retirement or the length that DC participants can expect to remain in retirement while maintaining a certain standard of living. Interestingly, although common wisdom suggests that non-40 Act funds are the exclusive purview of large plans, the authors' analysis suggests that even plans as small as $100 million in assets could benefit from fee reductions provided by moving to non-40 Act investment funds." (Callan Associates)

Roths Spearhead IRA Retirement Savings Increase
"IRA contributions for 2011 were nearly 15% higher than contributions for 2007, according to Fidelity. Moreover, investors have consistently preferred Roth IRAs for the last several years.... Average IRA contributions for 2011 were $3,930, up from $3,420 four years earlier. Every age group posted increases over 12%, with the largest increases coming from the 40-49 and the 70+ age groups." (Employee Benefit News)

DC Participant Balances Down 2.09% for Quarter
"The size of defined contribution participant balances dropped 2.09% during the second quarter, as higher contributions couldn't offset investment losses, according to the Callan DC Index ... The average second-quarter investment loss was 2.56%, while contribution inflows from participants and sponsors rose 0.47%[.]" (Pensions & Investments)

The Impossibility of Pensions: Can Society Support a Retired Population in the Style to Which It Aspires? (PDF)
"[This paper takes] a step back from the sophisticated asset/liability models and actuarial calculations used for individual asset pools and use some simple calculations to observe the 'pension problem' from a macroeconomic perspective. The current consensus among practitioners, if not the general population, is that people must save more for their retirement unless they are willing to work until they are very old. While a sensible course of action for an individual, we are skeptical this can be done in the aggregate." (Towers Watson)

Systematic Withdrawals During Down Markets Early in Retirement Can Devastate Nest Eggs
"Bear markets are easier to deal with during the accumulation phase, as investors have time to wait out downturns, benefit from recoveries and use dollar-cost averaging. The last is particularly effective in down markets, as it lets investors buy more shares at lower prices and reap the rewards when values recover. Unfortunately, some investors employ a similar strategy during the distribution phase, systematically withdrawing assets from their portfolios regardless of what's happening in the markets. To withdraw consistent sums, they have to liquidate more shares when prices are lower. This magnifies the net impact on their portfolio and leads to a permanent reduction in the base value of their retirement nest egg." (Investment News; free registration required)

CalSTRS Sees Slight Glimmer with Recent Favorable Real Estate Return
"CalSTRS' real estate portfolio returned 3% return for the quarter ended March 31, outperforming its benchmark for the first time in 10 years for all time periods, according to a report presented at [a recent] investment committee meeting.... But real estate lagged the index for the five years ended March 31, returning an annualized -7.6% vs. the NCREIF index's 2.9% during the same period. For the year ended March 31, CalSTRS' real estate portfolio returned 7.7% vs. 13.6% for the index." (Pensions & Investments)

Boeing Proposes Ending DB Plan for New Employees
"Boeing Co., Chicago, is proposing closing its defined benefit plan to Puget Sound-based new hires in the engineers union and placing them in an 'enhanced' 401(k) plan ... [A spokesman for the union, the Society of Professional Engineering Employees in Aerospace,] said Boeing's proposal would amount to a 40% reduction in benefits from current levels. The union's contract with Boeing expires Oct. 6.... 'The proposed retirement benefit for SPEEA-represented new hires is a market leader compared to the plans offered by our aerospace competitors to their new hires and will give our new hires an opportunity to build significant savings for retirement,' [said a Boeing spokesman]." (Pensions & Investments)

Are Baby Boomers and Generation Xers on Track to Reach Their Retirement Goals? (PDF)
"At first glance ... research shows members of both generations are satisfied with the way things are going in their lives today: 78.6% of Baby Boomers and 83.4% of Generation Xers. Yet in the past 12 months significant percentages of both generations reported that they: stopped adding money into a retirement savings plan (29.3% of Baby Boomers and 22.6% of Generation Xers); postponed plans to retire (20.9% of Baby Boomers and 17.1% of Generation Xers); and prematurely withdrew funds from a retirement plan (16.0% of Baby Boomers and 15.0% of Generation Xers)." (Insured Retirement Institute)


Comments to Moody's Investor's Service on Its Adjustments to U.S. State and Local Government Reported Pension Data (PDF)
"First and foremost, publishing adjusted information based on generic formulas will introduce a third set of financial figures (Actuarial figures, GASB figures, and Moody figures) which will at best confuse and at worst mislead investors. Moody's has a strong reputation and therefore investors and others may rely on the adjusted financial figures for purposes other than intended. In the current low interest environment, Moody's proposed adjustments will likely result in larger unfunded pension liability figures than what is shown in audited financial statements for state and local governments." (Gabriel Roeder Smith)


