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BenefitsLink Retirement Plans Newsletter

December 10, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

401(k) Retirement Plan Associate
for Delaware Valley Retirement, Inc. in PA

Assistant General Counsel - Welfare Benefit Plans
for Insperity in TX

401(k) Pension Administrator
for Nicholas Pension Consultants in CA

401K & Pension Relationship Manager
for Paul Global Benefits in NY

Retirement Plan Consultant
for Sentinel Benefits & Financial Group in NY

Plan Administrator
for SMI Pensions in CA

Associate Pension Administrator
for Alliance Pension Consultants, LLC in IL

Medical Review Specialist
for Prudential in NJ

Registered Nurse (RN), Disability Case Manager
for Prudential in AZ, ME, NJ

401(k) Plan Third Party Administrator
for Applied Pension Services, LLC in NY

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Webcasts and Conferences

Wellness Programs: Overcoming Compliance Hurdles and Looking Toward 2014
Nationwide on January 10, 2013 presented by Thomson Reuters / EBIA

Controlled Groups
Nationwide on December 14, 2012 presented by McKay Hochman Co., Inc.

Ethics and Circular 230
Nationwide on December 13, 2012 presented by McKay Hochman Co., Inc.

Pension De-Risking for Employee Benefit Sponsors Webinar
Nationwide on January 16, 2013 presented by Strafford Publications

Will Employers Play or Pay? Health Care Reform�s Shared Responsibility Provision
Nationwide on December 5, 2012 presented by Thomson Reuters / EBIA

View All Webcasts and Conferences


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[Official Guidance]

Text of IRS Notice 2012-76: 2012 Cumulative List of Changes in Retirement Plan Qualification Requirements (PDF)
"The 2012 Cumulative List is to be used by plan sponsors and practitioners submitting determination letter applications for plans during the period beginning February 1, 2013 and ending January 31, 2014. Plans using this Cumulative List will primarily be single employer individually designed defined contribution plans and single employer individually designed defined benefit plans that are in Cycle C, and Section 414(d) governmental plans (including governmental multiemployer or governmental multiple employer plans) that choose to file during Cycle C." (Internal Revenue Service)


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[Official Guidance]

Text of Proposed FSOC Recommendations Regarding Money Market Mutual Fund Reform (PDF)
"The Council is seejubg public comment on proposed recommendations that the Council may make to the [SEC] to implement structural reforms for money market mutual funds (MMFs). [These Recommendations provide] an overview of MMFs, an outline of the history of reform efforts and the role of the Council, the Council's proposed determination that MMFs' activities and practices create or increase certain risks, three proposed alternatives for reform, and an assessment of the impact of the Council's proposed recommendations on long-term economic growth. In addition, the Council is requesting public comment on alternative structural reforms for MMFs. Comment due date: January 18, 2013." (Financial Stability Oversight Council)

Verizon Retirees Lose Bid to Block Pension Annuitization
"'Plaintiffs have failed to establish a substantial likelihood that Verizon has a specific intent to interfere with their rights,' [U.S. District Court Judge Sidney A.] Fitzwater wrote ... 'They do not offer a rebuttal to Verizon's proffered legitimate, nondiscriminatory reasons for defining the group of retirees for the annuity contract.'" (Treasury & Risk)

Verizon and Prudential Say Annuities 'At Least' as Safe as DB Pensions
"All sides agree that the handover would strip all 41,000 members involved of the [ERISA] and [PBGC] protections. As annuity holders, the retirees will instead fall under insurance guaranty regulations, which the complaint alleges are 'an inferior safety-net.' Not so, says Prudential. In fact, the insurer's response, filed with a Dallas district court on December 5, claims Verizon's pensions would be safer as annuities." (aiCIO)

Borzi: DOL to Offer New Version of Fiduciary Rule in 'Several Months'
"'We're not finished" with the rule', [EBSA Assistant Secretary of Labor Phyllis Borzi said]. 'When people see the reproposal, reasonable people with open minds will say [DOL] listened, that [DOL] addressed the legitimate issues that were raised in the long comment process.' Added Borzi: 'The reproposal will be better, clearer, more targeted and more reasonably balanced.'" (Advisor One)


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Incenting Retirement: Navigating the Legal Issues - January 17, 2013

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Rhode Island Court Hears Arguments in Case Challenging State Pension Changes
"The outcome of the case could have far-reaching implications as states around the country wrestle with nearly $1.4 trillion in unfunded pension promises. Rhode Island, which had struggled with one of the most underfunded systems in the nation, drew national attention when lawmakers voted last year to suspend pension increases, raise retirement ages and merge pensions with 401(k)-style accounts to reduce its pension bills by an estimated $4 billion over the next two decades." (The New York Times; free registration required)

IBM Reins In Its 401(k) Plan
"Starting next year, IBM's contributions, which generally range from 6% to 10% of pay, will take place Dec. 31. Workers who leave the company before Dec. 15 won't qualify for the match, unless they retire. IBM's switch is the latest in a series of moves big companies have been making to rein in retirement-plan expenses in recent years -- and the financial implications for employees could be significant." (The Wall Street Journal)

IBM's Plan for Once-A-Year 401(k) Match Draws Mixed Reviews
"'The research is mixed on the impact of matching contributions on participant behavior,' Lori Lucas, executive vice president and defined contribution practice leader at Callan Associates Inc., San Francisco, said ... 'Switching to an annual matching structure could reduce employee savings in the 401(k) plan, as participants usually list the match as the No. 1 reason they invest.'" (Pensions & Investments)

