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BenefitsLink Retirement Plans Newsletter

November 9, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Plan Administrator
for The LBA Group in FL

Administrative Assistant
for Shore Tompkins Actuarial Resources, LLC in IL

for Berenbaum Weinshienk PC in CO

DC Compliance Specialist
for MBM Advisors, Inc. in TX

Retirement Plan Administrator
for Retirement Plan Services, LLC in IA, MO

Account Manager, Retirement Services
for Lockton Insurance Brokers, LLC - Recognized by Best Insurance as a Best Place To Work in Insurance - 2010, 2011, 2012 in CA

Employee Benefits Manager
for County of Sonoma in CA

Product Marketing Manager - E-Marketing
for New York Life Retirement Plan Services in MA

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Webcasts and Conferences

Preparing for the 2012-13 Proxy Season – Key Corporate Governance, Compensation & Disclosure Issues Webinar
Nationwide on December 4, 2012 presented by Skadden, Arps, Slate, Meagher & Flom LLP

Healthcare Reform Is Here To Stay--What Big Ticket Items Should You Be Thinking About? Webinar
Nationwide on November 15, 2012 presented by Trucker Huss

"1099-R: An Ongoing Challenge" Web Seminar
Nationwide on December 18, 2012 presented by SunGard Relius

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


American Airlines Gets OK to Freeze -- Not Terminate -- Pilots' Pensions
"Pilots who were hired before Nov. 1, 1983 ... were protected by a supplement to the Allied Pilots Association's contract. That supplement said American couldn't reduce their retirement benefits, ever, [the author believes]. Among the benefits was an option to take their accrued pension as a lump sum upon departure rather to take monthly pension payments. American considered that a deal-killer. However, it couldn't do away with the lump sum because federal regulations said that would be 'impermissibly reducing accrued benefits.' In the amendment posted Wednesday and made effective Thursday, Treasury and the IRS created an exception to cases like American's to allow the elimination of the lump sum option." (DallasNews.com)


DATAIR! Better Than Ever – Flexible Pricing – Superior Validation

Sponsored by DATAIR Employee Benefit Systems, Inc.

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Study Shows That Fee Disclosure Has Not Significantly Influenced Participant Behavior (PDF)
"The fee disclosure information that participants received seems to have had little impact their behavior. In summary: [1] An average of 1.4 percent of participants asked questions regarding the fee disclosure information they received. [2] 95.9 percent of plan sponsors reported no change in participant behavior as a result of the fee disclosure information. [3] 15.4 percent of plan sponsors sent out a RFP/RFI as a result of the fee disclosure regulations." (Plan Sponsor Council of America)

Bidwell Case Confirms that QDIA Safe Harbor Applies to Re-Enrollments (PDF)
"The failure of the plaintiffs in [Bidwell v. University Medical Center, Inc. (6th Cir. 2012)] to respond to the request for a new election was the critical condition enabling the plan sponsor to claim protection of the QDIA safe harbor. The court deferred to the DOL's interpretation that the safe harbor applies beyond automatic enrollment to 'any other failure' of a participant to provide investment instruction." (The Wagner Law Group via 401 (k) Advisor)

Distributions and 'Undistributions' -- IRS Letter Rulings Allow Beneficiaries to Fix Broken Rollovers from Retirement Plans
"Many tax effects hinge on receiving a 'distribution' from a retirement plan. Two recent letter rulings show that 'distribution' is a flexible term, that money can be 'undistributed'[.]" (Morningstar Advisor)

Retirement Is Top Priority for Younger Workers But Savings Pace Not High Enough
"Even as investors warily eye the 'fiscal cliff' and the ongoing Euro crisis, they are still focused on saving for retirement, according to a recent survey ... That's the good news. The bad news is most investors are unwilling to take on the necessary risk to improve their retirement savings." (Financial Planning)

Retirement Survey of Younger Employees Reveals Wishful Thinking, Blind Faith
"A T. Rowe Price survey of investors between the age of 21 and 50 showed that most at least recognize the need to save for retirement. However, most are not taking adequate measures to finance a secure retirement. The good news is that among the investors surveyed, 92 percent who can contribute to a 401(k) plan are doing so." (TheStreet.com)

PBGC Announces Formal Policy Reducing Impact of ERISA Section 4062(e) on Creditworthy Plan Sponsors
"Although PBGC will no longer actively enforce ERISA Section 4062(e) liability against financially sound large companies, it continues to apply the expansive definition of a Section 4062(e) event as set forth in its proposed rule. Therefore, all companies have an affirmative obligation to report Section 4062(e) events, although PBGC will no longer act on reports from creditworthy companies. PBGC intends to use the pilot program to assess any further changes to its proposed ERISA Section 4062(e) regulations." (McDermott Will & Emery)

GAO Says Redesigned Premium Structure Could Better Align Rates with Risk from Plan Sponsors
"GAO suggests that Congress consider revising PBGC's premium structure to better reflect the agency's risk from individual plans and sponsors, and recommends that PBGC further develop its analyses of possible redesign options. PBGC agreed with our recommendation.... Congress should establish an independent premiums advisory committee reflecting a range of perspectives ... PBGC should evaluate the potential effects on sponsors of incorporating additional risk factors, such as company financial health and plan investment mix, and include an assessment to identify any potentially disproportional hardships on smaller companies that may result from the redistribution of higher rates to riskier sponsors." (U.S. Government Accountability Office)

