EmployeeBenefitsJobs.com logo BenefitsLink.com logo

BenefitsLink Retirement Plans Newsletter

February 15, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
         Past Issues  |  Search

Employee Benefits Jobs

Retirement Planning Consultant
for Diversified in IN

Employee Benefits Associate
for Nixon Peabody LLP in NY

Product Manager
for Charles Schwab in AZ

Plan Administrator
for Pelion Actuarial Services in ANY STATE

Retirement Plan / 401(k) Analyst
for Altman & Cronin Benefit Consultants, LLC in CA

Emerging Business Account Executive
for Woodruff-Sawyer & Co in CA

Manager - Conversions
for Verisight, Inc. in CA

Post Your Job on EmployeeBenefitsJobs.com

View All Jobs

RSS feed for jobs RSS Feed: All Jobs

Webcasts and Conferences

Foreign Transferees: Outbound, Inbound, Equity and Treaty Issues
Nationwide on March 13, 2013 presented by ABA Joint Committee on Employee Benefits

"403(b) Plan Corrections: Correcting Under the New EPCRS Procedure" Web Seminar
Nationwide on March 21, 2013 presented by SunGard Relius

Is an ESOP Right for You?
Nationwide on April 2, 2013 presented by National Center for Employee Ownership

Valuation Basics
Nationwide on April 9, 2013 presented by National Center for Employee Ownership

View All Webcasts and Conferences

We also publish the BenefitsLink Health & Welfare Plans Newsletter (free): Subscribe


[Official Guidance]

Text of IRS Ann. 2013-15: Revised Sample Notice to Interested Parties (PDF)
"This announcement contains a revised Exhibit: Sample Notice to Interested Parties, attached to Rev. Proc. 2013-6, 2013-1 I.R.B. 198. The Exhibit is revised to include the correct addresses for submitting applications for determination letters and comments submitted by interested parties, in accordance with the corrections to Rev. Proc. 2013-6 made by Ann. 2013-13, which was released on January 25, 2013, and will appear in 2013-9 I.R.B." (Internal Revenue Service)


401k Professionals: Get your Qualified 401(k) Administrator Credential!

Sponsored by ASPPA

Work in some aspect of retirement plan administration? Want to specialize in the administration of 401(k) plans? The QKA credential is for you! Get your Qualified 401(k) Administrator (QKA) Credential and show that you're serious about your career!

[Guidance Overview]

DOL Clarifies Application of ERISA Rules to Cleared Swaps
"Intending to defer to Congress's understanding of how swaps are to be traded and cleared under Dodd-Frank and to avoid subjecting market participants to potentially inconsistent obligations, the DOL crafted responses, based on interpretations of ERISA, to industry questions that it believes would not 'impair or impinge upon the swaps framework' required under Dodd-Frank. In adopting positions similar to those it previously adopted for futures transactions (which are also subject to mandatory clearing), the DOL has found certain limits in the application of ERISA where other regulatory and contractual frameworks govern." (Morgan Lewis)

[Guidance Overview]

Swapping Uncertainty for Clarity
"Swaps could theoretically raise issues regarding the possible characterization of collateral as a 'plan asset' under ERISA, as well as under ERISA's 'prohibited transaction' rules relating to transactions with 'parties in interest' and fiduciary self-dealing.... The issues have become magnified in light of the upcoming implementation of requirements under Dodd-Frank that swaps generally be cleared through clearinghouses. The new requirements may be viewed as having put additional pressure on existing issues, as well as raising new issues specifically relating to clearing." (Dechert LLP)

Participants in Overfunded Pension Plan Lacked Constitutional Standing to Bring Claims Under ERISA
"Participants in an overfunded defined benefit plan maintained by a bank lacked Article III standing to bring claims under ERISA because the alleged fiduciary breach did not cause them a redressable, pecuniary injury ... The Fourth Circuit concluded that alleged risk was insufficiently concrete and particularized to constitute an injury-in-fact ... The risk that plan participants' benefits will at some point in the future be adversely affected as a result of the presently alleged ERISA violations, the court reasoned, was too speculative to give rise to Article III standing." (Wolters Kluwer Law & Business)

