[Official Guidance]
Text of PBGC Annual Report for 2012 (PDF)
"In FY 2012, [PBGC] stepped in to pay nearly 17,000 retirees already receiving monthly checks. All continued to receive their benefits without interruption.... PBGC paid $5.4 billion in benefits in FY 2012 to more than 836,000 retirees in single-employer plans.... PBGC's combined financial position declined by $8.34 billion, increasing the deficit to $34.38 billion as of September 30, 2012, from $26.04 billion as of September 30, 2011. The single-employer program's net position declined by $5.88 billion, increasing the program's deficit to $29.14 billion. The multiemployer program's net position declined by $2.47 billion, increasing its deficit to $5.24 billion. These deficits are all time record highs at year-end for both the single-employer and multiemployer programs."
(Pension Benefit Guaranty Corporation)
|
IRS Relaxes Retirement Plan Loan and Hardship Distribution Rules for Hurricane Sandy Victims
"[T]he six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply. This broad-based relief means ... that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.... Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features. In addition, the plan can ignore the limits that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement as described in the Announcement."
(Financial Planning)
|
[Guidance Overview]
Retirement Plans Can Make Loans, Hardship Distributions to Sandy Victims
"401(k) plan participants, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, and state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures. Retirement plans can provide this relief to employees and certain members of their families who live or work in the disaster area. To qualify for this relief, hardship withdrawals must be made by Feb. 1, 2013."
(Internal Revenue Service)
|
PBGC's Joshua Gotbaum Wants to Fix Retirement System, Not Just His Agency
"But fixing the PBGC's problems is not Gotbaum's primary goal. As the head of what is fast becoming the defined benefit pension provider of last resort, he has joined the ranks of industry leaders out to remake the U.S. retirement system. 'As a first principle, we need to find a way to make it easier and less expensive for employers and enable employees to achieve secure retirements,' says Gotbaum. If done correctly, that would ultimately put the agency out of business."
(Institutional Investor)
|
PBGC Director's Message on Release of PBGC 2012 Annual Report
"In 2003, the Government Accountability Office added PBGC to its 'High Risk' list of agencies, because we control neither the benefits we pay nor the premiums we charge. Congress has repeatedly raised PBGC's premiums, but they remain too low to fund our obligations. That's why, nine years later, we remain on GAO's High Risk List [said PBGC Director Josh Gotbaum in a prepared statement.]"
(Pension Benefit Guaranty Corporation)
|
PBGC Runs Record $34B Deficit
"Pension obligations grew by $12 billion to $119 billion last year. Assets used to cover those obligations increased by only $4 billion to $85 billion. The agency has now run deficits for 10 straight years. The gap has grown wider in recent years because the weak economy has triggered more corporate bankruptcies and failed pension plans."
(The New York Times; free registration required)
|
Pennsylvania Pension Costs to Wreck Balanced Budget in Coming Years
"An annual economic and budgetary projection from [Pennsylvania's] Independent Fiscal Office, a state equivalent of the Congressional Budget Office, forecasts 0.8 percent revenue growth this year and 3 percent annual growth for the state's revenues in the next five year. Pension costs are projected to climb by 46 percent in this year's budget and 42 percent in next year's budget."
(Delaware County Daily Times)
|
Professor Munnell Tells the Real Story of Public Pensions
"Alicia H. Munnell's new book, 'State and Local Pensions: What Now?', is essential reading for anyone who wants to move beyond the conventional wisdom and gain a real understanding of public-employee pensions. Much of that conventional wisdom, it turns out, is wrong.... Overall, Munnell's main message is probably that, in her words, we should 'dispense with some of the hysteria' over public pensions. The issues confronting state and local pensions, while not trivial, are manageable. Well, maybe not in every case. In Illinois and possibly Kentucky, she says, 'they should be hysterical.'"
(Governing)
|
EBSA Video: 'Choosing a Retirement Solution for Your Small Business'
This 24-minute video addressed to employers probably will begin playing immediately on your computer as a .WMV file using Windows Media Player. From EBSA: "The Choosing a Retirement Solution for Your Small Business video helps small employers and accountants understand the various options for providing a retirement program through four real-life experiences."
(Employee Benefits Security Administration)
|
|
|
401(k) Lawsuits, Investment Advisers and Fiduciary Breach
"One wonders if financial professionals ever tire of new rules, regulations and the pressures of trying to do their job while avoiding liability landmines at the same time.... RIAs may soon be tussling with another regulatory body if the Financial Industry Regulatory Authority ('FINRA') ... wins the battle to regulate financial advisors."