GAO Says PBGC Risk-Based Premium Idea Should Advance
"Despite resistance from some pension plan groups, which worry that it could push some companies to stop offering DB plans, the GAO recommended that Congress authorize the revised premium structure, as PBGC officials continue modeling of various premium redesign options, while evaluating the potential impact on plan sponsors. Despite administrative challenges, 'there are merits to a risk-based system, and a lot of agencies do it,' said Charles Jeszeck, GAO director of education, workforce and income security, in an interview. 'We think it could help keep some plans in place.'" (Pensions & Investments)

IRS Finalizes Change to Anticutback Regulation for Plans Facing Distress Termination (PDF)
"The final rule was modified to clarify references about the notice and hearing requirement ... to be clear that failure to notify a particular participant or beneficiary does not automatically invalidate the amendment. The IRS's June proposal asked whether affected plans should be required to offer a term certain and life annuity or 100% joint and survivor annuity option coincident with the elimination of the lump sum so that participants with substandard mortality have the opportunity to protect their survivors. The IRS and Treasury opted not to impose this requirement as a condition for making the amendment." (Buck Consultants)

How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population in the Health and Retirement Study?
"The retirement wealth of people aged 53-58 in 2006 declined by a relatively modest 2.8 percent by 2010. Relative losses were greatest among those with the highest wealth when the recession began. Most of the loss in wealth is due to a declining net value of housing, but several factors may provide this cohort with time to recover its housing losses. Although unemployment rose during the Great Recession, that increase was not mirrored by flows out of full-time work or partial retirement. To date, the retirement behavior of the Early Boomer cohort does not differ much from that of older cohorts at comparable ages." (U.S. Social Security Administration)

Risk Management for the Future: Age, Risk and Choice Architecture
"This study aims to deepen our understanding of how different age groups process choices in relation to future risk and retirement planning in diverse decision-making environments.... [The] findings suggest that much of the difference in financial choices between older and younger decision makers rests in the ability of each age group to override their intuitive and automatic responses to such decisions. At the policy level, ... [these] findings provide potential guidelines for better designing retirement and savings plans, such as the implementation of SMT-style programs and the encouragement of annuity over lump sum retirement benefits." (University of San Diego)

Mind the Gap: The Distributional Effects of Raising the Early Eligibility Age and Full Retirement Age
"Policymakers have proposed increases to the early eligibility age (EEA) and/or full retirement age (FRA) to address increasing life expectancy and Social Security solvency issues. This analysis ... compare[s] three retirement-age increases suggested by the Social Security Advisory Board: increase the gap between the EEA and FRA by raising only the FRA, increase both the EEA and FRA to maintain a 4-year gap between them, and increase both the EEA and FRA to maintain a 5-year gap between them. Although all three options would improve system solvency by similar proportions ... [b]enefit reductions are greater under the proposals with more months between the EEA and FRA, while the option that maintains a 4-year gap results in benefit increases for some beneficiaries compared with current law." (U.S. Social Security Administration)


Applied to Pensions, Risk Is a Four-Letter Word
"If experts are right, more pension de-risking deals are on the way. While there are plenty of reasons that a company may want to consider restructuring one or more of its ERISA plans, a final decision must be based on a comprehensive assessment of costs versus benefits, as well as taking legal and governance considerations into account." (CFO)


Is Portfolio Customization the Solution for Pension Funds?
"Sure, no two pension funds are alike. They all have different liabilities and liquidity constraints and their portfolio should reflect this. But at the end of the day, it's all about alpha. Stock and bond managers have to beat the established benchmarks and hedge funds and private equity have to return absolute returns. You can 'customize' your portfolio all you want, the bottom line is your internal and external managers need to deliver alpha." (Pension Pulse)

Benefits in General; Executive Compensation

Realized Pay: A New Approach for Measuring Executive Compensation (PDF)
"In evaluating whether or not to disclose a realized pay analysis, it is important to note that the SEC has recently cautioned companies regarding use of alternative definitions of pay in company proxy statements, which it believes, could be 'misleading to investors.' ... Even though it is currently unclear if and when a standardized definition of realized pay will be developed, investors are seeking ways to achieve uniformity of disclosure among companies to facilitate realized pay comparisons." (Frederic W. Cook & Co., Inc.)

Special Benefits Apply to Federal Employees Hit by Hurricane Sandy
"Federal employees and retirees who are victims of Hurricane Sandy are eligible for several special benefits, including additional supplies of medications if needed ... The Office of Personnel Management said that fee-for-service health plans under the Federal Employees Health Benefits Program also are to relax certain restrictions such as deadlines for notifying the plan of an emergency hospital admission or treatment by a non-network provider." (The Washington Post; free registration required)

Investment Advisors Sidestep Talk of Retirement Health Costs
"In [a] new survey, three out of four advisors said many of their clients don't seem to realize how crucial it is to plan for health care costs in retirement and nearly half of their do not have a plan to pay for those costs ... Some surveys have put lifelong out-of-pocket health care costs for an average 65-year-old couple at more than $200,000, not counting possible outlays for long term care." (On Wall Street)

Proskauer ERISA Litigation Newsletter, November 2012
"[The] lead article reviews the recent decision in Janese v. Fay, in which the Second Circuit held that the trustees of multiemployer plans act in a non-fiduciary capacity when amending the plans they administer.... [The] second article looks at the impact of the [ACA] on benefits claims under ERISA ... [and] considers two open issues that are likely to result in litigation: the fiduciary status of independent review organizations (IROs) established by the ACA, and the standard of judicial review applicable to those IROs." (Proskauer Rose LLP)

Press Releases

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