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March 19, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Marketing and Sales
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for Preferred Pension Planning Corporation in NJ

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for Hill, Chesson, & Woody in NC

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Webcasts and Conferences

Taking The Mystery Out Of Retirement Planning Workshop
in Washington on May 7, 2013 presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

The World of Plan Audits
in Florida on April 2, 2013 presented by ASPPA Benefits Council (ABC) of North Florida

Abandoned Plans Webcast
Nationwide on April 18, 2013 presented by American Society of Pension Professionals & Actuaries (ASPPA)

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[Official Guidance]

IRS 'Retirement News for Employers' (March 18, 2013 Edition)
Topics include 403(b) correction procedures, a discussion with the EP examination director, self-correction of plan errors, and 2012 reporting reminders for Roth IRA rollovers and conversions. (Internal Revenue Service)


The ftwilliam.com Product Line Has Launched Electronic Signature Capability

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[Official Guidance]

PBGC Announces Address Change for Missing Participant Program
From the PBGC: "The lockbox addresses for sending payment of designated benefits and/or other amounts due missing participants with a completed payment voucher have changed. You can find the new addresses for U.S. Postal Service and other mail delivery services, as well as for wire transfers, on page 5 of our Missing Participants Filing Instructions. The address for sending the Schedule MP (including any required attachments) along with the post-distribution certification has not changed." [Editor's note: those instructions are online at http://www.pbgc.gov/Documents/MP_instructions_092804.pdf#page=5] (Pension Benefit Guaranty Corporation)

[Official Guidance]

New Phone Number to Check the Status of VCP Submissions
"The new telephone number to check the status of your Voluntary Correction Program submission is: (626) 927-2011 (not a toll-free number). Appendix D, Acknowledgement Letter, has been updated to reflect this change. If you have saved an older copy of Appendix D (or Appendix E, for submissions under Revenue Procedure 2008-50), please update your file." (Internal Revenue Service)

[Guidance Overview]

DOL Releases Informal Guidance Addressing Fiduciary Responsibilities With Respect to Target Date Funds
"The new Guidance is technically framed as a series of non-binding tips for plan fiduciaries and does not constitute formal guidance. However, the DOL uses mandatory language in setting forth several of these tips, suggesting that plan fiduciaries should carefully analyze the DOL's position on TDFs set forth in the Guidance." (McDermott Will & Emery)

[Guidance Overview]

The 4 'W's of Withdrawal Liability
"[This article provides] a discussion of what withdrawal liability is, business activity that can trigger it and actions that can make a business owner personally liable for the liability. Also provided are steps employers can take to avoid being surprised by a withdrawal liability assessment or the amount of that assessment." (Quarles & Brady LLP)

Workers Saving Too Little to Retire
"Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes ... Only 49% reported having so little money saved in 2008. The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably -- the highest level in the study's 23-year history." (The Wall Street Journal)

Schwab: Nothing to Hide on Value of Money Funds
"[F]loating the value of each share in a money fund from a fixed $1 price would result in 'a lot of imposed inconvenience,' said Rick Holland, the managing director of the Schwab money market fund unit. The industry is trying to ward off attempts by the [SEC] and the [FSOC] to create and potentially enact rules that would require money funds to let the value float each day based on the value of assets held. That would threaten the basic promise of such funds that the value of a share is always $1 and that, in effect, you can bank on that, as you would the value of $1 in a bank account." (On Wall Street)

Americans' Retirement Confidence Remains at an All-Time Low
"Most workers -- 45% -- merely guessed at how much money they will need to accumulate for retirement, rather than doing a systematic needs calculation. Only 18% said they had consulted a financial adviser to help them with the estimate and another 18% tackled their own calculations." (Investment News; free registration required)

EBRI's 2013 Retirement Confidence Survey: Perceived Savings Needs Outpace Reality for Many
"The percentage of workers confident about having enough money for a comfortable retirement is essentially unchanged from the record lows observed in 2011.... Retiree confidence in having a financially secure retirement is also unchanged, with 18 percent very confident and 14 percent not at all confident.... [S]ome workers may be waking up to a realization of just how much they may need to save. Asked how much they believe they will need to save to achieve a financially secure retirement, a striking number of workers cite large savings targets: 20 percent say they need to save between 20 and 29 percent of their income and nearly one-quarter (23 percent) indicate they need to save 30 percent or more." (EBRI)

Ex-CalPERS CEO Buenrostro Indicted Over Apollo Investment
"The indictment mirrors civil charges filed April 23, 2012, by the Securities and Exchange Commission alleging that the two men forged documents at the pension fund to defraud private equity firm Apollo Global Management of $20 million in placement fees by giving Apollo Global the false impression that Sacramento-based CalPERS had signed placement agent fee disclosure letters. Apollo paid placement fees to Mr. Villalobos' placement agent firm, ARVCO Capital Research." (Pensions & Investments)

CalPERS Leaders Call Federal Indictments Against Former Officials 'Another Step on the Road Toward Justice'
"After years of coordination with authorities by CalPERS, the U.S. Department of Justice indicted Buenrostro on five counts including fraud, mail and wire fraud, making false statements to the U.S. government and obstruction of justice.... 'We are extremely pleased that law enforcement authorities are moving to hold individuals accountable for activities which violate the public trust,' said Rob Feckner, President of the CalPERS Board." (California Public Employees' Retirement System)

Clear the Confusion to Ensure ERISA Plan Exhaustion of Administrative Remedies
"In the Second Circuit's view, the term 'benefit claim' could be read to apply only when a participant seeks to commence her benefits immediately upon filing a claim. Kirkendall did not seek to retire immediately, but rather sought to know what her benefits would be if and when she chose to pursue early retirement.... The court thus concluded, as had the Seventh and Eleventh Circuits, that a plaintiff who 'reasonably interprets the plan terms not to require exhaustion and, as a result, does not exhaust her administrative remedies, ... may proceed in federal court.'" [Kirkendall v. Halliburton Inc., 2013 BL 23838 (2d Cir., Jan. 29, 2013)] (Proskauer's ERISA Practice Section Blog)

Anticipating the Bond Bubble Burst: Protecting Your 401(k) Plan
"Just how different are individual bond from bond funds? 'While the value of an individual bond may fluctuate based on changes in interest rates, the bond holder is guaranteed to receive the return of his principal ... Bond funds ... cannot guarantee the return of the investor's principal, ... and prices can fluctuate based on interest rates and other issues regarding the quality of the bond[.]'" (Fiduciary News)

Can a Targeted Retirement Communications Strategy Hit the Bullseye?
"A good retirement communications and education program ... offers plan members help with such financial fundamentals as budgeting and saving. The most effective way to communicate these lessons is with a targeted approach that takes into consideration plan members' ages and other demographic characteristics. The messaging also should be continuous, occurring throughout the year, experts advise." (Retirement Town Hall)

Providence Gets 30% Bonus from Wall Street as Reward for Curbing Pension Liabilities
"Providence was so close to running out of cash a year ago that it couldn't pay for tires on police cars. This month, Wall Street lined up to lend to Rhode Island's capital, shrinking its yield penalty 30 percent. Providence's path toward fiscal health went through the bank accounts of about 1,600 pensioners. They voted to freeze cost-of-living raises for a decade, a move that may be unprecedented[.]" (Bloomberg)

Reporting Changes for Stable Value Fund Expenses
"Stable value investment managers, including Vanguard Fixed Income Group, generally pay wrap fees out of the investment's assets. As a result, when the performance of the stable value investment is reported, it is net of these fees. Until the DOL clarification, Vanguard separately disclosed this cost in footnotes, explaining that the fund's reported performance was adjusted to reflect these separate costs....[The] DOL now requires that wrap fees be included in a stable value portfolio's total annual operating expenses." (Vanguard)

Public Pension Plan Investment Return Assumptions (PDF)
"Although public pension funds, like other investors, have experienced sub-par returns over the past decade, median public pension fund returns over longer periods meet or exceed the assumed rates used by most plans.... [At] 8.9 percent, the median annualized investment return for the 25-year period ended December 31, 2012, exceeds the most-used investment return assumption of 8.0 percent. The 10-year return is slightly below the average assumption of 7.80 percent[.]" (National Association of State Retirement Administrators)

CalPERS Investment Committee Rethinking Use of Actively Managed Funds
"California Public Employees' Retirement System's investment committee is considering whether active managers, once fees are taken into consideration, achieve better returns than the fund's passive index strategies.... More than half of CalPERS' $254.9 billion assets are in passive strategies." (Pensions & Investments)


The Eleven Biggest Flaws With 401(k) Plans
"Not enough people even have a 401(k) plan -- 53% of the population isn't covered.... Even those people with 401(k) plans can't retire because employers don't contribute enough. ... Vesting doesn't start right away so employees don't 'own' all ... Despite the Enron debacle employers can still get away with matching in company stock, which can potentially be worthless... Employees aren't told how much to contribute and the folks who advise the plans appear to be clueless. [Includes six more points.]" (Retirement Solutions)


Ban Actively Managed Funds in 401(k)s, IRAs
"Actively managed, high-fee funds should be banned from any type of account that receives favorable treatment under the Internal Revenue Code to encourage retirement saving. Many studies have shown that actively managed funds underperform index funds, even before accounting for the higher fees charged by the former ... But broker-sold mutual funds perform worst of all." (Alicia Munnell via MarketWatch)


California's State-Run Pension Plan for Private Employees Is Step Towards National DB Plan
"It turns out that the motive for fashioning a national-defined benefit pension plan is to undercut 'pension envy' on the part of the American public. This is the voting public envious of, if not incensed by, the guaranteed pension benefits enjoyed by government workers. Who wouldn't be envious of pension benefits that require a $400 annual taxpayer contribution for each $1,000 of paid government employee salary? These are the same pension payments that can start, for example, as early as age 49 and continue with inflation-indexed increases for the rest of a retiree's life. It's a formula that would immediately bankrupt most American companies. Rather than confront the threat to these benefits head-on, the strategy of the public employee officials is to try an end-run by bringing the same government-funded benefit to everybody!" (Contra Costa Times)


Nobody Should Expect DOL to Provide All the Answers on Target Date Funds
"[The author wonders] if we're giving in to the idea that if something ought to be done, the government should step in and ensure that it is done. That whatever needs to be said, the government should say. This is a problem because it can paralyze fiduciaries, teaching them to wait for guidance before committing to action. It can train fiduciaries to think of safe harbors and regulation, rather than sound investment principles, as the basis of a sound strategy." (Russell Investments)

Benefits in General; Executive Compensation

Abject Dismissal of a Proxy Disclosure Lawsuit May Augur Demise of a Novel Plaintiff Bar Business Model
"Judge James Kleinberg of the Santa Clara County Superior Court in California recently ... dismissed in its entirety a proxy disclosure lawsuit that alleged Symantec's directors had breached their fiduciary duties by, among other things, not disclosing certain information related to compensation consultant compensation, peer group company selection criteria and equity compensation metrics.... [T]he wholesale rejection by Judge Kleinberg of the fundamental underpinnings of the recent wave of proxy disclosure lawsuits may halt in its tracks future similar claims against Silicon Valley-based companies, as well as serving as a guidepost for jurists in other parts of the country." [Natalie Gordon vs. Symantec, et al. (No. 1-12-CV-231541, Feb. 22, 2013)] (DLA Piper)

Employers Slowly Enrich Programs for Older Workers
"To employers, ... older workers increasingly represent serious bottom-line expense and profitability issues. These financial issues may translate seniors' lifestyle aspirations into some impersonal statistics. But in terms of changing workplace programs and perceptions, dollars and cents may also drive change more quickly and effectively than any set of 'feel good' motivations." (U.S.News and World Report)

Press Releases

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