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September 11, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Pension Administrator
for Preferred Pension Planning Corporation in NJ

DC Administrator & Conversion Specialist
for Maryland Based Retirement Plan Design & Consulting Firm in MD

Retirement Plan Recordkeeper
for Progressive Employee Benefits Firm in Atlanta in GA

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Webcasts and Conferences

"Testing for Related Employers" Web Seminar
Nationwide on October 5, 2012 presented by SunGard Relius

"Electronic Notices: Fee Disclosures and Beyond" Web Seminar
Nationwide on October 10, 2012 presented by SunGard Relius

IRA Amendments: Ready, Set, Whoa! (Additional date added)
Nationwide on September 20, 2012 presented by Convergent Retirement Plan Solutions, LLC


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[Official Guidance]

Text of IRS Notice 2012-61—Guidance on Pension Funding Stabilization under the Moving Ahead for Progress in the 21st Century Act (MAP-21) (PDF)
"This notice provides guidance on the special rules relating to pension funding stabilization for single-employer defined benefit pension plans under amendments to the Internal Revenue Code and [ERISA] made by [MAP-21], The questions and answers in this notice relate to the following topics: General guidance relative to application of MAP-21 segment rates; Measurements for which MAP-21 segment rates do not apply; Statutory hybrid plans; Transition issues; MAP-21 elections; Schedule SB reporting." (Internal Revenue Service)


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[Official Guidance]

Request for Comments on Proposed Modifications to PBGC Premium Filing Procedures (PDF)
"PBGC now intends to revise the 2013 filing procedures and instructions to: Provide for revoking a prior election to use the Alternative Premium Funding Target (APFT) to determine unfunded vested benefits (UVBs).... Require plan administrators to provide a breakdown of the total premium funding target into the same categories of participants used for reporting on Schedule SB to Form 5500 ... Require plan administrators to report a contact name ... Require plan administrators to report the plan effective date for all plans ... Require plan administrators to break down the premium credit information in the comprehensive premium filing into two items ... Add a data item for the MAP-21 variable-rate premium cap ... Explain how MAP-21 affects premium computations.... Comments must be submitted by October 11, 2012." (Pension Benefit Guaranty Corporation)

[Official Guidance]

Text of IRS Notice 2012-56—Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
"This notice provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under Section 412(b)(5)(B)(ii)(II) of the Internal Revenue Code as in effect for plan years beginning before 2008. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), and the 24-month average segment rates under Section 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under Section 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, the 30-year Treasury weighted average rate under Section 431(c)(6)(E)(ii)(I), and the minimum present value segment rates under Section 417(e)(3)(D) as in effect for plan years beginning after 2007. These rates reflect certain changes implemented by the Moving Ahead for Progress in the 21st Century Act (MAP-21)." (Internal Revenue Service)

General Motors and the End of Defined Benefit As We Know It
"GM's decision to transfer some $26 billion of defined benefit liabilities to Prudential was ripe with portent—and irony. America's quintessential defined benefit plan, and one of the industry's most sophisticated actors, had determined that the risk of managing its outsized liability had risen to an unpalatable level. From that very moment, the question for many large corporate plan sponsors was no longer if to embrace pension risk transfer, but when. The consequences for all concerned—plan sponsors, insurance companies, regulators, asset managers, and indeed the stock and bond markets—are game changing." (aiCIO)

Ohio Lawmakers Ready to Approve Public Pension Reforms
"State lawmakers are poised to approve a package of public pension reforms this week that would eventually increase pension contributions for teachers, police and firefighters and make several other changes to stabilize the retirement systems' financial health.... The bills would affect 700,000 contributing members and 400,000 retirees throughout Ohio who have waited anxiously for the past few years to learn how their benefits would be affected. Legislative leaders said the changes, while unpopular among some workers, are needed to make sure members get the benefits they deserve." (Cleveland Plain Dealer)


[Advert.]

