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November 27, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Manager - Client Delivery
for Verisight, Inc. in CA

Manager of Retirement Plan Processing
for Aspire Financial Services in FL

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Webcasts and Conferences

Professionalism in the Everyday Life of an Actuary Webcast
Nationwide on November 30, 2012 presented by Society of Actuaries

Pension Risk Management in an Enterprise Risk Management Context Webcast
Nationwide on December 5, 2012 presented by Society of Actuaries

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[Official Guidance]

Maximum Guaranteed Pension Benefit From PBGC Is Increased
"The Pension Benefit Guaranty Corporation announced today that the yearly maximum guaranteed benefit for a 65-year-old retiree has increased to almost $57,500 from $56,000. Most retirees who get their pension from PBGC -- almost 85 percent -- receive the full amount of their promised benefit.... Beginning in 2013, the maximum yearly guarantee for a 65-year-old retiree is $57,477.24. The increase is not retroactive.... [A] chart shows the 2013 annual and monthly maximum benefit guarantees for retirees from ages 45 to 75." (Pension Benefit Guaranty Corporation)


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[Guidance Overview]

Notifying Participants of Changes to the Annual Fee Disclosure Report (PDF)
"The plan administrator must provide a description of any change (even if it is not a material change) in the annual required disclosure of certain plan-related information to participants at least 30 days and not more than 90 days before the change becomes effective. If this timeframe cannot be met as a result of unforeseeable events or circumstances beyond the plan administrator's control, the notice of change must be given as soon as reasonably practicable." (ING)

401(k) Industry Sounds Alarm Over Possible Tax Law Changes
"As the debate around tax reform grows more heated, broker-dealers and other companies that service retirement plans offered by employers are increasingly concerned that the tax benefits of 401(k) plans are on the chopping block.... A full-scale tax reform could cut or limit specific tax breaks as a way of lowering overall tax rates.... [T]rade groups representing both employers and financial services firms have voiced concerns that the tax benefits of 401(k) plans could be slashed." (Reuters)

8th Circuit: Employer Not Entitled to Restitution of $548K in Overpaid Contributions
"The employer mistakenly paid the contributions to the funds for work performed by its employees on projects that were outside the jurisdiction of the applicable collective bargaining agreement. The employer ceased making any CBA-required contributions after the funds determined that the employer was not entitled to credit for the overpayments.... [The Court of Appeals for the Eighth Circuit] determined that the employer demonstrated that it mistakenly made the overpayments but failed to demonstrate that restitution was equitable." [Greater St. Louis Construction Laborers Welfare Fund v. Park-Mark Inc., No. 11-3746, (8th Cir., 11/23/12)] (Bloomberg BNA)

DOL Releases 2010 Versions of Private Pension Plan Bulletins and Form 5500 Data
See the various links for 2010 under these headings: "Reports", "Excel Tables" and "XML Tables." (Employee Benefits Security Administration)


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Puerto Rico Races to Rescue Its Pension Fund
"Puerto Rico ... has to figure out how to salvage its retirement funds. After shortchanging them for years, it now has the weakest major public pension system in America. The main fund, which serves about 250,000 government workers, past and present, is only 6 percent funded ... and could run out of money as soon as 2014." (The New York Times; free registration required)

San Bernardino to Defer Contributions to State Retirement System
"San Bernardino, the second-largest U.S. city to seek bankruptcy protection, will put off paying $13 million to California's retirement system and $3.4 million for pension bonds issued in 2005, in a provisional spending plan." (Bloomberg BusinessWeek)

Will Fiscal Cliff Deal Harm 401(k) Investors?
"Increasing taxes, both directly through higher rates and indirectly through deduction reduction, acts as a double-edged sword.... But not all feel changing tax rates will have any real impact on 401k savings.... Financial professionals tend to agree lowering the retirement plan contribution limits would likely damage America's already fragile retirement system." (Fiduciary News)

Most Pre-Retirees Feel Unprepared for Retirement
"Twenty-five percent of the 33 million U.S. pre-retirees, surveyed, said they felt 'very prepared' for retirement, down from 30% of those surveyed in 2010. The study considered the pre-retiree population as people between the age of 55 and 70 who have not yet retired. Thirty percent of males said they were very prepared compared to 23% of females. Also, people with financial advisors seem to be in a better position with 39% of the very prepared already having advisors versus 20% who did not." (Financial Planning)

Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2011 (PDF)
"[T]he percentage of all workers (including part-time and self-employed) participating in an employment-based retirement plan moved from 39.6 percent in 2009, to 39.8 percent in 2010, to 39.7 in 2011. The increase in the number of workers participating in 2011 halted the three year decline from 2008-2010.... Among full-time, full-year wage and salary workers ages 21-64 (those with the strongest connection to the work force), 53.7 percent participated. This rate varies significantly across various worker characteristics and the characteristics of their employers." (EBRI)

