Year-End Compliance Issues for Single-Employer Retirement Plans (PDF)
"By year-end 2012, sponsors of calendar-year single-employer retirement plans must act on necessary and discretionary amendments and perform a range of administrative procedures to ensure compliance with statutory and regulatory requirements. There also are year-end issues that employers sponsoring nonqualified deferred compensation plans should consider. This [Bulletin] looks at key areas that such employers and sponsors ... should address by Dec. 31, 2012."
(Milliman)
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Upcoming Compliance Deadlines for Single-Employer Retirement Plans
"An amendment is required for all defined benefit (DB) plans; other amendments might be required for Cycle B plans, plans that have made discretionary design changes, plans with Puerto Rico participants, and plans that have recently received determination letters. Plans that took advantage of the Internal Revenue Service (IRS) voluntary corrections program (VCP) also are reminded about the procedural changes they were required to implement as part of VCP."
(The Segal Group, Inc.)
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Required 2012 Qualified Retirement Plan Amendments
"Plan sponsors of defined contribution plans and defined benefit plans may need to adopt amendments by the end of the 2012 plan year, including certain amendments to: Defined contribution plans that hold employer securities. Single-employer defined benefit plans to comply with funding-based limits on accelerated benefit payments and benefit accruals. Governmental plans to comply with the HEART Act and WRERA. Puerto Rico plans."
(Practical Law Company)
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A Powerful Combination: Target-Date Funds and Managed Accounts (PDF)
"The ultimate investment goal of a TDF is to offer participants a prudently selected and well-diversified portfolio appropriate for saving for retirement.... [A] a straightforward, index-focused approach makes these funds easy for participants to understand and for plan sponsors to evaluate. An index-based design is particularly suitable as a QDIA, as it helps to eliminate active risk exposures and to minimize fees, while offering the potential to improve performance over long periods."
(The Vanguard Group, Inc.)
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Following San Diego's Lead, Would Move to 401(k) Program by Los Angeles Be Sign of a Trend?
"Signature gathering began last week for an initiative to switch new hires of California's largest city from pensions to a 401(k)-style plan, a change begun in the second largest city, San Diego, after voters approved a similar initiative in June. Former Los Angeles Mayor Richard Riordan, who has warned the city is sliding toward bankruptcy, is pushing the initiative. He does not think costs will be controlled by the recent approval of lower pensions for most new hires, except police and firefighters."
(CalPensions)
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Cities' Disputes with CalPERS Have Ramifications, Moody's Says
"On one hand, the report warned that if the financially troubled cities succeed in delaying or reducing their CalPERS payments, it 'could incentivize other financially distressed cities to seek concessions from all creditors,' including bondholders. On the other hand, if cities are not required to make full pension payments while in bankruptcy, the report said, more might be left for other creditors, including bondholders."
(Los Angeles Times)
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International (Offshore) Pension Plans Are Growing Trend
"IPPs are seen as a flexible vehicle for retirement savings and are typically used for expats who are unable to participate in a domestic or local retirement plan. IPPs are more flexible than most home country plans as benefits are mainly paid as a lump sum at retirement (some providers may facilitate annuity purchase or provide one), and can also be paid when an employee leaves the company."
(Mercer)
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Glide Path Asset-Liability Modeling: a Dynamic Allocation Approach to Derisking (PDF)
"[A] glide path ALM approach combines traditional ALM with derisking by incorporating a dynamic asset allocation.... [M]arket and pension metrics [are forecasted] over the investment strategy planning period, with asset allocations changing as funding level thresholds, or 'triggers,' are reached. This approach creates a more applicable and actionable result for plan sponsors."
(The Vanguard Group, Inc.)
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Amounts Owed to Plans for Fiduciary Breaches Not Dischargeable in Personal Bankruptcy
"The facts here read like a textbook case of what not to do as a plan fiduciary, and should remind plan sponsors that desperate times do not call for desperate measures. Using plan assets to prop up a struggling business is not only unwise, but also unlawful." [In re John Dombek III, 2012 WL 4959442 (Bankr. N.D. Ill. 2012)]
(Thomson Reuters / EBIA)
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Upcoming Compliance Deadlines for Multiemployer Retirement Plans
"Amendments might be required for plans that have made discretionary changes, plans that recently received a determination letter, or plans that have Puerto Rico participants. In addition, defined benefit plans are reminded about the Summary Report required by Section 104(d) of [ERISA]."
(The Segal Group, Inc.)
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Effects of Retirement Pay on Military Officer Retention
"[T]he generosity of retirement benefits is significantly correlated with the decision to remain in [military] service until members qualify for benefits. The estimated effect of a 20 percent reduction in the generosity of retirement benefits upon the probability of remaining on active duty is equivalent to the effect of a 0.27 percentage point reduction in the unemployment rate, or approximately a 2 percent increase in the GDP growth rate."
(National Bureau of Economic Research; purchase required)
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Puerto Rico Treasury Department Issues Guidance on Retirement Plans Limits for 2013 (PDF)
"For plans qualified only in Puerto Rico (PR-Only Plans), and for plans qualified both in Puerto Rico and the U.S. (Dual-Qualified Plans), the limits on elective deferrals, annual benefits, annual contributions and plan compensation all will increase. However, after-tax and catch-up contributions limits, and the highly compensated employee threshold, will remain unchanged for 2013."
(Groom Law Group)
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Cypen & Cypen Newsletter for November 1, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: State and Local Pensions Are a Force in Our Economy; CalPERS Challenges Legitimacy of San Bernardino's Bankruptcy Filing; Ethics for Retirement Plan Professionals; Report on Trends Influencing Corporate DC and DB Plans; Baltimore County Pension Plan Violates ADEA.
(Cypen & Cypen)
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PBGC Is Changing Its Enforcement Approach with Companies That Have Operations Shut Down
"The decision to take no action will be based on the PBGC's analysis of a company's financial strength and the circumstances of the case. The agency may periodically request additional information from the company to confirm its continued qualification as creditworthy. If the company is no longer creditworthy during the five-year enforcement period, the PBGC will enforce the 4062(e) liability."
(PLANSPONSOR.com)
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Rising Tide for Investments to Generate Retirement Income
"America's population is steadily growing older as 10,000 baby boomers turn age 65 every day, creating a record tide of retirees with new and different financial needs.... Any serious review of retirement income options should start with a 'gap analysis' to determine what kind of lifestyle the client envisions in retirement, what expenses that lifestyle is likely to entail, how much income he or she will need to cover those expenses, and what income sources are available in retirement."
(On Wall Street)
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State Pension Plans Weaken for Fourth Straight Year
"The median funding ratio was 71.7% for the year through June 2011, down from 74.3% the prior period, data compiled by Bloomberg show. Taxpayers in Illinois, the weakest of the group for the fourth straight year at 43.4%, are paying the price. The relative borrowing cost of the state and its localities is almost double the five-year average."
(Investment News; free registration required)
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Pension De-Risking Presents Potential Conflicts of Interest
"One company that entered into a pension de-risking transaction cited the upside to include the following: Enhancing the sponsor's long-term financial position; Removing a 'volatile' pension liability from the balance sheet; Reducing cash flow and income statement volatility; and Improving financial flexibility. It is not known yet whether someone will challenge this kind of rationale as being too shareholder heavy or instead primarily in the best interest of plan participants who are impacted by a particular transaction."
(Pension Risk Matters)
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[Opinion]
Private Equity Having a Hard Time Defending Itself as Pension Fund Investment?
"The Private Equity Growth Capital Council released new infographic highlighting how over 10 years a $1 investment by pension funds in private equity yields a return of $2.30, easily outstripping gains from stocks, bonds and real estate.... Does private equity make sense for pension funds? You bet it does but the approach is crucial."
(Pension Pulse)
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[Opinion]
Plan Sponsors Express Concerns About New PBGC Enforcement Policy
"While this policy may provide relief to some credit-worthy companies, the approach presents a number of fundamental challenges to the continued health of the defined benefit pension system ... These proposed regulations -- and the new enforcement policy -- demonstrate a basic misinterpretation of the ERISA statute itself by radically re-defining what is a 'cessation of operations' and introducing vast new requirements that were not contemplated by Congress ... In fact, the enforcement policy itself is flawed, since it is being initiated under proposed regulations that have not yet been finalized or amended with the benefit of comments from the public[.]"
(American Benefits Council)
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Benefits in General; Executive Compensation
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Think Tank Recommends Ways to Rein in Military Pay, Benefits
"The Center for American Progress praised Pentagon proposals to cut personnel costs, which include capping pay raises for service members beginning in fiscal 2015, raising TRICARE enrollment fees for military retirees to keep pace with increases in health care costs, creating a 401(k)-based retirement system to replace the current vesting system, and increasing the age at which service members can receive their pensions."
(GovExec.com)
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Press Releases
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