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[Official Guidance]
DOL Fact Sheet: Proposed Amendments to Abandoned Plan Program
"The Department is proposing to expand the Abandoned Plan Program to assist bankruptcy trustees in distributing assets from bankrupt companies' individual account retirement plans. Bankruptcy trustees would be able to use the Program's streamlined plan termination and benefit distribution procedures. By extending the Program to plans of companies in chapter 7 bankruptcy, the proposal would enable bankruptcy trustees to better discharge their fiduciary obligations, distribute retirement benefits to participants more quickly and efficiently, and decrease the likelihood that participants' accounts would be reduced by excessive and unnecessary fees."
(Employee Benefits Security Administration)
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[Guidance Overview]
DOL Issues Proposed Amendments to Regs on Abandoned Plans and PTE 2006-06
"Under the proposed amendments: Chapter 7 Plans would be considered abandoned when the Bankruptcy Court enters an order of relief in the plan sponsor's bankruptcy proceeding. The bankruptcy trustee or a designee would be eligible to terminate and wind up Chapter 7 Plans using procedures similar to those provided under the program. The proposed amendments generally apply the same provisions to Chapter 7 Plans as are currently in place under the Abandoned Plans Regulations, with modifications to reflect fundamental differences between Chapter 7 Plans and abandoned plans."
(Practical Law Company)
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[Guidance Overview]
EPCRS Provides Flexibility for Unlisted Failures and Corrections
"One of the most important things EPCRS (Rev. Proc. 2008-50) gives us is a list ... of common failures and how to correct them.... But EPCRS gives us something else as well: flexibility. The plan can correct an eligible failure even if it is not on the list. Even if the failure is on the list, the plan can follow a different correction methodology. The list is essentially a set of safe harbors, but the ability always exists to fashion an alternative, although without any assurance that the IRS will accept that alternative unless the plan administrator files under VCP."
(SunGard Relius)
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[Guidance Overview]
Puerto Rico Hacienda Provides Last-Minute Extension to Deadlines for Retirement Plan Amendments (PDF)
"CL 12-09 extends the deadline for amending both dual-qualified plans and Puerto Rico-only qualified plans from December 31, 2012 to the later of: [1] June 30, 2013; or [2] The last day of the first plan year beginning on or after January 1, 2012. As a result, a plan with a calendar plan year has an amendment deadline of June 30, 2013. A plan with a plan year beginning on October 1, has a September 30, 2013 amendment deadline."
(Prudential)
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CalPERS Bankruptcy Strategy Pits Retirees vs. All Others
"CalPERS is arguing that all of its debt should be treated as an administrative claim, which means only a handful of creditors would be paid first, such as the lawyers and financial advisers working on the bankruptcy case ... 'What CalPERS is trying to do is rewrite the priorities of the bankruptcy code,' [said] Kenneth N. Klee, who helped revise Chapter 9 of the U.S. Bankruptcy Code in the 1970s[.]"
(Bloomberg BusinessWeek)
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Little Rhody Gets Big Pension Push
"Rhode Island's rollback of public-employee retirement benefits has turned the small state into a national battleground over pensions. But little known is that a key player in the campaign to curtail pension costs in Rhode Island was financed, in large part, by a Houston billionaire who sees the state as an opening salvo in a quest to transform retirement systems nationwide."
(The Wall Street Journal)
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De-Risking Your U.S. Pension: Choices and Challenges
"The steps taken by Verizon provide important reminders to employers seeking to protect themselves in de-risking situations: [1] Have an independent fiduciary in place to assist with implementation of settlor decisions to buy annuities. The selection of an annuity provider is a fiduciary action. [2] Make sure your operations follow plan documents and consider adding provisions directing the purchase of annuities. A plan amendment may be appropriate or necessary once the decision to annuitize has been made. [3] Disclose the possibility of annuitization in summary plan descriptions. [4] Record the basis for decisions in Minutes that are comprehensive and clear."
(Osler, Hoskin & Harcourt LLP)
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Employer-Sponsored 401(k) Plans Would Drop 'Significantly' if Tax Treatment Curtailed
"'[V]irtually all employers polled (91%) believe the exclusion of 401(k) contributions from current income taxation is important to their workers' decision to contribute to the plan and seven in ten employers (72%) think their workers contribute more than they otherwise would as a result of the exclusion," noted James Klein, president of [the American Benefits Council]."
(Advisor One)
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Even Non-IBM Plan Participants Kind of Blue Over IBM's 401(k) Surprise
"Advisers note that this might be a good time for workers to think about the role they play in shaping the outcome of their own retirement -- particularly if they lose the benefit of having an employer match at each paycheck and have to contend with a large lump sum at the end of the year. One obvious problem: Workers lose the benefit of dollar cost averaging under such a setup."