(Good Risk Governance Pays)
|
Getting a Second Wind, DOL Likely to Breathe Harder on ERISA Advisers
"Financial advisers and broker-dealers can expect a re-energized Labor Department to step up enforcement actions and investigations next year, thanks to the election. With President Barack Obama winning four more years in the White House, Assistant Secretary of Labor Phyllis Borzi is assured of keeping her post as head of the Employee Benefits Security Administration, where she is likely to push the enforcement of disclosure rules passed this year for plan sponsors and plan participants."
(Investment News; free registration required)
|
The Great Recession: Pressures on Public Pensions, Employment Relations and Reforms
Findings include: "Public employers would attract a different labor force if they switched retirement benefits away from pensions.... Employee turnover would increase under individual DC accounts and cash balance plans.... Moving from a pension structure would result in higher cost for public employers and employees because of higher investment and administrative costs for alternative retirement plans. Public employers and employees overwhelmingly choose to stay with pensions rather than moving to alternative benefits when faced with a choice, illustrating the high value of pensions to public sector employers and employees."
(National Institute on Retirement Security)
|
Beneficiary Designation Dispute Offers Harsh Reminder Concerning Preventable Plan Administration Expenses
"The plan administrator therefore had to decide which of these two groups was entitled to split Mr. Hunter's money. If the stepsons were his 'children' under the plan, they would be his beneficiaries. If not, then his siblings would receive the benefit. The plan's ambiguity as to the definition of this single word ('children') caused the administrator and sponsor to be dragged into court. The litigation lasted several years, leading all the way to the United States Court of Appeals for the Fifth Circuit -- just one step short of the U.S. Supreme Court."
(Spencer Fane)
|
A Common Plan Mistake: Failure to Timely Allocate Forfeitures
"Among the most common reasons for failing to timely allocate forfeitures are the following: A plan sponsor or TPA fails to monitor the plan's forfeiture account to ensure that forfeitures generated during a plan year are used according to the plan's terms. A plan sponsor and TPA both assume that the other party will be taking care of the forfeitures -- and neither does so. A plan sponsor erroneously assumes that it has discretion over how and when forfeitures held in a suspense account are to be applied."
(Spencer Fane)
|
Cypen & Cypen Newsletter for November 15, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: [1] Is Shrinking Number of DB Plans All Bad? [2] American Airlines Catches Big Pension Plan Tail Wind; [3] An Update To National Retirement Risk Index; [4] Will Your Benefits Be There When You Get There? and [5] Ten Things 401(K) Plans Will Not Tell You.
(Cypen & Cypen)
|
Hostess Brands to Terminate Pension Plan As Part of Liquidation
"Hostess suspended payments to the 42 multiemployer pension plans to which it contributes in August 2011.... The company's IBC Defined Benefit Plan had about $56 million in assets and $111 million in liabilities as of April 30, according to the PBGC."
(Pensions & Investments)
|
[Opinion]
Ding Dong, the Pension is Dead
"What [the Multiemployer Pension Plan Amendments Act of 1980] created was a bankruptcy machine that leaves employers participating in underfunded Multiemployer Defined Benefit Plans little other choice. Hostess was paying $22 million in contributions annually into This Dead Plan and wanted out. What they would have found is a draconian barrier called withdrawal liability which places the entire burden for making up shortfalls on employers who were silly enough not to jump ship earlier and allows the union very favorable terms for calculating this liability.... In this rigged game folding up was the only sensible option."
(Burypensions)
|
[Opinion]
Groups Defend 401(k) Plans' Tax Incentives
"As President Barack Obama and Congress grapple with proposals to reduce the U.S. federal budget deficit ... groups that represent retirement plan sponsors are emphasizing the importance of maintaining existing tax incentives for contributions to 401(k) and other employer-provided retirement plans.... [T]he Coalition to Protect Retirement, an alliance of groups working to safeguard retirement savings plans ... recently launched a website, 'How America Saves,' that encourages contacting members of Congress to tell them 'there should be more -- not fewer -- incentives to save.'"
(Society for Human Resource Management)
|
[Opinion]
The Effects of Tax Reform and Deficit Reduction on Employee Benefits (PDF)
"Currently, tax-qualified retirement plans hold $16.6 trillion in assets, of which about $13 trillion is attributable to employer-provided plans. This pool of capital helps to finance productivity, enhance investments and encourage business expansion. Changes to the tax treatment of retirement plans could have a negative effect on capital markets, which legislators must consider."
(Society for Human Resource Management)
|
[Opinion]
Ontario Advised to Save Expenses by Pooling Assets of Multiple Agencies Into Single Managed Pension Fund
"Once again, Ontario demonstrates leadership in being at the forefront of public pension management. By pooling these assets, it's doing what British Columbia and Alberta are doing and can even set the standard that other provinces should follow ... [W]e need new thinking in tackling corporate Canada's pension deficits. Public sector pensions are in much better shape but even there, much needs to be done to address pension funds dragging down cities. Ontario's proposal to pool public sector pension assets is definitely a step in the right direction."