New York Law School – Retirement Plan Summit 2012 – Sep 28th

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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


DOL Alleges Annuity Brokerage Firm Made Illegal Profits in Handling Purchase of Single-Premium Annuity by DB Plan
Link to a DOL press release. "The U.S. Department of Labor has filed a lawsuit against defendants Dietrich & Associates Inc., an insurance brokerage firm in Plymouth Meeting, and its chief executive officer and sole shareholder, Kurt E. Dietrich, to disgorge $522,047 plus interest gained from [allegedly] illegal activities related to the company's role as fiduciary to a hospital pension plan....[T]he suit alleges that Dietrich & Associates deceived the pension plan and its fiduciaries by falsifying the final bids of Hartford's competitors so that Hartford would appear to have the lowest bid. This action prevented the pension plan from knowing the true cost of the defendants' services and deprived the pension plan of the opportunity to negotiate the amount of any insurer-paid commission or other payment as an element of the total cost of its annuity." (Employee Benefits Security Administration)

Hedge Fund Due Diligence for Retirement Plans (PDF)
"Retirement plan sponsors are giving alternative investments, including hedge funds and private equity funds, a closer look—due to the lower historical volatility, higher returns and varied correlations offered when compared to traditional investments. In addition to performance, plan sponsors are also seeking increased levels of information on their operational complexities in order to address the total risk (investment and operational) funds pose to pension assets. Alternative investment managers must recognize the holistic nature of additional information data requests in order to promptly and effectively satisfy the increased transparency requirements of institutional investors." (PricewaterhouseCoopers)

What the Fiduciary Duty of Loyalty Means to Investors
"One of the first—and some say primary—duties of the fiduciary is called the 'Duty of Loyalty.' This term actually comes from corporate law ... It can be broken down into two components: 1) Loyalty; and, 2) Acting in the Best Interest of the Client.... If the client demands something not [in] his best interest, and the fiduciary cannot convince him to do otherwise, the client must either indemnify the fiduciary from that particular action or the fiduciary must resign." (Fiduciary News)

Company Stock Fading from 401(k) Plans, But Still Used by Participants
"Despite a drop in the number of companies offering their shares as investment options in 401(k) plans, and more than a decade after the former Enron Corp. lost billions in retirement dollars after loading up on company stock, the option is highly used when still offered. BrightScope Inc., the San Diego-based ratings service, examined 401(k) plans with more than $100 million in net assets in its database and found that 9.9% of the 52,000 plans that the company tracks offer company stock. That's down from 11% in 2009 and hovers at 10% from 2008." (Pensions & Investments)

Moody's Says Pension Changes Credit Positive for California
"Moody's said in a report that reduced spending on pensions would help the finances of the state and many of its local governments and agencies in the California Public Employees' Retirement System, along with those in the California State Teachers' Retirement System. Moody's rates California 'A1' with a stable outlook." (Reuters)

Local Government Pension Plan Funding Ratio Up 8% in 2011, Wilshire Says
"Local government pension plans saw an eight percent jump in their aggregate funding ratio from 2010 to 2011, Wilshire Associates said, citing its 2012 report on the funding of city and county pension plans. The estimated ratio of pension assets-to-liabilities, or funding ratio, for all 106 city and county pension plans included in the study was 80 percent in 2011, higher than the 72 percent for all plans in 2010." (Bloomberg)

Investors Increasingly Consider Annuities 'Vital' to Retirement Plan
"In the past year, annuities have become more widely accepted as a vital part of a retirement strategy, according to survey by the Insured Retirement Institute and Cogent Research. Seventy-three percent of annuity owners and 17% of non-owners agreed that annuities are an important part of a retirement strategy, compared to 55% and 8%, respectively a year earlier ... While guaranteed income, advisor recommendation, and tax deferral continue to top the list of reasons to purchase annuities, inflation is becoming an increasing concern for investors. One percent of investors cited inflation protection as a reason to purchase an annuity that year, but that reached 6% this year." (On Wall Street)

BNY Mellon Suit Over Lehman Losses by Pension Funds Narrowed
"Bank of New York Mellon Corp. lost a bid to dismiss a lawsuit alleging it mishandled pension funds' investments in Lehman Brothers Holdings Inc. while persuading a judge to narrow the claims in the case.... The plaintiffs, including the General Retirement System of the City of Detroit and the Police & Fire Retirement System of the City of Detroit, filed class-action, or group, complaints last year. They allege that BNY Mellon ... encouraged them to join its securities lending program, under which the bank would lend securities owned by the funds to creditworthy borrowers. The funds and other members of the class said the bank invested in Lehman notes in 2006 on behalf of the funds and continued to maintain the investments as uncertainty surrounding Lehman grew. The plaintiffs said they lost more than $1 billion in the notes." (Bloomberg)

Milliman Pension Funding Index, September 2012
"Pension liabilities of the 100 largest corporate defined benefit pension plans fell by $23 billion in August while their corresponding assets improved by $11 billion, bringing the Milliman 100 PFI funded status deficit to $498 billion and a 72.4% funded ratio. Despite the modest improvement, the August 31 funded ratio remains well below its December 31, 2011, value of 78.7%." (Milliman)

Tougher Dodd-Frank Fiduciary Standard for Brokers Runs Aground
"The [SEC], which has been drafting a rule for almost two years, has scheduled no action on the measure even as 2012 wanes and a presidential election approaches. SEC Chairman Mary Schapiro, who pushed to include the measure in the 2010 Dodd-Frank Act to ensure clients receive equal treatment from brokers and investment advisers, said other rules will probably take precedence in coming months." (Investment News; free registration required)

Social Security Spousal Benefit Calculations Are More Complicated Than You Think
"When a worker files for retirement benefits, the worker's spouse may be eligible for benefits based on the worker's earnings. The spousal benefit can be as much as half of the worker's primary insurance amount, but it's not always a simple matter of dividing by two. It also depends on what age the spouse files for ... benefits." (Investment News; free registration required)

Quantifying Key Risks in Retirement from the Perspective of Retirement Income Adequacy (PDF)
"[The authors] hope that plan sponsors choose to focus on participant retirement income adequacy, as opposed to simply investment returns, savings rates and participation rates. Those metrics are part of what makes a successful DC plan, but DC plans are now a primary source of retirement income for millions of American workers and so the objective needs to expand. A sponsor who understands this can act accordingly, in the best interest of their plan participants—which is what being a fiduciary is all about.... Quantifying [six] key risks for sponsors is the first step to helping plan participants deal with them. For each key risk, [this paper gives] a brief description and [identifies] some actionable steps a plan sponsor can take to help their participants mitigate them." (Institutional Retirement Income Council)

IRS Letter-Forwarding Program Modified to Exclude Qualified Plans (PDF)
"On August 31, 2012, the Internal Revenue Service (IRS) released Revenue Procedure 2012-35 that modifies the letter-forwarding program, and is effective for all requests postmarked on and after August 31, 2012.... Revenue Procedure 2012-35 provides that given there are alternative means of locating missing participants including the internet, the IRS will no longer offer letter-forwarding services on behalf of Plan Administrators, sponsors of qualified retirements or QTAs for abandoned plans." (ING)

Should a Mutual Fund Be Your Pension?
"Target-income funds, also known as income-replacement funds or managed-payout funds, started appearing about five years ago. While their designs vary, these funds—which had $1.36 billion of assets as of June—have a common goal: investing your assets with an eye toward providing you income over a specific period of time." (Fidelity.com)

IRS Updates Determination Letter Procedures for Multiple Employer Plans
"If a determination letter application is submitted without a lead plan, the IRS will return it accompanied with a 1012 letter and a refund of the user fee. The 1012 letter will instruct the representative submitting the application to resubmit it, this time including a copy of the lead plan." (The Pension Protection Act Blog)

Are ESOPs Really More Complex Than Other Ways to Sell a Business?
This article presents a table comparing an ESOP sale to a sale to another company. The table indicates that the overall complexity is similar, but ESOPs are much less risky in terms of the likelihood of finding a buyer. (National Center for Employee Ownership)

[Opinion]

Union Slams Detroit Three's Pension Offer?
"Assuming these figures are correct, it's not hard to see why these car manufacturers want to negotiate away defined-benefit pension plans for their Canadian workforce.... The problem is that while it makes perfect sense for companies to offload retirement risk onto workers, it makes absolutely no sense for workers. They are right to be fuming over these proposals as it will lower their standard of living and increase their retirement angst. And longer term, such shortsighted measures will reduce productivity in an already ailing industry." (Pension Pulse)

