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BenefitsLink Retirement Plans Newsletter

December 28, 2012          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Ameriprise 401(k) Fee Lawsuit Set for January Court Date
"[W]hile previous cases that focused on retirement plan fees point to a lack of process on the part of the plan sponsor for fund selection, this case appears to concentrate on allegations of self-dealing ... The plaintiffs ... contend that Ameriprise chose to offer the costlier R4 share class of its RiverSource funds when it could've used the cheaper R5 share class. They claim the costlier share class added 25 basis points in costs for 'plan administrative services' and a service fee of up to 10 basis points." (Investment News; free registration required)


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CalPERS CIO Discusses Pensions vs. 401(k)s: Which Have Best Prepared America for Retirement?
"The pension dollar that we pay out to the beneficiary is about two-thirds investment. That's a pretty good deal for taxpayers. You're getting a safe retirement, an economic security for public workers at a cost to the taxpayer of about 15 to 20 cents per dollar.... The critics of defined benefit plans say that all the risk is on the taxpayer and none of it is on the worker and then so they want to flip it over and let's have defined contribution plans be the answer where all of the risk is on the worker. Well risk transfer is a good public policy topic to talk about, but if you do it in defined contribution space and expect individual workers who in many instances are totally intimidated by the choices they have in investment, is that really the right way to handle it?" (Motley Fool)

Prolonged Low Interest Rates Killing Retirement Savings
"A recent study ... calculated the impact of market volatility, longevity and sustained low interest rates on a hypothetical retirement portfolio of $300,000 ... [under] three scenarios: one with no market volatility or longevity risk; another with both market volatility and longevity risk; and the third with market volatility, longevity risk and an extended period of low interest rates.... In the second scenario, the portfolio ran out of income 21 percent of the time. In the third scenario, when low interest rates were factored in, the failure rate in the simulations rose to 54 percent." (BenefitsPro)

DB Plan Administration: Will Outsourcing Work for Your Company? (PDF)
"Defined benefit plans face many administrative challenges as new regulations are enacted, old rules are changed, and companies are reorganized. In the past, it may have been easier to keep pension administration in house with killed, knowledgeable staff who could calculate benefits using a spreadsheet. But now, the volume and ever-changing rules and regulations have made administration more complex. Out-of-date calculation spreadsheets and internal systems no longer meet compliance requirements, and replacing pension staff members is difficult once they retire. Is it time for you to make a change?" (Milliman)

Four Reasons Not to Roll Over Your 401(k) Held by a Former Employer
"Conventional wisdom says that after leaving your job, it's smart to roll your old 401(k) into an IRA.... There are, however, certain situations -- some of them fairly common -- in which it makes sense to leave your old 401(k) alone or move it somewhere other than an IRA: 1. You plan to retire between ages 55 and 59.5 ... 2. You're planning a Roth conversion ... 3. Your old 401(k) has better investment options ... 4. You have employer stock in your 401(k)." (MarketWatch.com)

Ordinary Folks Losing Faith in Stocks
"Defying decades of investment history, ordinary Americans are selling stocks for a fifth year in a row. The selling has not let up despite unprecedented measures by the Federal Reserve to persuade people to buy and the come-hither allure of a levitating market. Stock prices have doubled from March 2009, their low point during the Great Recession. It's the first time ordinary folks have sold during a sustained bull market since relevant records were first kept during World War II[.]" (Associated Press)

Busted Boomers: How to Bounce Back After Being Out of Work
"Millions of older Americans now have the experience firsthand: A longtime job suddenly evaporates. Months, even years of unemployment ensue. Eventually, a lower-paying job is found and gratefully taken. But what now? How to make up for the setbacks in retirement savings?" (AARP)

Rethinking Fiduciary Allocations Under ERISA Sections 402 and 405: Back to the Future
"Between growing fiduciary obligations, increased disclosure and reporting rules, a growing panoply of different retirement plan products, its not easy to maintain a 401(k) or 403(b) plan anymore.... [I]n the days before daily valuations; mutual fund investment accounts in defined contribution plans; before employee contributions were the predominant feature of these plans; before the differences between 3(16), 3(21) and 3(28) were parsed and analyzed; an employer establishing a profit sharing plan would usually seek to hire a centralized fiduciary to run the plan.... The market has moved dramatically over a generation, away from a centralized independent authority which took full responsibility for operating a plan." (Business of Benefits)

Benefits in General; Executive Compensation

Hodgson Russ Employee Benefits Developments, December 2012
Articles include: New Proposed Regulation Relating to Wellness Programs; District Court Rejects Private Equity Fund Liability for Multiemployer Plan Withdrawal; Actual Receipt of COBRA Notice Not Required; and Plan Cannot Exclude COLA From Lump Sum Payouts of Accrued Benefits. (Hodgson Russ LLP)

Cypen & Cypen Newsletter for December 27, 2012
Covers employee benefit developments with an emphasis on governmental plans. Topics in this issue include: San Bernardino Bondholders Play Hardball With CalPERS; CalPERS Statement on U.S. Bankruptcy Proceedings in San Bernardino; Will 401(K) Plans Keep Getting Worse? Omission of Reference in SPD Does Not Create Inconsistency With Terms of Pension Plan; Public Pension Plans Consider Shooting Down Gun Investments; and Okay To Eliminate American Airlines Lump-sum Pension Payout. (Cypen & Cypen)

DOL Regulatory Agenda Released
The U.S. Department of Labor has published the Fall 2012 issue of its regulatory agenda, which lists the regulations under active consideration for publication, proposal or review during the next 12 months. (Employee Benefits Security Administration)

Press Releases

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