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[Official Guidance]
Voluntary Correction Program Submission Kit for 403(b) Plans (PDF)
"This kit was created to guide [the 403(b) Plan Sponsor] through the steps in filing a submission for a VCP compliance statement. It includes instructions and a sample submission correctly completed. It is designed for use by eligible organizations that sponsor a 403(b) retirement plan but that failed to adopt written plan document(s) for the plan by December 31, 2009, as required."
(Internal Revenue Service)
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[Official Guidance]
403(b) Plan Fix-It Guide
Chart details common plan mistakes and methods of correction under EPCRS. Columns include Find the Mistake, Fix the Mistake, and Avoid the Mistake.
(Internal Revenue Service)
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[Guidance Overview]
Swapping Safely: DOL's Opinion on Swaps and ERISA Plans (PDF)
"[T]he DOL expressly recognizes that (i) Congress did not intend for clearing members to perform activities under Dodd-Frank in a fiduciary capacity and (ii) the swaps framework 'could not function properly if Clearing Members were exposed to the incompatible obligations of ERISA fiduciary status'.... The swaps opinion does provide, however, that the activities of a clearing member that represents a plan, and has a direct contractual agreement with the plan, constitute services to a plan, and that the clearing member would therefore be a party in interest to the plan. Thus, the ERISA 'prohibited transaction' rules might apply."
(Dechert)
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[Guidance Overview]
DOL Issues Guidance on Swap Clearing Process (PDF)
"[W]hile the Opinion was favorable with respect to fiduciary status, the Opinion raises issues regarding the following: [1] the 'party in interest' status of clearing members; and [2] the availability (or lack thereof) of certain statutory and class exemptions needed to avoid non-exempt prohibited transactions."
(Groom Law Group)
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As Plan Sponsors Shop Around, Greater 401(k) Transparency Looms
"Last summer the U.S. Labor Department imposed new requirements on 401(k) plan providers, calling on them to disclose clearer and more detailed fee information to plan sponsors by August 30, 2012. And despite a statement this month from Phyllis Borzi, head of [EBSA], that it is too early to see any real changes, some pension experts are noticing a greater inclination to shop around among plan sponsors."
(Institutional Investor)
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Considering Financial Inertia Among Low-Income Individuals: Set 401(k) Defaults Carefully (PDF)
"[A]utomatic enrollment dramatically increases employee participation in retirement savings plans. Employees are very likely to accept the default contribution rate and asset allocation. Therefore, the chooser of the default is often able to determine the savings outcomes for a large number of employees.... [The authors] present evidence that 401(k) defaults are particularly influential for low-income individuals in general, using data from three employer-sponsored defined contribution retirement savings plans."
(Retirement Made Simpler)
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401(k) Fiduciary Due Diligence: Often Overlooked Steps that Can Minimize the Likelihood of Litigation (PDF)
"Fortunately for fiduciaries, most of the 401(k) litigation to date has involved excessive fees, has been poorly presented, and has resulted in dismissals. Most of the cases that have not been dismissed have resulted in small settlements, and in the few cases which the plaintiffs have won, the judgments have been miniscule when measured against plan assets. The only winners in these cases have been the plaintiffs' attorneys. It's unlikely, however, that the plaintiffs' bar will remain 'happy in their ignorance'."
(Investment Horizons, Inc.)
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Cantor Calls for Increasing Federal Employee Retirement Contributions
"House Majority Leader Eric Cantor (R-Va.) on Thursday repeated his call to replace sequestration with changes including revisions to the federal employee retirement program.... Nearly nine-tenths of federal employees are under the Federal Employees Retirement System, for which they pay the standard Social Security payroll tax of 6.2 percent of salary. Those first hired before this year pay an additional 0.8 percent of salary toward a civil service annuity; under a law enacted early in 2012, those first hired this year and after must pay an additional 2.3 percentage points."
(The Washington Post; free registration required)
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Advisers Focusing More on Plan Design
"Advisers' focus on plan design could be one reason both automatic enrollment and automatic escalation seem to be on the uptick ... Prudential's retirement plans saw an increase in auto enrollment, from 20% in the fourth quarter of 2011, to 31% in the same quarter a year later, as well as a significant increase in plans using auto escalation, (9% in the fourth quarter of 2011, to 17% in the same quarter 2012)."
(PLANADVISER.com)
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Seven Smart Ways to Boost Your 401(k)
"If you're like most people, you still need to save harder and longer to accumulate enough for a secure retirement ... [R]ather than letting your employer make all the decisions, get the retirement you want by following these seven steps. 1. Beef up your contributions ... 2. Consider the mix ... 3. Go with a target-date fund ... 4. Watch those fees ... 5. Save in a Roth 401(k) ... 6. Build your own pension ... 7. Educate yourself"
(Fidelity.com)
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Anticipated DOL Guidance May Amend the 408(b)(2) Regulation
"This [article] focuses on a DOL project to amend the 408(b)(2) regulation to possibly require that covered service providers furnish a 'guide' or similar tool, along with the disclosures.... It appears that the DOL is concerned that -- by using multiple disclosure documents or lengthy or complex documents -- service providers may have presented the disclosures in a manner that is difficult for plan sponsors to understand. While the guide would likely benefit plan sponsors, it can impose a significant burden on providers who have used multiple documents and/or lengthy documents to make their disclosures."
(FredReish.com)
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401(k) Plan Revenue Sharing: An ERISA Budget Account Primer for Employers
"[A]n employer considering adding an ERISA Budget Account, or whose plan already has such an account, needs to answer at least 10 questions: 1. Which employees/officers should determine what expenses qualify as administrative expenses potentially eligible for reimbursement? 2. What kinds of records should be requested from the plan's service providers to document administrative expenses? 3. How does an employer determine that the administrative expenses are 'reasonable?' ..."
