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October 3, 2012 Get Health & Welfare News  |  Advertise  |  Unsubscribe  |  Past Issues  |  Search

Employee Benefits Jobs

Webcasts and Conferences

Rocky Mountain Retirement Plan Conference
in Colorado on November 14, 2012 presented by Innovest Portfolio Solutions

Preparing for 2014: Should an Employer Pay or Play? Webinar
Nationwide on November 8, 2012 presented by Spencer Fane Britt & Browne LLP

Understanding Retirement Plan Fee Disclosures
Nationwide on October 16, 2012 presented by Hay Group

We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe


Learning from IRS LESE Projects—Common Mistakes in Operation of Defined Contribution Plans
"The IRS' 'Learn, Educate, Self-Correct, Enforce' (LESE) projects give the IRS a streamlined way to examine defined contribution plan compliance issues. By sampling a small portion of Form 5500 returns, the IRS can see how well plans are complying with specific plan features.... [This article reviews] results from recent LESE projects involving common plan features: Small Plans and Participant Loans... Top Heavy 401(k) Plans... Bonding Errors." (McKay Hochman Co., Inc.)


Retirement Plan Professionals: Attend the ASPPA Annual Conference

Sponsored by ASPPA

Don't miss The 46th ASPPA Annual Conference. Attend more than 70 interactive sessions for TPAs, plan sponsors, actuaries, attorney's consultants & more. Plus earn up to 25 CE credits & network with over 1,500 retirement plan professionals.

Zap Pension Costs Before MAP-21 Takes Effect (PDF)
"Performing mandatory cash outs is one way plan sponsors can lower their PBGC premiums, which can save money in the long run.... Cashing out small benefits can be a relatively simple process that does not differ much from regular benefit payment processing." (Healthcare Town Hall)

Public Employee Pensions Weaken for Fourth Consecutive Year As Illinois Leads Decline
"Funding for U.S. state retirement plans fell for a fourth straight year as insufficient contributions and inadequate investment gains overwhelmed cuts that more than 40 legislatures have made to benefits since 2007. The median funding ratio was 71.7 percent for the year through June 2011, down from 74.3 percent the prior period ... Taxpayers in Illinois, the weakest of the group for the fourth straight year at 43.4 percent, are paying the price: the relative borrowing cost of the state and its localities is almost double the five-year average." (Bloomberg BusinessWeek)

DOL Sues to Recover Losses Suffered by Participants in ESOP of California Company
"The suit alleges that GreatBanc failed to adequately inquire into an appraiser's report that presented unrealistic and aggressively optimistic projections of Sierra Aluminum's future earnings and profitability. GreatBanc allegedly failed to investigate the credibility of the assumptions, factual bases and adjustments to financial statements that the appraiser relied upon in preparing its report. The suit also alleges that GreatBanc asked the appraiser to revise its valuation opinion in order to reconcile the ESOP's higher purchase price with the lower fair market value of the company stock." (Employee Benefits Security Administration)

401(k) Plan Trustees Sentenced to Prison for Embezzling More Than $487,000
"Following a plea agreement entered in the U.S. District Court for the Eastern District of Kentucky, William H. Kiser and Mary Sue Kiser, trustees of the Irotas Manufacturing Co. Inc. 401(k) Plan, have been sentenced to 15 months in prison and three years of supervised release for embezzling funds from the plan. The Kisers also have been ordered to pay restitution." (Employee Benefits Security Administration)


Join Sutherland for a Free Webinar -- October 23 -- Register Now

Sponsored by Sutherland Asbill & Brennan LLP

We will provide an overview of the 3 components of the EPCRS program, including when to determine if self-correction is appropriate versus when a filing should be made with the IRS and methods for identifying and correcting common plan errors.

Taking Control of Your 401(k) Accounts
"[C]onsider that your 401(k) or similar retirement plan, such as a 403(b) or 457 deferred compensation plan, is such a core piece of your retirement that you ought to not be particularly aggressive in the plan.... Benjamin Graham—Warren Buffett's mentor—suggests a 50/50 asset allocation between stocks and fixed-income as a baseline which swings between 75/25 and 25/75 depending on market conditions." (MarketWatch.com)

The Best Laid (Retirement) Plans
"In 1991 only 11% of American workers expected to retire after age 65. Today, that number is over 37%, with 26% saying they expect to retire sometime after age 70. An additional 7% say they will never retire. While the benefits of continued work on one's personal financial situation are well documented, the ... ability to actually keep, find or engage in paid employment as they approach or surpass traditional retirement age is questionable." (Financial Planning)

New San Diego City Workers to Be Enrolled in Social Security
"[California Governor] Brown signed legislation over the weekend that requires the city of San Diego to enroll new hires eligible for a 401(k)-style plan into Social Security, a social safety net that city workers voluntarily gave up in the 1980s.... Supporters, including a leading union advocate, say the bill was needed to ensure that an adequate safety net exists for workers and they aren't left completely at the whim of the stock market." (San Diego Union-Tribune)