Plan Sponsors Largely Optimistic About Fee Disclosure Regulations But Say They Need Help from Advisers
"Despite their optimism, the survey showed that sponsors need, and are open to, plan advisers helping them with fee disclosure. Sponsors are concerned about the time consumption of fee disclosures; the use of resources that could be better used for other purposes; and an increase in participants challenging plan decisions." (PLANSPONSOR.com)

Retirement Options Grow As Gay Boomers Find More Mainstream Acceptance
"The generation of gays and lesbians that literally created the modern LGBT movement -- from the heroes of the 1969 Stonewall riots to their slightly younger friends -- is at, or nearing, retirement age. That used to mean the beginning of an extremely difficult time in an LGBT person's life. But as gay baby boomers find more acceptance in mainstream society and continue to do what they've always done -- push to make a better world for the LGBT community -- their retirement options are slowly improving. That is, if they decide to retire at all." (CNN)

DC Plans Aiming High, Shooting Low on Best Practices
"DC plan executives have lofty goals for their participants, with 20% saying their optimal annual savings rate should be more that 15%, while 19% say the rate should be 14% to 15% and 39% advocate 10% to 13%. But those executives don't always back those words with actions ... The most-offered default rate in auto-enrollment programs remains the traditional 3%, a rate the ... survey said could be increased to help participants achieve higher retirement savings." (Pensions & Investments)

Oregon Retirees May Lose in Pension Reform Proposal
"[Oregon] Gov. John Kitzhaber's proposal to slow the growth of pensions distributed by the Public Employees Retirement System ... has already riled unions and concerned public workers, but the numbers show reforms would have little impact on low-income pensioners over a decade. Retirees with larger pensions, however, could stand to lose thousands of dollars over time. For example, the average retiree with 30 years of service could stand to lose more than $4,000 per year." (StatesmanJournal.com)

Pension Plan Funding Even Worse Off Than Sponsors Thought
"[A]n easy-to-miss subtlety is likely to have a major impact on the 'discount' interest rate ... During 2011, markets perceived that bank bonds had become riskier, so their yields went up. But typically ... debt-rating agencies don't get around to dropping ratings on bonds until well after the markets sense changes in their riskiness.... The effect is that while average interest rates within the entire universe of investment-grade bonds fell from about 5.0% to 4.5% this year, the decline just for AA-rated bonds was twice as steep, from about 4.8% to 3.8%[.]" (CFO)

Illinois Pension Crisis: Could It Happen in California?
"Illinois state pension systems are the worst-funded in the nation -- called a 'crisis' by the governor, 'unfixable' by a Chicago business group -- and they share a problem with CalSTRS: years of deliberate underfunding.... Like other pension funds, the five Illinois state pension funds were hit by big investment losses during the decade. But what sets Illinois apart, with a funding level that fell to 38 percent, is the failure to make actuarially required contributions." (CalPensions)

Even Boomers With Pensions Will Retire With Debt
"While baby boomers with pension plans are more likely to retire at or before the traditional age of 65 than those without pensions, they still wish they had done more to save for retirement ... Nearly half (48%) expect to retire with debt, primarily mortgage payments followed by credit cards, car payments and student loans for either themselves, their spouse or their children." (Financial Planning)

The Case for Fixed-Income Annuities
"So far this year, somewhere around $34 billion worth of fixed-income annuities has found its way into Americans' retirement portfolios. Though that's well below the $80 billion in variable annuities purchased, the gap is closing. And there is good reason to think it will close further." (Investment News; free registration required)

FTSE350 Pension Plan Liabilities Reach 2012 High
"[T]he estimated aggregate IAS19 deficit for the defined benefit [plans] of the FTSE350 companies stood at 61B GBP (equivalent to a funding ratio of 90%) at 30 November 2012. This compares to a deficit figure of 55B GBP at the end of September (funding ratio of 90%) and a figure of 61B GBP at the end of December 2011 (funding ratio of 89%), using a like for like measure." (Mercer)

[Opinion]

Illinois Pension 'Reform' Is a Step Backward
"Foremost in its regression is language that impairs and diminishes the constitutionally guaranteed pension benefits being received by current retirees. There is one indisputable fact that cannot be ignored: cutting or diminishing benefits to those already retired is a violation of the Illinois Constitution." (Chicago Sun-Times)

[Opinion]

The Challenge of Transferring Pension Risk
"Does GM's transaction open the door to more big pension risk transfer deals? It is already happening. Verizon has gone ahead [with announcing] a similar transaction, about one-third the size of what [GM] did. And CFOs and treasurers are looking at [GM's] transaction to see if it could make sense for them. But it will be different for each company." (Treasury & Risk)

[Opinion]

U.S. Financial Stability Oversight Council Proposes Recommendations for Money Market Fund Reform (PDF)
"The money fund industry continues to face regulatory uncertainty due to the Proposed Recommendations and other potential actions that the FSOC or the Federal Reserve may take, if the SEC does not take action.... Undertaking reforms without adequate consideration and analysis of the economic impact on the industry, investors, corporate issuers and state and local governments, however, raises the danger that the cure might be worse than the disease, with reforms having a greater detrimental impact on the U.S. economy than the perceived risk exposures that the regulators are seeking to address." (Dechert LLP, via The SPARK Institute)

Benefits in General; Executive Compensation

Form 5500 for 2012 Plan Year Released
"There are few new elements in the 2013 Form 5500 and related materials, but familiarity with the changes is advisable in order to ensure complete and accurate plan filings. In particular, plan administrators should pay close attention to the signature requirements to reduce the likelihood that a filing will be rejected for electronic signature problems." (Thomson Reuters / EBIA)

Press Releases

Legal Plans Named a Voluntary Product to Watch in 2013
Hyatt Legal Plans, a MetLife company

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