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February 20, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Webcasts and Conferences

COBRA for Rookies: Understanding the Basics to Avoid Liability
Nationwide on March 14, 2013 presented by Thomson Reuters / EBIA

Health Care Reform: Employer Compliance and Strategies - Webinar Recording
Nationwide on March 20, 2013 presented by Nixon Peabody LLP

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[Guidance Overview]

DOL Clarifies that Clearing Members Are Not ERISA Fiduciaries in Connection with Cleared Swap Transactions
"As noted in the Advisory Opinion, ... 'the swaps framework enacted by Congress and implemented in the CFTC's regulations could not function properly if Clearing Members were exposed to the incompatible obligations of ERISA fiduciary status'.... [Prohibited Transaction Exemption] 84-14, as amended (the 'QPAM Exemption') or PTE 96-23, as amended (the 'INHAM Exemption'), will exempt such transactions if the conditions of the applicable exemption are satisfied, including the condition that the transaction be negotiated by a 'qualified professional asset manager' (QPAM) or an 'in-house asset manager' (INHAM), as applicable." (Sidley Austin LLP)


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Retirement Policy 2012 Recap and 2013 Agenda at the Federal Level
"[T]he major piece of legislation affecting retirement policy last year was transportation legislation -- and the retirement policy provisions of it (funding relief and an increase in PBGC premiums) were probably only included because they produced revenues to cover the cost of transportation and student loan proposals.... With Hilda Solis leaving DOL and Timothy Geithner leaving Treasury, it's unclear whether there will be changes in key retirement policy personnel, or changes in policy, at either agency. But if Mark Iwry remains the principal retirement policy 'thought leader' at Treasury, we are likely to see a continued commitment to 'retirement income' initiatives." (October Three)

PSCA Survey Soaks Up Valuable Retirement Plan Data
"The benefits of benchmarking are numerous. For example, benchmarking can potentially help improve performance by pointing out where strengths and weaknesses may exist. Benchmarking may also overcome paradigm shifts and paradigm blindness -- two terms that describe the inability to see the changing world while you're wrapped up in the way things are currently done." (The Principal Blog)

Retirement Readiness: A Reality Check
"The world's population is ageing. By 2050, the United Nations predicts about one in five people will be retired.... [R]esearch shows that people expect retirement to last for an average of 18 years. Yet, on average, people expect their savings to last for just ten years, leaving an eight-year difference.... [T]he second half of retirement is often when health and care costs rise." (HSBC)

How Lower Earnings Will Impact California's Total Unfunded Pension Liability
"[If] the discount rate is lowered to 5.5%, and the actuarial accrued liability is revalued according to Moody's proposed criteria scheduled for adoption in 2014, it results in the estimated funding status of California's consolidated state and local government pension plans lowering from 82% funded to 64% funded.... If you increase the duration of the pension plan discounting to what is probably a more representative 17 years, ... the unfunded pension liability at 6.2% is $295 billion (67% funded), at 5.5% it rises to $401 billion (60% funded), and at 4.5% it rises to $576 billion (51% funded)." (California Public Policy Center)


Registration Now in Progress: 2013 Employee Ownership Conference

Sponsored by National Center for Employee Ownership

This conference on ESOPs and equity compensation draws over 1,000 attendees from across the U.S. and includes 88 panels and many additional interactive sessions, keynote addresses and more.

Finding Lost Plan Participants
"The more time that passes after an employee terminates employment, the more difficult it may be to find them.... This article focuses on distribution processing, the required and optional methods for finding lost participants, and a checklist for Plan Sponsors to use to help minimize the impact of lost participants on their plans." (Benefit Resources, Inc.)

It's Never Too Late to Add a Forum Selection Clause
"[The federal district court in Kentucky] confirms that ... a forum selection clause ... may be applied broadly, even to persons who retired before the date of the amendment.... The court identified the factors to be evaluated in determining whether a forum selection clause is enforceable, namely '(1) whether the clause was obtained by fraud, duress, or other unconscionable means; (2) whether the designated forum would ineffectively or unfairly handle the suit; and (3) whether the designated forum would be so seriously inconvenient such that requiring the plaintiff to bring the suit there would be unjust.'" [Smith v. Aegon Companies Pension Plan, 3-12-CV-697-H (W.D. Ky., Jan. 28, 2013)] (Littler Mendelson LLC)

Top NY Court: Victims Can't Claim Perpetrators' Pensions
"A midlevel court ruling that New York crime victims can claim their attackers' pensions was thrown out Tuesday by the state's highest court on a technicality.... The Court of Appeals reversed the midlevel court ..., concluding that while the state's lawyers argued that the Son of Sam Law trumped the civil practice law, they failed to bring the argument that it also trumped the Retirement and Social Security Law." (Ithaca Journal)

CalPERS to Divest from Manufacturers of Assault Weapons Illegal Under California Law
"CalPERS holdings represent a 'de minimus' value of less than one one-hundredth of one percent of the Fund's total assets. Related transaction costs are expected to have no impact on the Fund." (California Public Employees' Retirement System)

Two of Illinois' Five Pension Systems Lost Money in 2012
"Not a single one of the state's five public pension systems earned more than 1 percent returns on their investments last year. In fact, two of the five funds actually lost money. Although pension trustees predicted Illinois' five pension funds would earn more than $5.1 billion in fiscal year 2012, the funds actually earned less than $239 million. The systems posted a combined investment return of just 0.38 percent, far below the combined 8.18 percent expected." (Illinois Policy Institute)

