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November 16, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Account Manager
for Verisight, Inc. in CA

Associate Attorney
for Beeson, Tayer & Bodine APC in CA

Retirement Plan Administrator
for PenSys, Inc. in CA

Retirement Plan Associate
for Trutina Financial in WA

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[Official Guidance]

PBGC Interest Assumptions for Paying Benefits From Terminated Single-Employer Plans for December 2012 (PDF)
"The December 2012 interest assumptions under the benefit payments regulation will be 0.75 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for November 2012, these interest assumptions are unchanged." (U.S. Office of Personnel Management)


Advisors & TPAs: Don't Miss the NAPA/ASPPA 401(k) SUMMIT 2013!

Sponsored by ASPPA

Join us in exciting Las Vegas at Caesar's Palace and get the latest government and regulatory updates that affect you and find out why 1,300+ retirement plan professionals return every year.

The Fight to Retain Retirement Plan Tax Advantages
"[T]he government sees its top three tax expenditures as employer-provided health care, retirement plan and IRA exemptions, and mortgage interest exemptions. Ideas have been proposed to cap retirement plan contributions and to tax a percentage of defined contribution plan contributions as if they were Roth contributions. Also in the mix is capping the compensation limit that can be taken into account for pre-tax contributions[.]" (PLANSPONSOR.com)

Fewer Companies Offer Matching Contributions to 401(k) Plans
"The Transamerica Center for Retirement Studies, in its 13th annual report, said retirement benefits for American workers 'weathered the storm' over the last five years, with some exceptions. The main exception was a continued decline in the number of companies offering defined-benefit, or 'traditional,' pension plans. Only 16 percent of companies provided such plans in 2012, down from 19 percent in 2007, the study said.... [T]he percentage of employers who offer a matching contribution to employee retirement plans ... fell to 70 percent this year, compared to 80 percent in 2007." (Kansas City Star)

Multiemployer Plan Erred by Not Using Actuary's 'Best Estimate' of Funding Shortfall to Compute Withdrawal Liability
"A multiemployer plan violated ERISA when it chose not to use its actuary's 'best estimate' of the plan's funding shortfall for purposes of calculating withdrawal liability, the U.S. Court of Appeals in Chicago (CA-7) has ruled. The Seventh Circuit upheld an arbitrator's conclusion that use of an alternative calculation method overestimated an employer's share of withdrawal liability by just over $1 million." (Wolters Kluwer Law & Business)

Upcoming Compliance Deadlines for Public Sector Retirement Plans
"Amendments relating to laws already in effect for public sector plans are required for all defined benefit and defined contribution plans; other amendments might be required for plans that have made discretionary design changes and plans that have recently received determination letters. Plans that took advantage of the Internal Revenue Service voluntary corrections program (VCP) also are reminded about the procedural changes they were required to implement as part of VCP." (The Segal Group, Inc.)

Investors Lowering Expectations for Retirement Lifestyles
"More than four in 10 (42 percent) of non-retired investors say they have lowered their expectations for the kind of lifestyle they will have in retirement. Half of investors say either they have pushed their date back to retire later (15 percent) or are unsure regarding when they will retire (35 percent)." (BlackRock via BusinessWire)

Middle-Aged Americans View Retirement as Old School
"More than half (55%) of Americans age 53-65 say they plan to continue working full-time as long as their health permits, up from 51% last year. And among full-time workers over 65, 46% plan to continue working full-time and 41% at least part-time[.]" (Financial Planning)

Move to Fair-Value Pension Accounting Gathers Steam
"Recent comments from Boeing CFO Greg Smith and a technical director with the U.S. accounting standards setter suggest corporations and rulemakers are moving away from the existing, complicated accounting methods for corporate pensions, and are increasingly favoring simpler, albeit more volatile, fair-value reporting." (The Wall Street Journal CFO Blog)