(Investment News; free registration required)
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Few DC Participants Using Auto Escalation
"Among DC plans with more than 1,000 employees,... [R]esearchers found that although 51% of participants said they wanted auto escalation and 48% of plans offered it, only 19% of participants are enrolled in it ... When [researchers] looked at a broader group of plans -- from those with more than 1,000 participants to those with fewer than 25 employees -- [they] found that 49% of participants wanted auto escalation, but only 18% participated. Among the smallest plans, 53% of participants said they wanted auto escalation, but only 13% of these plans with fewer than 25 employees offered it[.]"
(Pensions & Investments)
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Would Use of Means Testing Help Social Security? (PDF)
"Advocates argue that means testing would reduce costs to the Social Security program. But such a move could have serious unintended consequences, including erosion of public support for Social Security, savings disincentives during working years, and administrative complexity. Social Security already includes an 'earnings test' based on the principle that Social Security payments should replace lost earnings, and it is therefore appropriate to reduce benefits for those whose earnings indicate that they have not yet retired. Policymakers seeking to avoid means testing could achieve much of the same results by adjusting the benefit formula for highly compensated individuals or by increasing the taxation of Social Security benefits at a higher rate than the one currently used."
(American Academy of Actuaries)
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Virginia Pension Managers Get Bonuses Despite Declining Performance
"Investors for the Virginia Retirement System used to get bonuses based on the pension fund's performance. No one received a bonus in fiscal year 2009, and afterward the fund's trustees changed the system so that they -- and not a performance benchmark -- would decide who got a bonus. A year after the system was changed, VRS employees shared $2 million in bonus payouts even though the pension fund did worse than in 2009 ... After meeting benchmarks in 2012, staff split about $3.7 million, roughly the same amount employees received in 2011, when goals were not hit."
(The Examiner)
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Virginia's Bonus Bonanza?
"In the US, some large pension funds have started a crusade against fees but few have the compensation system to attract and retain qualified investment managers in public and private markets. None of them have internalized public and private assets to the extent large Canadian public pension funds have."
(Pension Pulse)
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Lockheed Martin Offers Lump Sums to Some Former Salaried Non-Union Employees
"The offer went out to about 33,000 former employees who have a vested pension benefit and have yet to retire, who terminated employment before Dec. 31, 2011.... As of Dec. 31, the fair value of plan assets of the firm's defined benefit plans totaled $27.3 billion, while projected benefit obligations totaled $40.6 billion, for a funding ratio of 67.2%."
(Pensions & Investments)
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Everything You Need to Know About Chained CPI in One Post
"When propane costs go up, CPI-U and CPI-W include that as an increase in the cost of living. But some people would just stop using propane if its price went up. They'd switch to electric heating, or a geothermal system, or a wood stove. So their actual heating costs wouldn't go up as much as CPI-U and CPI-W would suggest. Chained CPI attempts to take 'substitution effects' like this into account. Thus, its number generally rises more slowly than other metrics. That adds up to a big cut in Social Security benefits."
(The Washington Post; free registration required)
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[Opinion]
Will BCE Follow Verizon on Pensions?
"In Canada, BCE is one of a few large corporations with a serious pension deficit and unlike others flying off course, it continues to make cash contributions to its pension plan. But as Canadian and US insurers look to carve out the pension turkey, it's only a matter of time before we see a mega deal up here. Who benefits from these deals? Corporations and insurance companies."
(Pension Pulse)
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Benefits in General; Executive Compensation
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Avoiding SEC Comments on Executive Compensation Disclosures
"When drafting the executive compensation proxy disclosure for their 2013 annual meetings, companies should consider the following specific topics on which the SEC staff frequently issues comments: [1] Compensation Discussion & Analysis (CD&A) generally. [2] Disclosure of performance targets. [3] Benchmarking and peer groups. [4] Factors considered when determining compensation. [5] The role of compensation consultants. [6] Using non-GAAP financial measures."
(Practical Law Company)
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U.S. Census Bureau Projections Show a Slower Growing, Older, More Diverse Nation a Half Century from Now
"According to the projections, the population age 65 and older is expected to more than double between 2012 and 2060, from 43.1 million to 92.0 million. The older population would represent just over one in five U.S. residents by the end of the period, up from one in seven today. The increase in the number of the 'oldest old' would be even more dramatic -- those 85 and older are projected to more than triple from 5.9 million to 18.2 million, reaching 4.3 percent of the total population."
(U.S. Census Bureau)
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Press Releases
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