Are U.S. Pension Funding Woes Out of Control?
"[S]hoving more assets into hedge funds, private equity, real estate and infrastructure is no panacea. And since most state plans are approaching their alternative investments the wrong way, all they're doing is doling out huge fees, getting low profits in return." (Pension Pulse)


What California Pension Reform Does and Doesn't Do
"The most significant parts of the [recent California public employee pension] legislation apply only to public employees hired after Jan. 1, 2013. The legislation helps prevent the current pension hole we are in from getting deeper, but does little to get us out of that hole.... CalPERS estimates cumulative savings from this legislation of up to $55 billion over the next 30 years -- on average less than $2 billion per year, most of that well into the future. Yet CalPERS faces an unfunded liability of at least $100 billion for pensions already earned. The legislation does nothing to address that." (SanLuisObispo.com)


Remarks by Pension Rights Center Executive Director Karen Friedman on the Pension Crisis
"[I]f you have good pensions, you recognize, that -- unlike people that don't have good pensions or who have 401(k) plans and have to keep managing that money over your lifetime -- you can keep spending money in the economy.... [W]e have to halt these assaults on retirement security. The same people who want to destroy Medicare and Social Security -- all programs with collective risk -- also are working to undermine public and private pension plans, all in favor of a so-called 'ownership society.'" (Pension Rights Center)


Big Buyout Funds a Drag on Pension Funds?
"[S]ome pensions are moving into 'strategic partnerships' to lower fees but this just seems like another way for big funds to attract more capital with no guarantees that they'll deliver the targeted returns. One positive development for private equity and markets in general is that risk appetite is coming back as global central banks signal they're ready to do whatever it takes to shore up confidence and boost growth." (Pension Pulse)

Benefits in General; Executive Compensation

[Guidance Overview]

December 31 Deadline to Update Severance, Employment and Change in Control Agreements
"Transition relief ends on December 31, 2012, and the penalties for noncompliance can be harsh.... Any arrangement providing payments that are conditioned upon an employment-related action of the employee (such as the execution of a release or restrictive covenants) must be revised to remove the ability of the employee to delay or accelerate the timing of the payment." (McDermott Will & Emery)

Severance Pay in Connection with Layoff Does Not Trigger FICA Taxes, Sixth Circuit Rules (PDF)
"Whether [supplemental unemployment compensation benefits, or 'SUB'] payments are 'wages' under FICA is a complex question because the FICA statute does not expressly include or exclude SUB payments, nor do the Treasury regulations promulgated under FICA address the subject.... [We conclude that, because] Congress has provided that SUB payments are not 'wages' and are treated only as if they were 'wages' for purposes of federal income tax withholding, such payments are not 'wages' for purposes of FICA taxation.... [W]e do not adopt the government's other arguments or follow the IRS revenue rulings the government cites." [U.S. v. Quality Stores, Inc., No. 10-563 (6th Cir. Sept. 7, 2012)] (U.S. Court of Appeals for the Sixth Circuit)

Benefits Litigation Update, September 2012 (PDF)
Quarterly Newsletter; articles in this issue include: Practical Guidance for Employer Plan Sponsors from the Tussey v. ABB, Inc., Decision; Why It May Be Important to Your Administration of Pension Plans for the Supreme Court to Decide If Section 3 of the Defense of Marriage Act Is Enforceable; and Important Issues in Pending Cases—Subrogation: U.S. Airways, Inc. v. James E. McCutchen (3rd Cir. November 16, 2011)—Forum Selection Clauses: Mozingo v. Trend Personnel Serv., Dkt. No. 11-3282 (10th Cir.)—Judicial Deference: Frommert v. Conkright, Dkt. No. 12-67 (2d Cir.). (Epstein Becker & Green, P.C. and The ERISA Industry Committee)

First Circuit Includes Overtime in Back-Pay Award Under FMLA
"At the district court level, the jury returned a verdict in favor of Pagan on his FMLA retaliation claim. As part of his back-pay award, the district court included $20,637 in lost overtime wages. In affirming the overtime award, the First Circuit reasoned that, under the FMLA, a prevailing plaintiff may recover 'any wages, salary, employment benefits or other compensation denied or lost' due to violation of the statute and that overtime pay certainly falls into the category of 'other compensation.'" (Franczek Radelet PC)

Press Releases

EBRI Rolls Out Free Retirement Savings App
Employee Benefit Research Institute (EBRI)

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