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October 11, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Pension Administrator II
for Beneco in AZ

Benefits Specialist
for Beneco in AZ

Pension Paralegal / Employee Benefits Paralegal
for Pension Corporation of America in OH

Executive Director
for BTHR Solutions (for NEEBC) in MA

Compliance Analyst
for Growing Firm in Greater Cincinnati (Southwestern Ohio/Northern Kentucky) in OH

Institutional Trust Relationship Manager
for BMO Financial Group in WI

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Webcasts and Conferences

Women in Retirement: Managing Longevity Webcast
Nationwide on October 30, 2012 presented by InvestmentNews

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


[Guidance Overview]

Required 2012 Tax-Qualified Plan Amendments and Cycle B Determination Letter Filings (PDF)
"[This article summarizes] amendments that may be needed for all plans in 2012, review[s] the document considerations for plans that are scheduled to apply for an IRS determination letter under Cycle B, and provide[s] action steps for all plan sponsors.... [S]pecial delayed deadlines may apply to collectively bargained and governmental plans[.]" (Groom Law Group)


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PSCA's Annual Survey Shows Company Contributions Are Bouncing Back
"[C]ompanies and participants are putting money into their plans, and they are doing so at higher rates than in previous years. The Annual Survey, which reports on the 2011 plan-year experience of 840 plans representing 10.3 million participants and $753 billion in assets, showed improvement in all key confidence indicators." (Plan Sponsor Council of America)

Former CEO Found Individually Liable as Fiduciary for Failing to Report Accurate Hours Worked to Multiemployer Fund
"The Court also determined that the CEO was individually liable for certain benefit contributions, because he intentionally underreported the work hours of employees to reduce their benefits under the plan. As the CEO, he exercised control over plan assets in the form of delinquent contributions, and as he exercised control over plan assets, he was acting as a fiduciary. As a fiduciary, he was obligated to provide participants with earned benefits, and by reducing the hours reported, he intentionally denied participants benefits due." (Seyfarth Shaw LLP)

Locating Lost Participants in Qualified Plans: Some Tips and a Change to an IRS Program
"[A]ccording to the DOL, plan fiduciaries should take the following courses of action to locate former employees when a plan is terminating ... These are also good steps to follow even if the plan is not terminating. Send a certified letter to the last known address ... Check related plan records ... Check with designated plan beneficiary ... Send a letter to the Social Security Administration (SSA) to forward to the former employee." (TRI-AD)


California Pension Plan for Private Sector Employees Is a Bad Trend
"Though encouraging people to save for the elder years is a noble cause, getting states into the business of running another kind of retirement fund, when they have done such a poor job with their existing ones, is a bad idea." (USA TODAY)


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.

Pension Funds Adding Risk in Hope of Bigger Returns
"Investment return expectations vary around the world, but Canadian plans on average expect a six per cent return, according to [a recent] survey. That compared with eight per cent in the United States and five per cent in Europe and Asia. However, the survey found 36 per cent of fund managers felt they would not achieve their expected return over the next five years, including 40 per cent in Canada." (The Chronicle Herald)

How To Fix Your Lousy 401(k) Retirement Plan: Pool It, Like a Pension Fund
"[H]ere's a painful truth about the typical self-directed plan, with its elaborate menu of racy mutual funds and their sometimes outrageous fees: It is just about the clumsiest possible way for us to help our employees save for retirement. The fact is, those dowdy pension plans that most of us associate with public employees and old-timey union workers -- those are the steady performers. They consistently outrun the average 401(k) account." (Forbes)

Could Exchanging Delayed Social Security Benefits for Lump Sums Incentivize Longer Work Careers?
"Social Security benefits are currently provided as a lifelong benefit stream, though some workers would be willing to trade a portion of their annuity streams in exchange for a lump sum amount. This paper ... model[s] the factors that influence how people trade off a Social Security stream for a lump sum, and ... examine[s] the consequences of such tradeoffs for work, retirement, and life cycle wellbeing.... [W]orkers given the chance to receive their delayed retirement credit as a lump sum payment would boost their average retirement age by 1.5 - 2 years." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)


Are Pension Funds Adding More Risk?
"Even if stocks continue to climb the wall of worry ... it won't make a big difference to pension deficits which are much more sensitive to interest rates. In other words, significant solvency deficits are here to stay and plan sponsors and their stakeholders better address this issue head on.... True, pensions are long-term investors and can ride out any storm, but the harsh reality is that the 2008 crisis exposed how most pensions were not managing liquidity risk properly." (Pension Pulse)

Benefits in General; Executive Compensation

[Official Guidance]

Text of BATS Exchange Proposed Rule to Establish Listing Standards for Compensation Committees, as Amended (PDF)
[BATS operates two stock exchanges in the U.S., the BZX Exchange and the BYX Exchange, which currently account for about 11-12% of all U.S. equity trading on a daily basis.] Excerpt: "The Exchange proposes ... to require that,... in evaluating the independence of a director [who participates in determining the compensation of executive officers], the board of directors of a Company shall consider the following factors: (i) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the Company to such director; and (ii) whether the director is affiliated with the Company, a subsidiary of the Company, or an affiliate of a subsidiary of the Company.... Additionally, the Exchange is proposing ... to permit the compensation committee of a Company, acting in its capacity as a committee of the Company's board of directors and in its sole discretion, to retain or obtain the advice of a Compensation Consultant. The Company must provide for appropriate funding, as determined by the compensation committee, for payment of reasonable compensation to a Compensation Consultant retained by the compensation committee.... [T]he Exchange is proposing that Independent Directors of a Company ... (i) shall be directly responsible for the appointment, compensation and oversight of the work of any retained Compensation Consultant; and (ii) shall not be required to implement or act consistently with the advice or recommendations of the retained Compensation Consultant, nor be restricted in their ability or obligation to exercise their own judgment in fulfilling their duties.... The Exchange is also proposing ... to require foreign private issuers to comply with the Compensation Consultants requirement[.]" (BATS Exchange)

[Official Guidance]

Text of Chicago Board Options Exchange Proposed Rule Change to Establish Listing Standards for Compensation Committees (PDF)
"The Exchange believes that the current definition of 'independent director' meets the criteria listed for determining independence requirements under the New Rule.... The Exchange believes that independence of compensation committee members is important to ensure that there exist no undue influences in the compensation of executive officers. Further, in these times during which executive compensation has (understandably) fallen under some scrutiny, it is important to provide the appearance of a transparent and not-unduly-influenced process to determine executive compensation, and an exception that allows issuers to have nonindependent directors influence compensation can have a damaging impact on the markets.... New Rule [10C-1] discusses the retention of compensation consultants, independent legal counsel and other compensation advisers to assist the compensation committee of an issuer in determining compensation for executives. [CBOE] Rule 31.10 currently does not speak to this issue. Therefore, the Exchange proposes to adopt the provisions of the New Rule regarding this issue in a substantively identical manner to that in the New Rule in new Interpretation and Policy to Rule 31.10." (Chicago Board Options Exchange)

[Guidance Overview]

NYSE and NASDAQ Issue Proposed Listing Rules on Compensation Committee Independence Standards (PDF)
"Both exchanges' proposed rules adopt, without modification, the requirement that compensation committees must consider six independence factors prior to the retention of an adviser. In anticipation of the eventual implementation of compensation committee standards, ... many public companies [have begun] to assess the independence of their advisers against the six factors. This assessment will be required prior to the retention of an adviser and, at least annually, to determine whether a conflict has arisen due to the work of the consultant that is subject to disclosure." (Meridian Compensation Partners, LLC)

[Guidance Overview]

Additional Medicare Tax in 2013 Might Make Acceleration of Executive Compensation Desirable by Year-End
"Employers looking to lessen the burden of this new tax on their employees should consider whether there are opportunities to accelerate the inclusion of amounts in wages in 2012 for employment tax purposes. For example, for nonaccount balance nonqualified deferred compensation plans (e.g., defined benefit-type supplemental executive retirement plans), employers have the option of including the value of vested benefits prior to the actual payment or the date the amount of the benefit is reasonably ascertainable. An employer could accelerate inclusion of vested amounts in wages in 2012 to reduce taxes for its employees." (Morgan, Lewis & Bockius LLP)

How Do Employers Count Unexcused Absences When FMLA Medical Certification is Not Returned?
"The regulations tell us that any day following Day 15 can be counted as unexcused absences until the employee provides sufficient certification.... Interestingly, the regulations further state that, if the employee never returns the certification, 'the leave is not FMLA leave.'" (FMLA Insights)

Fire Authority Liabilities Doubled to a Half-Billion Dollars in 7 Years in Orange County, California
"On top of pensions, [the Orange County Fire Authority] has piled what it owes workers for medical benefits once they retire, workers' compensation, and for vacation, sick and other leave time earned but not taken ... Here, then, is the picture that emerges: Over the last seven years, OCFA's total long-term obligations have more than doubled, to $558 million. That happens to be twice as much as its general fund budget this year ($282 million)." (Orange County Register)

Cypen & Cypen Newsletter for October 11, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: Associations Tackle Public Pension Funding Issue; Florida Supplemental Premium Tax Distribution; Boomer Women Feeling More Financially Insecure Than Men; EBSA Says Public DC Plans Should Mimic Corporate Fee Disclosure; Questions Every Client Should Ask (and Advisors Should Be Prepared To Answer). (Cypen & Cypen)

Online Avatars and Cyber Concierges Walk Workers Through Benefits
"From increasing involvement and understanding of benefits during the open enrollment process to guiding a plan participant through a wellness program, interactive technology is becoming an ever more important and prominent part of the employee benefits communication package." (Employee Benefit News)

Execs Say Benefits More About Retention Than Attraction
"In a pair of recent interviews, executives from two of the 10 companies top-ranked for employee financial wellness by the Principal Financial Group both stressed that benefits programs should be tethered as closely as possible to retention and customer satisfaction. Good health care and retirement options are attractive to new hires, they say, but the real return on investment comes with nurturing someone through the company." (Employee Benefit News)

Sixth Circuit Decision Provides Employer Tax Relief and Refunds on Severance Payments Not Subject to FICA
"Employers who collected and paid FICA taxes on severance payments (and their employees) may be entitled to refunds of those FICA taxes. With rates as high as 15.3%, the refunds can be substantial. The refund procedures are complex. Employers cannot simply amend their employment tax returns and claim a refund." (Miller Johnson)

Press Releases

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