ASPPA

Director of Human Resources and Training
for IAM National Pension Fund in DC

Retirement Plan Administrator
for Fred S. Shapiro & Associates, Inc. in MD

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Judge Allows American Airlines and PBGC to Cancel Lump-Sum Payment Option in Pilots' Pension Plan
"U.S. Bankruptcy Court Judge Sean Lane in New York also approved the new labor contract with the Allied Pilots Association, which calls for the company to contribute 14% of pay into a new 401(k) plan. The ruling denied a request from a group of senior pilots who wanted to preserve the lump-sum option." (Pensions & Investments)

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Pennsylvania Municipalities Finding Hands Tied on Liability to Pay Illegal Firefighter Pensions
"A firefighter in Allentown, Pennsylvania, which plans to lease its water system to meet retirement costs, left last year with an annual pension of $99,289, more than double what state law says was due. Most municipalities in the state, home to a quarter of U.S. public pension plans, show similar disregard for local statutes ... The liability for the extra payments may approach $1 billion[.]" (Bloomberg BusinessWeek)

Illinois Public Unions Insist on Higher Taxes If Reform Deal Includes Higher Employee Contributions
"A coalition of public employee unions Wednesday blasted legislation to address the [Illinois] underfunded worker pension systems and offered instead to make increased contributions -- if the state guarantees its share of retirement payments and raises $2 billion by ending corporate tax benefits and imposing new taxes.... The offer to require state workers and teachers to pay 2 percent more toward their retirement was conditional upon getting an 'ironclad guarantee' in state law that government would fund its share of pension obligations as workers have done over the years." (Chicago Tribune; free registration required)

Illinois Public Employee Unions Contest Pension Reform Plans
"The unions offered their own proposal for 'an ironclad guarantee' that the state will make actuarially required pension payments, a gradual increase of 2 percent in workers' pension contributions that would ultimately raise more than $350 million a year and the closure of so-called corporate tax loopholes to gain $2 billion for state coffers." (The New York Times; free registration required)

Is San Bernardino Looking for Way to Cut Pensions, Not Just Defer Contributions?
"CalPERS accuses San Bernardino of halting payments to the big pension fund in a plan to use bankruptcy to cut pensions owed workers. But the city says it's simply unable to pay now and wants to work out a way to repay CalPERS over time. A federal bankruptcy court in Riverside is scheduled tomorrow (Dec. 21) to hear a CalPERS plea to block or delay San Bernardino's eligibility for bankruptcy, a key leverage point for creditors as CalPERS acknowledged in a court filing." (CalPensions)

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

Many companies are directed to reduce headcount: whether it is reducing the number of active employees or deferred vested participants. But to implement that directive requires navigating numerous potential legal issues. Discounted pricing for BenefitsLink readers.

Collective Bargaining Agreement Allowed to Apply Alternate Method for Calculating Contributions When Employer Fails to Provide Records
"When an employer fails to provide to multiemployer plan funds the necessary records to calculate employer contributions, the funds may utilize an alternative calculation method contained in the collective bargaining agreement without running afoul of the requirement that damage awards be calculated with 'reasonable certainty,' the U.S. Court of Appeals in New York City ... has ruled." [Cement and Concrete Workers v. Metro Foundation Contractors, Inc. (2d Cir.)] (Wolters Kluwer Law & Business)

PBGC Calls for Legislation to Help Sustain Multiemployer Pension Plan System
"According to [PBGC Director Joshua] Gotbaum, two years ago only about a third of multiemployer plan participants were in plans that reportedly were in the financially sound 'green' zone. Today, Gotbaum said that the majority of participants are in plans that are recovering. Without changes, however, some plans will be unable to avoid insolvency. Gotbaum claimed that part of the problem is that the multiemployer system has not been rethought in 30 years, and that any solution -- in addition to necessitating higher premiums -- will involve changes to the multiemployer system in general." (Littler Mendelson LLC)

Contributing 6% of Pay to 401(k) Falls Short of Retirement Goals
"Modern workers have long depended upon Social Security, employer-based pension plans and personal savings to support them in retirement. Surprisingly, it is not an impending Social Security crisis but the replacement of traditional pension plans with 401(k)s that is the biggest problem for funding retirement. Too many workers rely upon the mistaken belief that contributing 6 percent of their salaries annually to a 401(k) is prudent planning." (The Star Press)