The 401(k) Paper Chase: AARP Fights for Continued Use of Hard-Copy Participant Communication
"While the animosity between the industry and the Feds is one thing, the seemingly benign and pro-retiree AARP continues to build a divide between the public and retirement professionals -- and a new study seems to reiterate one particularly burdensome sticking point.... [For distribution of retirement plan information,] the AARP continues to push for paper first, electronic as a secondary and less warranted option." (BenefitsPro)

Participants Suing Plan Fiduciaries Are Themselves Sued as Co-Fiduciaries
"Retirement plan fiduciaries found to have violated federal law claim some of the plaintiffs that sued them are also liable. A federal district court agreed, in part, and moved forward some of the defendant's claims.... [The judge] concluded that rights to contribution and indemnity from co-fiduciaries under ERISA are properly permitted pursuant to federal common law based upon traditional trust law. " [Guididas v. Community National Bank Corporation, No 8:11-cv-2545-T-30TBM (M.D. Fla. Nov. 5, 2012)] (PLANSPONSOR.com)

More California City Bankruptcies Loom
"California's cities are being eaten alive by employee compensation costs. The pension reform measure signed into law in September by Gov. Jerry Brown ... pretty much left current employees alone, focusing instead on new hires. Government officials will have to wait until 2018 to negotiate with public employee unions to reform pensions for current employees." (Cal Watchdog)

The Modern ESOP and Fair Market Value After the End of Tax Cuts
"As the baby boomers retire, their exit strategy will more than likely include the transfer or sale of their privately owned business. The options typical considered are to sell to a competitor, sell to a financial buyer (ie. a private equity group), transfer the business to the management team for a note or sell the business to an ESOP. The sale to an ESOP provides a financially attractive, tax-advantaged, and socially accepted vehicle to effectuate the transfer of a business." (Bloomberg BNA)

Employee Ownership Update for November 15, 2012
NCEO Executive Director Loren Rodgers discusses new roles in Congress for ESOP supporters, a lack of options for Starbucks employees in India, the Excellence in Ownership Awards, and an employee ownership award given to Royal Dutch Shell. (National Center for Employee Ownership)

Text of CRS Report: 'Social Security: Cost-of-Living Adjustments' (PDF)
Updated annually; issued Nov. 8, 2012. Describes how the Social Security COLA is determined each year and includes a chart of adjustments made since 1950. Excerpt: "Because a COLA of 1.7% will be paid to Social Security beneficiaries in 2013, identical percentage increases in Supplemental Security Income (SSI) and railroad retirement 'tier 1' benefits will be paid, and other changes in the Social Security program will be triggered. Although COLAs under the federal Civil Service Retirement System (CSRS) and the federal military retirement program are not triggered directly by the Social Security COLA, these programs use the same measuring period and formula for computing their COLAs. As a result, their recipients similarly will receive a 1.7% COLA in January 2013." (Congressional Research Service, U.S. Library of Congress)

Defined Benefit Plan Structures in Large Law Firms: Not All Plans Are Created Equally
"During the past 15 years, virtually every law firm in the Am Law 100 has adopted a defined benefit plan to provide their Partners with enhanced retirement benefits. While each Firm may have different objectives for what they wish to accomplish, certain general themes are shared when it comes to key design considerations." (October Three)

After a Corporate Merger, Confronting the Woes of Merging Retirement Plans
"Merging multiple retirement plans can be great for administrative purposes. However, more often than not a merger results in an enormous consulting project and plan design change. Sponsors should be aware of the complexity before they make the decision to merge." (Retirement Town Hall)

Government Finance Officers Association Recommends Best Practices for Pension Obligation Disclosure
"The Government Finance Officers Association document properly identifies materiality to an investor as the key consideration underlying good disclosure practice. While facts and circumstances may differ for each debt offering, including the type of securities offered, the financial health of the municipality, its form of pension plans, and funding ratios and contribution requirements, enhanced disclosure should address a municipality's pension obligations within the broader context of its financial resources and competing obligations." (Ballard Spahr)