(Pension Pulse)
|
[Opinion]
Text of Letter to Treasury Department on Nondiscrimination Rules for Frozen Pension Plans (PDF)
"Many companies are transitioning away from a defined benefit plan benefit formula in one of various ways. This can arise, for example, by reason of (1) closing the plan to new hires, (2) converting the plan from a traditional plan to a hybrid plan, or (3) moving acquired employees from disparate benefit formulas to a uniform benefit formula. In the context of such transitions, it is not unusual for companies to grandfather some or all of the existing employees under the benefit formula in effect.... These 'grandfathering' arrangements are very helpful to the older longer service employees who often have made retirement plans based on the benefit formula previously in effect."
(American Benefits Council)
|
[Opinion]
PBGC's Deficit Announcement a Non-Event, Says American Benefits Council
"'The public should not be led to believe the PBGC is in danger of a bailout and Congress and the Obama Administration should not use this number as a pretext to raise premiums paid by pension plan sponsors,' American Benefits Council President James A. Klein said .... 'As employer pension plan sponsors have repeatedly pointed out, all pension fund liabilities -- including the PBGC's -- are overstated by the historically low interest rates of the past several years. Keeping interest rates low is good policy to stimulate the economy, but it has the perverse effect of making very secure pension funds -- and the PBGC's own situation -- appear underfunded[.]'"
(American Benefits Council)
|
|
Benefits in General; Executive Compensation
|
[Guidance Overview]
Overview of 2012 Year-End Amendments for Retirement and Cafeteria Plans
"There are no interim amendments needed for ongoing DC plans in 2012.... All defined benefit plans must adopt a [Section] 436 interim amendment by the last day of the 2012 plan year (IRS Notice 2011-96).... There are currently no amendments required in 2012 for ongoing 457(b) plans.... An amendment is technically not needed [for cafeteria plans] in 2012, but one may be needed in 2013 ... [if the plan] includes a health care flexible spending account (health FSA) with a limit over $2,500[.]"
(SunGard Relius)
|
Beware of Section 409A Traps in Employment Agreements
"[F]ailure to comply with section 409A results in expensive tax issues not for the employer, but for the executive, including income tax on any amounts deferred under the agreement retroactive to the first year the agreement violated section 409A, interest on the unpaid taxes, and an excise tax payable by the executive (not payable by the employer) of 20% of the income recognized. [This article discusses] some of the more common section 409A compliance issues as they relate to employment agreements."
(EisnerAmper LLP)
|
ISS Releases 2013 Policy Updates
"Acknowledging the comments received during ISS' 2012 comment period, ISS will be taking a case-by-case approach in determining whether pledging rises to a level of serious concern for shareholders. Also in response to comments, ISS is including significant pledging of company stock as a failure of risk oversight and thus considered a governance failure whereby directors should be held accountable.... Realizable pay is being added to the research report for large capitalization companies."
(Dodd-Frank.com, a blog by Leonard, Street and Deinard)
|
ISS Releases Final Policies for 2013 -- Share Pledging Addressed
"In the 2013 Update, ISS indicates, by footnote, that 'under extraordinary circumstances,' ... hedging of company stock and significant pledging of company stock by directors and/or executives could be considered a failure of risk oversight that could lead ISS to vote AGAINST or WITHHOLD from directors individually, committee members, or the entire board."
(Winston & Strawn LLP)
|
Postal Service Posts Record Loss, Wants Pension Cash Freed Up
"The Postal Service had a record loss of nearly $16 billion in fiscal 2012 ... [T]he agency said $11.1 billion of its losses were related to two payments to prefund its retiree health benefits. The Postal Service again said that solvency is within its reach, but this requires congressional action, including the elimination of the prefunding requirement."
(FierceGovernment)
|
After the Storm: Employers' Obligations After Sandy
"Between the devastation caused by the storm itself, power outages, and transportation shutdowns, employers were forced to close business or operate on a significantly reduced basis for days, and, in some cases, weeks. Nevertheless, companies must still satisfy certain obligations as employers. While situations vary considerably from employer to employer, here is a summary of key issues and employer obligations post Sandy[.]"
(Orrick)
|
IRS Announces Tax Relief for Leave Donations to Aid Hurricane Sandy Victims
"The IRS has previously provided relief for leave-based donation programs in two other instances -- in the aftermath of the September 11, 2001 terrorist attacks (see our article) and for victims of Hurricane Katrina (see our article). The special relief granted in this notice automatically expires on December 31, 2013."
(Thomson Reuters / EBIA)
|
|
Press Releases
|
|
|
|
|
|
|