(Wolff Samson)
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Modeling Behavioral Responses to Eliminating the Retirement Earnings Test
"[Proposed reforms to the retirement earnings test ('RET')] meant to encourage working at older ages could also cause earlier benefit claiming. [This study analyzes] the complete repeal of the earnings test for beneficiaries aged 60 or older ... [and finds] that beneficiaries affected by RET repeal would generally receive significantly higher benefits when they are younger than the full retirement age ('FRA'), and somewhat lower benefits after reaching FRA. RET repeal would not significantly change individuals' lifetime benefits and [the authors] find no significant changes in the overall poverty rate under either scenario.... [A]ssumed behavioral responses -- particularly the benefit claiming change -- have a bigger effect on lifetime benefits than the RET policy change itself."
(Social Security Bulletin, via SSRN)
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Brief of Amici Curiae to the 7th Circuit Court of Appeals in Abbott v. Lockheed Martin Corporation (PDF)
"This Court has already made clear that a fund's performance must be evaluated in relation to its own disclosures, not to the performance or profile of other funds that share similar labels. Allowing a plaintiff to certify a class -- even provisionally -- on this rejected theory of liability would impose significant adverse consequences on the sponsors, administrators, and beneficiaries of ERISA plans."
(U.S. Chamber of Commerce; ERISA Industry Committee; American Benefits Council)
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[Opinion]
Pension Funds Improving Corporate Governance?
"Does it make sense for pension funds to go after powerful bankers and strip them of their titles to improve corporate governance? You bet it does and many individual investors will cheer them on. In the wake of the financial crisis, corporate governance will be a dominant theme."
(Pension Pulse)
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[Opinion]
Public Employee Compensation Reform is Vital
"Critics of public employee compensation reform can decry advocates of fairer contracts for public employees until they are blue in the face, but this won't change the essential reality: As a group, public employees work fewer hours in a week, fewer weeks in a year, and fewer years in a career, while receiving exceptional salaries and other benefits, and then retire at a younger age with incomparably better pensions than private-sector employees.... Fortunately, reform is on the way."
(California Public Policy Center)
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[Opinion]
Extra, Extra, Read All About It -- Americans Are Prepared for Retirement
"Americans today have a record $19 trillion in assets earmarked for retirement. That's in addition to Social Security, which provides a bedrock retirement foundation for all working Americans.... But the constant drumbeat of bad news about Americans' retirement prospects risks undermining a strong public-private system that successfully helps workers plan for their old age -- and distorts the record."
(Investment Company Institute)
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[Opinion]
CalPERS: Model of Pension Dysfunction
"CalPERS' desperate search for yield led to riskier investments, which led to cash flow problems, which in turn led to the sale of assets that could have yielded gains if they hadn't needed to be shed due to lack of liquidity.... States that wish to continue providing defined benefit pensions should make the costs of such plans clear to taxpayers by focusing on low-risk conservative investments that reflect the obligatory nature of pension obligations. In many cases, that would require states to increase their contributions."
(OpenMarket.org)
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Benefits in General; Executive Compensation
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Proxy Season Brings Third Wave of 'Gotcha' Shareholder Litigation
"This new wave, which has not crested yet, consists of a return to derivative shareholder suits but no longer concerning say-on-pay votes. Instead, these lawsuits are focused on 'gotcha' allegations that companies issued stock options or restricted stock units to executives in amounts that exceed the limits of those companies' stock plans. These lawsuits are easily preventable with careful planning by Compensation Committees and their in-house and outside counsel to ensure that all stock grants and executive compensation proposals are in compliance with the company's stock plan."
(Pillsbury Winthrop Shaw Pittman LLP)
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Citigroup Shelving Executive Profit-Sharing Plan
"Citigroup Inc. is shelving an unusual executive profit-sharing plan that raised hackles with investors ... The decision to allow the plan to expire next year comes after ... the New York company's chairman met with numerous Citigroup shareholders in a bid to avoid a repeat of an embarrassing defeat last spring in the shareholder-advisory vote [say on pay]. Citigroup was alone among major lenders in having its plan rejected by shareholders."
(FoxBusiness.com)
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Many Executives Re-Examine Their Retirement Intentions
"Some executives dreaming of their golden years are unsure when those years will actually start. Nearly four in 10 (38 percent) chief financial officers (CFOs) interviewed for a Robert Half Management Resources survey said they are more uncertain about when they're going to retire than they were five years ago. Another 13 percent stated their expected retirement plans have changed compared to five years ago."
(Robert Half Management Resources)
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'Slayer Statute' Options for Plan Administrators
"One of the sadder tasks encountered by a plan administrator is sorting out who is the appropriate recipient of benefits when a participant has been murdered by the intended beneficiary of such benefits.... [P]lan administrators ... dealing with ... pension, 401(k), life insurance and accidental death plans ... [have] a variety of alternatives each with varying levels of cost and risk. These alternatives, each of which is summarized in more detail ... include: (1) commencing an interpleader action, (2) securing a receipt, release, and refunding agreement, and (3) obtaining an affidavit of status (e.g., heirship)."
(Benefits Bryan Cave)
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CalPERS Plans 85% Rate Hike for Long-Term Care Insurance
"More than 110,000 CalPERS policyholders are receiving ... news [similar to one retiree's 85% rate hike] this week after the pension fund's board approved the changes late last year. CalPERS said the hefty rate hikes won't take effect until 2015 and are necessary to keep this $3.6 billion insurance fund intact for future claims.... CalPERS, which runs the nation's second-largest long-term-care plan, after one for federal government employees, said it would offer affected policyholders several ways to adjust their benefits to avoid these premium increases."
(Los Angeles Times)
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Press Releases
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David Rhett Baker, J.D., Editor and Publisher
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