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CalPERS Objects in Court to San Bernardino Bankruptcy
"The case could set precedent in how local governments deal with soaring pension costs. In particular, it is setting the stage for a showdown between Calpers and Wall Street bondholders and bond insurers over how they are treated as creditors in a municipal bankruptcy.... In its filing on Wednesday Calpers, which has long argued that contributions to its fund can never be suspended, even in a bankruptcy, said any arguments about whether San Bernardino can seek bankruptcy protection should be deferred until the city presented a detailed financial plan."
(The New York Times; free registration required)
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[Advert.]
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A Look at Retiree Cashouts as the New De-Risking Strategy
"[One] way to manage risk is to cashout pensioners altogether, effectively shifting the investment and longevity risks to them. Two recent IRS private letter rulings signal that the minimum distribution rules don't stand in the way of this technique. [This article describes] these private letter rulings -- LTR 201228045 and LTR 2012280511 -- and provide[s] an additional review of other legal and administrative complexities involved with lowering the cost of defined benefit plans through a one-time cashout option to former participants."
(Groom Law Group)
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Avoiding Pitfalls in Administering Retirement Plan Forfeitures
"In recent years, employer-sponsored retirement plans have experienced heightened scrutiny of forfeitures during [IRS] audits. Failures to use or allocate forfeitures on a timely basis highlight the need for a proper forfeiture management process. Some plan sponsors have been surprised to find that their plan documents do not align with their plan operations. Ensuring that forfeitures occur timely and are used according to the terms of the plan document will mitigate compliance risk."
(The Vanguard Group, Inc.)
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[Opinion]
AT&T Proposes Massive Contribution of Company Stock to Pension Plan
"With total plan assets of approximately $46 billion, the percentage of company stock held in the plan following the proposed transaction would soar to an astounding 18% -- well above the 10% limitation under ERISA. Heavy concentration in the stock of a single employer with no voting or managerial rights sounds, to me, like a recipe for disaster."
(Forbes)
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Translating 401(k) Success Into 403(b) Success
"[T]he 403(b) world represented an $805 billion market in 2011 and enjoyed a 4.9 percent overall growth during the past decade ... With 8.1 million participants and 34,700 plan sponsors across the nation in private and public primary and post-secondary institutions, there are also many opportunities to get in and provide better options and better service. The most significant obstacle is a relatively low turnover of providers and a three- to five-year period of flat growth expected in the space."
(BenefitsPro)
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Largest Private-Sector Employer in Milwaukee Area Ends Pension Contributions, Enhances 403(b) Plan Instead
"Aurora, [a network of hospitals and healthcare providers], cited three reasons for the change: (1) The cost of funding a pension plan is unpredictable because it is tied to economic and market factors.... (2) Pensions were designed for a different time, when employees generally stayed with an employer for 30 or 40 years. (3) An account-based plan ... is more popular with employees because it is more flexible for employees and helps Aurora be more competitive in recruiting and retaining employees."
(Milwaukee Business Journal)
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Federal Employees' Retirement System and the Thrift Savings Plan: A Combined Approach to Retirement Security
"One of the most well-known transformations of a pension system occurred when President Ronald Reagan signed the Federal Employees' Retirement System Act into law on June 6, 1986. This law moved federal employees from the Civil Service Retirement System (CSRS), to a retirement system that integrated Social Security, a DB pension, and a DC savings plan. This issue brief reviews this new system, known as the Federal Employees' Retirement System (FERS). More specifically, this issue brief explores its impact on the funding of benefits and the adequacy of retirement income benefits for federal employees over the last twenty-five years."