Proskauer ERISA Litigation Newsletter, December 2012
"[This edition explores] the arguments asserted by the parties in U.S. Airways v. McCutchen as to whether, and under what circumstances, plans may enforce provisions entitling them to reimbursement of previously paid medical benefits where the participant obtains a recovery from another source." (Proskauer Rose LLP)

401(k) Participation Rises Despite Economic Woes
"For the quarter ending Sept. 30, 2012, more than 141,000 employees started or increased their participation in the retirement plans provided through plan sponsors. Those results for the third quarter nearly matched the firm's second quarter results that saw more than 142,000 who started or increased contributions to their retirement plans." (On Wall Street)

2013 Compliance Calendar for Defined Contribution Plans
"[This is the] Vanguard Strategic Retirement Consulting annual reference for recurring compliance and notice requirements.... The deadlines in this calendar are for plans with calendar-year plan years. This chart is intended to provide plan sponsors with a list of notable deadlines[.]" (The Vanguard Group, Inc.)

'High Touch' Doesn't Always Mean Higher Education in Retirement Plans
"[T]here's a wide range of product offerings for 401(k) and 403(b) plans, from the simple issuance of annuity products or mutual fund shares to robust plan designs tailored to the needs of both the plan sponsor and the participants. And you could think of participant education in the same way, with offers ranging from a 'textbook' approach of what's always been done to a 'lesson plan' that's tailored to different demographics, measures results and sets goals. Unlike plan service, however, the answer for participant education has traditionally always been 'high touch.' But high touch doesn't necessarily equal highly productive results." (The Principal Blog)

Proposed Senate Resolution Would Recognize Importance of Preserving Tax Incentives for Retirement Savings
"A new Senate resolution hoping to at least recognize the long-term importance of tax-deferral incentives for retirement savings -- 'low-hanging fruit' in this time of 11th-hour fiscal cliff budgetary wrangling -- is making the rounds in Washington, with some extra support from the retirement industry.... The resolution, a 'Sense of Congress' statement, reiterates that current tax incentives for retirement savings do indeed provide important benefits for Americans, as well as actually providing the impetus for workers to help prepare for their own retirement -- in the absence of any other nationalized retirement or pension plan, other than Social Security." (Financial Services Institute)

New Study on Use of Investment Advisors Reveals Stark Differences Among Different Ages of Baby Boomers
"[Y]ounger boomers are less comfortable with financial advisers. The survey of 4,000 affluent investors across different age groups found that 63% of the younger boomers had financial advisers compared with 66% of the older members of the generation. The younger boomers are also a lot less confident in their advisers. Just 33% of the younger boomers said they were highly confident with their advisers, while 44% of the 'first wave' of boomers -- those between the ages of 57 and 66 -- said they were highly confident. The older investors had an adviser managing more of their assets, and 69% of them said they were satisfied with the relationship versus 58% for the younger group." (Investment News; free registration required)

Employee Benefit Trade Associations and Advocacy Groups Tailor Policy Agendas to Congressional Lame-Duck Session (PDF)
The linked article summarizes proposals, lobbying efforts and comments by the American Benefits Council, the ERISA Industry Committee (ERIC), the American Society of Pension Professionals & Actuaries (ASPPA), the Pension Rights Center, and others. (Bloomberg BNA)

[Opinion]

Pension Underfunding Is Part of Much Larger Problem: Too Few Young Workers
"The consequences of declining birthrates, occurring faster than anyone thought possible, go beyond requiring new formulas whereby current workers deliver sufficient productivity to adequately support a larger proportion of retirees. It means that the 'population bomb' that was supposedly going to explode has fizzled. It means that the prevailing challenge of the 21st century is not how to avoid a Malthusian collapse of resources, but rather is how to continue to generate robust global economic growth in a world where the human population is declining. The magnitude of this challenge cannot be understated. It has never been done." (California Public Policy Center)

[Opinion]

Text of ICI Comments to IRS on SIMPLE IRA Guidance (PDF)
"[ICI suggests] eliminating the requirement to attach or otherwise include the financial institution's procedures for withdrawal and transfer on the form and summary description. Instead, guidance could state that the financial institution must identify on the form where procedures for withdrawal and transfer can be located.... [T]he IRS should reconsider the requirement for each financial institution to provide the employer with the summary description ... [ICI requests] guidance clarifying the circumstances under which a financial institution could stop sending annual summary descriptions." (Investment Company Institute)