The Pension World's Biggest Risk-Takers? Corporate and Governmental Plans in the U.S.
"Pension plans across the globe tend to react to low interest rates the same way, research has found: by lowering their liability discount rates. Everywhere except in the United States' public space, that is.... U.S. public and corporate funds, on average, allocate 68.3% of their assets to 'riskier investments' (defined as everything but cash and investment-grade fixed income), compared with 60.5% for Canadian funds, and 51.7% among European pensions. For every fund region and category except US publics, the study found that these allocations drop as funds become more mature (i.e. the ratio of retirees to working members rises). Likewise, the researchers found that US funds also have the highest average liability discount rates, at 7.8% in the public space and 7.2% among corporates. Canadian plans come in lower at 6.8%, with European funds far below that at 3.8%, on average." (aiCIO)


Retirement Symposium-2/12-2/13 - Special Discount $49 Registration Rate

Sponsored by Financial Advisor

Financial Advisor magazine assembles industry experts and advisors to share their insights and strategies and enhance the ability of the advisory community to assist clients who are planning for retirement or need help meeting their retirement needs.

How Much CalSTRS Debt Due to Mismanagement?
"Some still have hard feelings about what happened when CalSTRS, now deep in the red, had a brief funding surplus more than a decade ago: Teacher and state payments into the fund were cut, and retirement benefits were raised.... The bill that made a major change in CalSTRS structure, converting it to a 'hybrid' plan combining a pension and 401(k)-style individual investment plan, apparently was never heard by a legislative committee." (CalPensions)

Attractiveness of Pension Risk Transfer Improves
"The Dietrich Pension Risk Transfer Index increased from its prior month level of 84.92 to 86.71 as of February 1, 2013. The index, which tracks the relative attractiveness of annuitizing pension liabilities, rose primarily due to an increase in the average funded status of pension plans. The current annuity discount rate proxy embedded within the index also rose by seven basis points and currently sits at 2.61%." (PLANADVISER.com)

Average Balance in Fidelity 401(k) Plans Hits a Record High
"Participants, on average, put away 8% of their salaries in their 401(k) plans. More participants increased their savings rate, than decreased it -- 5.8% vs. 3.1%. One reason people are contributing more is the growing of popularity of automatic escalation programs where annual increases are put on autopilot." (New York Daily News)

Senator Pushes SEC on Fiduciary Rule
"A rising leader on the Senate Banking Committee [has] pushed the Securities and Exchange Commission to advance a regulation that would subject brokers to an investment advice standard.... The SEC is working on a cost-benefit analysis that would help shape a rule imposing a uniform fiduciary duty for anyone providing retail investment advice. [SEC Chairman Elisse] Walter said that a formal request for information from investors, experts and market participants will be released 'in the next month or two.'" (Investment News; free registration required)

What Can Roth Do for Your Participants? (PDF)
"[Y]ounger participants are leading the way. Ten percent of those under age 30 are making Roth contributions compared with 6% of participants overall. Usage is especially high among participants under age 30 earning $60K-$100K, averaging a 15% usage rate. Longer time horizon and the likelihood of landing in a higher tax bracket upon retirement means those in the earlier stages of their careers are particularly well positioned to take advantage of Roth and its related tax benefits." (Fidelity)

Majority of Gen X and Y Americans Are Uninformed About Investments and Financial Products
"More than half of Gen X and Gen Y consumers admit having little or no knowledge about investments and financial products, according to a recent LIMRA study ... Gen X and Gen Y consumers who work with financial professionals to make investment decisions are more likely than those who do not work with financial professionals to be very knowledgeable about investments and financial products (14 percent versus 6 percent). Yet, only one in five work with a financial professional." (LIMRA)

401(k) Balances Reach Record on 2012 Stock Market Rally
"The average balance in the U.S. rose 12 percent from a year earlier to $77,300 as of Dec. 31, according to a report [from Fidelity] ... About two-thirds of the average-balance increase came from market appreciation. The rest was from contributions to the accounts[.]" (Bloomberg)

Proposed Revisions to IRS Circular 230 May Set New Attorney Standards for 'Reasonable' Practices
"Under proposed 'reasonableness' standards for Circular 230, employee benefit attorneys who provide written tax advice may not rely on information from benefit plan sponsors if the attorneys know or should know that the information is incorrect or incomplete, an Internal Revenue Service official said ... during [a recent] an agency-sponsored phone forum." (Bloomberg BNA)

Lifetime Income in Defined Contribution Plans: A Fiduciary Approach (PDF)
"[This paper explores] in detail the issues facing retirees, the alternatives being developed or that already exist to address retirement income adequacy and the legal issues that plan sponsors must consider in offering a lifetime income solution for their participants.... The fiduciary challenge is to select a provider today that will be there in the future to make the payments, and the question is how a fiduciary acts prudently in making that selection." (Drinker Biddle)