Proposal Games: Why You May Not Know What Your 401(k) Plan Will Cost
"Plan providers often receive revenue from the companies that provide the investment options within the plans. These revenues can vary among investment options, creating a conflict of interest and allowing the provider to imply to clients that it cuts costs by offering proposals with funds that generate lower revenue for the provider. Fiduciaries who allow providers to play these proposal games without understanding the actual cost of the plan may violate their fiduciary duty to understand plan fees and determine whether they are reasonable." (401kHelpCenter.com)

Will Delayed Retirement by the Baby Boomers Lead to Higher Unemployment Among Younger Workers?
"The estimates show no evidence that increasing the employment of older persons reduces the job opportunities or wage rates of younger persons. Indeed, the evidence suggests that greater employment of older persons leads to better outcomes for the young in the form of reduced unemployment, increased employment, and a higher wage." (Center for Retirement Research at Boston College)

U.S. Plans Manage Modest Funding Recovery in September
"The aggregate deficit in pension plans sponsored by S&P 1500 companies decreased $38 billion during September, to $593 billion ... This deficit corresponds to an aggregate funded ratio of 73% as of September 30, 2012, compared to a record low funded ratio of 70% as of July 31, 2012, at which point the aggregate deficit was $689 billion." (Mercer)

Pension Finance Update as of September 30, 2012 (PDF)
"September was another month of modest improvement for pension finance, as sponsors clawed their way back toward a 'break-even' 2012, helped by another strong month in the stock market and interest rates that inched upward. Overall, sponsors saw funded status improve about 1% during September." (October Three)

The 2012 Long-Term Projections for Social Security
"In calendar year 2010, for the first time since the enactment of the Social Security Amendments of 1983, spending for the program exceeded its dedicated tax revenues. In 2011, spending exceeded dedicated tax revenues by 4 percent, and that gap is growing." (Congressional Budget Office)

Funding Levels for Large Company Pensions in Europe Hit 2012 High
"[Key findings:] (1) Pension scheme accounting deficits were 42bn GBP at 30 September 2012, corresponding to a funding ratio of assets over liabilities of 92%. (2) 33% improvement in September compared to a deficit of 63bn GBP (funding ratio of 89%) in August; continues the theme of volatility seen over past years. (3) Improvement a result of a reduction in the value of the liabilities due to an increase in corporate bond yields and reduced outlook for market implied price inflation." (Mercer)

Pension Action Center's 'Pension Notes' (Summer 2012) (PDF)
The Pension Action Center, at UMass Boston, operates the New England Pension Assistance Project and the Illinois Pension Assistance Project, which assist plan participants and beneficiaries with counseling and claims for benefits. (Pension Action Center)


Investigation Alleges Treasury Department Involved in PBGC Decision to Terminate Delphi Pension Plans
"Treasury has repeatedly denied involvement in the Delphi pension decision claiming that it 'did not authorize, approve, or consent to the PBGC's determination to terminate either pension plan.' Seeking to minimize its apparent involvement, the agency claimed that 'Treasury played an advisory role only' in PBGC's 'independent' decision. The limited documents already provided to the Committee do not support Treasury's claim of non-involvement." (House Ways and Means Committee)

Benefits in General; Executive Compensation

[Official Guidance]

Text of Farm Credit Administration Regulations Requiring Disclosure by Farm Credit Banks of Officer Compensation and Benefits
"[These regulations] require disclosure of pension benefit and supplemental retirement plans and a discussion of the link between senior officer compensation and performance.... [T]hese requirements will promote transparency of and consistency in disclosures and ensure timely reporting to shareholders. In addition, the final rule establishes minimum responsibilities that a compensation committee must perform. Further, the final rule requires that System banks and associations provide for a non-binding, advisory vote on senior officer compensation by shareholders." (Farm Credit Administration)

Is It Time to Reform Executive Compensation and Stock Option Grants?
[Video.] "Governance Studies at Brookings hosted a forum on executive compensation practices and the links to economic vitality. A panel of experts discussed the changes in corporate pay since 1980 and how they have affected companies' long-term viability, as well as possible solutions that would encourage executives to focus on long-term business goals and growth." (Brookings)

Executive Pay: How Much Is Too Much?
"During the 1970s, the late management theorist Peter Drucker recommended that 20 times average worker pay was an appropriate upside ceiling for top executive compensation. Today, CEOs at S&P 500 firms are more likely to be paid more than 200 times what a typical worker earns, according to compensation specialists[.]" (Society for Human Resource Management)

Severance Packages Can Lead to Discrimination Suits
"Severance benefits are inherently discriminatory unless all employees receive the same package. Chances are a rank-and-file worker will get a less generous package than an executive, but discrimination is problematic only when it involves a protected class such as women or people of a particular religion." (Human Resource Executive Online)

Press Releases

EBRIís Fronstin Appointed to Maryland Health Care Commission
Employee Benefit Research Institute (EBRI)

GASB Chairman Robert H. Attmore to Retire in June 2013
Governmental Accounting Standards Board (GASB)

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Fax (407) 644-2151

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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