(National Institute on Retirement Security)
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IRA Allocations Vary by Age, Balance and Type, But Not by Gender (PDF)
"Those older, having higher account balances, or owning a traditional IRA that originated as a rollover had, on average, lower allocations to equities ... [A]s account balances increased, the percentages of assets in equities (i.e., direct ownership, mutual funds, etc.) and balanced funds (including target-date funds) combined decreased, while bond (i.e., direct ownership, mutual funds, etc.) and "other" (i.e., real estate, annuities, etc.) assets' shares increased. Equity allocations for the youngest IRA owners (under age 35) with small account balances were the lowest across the age groups. However, when balances reached $10,000 or more, younger IRA owners had significant increases in equity allocations, such that those ages 25-34 with the largest account balances had the largest equity allocation."
(EBRI)
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Former Michigan Governor Describes Experience with Public Employee Pension Reform
"Michigan in 1997 became the first state to close a large DB pension plan and replace it with individual accounts.... [T]his has saved the state around $167 million in normal cost and $2.3 to $4.3 billion in unfunded liabilities. Fifteen years later, many states are considering legislation to do the same thing."
(Truth in Pensions)
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Proposed Changes to Calculation Method for Social Security COLAs: What Would They Mean for Beneficiaries? (PDF)
"A new cost of living measure (chained-CPI), which grows more slowly than the current calculation (CPI-W), would reduce spending on Social Security ... Changing the cost-of-living adjustment (COLA) using a chained CPI would have a detrimental impact on the economic wellbeing of older and disabled Americans and their family members who receive benefits from Social Security. Small reductions to the annual COLA will accumulate over time so that the largest reductions in benefits will be on the oldest beneficiaries and the long-term disabled."
(AARP)
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Generation X Most Concerned About Financing Retirement
"Among Generation X adults between the ages of 36 and 40, more than half (53 percent) said they were either 'not too' or 'not at all' confident that their income and assets will last through retirement. In contrast, only about a third (34 percent) of those ages 60 to 64 expressed similar concerns, as did a somewhat smaller share (27 percent) of those 18 to 22 years old."
(Society for Human Resource Management)
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[Opinion]
Auto-Enrollment Coupled With Auto-Escalation of Contributions Takes Away Choice but Increases Success
"[I]t seems pretty clear that to help people reach some extremely nebulous but substantial retirement goals, you've got to use some psychology. And, maybe, take away their freedom of choice. For their own good. The context for all of this heavy-handed behavior is the well-intentioned but way-too-optional-for-its-own-good 401(k). Put simply, while it's a relatively good tool -- especially if it's the only tool most American workers have, minus the prospect of some possible Social Security benefits, perhaps maybe -- it's a totally ineffective tool if people don't use it. A waste of money, in fact. And your time."
(BenefitsPro)
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Benefits in General; Executive Compensation
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ISS Issues 2013 Draft Policy Updates (PDF)
"The proposed policy raises serious issues regarding corporate governance and the role of shareholders. Under most state corporate laws, shareholder voting on proposals is advisory in nature. Boards are not bound to implement or comply with shareholder proposals that garner the majority of votes cast ... However, both ISS's current and proposed policy requires boards to implement shareholder approved proposals or face a negative vote recommendation. ISS appears less concerned with corporate boards' fiduciary obligation to take actions that are in the best interests of shareholders."
(Meridian Compensation Partners, LLC)
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Text of 2012 Report to IRS by Information Reporting Advisory Committee, Including Employee Benefit Issues (PDF)
160 pages. "[The report by the committee's Employee Benefits & Payroll Subgroup makes recommendations about] (A) Employer and Insurer Shared Responsibilities Under the [ACA]; (B) Employer and Insurer Reporting Under the [ACA]; (C) $2,500 Limit on Health Flexible Spending Arrangements; (D) Health Care Valuation on Form W-2; (E) Patient-Centered Outcomes Research Trust Fund; (F) Integrated Plans; (G) Third Party Sick Pay; (H) Proper Reporting for Flexible Spending Arrangement improper payments; (I) Form 5558, Application for Extension of Time to File Certain Employee Plan Returns, Penalty Relief; (J) Employee Stock Ownership (ESOP) and Cash Balance Plan Prototypes."
(Internal Revenue Service, Information Reporting Program Advisory Committee)
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Press Releases
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