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March 22, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Senior Client Conversions Manager
for Charles Schwab in NC

Client Relationship Consultant
for Gallagher Retirement Services in MA

Benefits Analyst (ECRO)
for Chugach Alaska Corporation in VA

Tax Specialist
for Charles Schwab in TX

Manager of Retirement Plan Processing
for Aspire Financial Services in FL

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Webcasts and Conferences

Follow the H.R. Leader - Live FutureOffice Network Smartcast
Nationwide on April 16, 2013 presented by Davidson Marketing Group -- FutureOffice Network

Healthcare Reform Webinar - Improvements Effective January 1, 2014
Nationwide on March 29, 2013 presented by Davidson Marketing Group -- FutureOffice Network

HIPAA Omnibus Rule Changes for Covered Entities Webinar
Nationwide on April 9, 2013 presented by BridgeFront

"Form 5500 Workshop 2013: Issues and Answers" - Atlanta
in Georgia on April 18, 2013 presented by SunGard Relius

"Form 5500 Workshop 2013: Issues and Answers" - New Orleans
in Louisiana on April 18, 2013 presented by SunGard Relius

"Form 5500 Workshop 2013: Issues and Answers" - New York
in New York on April 18, 2013 presented by SunGard Relius

"Form 5500 Workshop 2013: Issues and Answers" - Philadelphia
in Pennsylvania on April 23, 2013 presented by SunGard Relius

What the Pension Rights Center Can Do for You and Your Clients Webinar
Nationwide on March 29, 2013 presented by Pension Rights Center

Workforce Benefits Online Conference 2013
Nationwide on April 10, 2013 presented by Workforce

HIPAA Omnibus Rule Changes for Business Associates Webinar
Nationwide on April 11, 2013 presented by BridgeFront

View All Webcasts and Conferences

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[Guidance Overview]

What You Need to Know About FATCA's Impact on Non-U.S. Retirement Plans
"The final regulations provide important exemptions from FATCA's reporting and withholding requirements for some, but not all, non-U.S. retirement plans. In response to public comments, the final regulations revised certain exemption requirements under the proposed regulations to broaden the types of retirement plans that will be exempt from FATCA." (McDermott Will & Emery)


Attend the Benefits Conference of the South, May 9-10!

Sponsored by ASPPA

The Benefits Conference of the South provides an opportunity to discuss employee benefits issues with colleagues and representatives from the IRS & DOL!

[Guidance Overview]

Roth Retirement Savings Are More Accessible Than Ever (PDF)
"One of the most important considerations is that of designing a communication program to explain the benefits of Roth contributions and how they differ from traditional contributions to participants. Such a program would ideally incorporate information about the conversion opportunity so that participants have a full understanding of the options available to them, as well as an awareness of the tax ramifications of converting assets to a Roth account." (Arnerich Massena)

401(k) Fee Update: Ninth Circuit Affirms Edison Decision
"The Ninth Circuit rejected a 'continuing violation theory' in favor of a bright-line rule that the act of designating an investment for inclusion starts the running of ERISA's six-year [statute of limitations ('SOL')]. Beneficiaries did not have 'actual knowledge' of the alleged deficiencies in the process for selecting retail class mutual funds for the plan's investment line-up, and, therefore, ERISA's three year SOL does not apply.... The Ninth Circuit panel affirmed the district court's grant of summary judgment to defendants on the claim that revenue sharing between mutual funds and the administrative service provider violated the plan's governing document and was a conflict of interest." (Benefits Bryan Cave)

And the Ninth Circuit Swings Away at Tibble v. Edison ...
"The Court held that, in this context, ERISA's six year statute of limitations starts running when a fiduciary breach is committed by choosing and including a particular imprudent plan investment. The Court held that the fact that it stayed in the investment mix did not mean that the breach continued, and the statute of limitations therefore did not start running, for so long as the investment remained in the plan." (Boston ERISA Law Blog)

Text of Ninth Circuit Opinion in Tibble v. Edison (PDF)
"Rejecting a continuing violation theory, the panel held that under ERISA's six-year statute of limitations, the district court correctly measured the timeliness of claims alleging imprudence in plan design from when the decision to include those investments in the plan was initially made.... The panel held that the defendants did not violate their duty of prudence under ERISA by including in the plan menu mutual funds, a short-term investment fund ... and a unitized fund for employees' investment in the company's stock. The panel affirmed ... that the defendants were imprudent in deciding to include retail-class shares of three specific mutual funds in the plan menu because they failed to investigate the possibility of institutional-share class alternatives." (U.S. Court of Appeals for the Ninth Circuit)