[Opinion]

Text of Testimony by PBGC Director Before Congress on the Multiemployer Pension System (PDF)
"After all the events of the past decade, the financial health of these plans varies widely. The majority are recovering, in part by relying on the tools and authorities provided to plans under the Pension Protection Act of 2006 (PPA) and subsequent legislation, as the economy and the financial markets improve. Some plans, however, lack the necessary economic base and will not, absent changes, be able to avoid eventual insolvency. As a result, PBGC's multiemployer insurance program will need a fresh look." (Pension Benefit Guaranty Corporation)

Improving Retirement Savings for Executives
"Over the years, the 'pay for performance' trend has led many companies to institute stock options and other equity awards for wealth creation. But with market volatility and stock options 'under water' ... there are significant variations in these benefits. Some companies have even incurred a compensation expense and then been unable to award that compensation." (PLANSPONSOR.com)

Can an Executive Cancel an Election to Defer This Year's Earnings in Order to Take Advantage of This Year's Lower Tax Rates?
"As tax rates are likely to rise after 2012 ... many people are looking at ways to accelerate income into 2012 to get the lower tax rates available now.... It is crucial to understand that NQDC deferrals already made for 2012 income cannot be shifted into 2012. Instead, keeping tax increases in mind, now is the time to focus on deferring 2013 compensation income, as deferral elections for next year must be made before year-end." (myStockOptions.com)

Additional Medicare Tax and New Tax on Net Investment Income Start in January 2013: Year-End Tax Planning by Employers
"Before December 31, employees and employers should consider tax strategies for reducing the effect of the new Medicare taxes including: [1] Accelerating income to 2012 that would otherwise be subject to the new tax rate in later years [2] Redirecting income to the few types of income exempt from either of the new taxes [3] Deferring for as long as possible income receivable after 2013 and not exempt from the new taxes." (Polsinelli Shughart)

Unlimited Time-Off Policies Attract Passionate Supporters
"[B]eginning in October 1, OutcomesMTM officially launched 'MyTime,' an unlimited time-off program ... [The company's CEO] says the company is interested in outcomes and results, not artificially tracking employees' time.... While extremely rare -- a 2010 study by WorldatWork found that only 1 percent of companies embrace such an approach -- the concept is being tested in certain sectors, especially in high tech. Netflix is another company that hasn't had a vacation policy since 2004." (Human Resource Executive Online)

Litigation Outlook for 2013: Obamacare, Banking Regulations, Pension Underfunding Will Make Lawyers Rich
"For lawyers next year, Obamacare will be the gift that keeps on giving. The hastily drafted, 2000-page law that virtually no one read in its entirety before voting on it left so many details to government bureaucrats that it will provide grist for litigation for years to come." (Forbes)

BLS Report on Employer Costs for Employee Compensation, September 2012
"In September 2012, wages and salaries of all civilian workers accounted for 69.2 percent of employer costs for employee compensation and averaged $21.32 per hour worked. Benefits accounted for the remaining 30.8 percent of employer compensation costs and averaged $9.48 per hour worked. For private industry workers, wages and salaries accounted for 70.3 percent of employer compensation costs in September 2012 and averaged $20.36 per hour worked. Benefits accounted for the remaining 29.7 percent of employer compensations costs and averaged $8.58 per hour worked. The largest components of benefit costs were insurance and legally required benefits, each representing 8.2 percent of total benefit costs. Retirement and savings accounted for 3.6 percent of total employer compensation." (U.S. Bureau of Labor Statistics)

Human Resource Executive� Health & Benefits Leadership Conference & Expo Focuses on Healthcare Reform for Employers
Human Resource Executive Magazine

Hyatt Legal Plans, America�s Largest Provider of Group Legal Plans, Adds 159 Clients, Including 4 Fortune 500s�
Hyatt Legal Plans, a MetLife company

Walgreens Worksite Health Centers Receive Accreditation as Patient-Centered Medical Homes from the Accreditation Association for Ambulatory Health Care (AAAHC)
Walgreens

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