IRS Adds Time for Section 436 Retirement Plan Amendments and Governmental Plan Determination Letter Submissions (PDF)
"The IRS had previously announced that it would not consider Section 436 amendments when it reviews plans submitted during the Cycle B submission period (February 1, 2012 through January 31, 2013) even though it required the submitted restated plan to include the amendment. By extending the Section 436 deadline, plan sponsors are not obligated to include the amendment that IRS is not planning to review in any event." (Buck Consultants)

Year-End 401(k) Plan Disclosures: Upcoming Deadlines
"Having distributed the first set of fee disclosure documents this summer and initial quarterly statements of plan fees and expenses this fall, it's time for 401(k) plan administrators to turn their attention to recurring year-end disclosure requirements. Upcoming deadlines include: Notice of automatic enrollment ... annual qualified default investment alternative (QDIA) notice ... safe harbor notices ... Quarterly benefit statements[.]" (Bloomberg BNA)

Wisconsin, Illinois Far Apart on Public Pension Funding
"Wisconsin and Illinois share the shoreline of Lake Michigan but when it comes to the health of their state public pension funds, they are polar opposites -- one sits at the top and the other at the bottom in a new ranking of U.S. states ... Wisconsin residents faced a liability of just $23 each for their state's public pension system, which was 99.8 percent funded in fiscal 2011. That contrasted with Illinois, where the funded ratio was just 43.4 percent." (The New York Times; free registration required)

Campaign for Los Angeles Pension Reform Measure Suspended
"Former Los Angeles Mayor Richard Riordan suspended on Monday his campaign to put a measure before voters to overhaul the second-largest U.S. city's pension system. Riordan concluded the campaign could not meet the deadline for gathering signatures to qualify the plan for the May 2013 ballot ... Riordan is reviewing options for the measure, including a potential effort to put it on the June 2014 city ballot." (Reuters)

DC Plan Design Could Be Coming to State and Local Pension Systems in Florida
"Overhauling the state's retirement program for new employees could result in big changes for government pension plans in Broward and Palm Beach counties. The shift would mean that city employees, rather than the employers, would be vulnerable to market downturns, and could risk losing their retirement funds. But advocates say the private-like plans would help employers better control retirement costs." (South Florida Sun-Sentinel)

How Retirement Plan Assets Have Changed Since 2007
"The retirement savings of American households took a big hit when the stock market crashed in 2008. Since then, however, a good portion of these losses has been reversed. This fact sheet reports the value of assets held in retirement accounts and defined benefit plans and how they have changed since 2007 -- before the stock market crash and the Great Recession." (Urban Institute)

SEC Chairman Schapiro to Step Down
"Schapiro's departure comes as the agency navigates through a flood of new mandates generated by the Dodd-Frank Act and a wave of enforcement matters stemming from the financial crisis that peaked in September 2008.... [Elisse] Walter, who served as interim chairman before Schapiro took over, will return to the helm as the agency works to implement Dodd-Frank rules ordered in response to the credit crisis and looks to overhaul oversight of the money-market mutual fund industry after Schapiro's initial effort ended in failure." (Treasury & Risk)

New SEC Chair Elisse Walter May Not Be Lame-Duck
"The nuance surrounding Ms. Walter's title is important. As designated chair, she is eligible to serve as head of the agency until late 2013. Currently an SEC commissioner, Ms. Walter's term in that role has expired, but she can stay at the SEC until the end of the next session of Congress, which likely will occur next December. Under Secretary of Treasury Mary Miller, former Bank of America Merrill Lynch chief executive Sallie Krawcheck and Ms. Walter are among those mentioned to succeed Schapiro on a long-term basis." (Investment News; free registration required)

Limiting the Withdrawal Liability Exposure of Private Equity Funds
"[A] recent district court opinion determined that two PE [private equity] funds and their bankrupt portfolio company were not a 'controlled group' and thus the PE funds were not responsible for pension liabilities at the portfolio company. The decision, Sun Capital Partners III, LP v. New England Teamsters and Trucking Industry Pension Fund, explicitly rejected a prior [PBGC] ruling on the same question and illuminated best practices for structuring future PE fund investments." (Pillsbury Winthrop Shaw Pittman LLP)

The Relationship Between Employee Mobility and Employer-Provided Retirement Plans
"[The authors] find evidence that employees with higher mobility tendencies self-select into the DC plan. Furthermore, [they] find a negative direct effect of DC enrollment on turnover that takes place within one year.... [R]esults suggest that selection likely contributes to an observed positive relationship between the transition from DB to DC plans and employee mobility in settings where employees choose plans or employers." (Center for Retirement Research at Boston College)

Pennsylvania Confronts $41 Billion Pension Deficit
"The Pennsylvania State Employees' Retirement System, Harrisburg, has 65% of assets needed to cover projected liabilities, and the Pennsylvania Public School Employees' Retirement System, also in Harrisburg, is 69% funded, the report said. The school employees pension plan has $47.9 billion in assets; Pennsylvania State Employees has $25 billion." (Pensions & Investments)