PBGC's Single Employer Deficit and PBGC Premiums
"[T]his article [reviews] just what goes into PBGC's deficit numbers and, briefly, the debate over how realistic they are. [The] analysis is based on the PBGC's fiscal year 2012 annual report, which was prepared as of September 30, 2012, and is limited to the PBGC's 'single-employer' insurer program ... The $5.9 billion increase in the PBGC's single-employer deficit during 2012 provides a basis for arguing for another round of premium increases. The 'push back' from the sponsor community will be ... that these rates are unrealistically low and likely to be temporary (in fact, rates right now are about 30 basis points higher than they were last September) and that they therefore should not drive premium policy." (October Three)

Are a Plan Fiduciary's Conversations with Lawyers Privileged under ERISA?
"Although courts have recognized that there are circumstances where the fiduciary exception is inapplicable, it is often difficult to predict in advance whether and when attorneys can provide advice that will be immune from disclosure, and there is an ever-present risk that advice to fiduciaries regarding plan administration will be subject to the fiduciary exception.... Although there is no fool proof method for protecting the confidentiality of fiduciary advice, plan fiduciaries and their counsel should consider in advance the nature of the legal advice being solicited or rendered, and whether such advice can be timed and structured in a way that will minimize the risk of disclosure." (Proskauer Rose LLP)

Most Older Americans Avoid Dipping Into Savings But 1 in 5 Outspend Income by 50% or More (PDF)
"About 60 percent of elderly American households spend less than their incomes, but in 2009 more than 14 percent of older households spent considerably more than their income, according to a new report ... Singles, households with no pensions, African-Americans and Hispanics have larger shares of households with deficits. Health care and home related expenses are the biggest drivers of income deficit." (EBRI)

Will Regulations to Reduce IRA Fees Work?
"Due to 401(k) rollovers, IRAs have become the biggest form of retirement savings. But IRAs tend to have higher fees, partly because commissions -- such as 12b-1 fees -- encourage broker-dealers to sell more expensive mutual funds. 12b-1 fees would have been eliminated under a 2010 Department of Labor reform proposal ... [which] would produce only modest benefits and, despite industry concerns, would create little harm. Bolder reforms merit consideration, such as keeping savings in 401(k)s, extending 401(k) protections to rollover IRAs, and limiting fees in both accounts." (Center for Retirement Research at Boston College)

New York Review Concludes State Pension Fund 'Thinly Staffed'
"Insufficient staffing has caused the fund to delay achieving long-term asset allocation targets, to rely more on consultants than many peers and to have higher investment management costs because it cannot "efficiently gain exposure to various asset classes and management styles," according to a report reviewing the $150.1 billion pension fund[.]" (Pensions & Investments)

Income Composition, Income Trends, and Income Shortfalls of Older Households (PDF)
"In 2009, households ages 65-74 and households with members age 85 or above received 54 percent and 66 percent of their total household incomes, respectively, from Social Security benefits.... For households that had members ages 65-69 in 2001, the share of household income derived from Social Security rose from 47 percent in 2001 to almost 60 percent in 2009.... In 2009, households ages 65-74 received 17.1 percent and households above age 85 received 15.3 percent of their incomes from pensions and annuities." (EBRI)

Economic Implications of the DOL's 2010 Proposals for Broker-Dealers
"This paper examines the tradeoff between lower fees and investor mistakes due to forgoing advice. The analysis draws on existing pricing and cost evidence from the United States and on the experience of ongoing reforms in the United Kingdom aimed at lowering fees and improving investment advice.... It is unlikely that broker-dealers would change their business model with respect to the provision of advice as a result of the loss of 12b-1 fees.... The results of the optimization exercise point to relatively modest potential benefits, but even more modest costs under plausible assumptions." (Center for Retirement Research at Boston College)


Accounting Standards, Not Elections or Litigation, Ultimately Will Enable Reform
"Moody's and GASB: Unlikely sparks to fire a revolution.... Using the data from a March 20, 2012 report from the California State Controller ... [the] study revalued the official unfunded pension fund liability -- for all state and local government pension funds -- exactly according to Moody's proposed guidelines. The result was dramatic. Instead of California's total public employee pension plans being underfunded by $128.3 billion, which is the state controller's official estimate, the amount of underfunding nearly tripled, to 328.6 billion." (California Public Policy Center)


A Plan to Safeguard Multiemployer Retirement Security, Protect Taxpayers and Spur Economic Growth (PDF)
"For the limited number of plans that, despite the adoption of all reasonable measures available to the plans' settlors and fiduciaries, are projected to become insolvent within certain prescribed time frames, the Commission recommends that limited authority be granted to plan trustees to take early corrective actions, including the partial suspension of accrued benefits for active and inactive vested participants, and the partial suspension of benefits in pay status for retirees.... [Further,] the Commission recommends the enactment of statutory language and/or promulgation of regulations that will facilitate the creation of new plan designs that will provide secure lifetime retirement income for participants, while significantly reducing or eliminating the financial exposure to contributing employers." (National Coordinating Committee for Multiemployer Plans)


Text of Letter to FASB on Impact of Required Disclosures Under Accounting Standards Update on Private Companies with ESOP Ownership (PDF)
"On behalf of the thousands of private ESOP companies in the U.S. and the millions of employees currently enjoying the benefits of an ownership stake in those companies, we respectfully request FASB exempt employer securities held by ESOPs and other non-public employee benefit plans (benefit plans other than those required to file financial statements with the SEC on Form 11-K) from the quantitative and qualitative disclosures required for Level 2 and Level 3 fair value measurements required under ASC 820-10-50 as amended by ASU 2011-04[.]" (National Center for Employee Ownership, The ESOP Association, and Employee-Owned S Corporations of America)

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