GM Says No Pension Contributions Coming for Next 5 Years
"General Motors Co., Detroit, does not expect to make any mandatory pension contributions for the next five years, according to its fourth-quarter earnings statement. GM completed its annuity purchase with Prudential Insurance Co. of America in the fourth quarter, resulting in $28 billion in reduced pension liabilities, or 25% reduction. The U.S. pension plans were about 84% funded with $13.1 billion in unfunded liabilities at the end of 2012[.]" (Pensions & Investments)

Cypen & Cypen Newsletter for February 14, 2013
Covers employee benefit developments with an emphasis on governmental plans. Topics include: [1] Fewer Have Retirement Funds, but More Raid Them; [2] What Are Florida's Priorities, Anyway? [3] S&P Lawsuits Show Improved State/Federal Relations; [4] Florida Legislators Blast City of Hollywood; [5] Munnell's Book Hits the Streets; and [6] Pension Costs on Department of Defense Contracts. (Cypen & Cypen)

French President Tiptoes Toward Pension Reform With EU Pressure
"President Francois Hollande is preparing to take on a French sacred cow: pensions. Facing European Union pressure to reach budget targets, the Socialist president is risking the wrath of his core supporters to shrink the pension system, which had a deficit of 14 billion euros ($19 billion) in 2011. While leaving the issue of fixing the retirement age to talks between representatives of employees and employers, Hollande may propose separating pension increases from inflation[.]" (Bloomberg BusinessWeek)

Time Inconsistent Preferences and the Annuitization Decision
"At time of retirement people are increasingly faced with the decision to take out a lump sum of money from their retirement account or to opt for an annuity payment. Based on standard theoretical analysis people should opt for the annuity payment to maximize expected utility. However, empirically people by a vast majority opt for the lump sum ... [S]imple calculation shows that older people will prefer the lump sum over the annuity. The effect reverses for younger people where hyperbolic discounting leads to a preference for annuity payments. This is true for the immediate and the deferred decision." (University of Mannheim via SSRN)

Derisking Strategy Needed for Pension Plans in Canada
"[A]lmost 60% of [Canadian] financial executives surveyed indicated that their pension plan posed either a moderate or substantial risk to their organization.... At the end of 2012, only about one in 20 Canadian DB pension plans were fully funded on a solvency basis. By far, the biggest factor in the decline is the fact that long-term interest rates have plunged to their lowest levels in 60 years. Disappointing asset returns, demographic pressures and the increasing maturity of pension plans have also played their part." (Mercer)


Fiduciary Hedge Clauses, Mary Jo White, and the Pending Rule
"In its own inexplicable wisdom, Congress chose to narrow the parameters of the fiduciary duty under the Dodd-Frank reform act by limiting investment advice to retail customers, and curtailing the duty once advice is dispensed. The prognosis for preserving the traditional fiduciary standard isn't much better at the SEC, unless the putative new SEC Chairman, Mary Jo White, proves to be a wild card." (fi360 Blog)


Financial Planning Coalition Renews Call for Increased Adviser Examinations by SEC
"The Coalition strongly supports the SEC using adequate resources for investment adviser oversight to ensure that examinations are conducted at least once every four years without impacting taxpayers or the federal deficit could include the assessment of user fees upon Registered Investment Advisers as an alternative to an SRO regulatory approach. To achieve the needed oversight, without unnecessarily burdening advisers, small- and mid-sized advisory firms and their clients, the Coalition further encourages solutions that do not require establishing a whole new regulatory bureaucracy." (Certified Financial Planner Board of Standards)

Benefits in General; Executive Compensation

CalSTRS Fights Disney Over Executive Comp and Role of Board Chairman
"The $158 billion state pension, with 5.28 million Disney shares, will oppose an amendment to the company's stock incentive plan and cast a 'no' advisory vote on executive pay, according to a statement today. CalSTRS also will vote in favor of splitting the chairman and CEO roles in the future." (Bloomberg)

Press Releases

BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park, Florida 32789
Phone (407) 644-4146
Fax (407) 644-2151

Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

Copyright © 2013 BenefitsLink.com, Inc. but feel free to forward this newsletter if done without modification in any way.

All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

Links to Web sites other than those owned by BenefitsLink.com, Inc. are offered as a service to readers. The editorial staff of BenefitsLink.com, Inc. was not involved in their production and is not responsible for their content.

Useful links: