QDIA Q&A: A Resource for Plan Sponsors (PDF)
"A [QDIA] is intended to encourage investment of employee assets in appropriate vehicles for long-term retirement savings. This [article] will help you understand how selectiond QDIAs that comply with the [DOL] regulations can reduce fiduciary liability for plan sponsors and help participants save for retirement."
(Invesco)
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17 Frightening Retirement Facts
"Investing great John Bogle, founder of The Vanguard Group and champion of the index fund, believes our nation's retirement system is headed for a serious train wreck.... One big takeaway is that many Americans are saving far too little for their retirement. And many of those individuals who are saving are making costly errors that result in poor investment returns."
(Business Insider)
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The Slippery Concept of Materiality
"While everyone seems to admit that all investment advisors have some conflicts of interest, only the "material" conflicts need to be disclosed ... The problem here ... is that materiality is not only in the eye of the beholder, but it's when the beholder is looking backwards. When it counts, everyone tries to determine whether the missing disclosure was material after it has caused a loss."
(fi360 Blog)
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Top 100 Public Plans Worse Off Than Reported
"The plans, which reported $895 billion in unfunded liabilities reflecting the actuarial size of assets, should more accurately be reporting $1.193 trillion in unfunded liabilities reflecting the market size of assets, according to the Milliman 2012 Public Pension Funding Study."
(Pensions & Investments)
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Employee Ownership Update for October 15, 2012
NCEO Executive Director Loren Rodgers discusses a new PwC/NASPP study that shows multinational ESPP participation is declining; a proposal from the UK Chancellor of the Exchequer: 'Shares for Rights'; DOL allegations of overvaluation of ESOP Stock; and the premiere of a documentary on worker cooperatives.
(National Center for Employee Ownership)
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Defined Benefit Plans Must Make Required Payments (PDF)
"All qualified plans must begin making payments, called Required Minimum Distributions (RMDs), by a participant's required beginning date (RBD). Most defined benefit plans begin making pension payments at a participant's RBD, rather than making just an RMD payment. However, RMD rules do apply and may be most notable when an employee earns additional benefits after reaching his RBD."
(Prudential)
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Companies Pitch Lump Sums to Dig Out of Pension Holes
"Corporate America has been freezing or terminating traditional, seniority-based plans for the past 30 years, and moving employees into cheaper 'defined contribution' plans, such as a 401(k). Lump sum offers are a way for companies that have or had pension plans to reduce their often huge longterm liabilities ... Equifax and NCR are among U.S. giants including General Motors, Ford and Sears that have made similar offers to thousands of former workers."
(Atlanta Journal-Constitution)
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Companies That Are Offering Lump-Sum Pension Buyouts
"[At the link is] a list of employers that have announced that they are offering lump-sum pension buyouts to certain groups of employees, former employees, or retirees.... [Also available are] similar lists of companies that have frozen or changed their traditional pension plans and companies that have reduced or eliminated their matching contributions to employees' 401(k) plans."
(Pension Rights Center)
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Plan Sponsors Should Redirect Focus from Fund Performance to Increasing Deferrals
"While fund performance is important, the fund-centric focus may not be the best means of preparing participants for retirement, according to [a recent study] ... the performance of underlying funds and rebalancing have far less of an effect on retirement wealth accumulation than the impact of higher deferral rates[.]"
(Wolters Kluwer Law & Business)
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The Modern ESOP and Fair Market Value After the End of Tax Cuts (PDF)
"[T]his article reviews the general purpose and benefits of (ESOPs) ... [and] discusses the specific tax incentives associated with implementing an ESOP that are available to the company, the selling shareholder(s), and the employees ... the fiduciary responsibilities associated with establishing and maintaining an ESOP ... the by-product benefits of an ESOP ... the current legal environment facing ESOPs and best practices to avoid common pitfalls ... [and] the future of ESOPs[.]"
(Morgan, Lewis & Bockius LLP via Bloomberg BNA)
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2012 Public Pension Funding Study
"During the past year, the 100 largest U.S. public pension plans (as measured by accrued liability) reported assets of $2.705 trillion and accrued liabilities of $3.600 trillion, for an aggregate underfunding of $0.895 trillion and an aggregate funded ratio of 75.1%.... [T]hese plans have assets of $2.513 trillion and accrued liabilities of $3.706 trillion, resulting in aggregate underfunding of $1.193 trillion and an aggregate funded ratio of 67.8%."
(Milliman)
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Governmental Plans: Are Your Plan Fees Reasonable?
"All plan fiduciaries, including governmental plan fiduciaries, have the duty to make sure fees paid for services are reasonable.... In 2012, the Department of Labor (DOL) finalized fee disclosure rules applicable to ERISA plans.... Although these fee disclosure rules only apply to ERISA-governed private sector plans, governmental plans should consider following these new rules as a fiduciary best practice."
(Benefits Bryan Cave)
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Terminating Pension Plan Can't Use PBGC's 'Weekend Rule'
"Amendments reducing benefit values must be adopted by a pension plan's stated termination date, not the next business day, a federal court in Kentucky has ruled. An employer terminated its plan on Saturday, Aug. 15, 2009, but two days later adopted PPA segment rates, reducing lump sum values by more than $700,000. The employer argued the "weekend rule" for computing certain time periods extended the plan's termination date to the next business day. The court disagreed, deferring to PBGC's view that a termination date set to fall on a weekend or holiday does not slide to a weekday." [PBGC v. Town & Country Bank and Trust Co. (W.D. Ky, 4 Oct 2012)]
(Mercer)
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Benefits in General; Executive Compensation
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Compensation for Corporate Directors Rose in 2011
"compensation for board members of S&P 500 companies shows pay increased by 8% in 2011 driven by increased board retainers and equity awards. For baseline board service -- duties and responsibilities common to directors regardless of service on committees or in other roles -- annual cash retainers rose 15% to a median $75,000 and equity compensation increased 10% to a median $131,900."
(Mercer)
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Eighth Circuit Rejects 401(k) Participant's Claim Under ERISA's Anti-Retaliation Rule
"[The 8th Circuit Court of Appeals] found [the participant's] claim under ERISA Section 510 -- which bars retaliation against participants for exercising rights under an employee benefit plan or ERISA -- wasn't supported by the facts. As a result, the court said, it needn't address the larger question of whether informal complaints are covered by Section 510. The circuit courts are split on that issue." [Shrable v. Eaton Corp. (8th Cir., 3 Oct 2012)]
(Mercer)
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Time to Prepare for 2013
"Some of the issues you may need to address before the end of 2012 include: Health Care Reform.... Determination Letter Filings.... Qualified Retirement Plan Amendments.... Corrections of Certain Deferred Compensation.... Evaluate Retirement Plan Service Provider Fee Disclosures.... Regular Annual Notices."
(Holland & Hart)
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Press Releases
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