Cities, Bankruptcy Law and Pension Payments
"When Central Falls, R.I., emerged from Chapter 9 bankruptcy a few weeks ago, it did so with a court-sanctioned plan that calls for, among a litany of tax increases and spending cuts, lower pension payments. In other words, the city will be sending less money to its pension plan, reducing its costs but also decreasing the benefits for a group of the city's retirees. Central Falls isn't the only city in the country having trouble funding its pension plan." (Governing)

MassMutual Settles with SEC for $1.6 Million Over Alleged Insufficient Variable Annuity Disclosures
"The regulator claimed that the carrier failed to disclose to investors the downside of a cap on its guaranteed minimum income benefit [or 'GMIB'] riders -- specifically that if the benefit base reached a maximum value, accruals would end and subsequent withdrawals would reduce the value of the contract and the GMIB." (Investment News; free registration required)

Recipe for Success: Retirement Savers Can Learn from WeightWatchers
"The majority of the affluent respondents said they used detailed planning and calculations to estimate the percentage of their current household income needed to live on in retirement while most of those with less than $250,000 in assets said they guessed at how much they would need." (Investment News; free registration required)

Pennsylvania Public School Employees' Retirement System Returns 11.45% for Year Ended September 30
"The $49.5 billion pension fund's master limited partnership portfolio posted the highest return, at 31.72% for the year, followed by domestic equities, with 29.74%, and risk parity, 24.36%. Other returns were international equities, 16.04%; fixed income, 12.09%; commodities, 11.31%; real estate, 6.85%; private equity/venture capital/private debt, 5.85%; and absolute return, 3.59%." (Pensions & Investments)

Census Bureau Reports Increase of 13.2 Percent for State and Local Government Pension Funds in 2011
"The nation's state and local public-employee retirement systems had $3.0 trillion in total cash and investment holdings in 2011, a $351.9 billion or 13.2 percent increase from $2.7 trillion in 2010, according to new statistics from the U.S. Census Bureau. This follows a $288.7 billion gain from 2009 to 2010." (U.S. Census Bureau)

Liability-Driven Investing Strategies Grow in Complexity and Sophistication
"[M]ore than half (57 percent) of corporate pension sponsors continue to use liability driven investing (LDI). Now in its sixth year, the poll also found that of those organizations using LDI, more than half (52 percent) invest greater than 40 percent of the portfolio in an LDI strategy." (SEI)


Canadian Pensions Flying Off Course?
"The only real fix to the private sector's pension woes is bolstering defined-benefit plans using an approach that works. Companies need to focus on their core business, not pensions. Pensions should be managed by large well governed defined-benefit plans." (Pension Pulse)

Benefits in General; Executive Compensation

Year-End Action Items for Executive Compensation
"[1] Amend stock incentive plans to impose a meaningful annual limit on awards to non-employee directors -- or adopt a separate plan for them. [2] Compensation Committees should apply the six independence factors to any lawyers or consultants that provide advice, information, or material to the Committee. [3] Reevaluate your CD&A disclosure in light of the rash of lawsuits against public companies seeking to enjoin their annual shareholders meetings. [4] Review and revise the Compensation Committee Charter to reflect Dodd-Frank Act changes and some developing best practices." (Winston & Strawn LLP)

Trends In Stock Options, Restricted Stock and RSUs for Company Board Members
"At the median, the mix of pay for directors was 45% cash and 55% equity in 2011.... [E]quity awards to directors are now almost entirely restricted stock grants, and the number of Fortune 500 companies using stock options has dwindled to a "select group." The value of equity awards to directors has not been affected by volatility in stock prices because most companies base director grants on a fixed value rather than on a fixed number of shares." (myStockOptions.com)

2012-13 Towers Watson Talent Management and Rewards Survey (PDF)
"One reason may be the mismatch that often exists between what an organization offers and what employees are looking for.... Employees -- from recent college graduates to top talent in high-potential programs -- are focused more now on security issues and the broader employment deal. Many employers, on the other hand, continue to emphasize nonmonetary rewards such as challenging work and the organization's mission, vision and values." (Towers Watson)

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