[Opinion]

Pension Changes Are Unwarranted Attack on California's Middle Class
"[I]nstead of propping up the middle class, the so-called 'pension reform' proposal outlined by the governor and legislative leaders will undermine California's middle class and strike a blow at the economy when we can least afford it. It will do that by destabilizing a sound pension system that contributes some $26 billion to the state's economy a year, supports more than 90,000 jobs, and generates nearly $7 in economic activity for every $1 invested. By overreaching and proposing to roll back pensions to pre-Ronald Reagan levels, all of that is put at risk." (Silicon Valley MercuryNews)

[Opinion]

Comments to Moody's on Adjustments to Pension Liability and Cost Information for Credit Ratings for States and Municipalities (PDF)
"While there is reference to 'relative' creditworthiness, rating should be based on the fiscal environment of each jurisdiction. Moody's is proposing to assess pension obligations through a comparative lens that does not adequately consider factors specific to an entity. These factors include funding policy, changes in plan design, contribution sources and/or contribution history. In addition, Moody's has indicated that the application of these adjustments will not only be used when assessing creditworthiness, but it will make the adjusted liabilities and cost for all states and localities public even when not determining credit ratings. NCPERS believes that such comparisons will lead to the release of flawed information." (National Conference on Public Employee Retirement Systems [NCPERS])

Benefits in General; Executive Compensation

Employer Costs for Employee Compensation During June 2012
"Private industry employers spent an average of $28.80 per hour worked for employee compensation in June 2012, the U.S. Bureau of Labor Statistics reported today. Wages and salaries averaged $20.27 per hour worked and accounted for 70.4 percent of these costs, while benefits averaged $8.52 and accounted for the remaining 29.6 percent. Total compensation costs for state and local government workers averaged $41.10 per hour worked in June 2012. Total compensation costs for civilian workers, which include private industry and state and local government workers, averaged $30.61 per hour worked in June 2012." (U.S. Bureau of Labor Statistics)

Can Lack of Access to Sick Leave Be Dangerous to Your Health?
"Battling the abuse—or supposed abuse—of sick leave has been an HR challenge for decades, but now a report suggests that not having a sick leave policy can be damaging to both employee health and organizational productivity. The report, from the U.S. Centers for Disease Control and Prevention's National Institute for Occupational Safety and Health indicates that workers with paid sick leave are 28 percent less likely to be the victims of non-fatal workplace injuries than those without such benefits available to them. Those in high-risk fields (e.g. construction, manufacturing) realize the greatest benefit." (Human Resource Executive Online)

Guidance Issued on Employee Expense Reimbursement Arrangements
"The IRS issued guidance on situations in which employers recharacterized wages as nontaxable reimbursements and whether they satisfied the business connection and other requirements to be treated as paid under an accountable plan under Sec. 62(c) (Rev. Rul. 2012-25). The revenue ruling covers four situations. In three of the four situations, the IRS ruled that the employer's payments were recharacterized wages that did not qualify as nontaxable reimbursements." (Journal of Accountancy)

Unsolicited and Informal ERISA Complaints May Be the Basis for ERISA Section 510 Retaliation Claims in the Seventh Circuit
"[T]he Seventh Circuit held that ERISA Section 510 protects from retaliation employees who lodge unsolicited, informal complaints regarding alleged violations of ERISA, in addition to those who make complaints or provide information in connection with formal proceedings such as claims procedures, administrative actions or court proceedings. In so holding, the Seventh Circuit joined the Fifth and Ninth Circuits Circuits and widened the split with the Second, Third, and Fourth Circuits." [George v. Junior Achievement of Central Indiana (7th Cir. No. 11-3291, Sept. 4, 2012)] (Littler Mendelson LLC)

Effective Employee Communication: The Benefits of Best Practices
"Employers spend millions of dollars to offer a benefit and sometimes a surprisingly small amount to ensure that employees understand and appreciate it. Communications—what you say, how you say it, when you say it, who you say it to—can make a world of difference in how employees or members feel and think about their benefits, workplace, and employer." (Milliman)

Press Releases

Pensionmark Expands With Austin, TX, Location
Pensionmark Retirement Group



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