Exposing the Massive Retirement Funds for CEOs and the Underfunded Workers' Pensions at Companies Advocating Social Security Cuts
"A major player in the national debt debate, the 'Fix the Debt' campaign, is arguing that cuts to Social Security and Medicare are necessary to avoid economic disaster. Meanwhile, the corporations leading this campaign are contributing to Americans' retirement insecurity by funneling enormous sums into their CEO retirement accounts while underfunding their employee pension funds." (Institute for Policy Studies)


California City Rushing to Increase Pension Benefits
"In a bizarre twist on pension reform, Antioch leaders are considering increasing retirement benefits for future employees hired from other cities.... City officials claim the change is needed to help Antioch compete for experienced cops. But a comparison shows Antioch pension benefit levels match or exceed 10 of 15 nearby cities. Moreover, the officials made no effort to figure out the cost of the change." (Contra Costa Times)


Los Angeles Should Keep Pension Reform Discussion Going
"With former Mayor Richard Riordan ... suspending his effort to put the pension measure on the May 21 ballot, voters will now get to decide whether to pay more but not whether to ask the city to pay less. [The authors] had misgivings about Riordan's proposal, but its premature disappearance closes off discussion of a genuinely important issue and eliminates a possible solution to L.A.'s budget problems.... Independent study of the plan's costs and benefits was sorely needed, but now that it's off the ballot, that's not in the cards." (Los Angeles Times)


The 401(k) Is a $240 Billion Waste of Tax Expenditures
"[A]ccording to a new paper, most households wouldn't sock away any less for their golden years if we eliminated 401(k)s. Which raises a $100 billion question... Why subsidize retirement saving if the subsidies don't work? As far as tax expenditures go, the one for retirement savings is a biggie." (The Atlantic)

Benefits in General; Executive Compensation

Which Benefits Do Your Employees Value Most?
"[B]enefits that provide instant gratification are preferred over those that could produce more long-term value. Where an additional salary increase was offered ... it was preferred over all other options offered.... Employer contributions to DC or other retirement savings plans are also popular benefits, making the top three in four of the 9 markets: the U.S., Canada, Brazil and Italy." [Editor's note: Summaries for specific geographic markets as well as Global Survey Findings are available at the link.] (Mercer Marsh Benefits Research; free registration required for full report)

DOL Adds to Hurricane Sandy Relief for Benefit Plans (PDF)
"While the news release does not specifically mention the special deadline for employers of fewer than 100 employees to remit participant contributions and loan repayments (not later than the seventh business day following the day on which such amounts are received by the employer), there is no reason to believe that the relief does not also extend to such employers." (Buck Consultants)

Distribution to Employees of MLR Rebate Received by Employer Could Be 'Compensation' for Retirement Plan Purposes
"Any employers that returned all or a portion of the [medical loss] rebate to participants should (i) review the definition of "compensation" for their qualified retirement plans to determine whether the rebate amount would be 'compensation' for purposes of the plan; and (ii) work with their payroll departments or outside payroll providers to ensure that these rebate amounts are properly coded for retirement plan purposes." (Haynes and Boone, LLP)

Case at Supreme Court: Do Equitable Defenses Preclude ERISA Plan Subrogation Rights?
"The case will most likely have a huge impact on ERISA reimbursement. ... A very tough factual case -- McCutcheon was seriously injured and is now disabled. His attorneys already took 40% of the very limited settlement proceeds -- the tortfeasor had little or no assets or insurance; if the ERISA plan wins, McCutchen will have little or no recovery. Tough facts could result in some bad law." (Lane Powell PC)

What Is 'Appropriate Equitable Relief' Under ERISA in a Subrogation Case?
"Individuals who participate in a benefit plan sponsored by their employer are often entitled to have medical expenses paid for by the plan if they are injured. But if the employee later sues a third party responsible for the injury and recovers damages, to what extent is he or she obligated to reimburse the plan? And does the answer change if (as is frequently the case) a significant percentage of the damages award goes to pay the employee's attorneys? These are the questions that the Supreme Court will consider [on Nov. 27, 2012] when it hears arguments in U.S. Airways, Inc. v. McCutchen." (SCOTUSblog)

CBO Cost Estimate for S.1910, The Domestic Partnership Benefits and Obligations Act of 2011
"S. 1910 would make same-gender domestic partners of certain federal employees ... eligible to receive the same employment benefits as married spouses of federal employees ... [including] health insurance, survivor annuities, compensation for work-related injuries, and travel and relocation benefits. CBO estimates that enacting S. 1910 would decrease net direct spending by $13 million between 2013 and 2022. Pay-as-you-go procedures apply because enacting the legislation would affect direct spending. Over the same period, CBO estimates that implementing the bill would have a discretionary cost of $144 million, assuming appropriation of the necessary funds." (Congressional Budget Office)

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