Two Detroit Pension Officials Indicted in Bribery Conspiracy
"[General Counsel Ronald] Zajac and [former trustee Paul] Stewart were added as defendants in a superseding indictment that had already charged former city Treasurer Jeffrey Beasley and investment sponsor Roy Dixon with the bribery and kickback conspiracy.... [The indictment alleges that] Stewart accepted a $5,000 casino chip, a Christmas basket that included an envelope with thousands of dollars in cash, a cash payment of $2,500 during a trip to New York City, a cash payment of $2,500 during a trip to Florida, an excursion to the Bahamas ... a trip to Naples, Florida, ... [and] a 'birthday present' of $5,000 in cash at a party at the Atheneum Hotel. [According to the indictment,] Zajac organized the party, and Zajac solicited and collected the cash from people having business before the Boards of Trustees of the pension funds." (Federal Bureau of Investigation)

Federal Indictment Alleges Detroit Pension Fund Trustee Pocketed Basket of Cash and Trips
"For 30 years, attorney Ronald Zajac watched over Detroit's billion-dollar pension funds.... According to the 13-count superseding indictment, Stewart accepted thousands of dollars in cash, trips, entertainment and other items of value from people seeking investments from the Police and Fire Retirement System." (Detroit Free Press)

Former CalPERS Chief Indicted Over Fraud
"The corruption charges against Mr. Buenrostro and Mr. Villalobos are connected to a nationwide pay-to-play scandal that erupted several years ago. Regulators from numerous states, including California and New Mexico, have cracked down on widespread influence peddling in how their state pension funds were invested. The scandals focused on the role of middlemen, or placement agents, who charged lucrative fees to help money managers win business from state pension funds." (The New York Times; free registration required)

Illinois House Votes to Curb Pension COLAs
"After years of debating how to deal with the most underfunded public employee pension system in the nation, the Illinois House voted Thursday to sharply curb automatic cost-of-living increases to retirees that helped drive up the state's retirement costs.... The measure would affect current and future state retirees, except judges, and is estimated to save as much as $100 billion in taxpayer dollars over 30 years owed to the pension systems and to immediately cut the unfunded liability by as much as $20 billion. But its fate remains questionable in the Senate." (Chicago Tribune; free registration required)

Kansas Lawmakers End Push for 401(k)-Style Public Pension Plan
"A proposal for issuing $1.5 billion in bonds to boost the long-term health of Kansas' public pension system advanced Thursday in the state Legislature, but Republican lawmakers who want to put new government employees into a 401(k)-style plan abandoned an effort to pass such a bill this year.... The measures followed two years' worth of legislation overhauling the retirement system for teachers and state and local government employees." (Kansas City Star)

DOL Alleges Scotia, NY, Plan Was Abandoned by Fiduciaries
"Sunrise Enterprises 401(k) Profit Sharing Plan, based in Scotia, N.Y., is a defined contribution employee benefit plan established in 2003. The plan was sponsored by Near-Rychcik, Inc., which ceased operations in 2004 and was dissolved in 2012.... [T]welve participants cannot access their pension benefits. Resolution: The Labor Department is seeking the appointment of an independent fiduciary to administer the plan and distribute its assets to participants and beneficiaries." (Employee Benefits Security Administration)

California Teachers Pension Faces $73 Billion Funding Gap
"[I]t would take another $4.5 billion a year to get CalSTRS up to par in 30 years. Currently the system gets $5.7 billion a year from teachers, school districts and the state, with the state's contribution coming to $1.4 billion." (The Examiner)

As Boomers Age, 'Lost' Pension Participants Come Knocking (PDF)
"As Baby Boomers retire, plan sponsors are seeing more and more people come forward with old letters describing pension benefits. Because no electronic records existed when the Boomers were in their prime, today's plan administrators have to play detective to determine if pensions are owed, lump sums were paid, or whether annuity contracts were purchased." (Milliman)

Looking Back -- and Ahead -- at the Pension Promise
"What have we gained, lost and learned with the shift to DC? We now know that plan sponsors can't exist in perpetuity -- or take on unlimited risk.... But while the DC movement isn't yet fully mature, concerns are emerging.... So it's definitely time for the fourth generation of retirement." (Towers Watson)

Pension De-Risking Through Borrowed Accelerated Contributions
"The idea of accelerating cash contributions may seem counterintuitive, especially with the passage of funding relief ... that lowers near-term cash contribution requirements. However, achieving a relatively strong funded status can open the door for certain de-risking actions." (Towers Watson)

Pension Plans Evolve into Quasi-Insurers
"[L]egislation passed in 2006 has made private-sector pension plans look more and more like insurance companies. Many corporate pension plans are shifting their asset allocations heavily toward fixed income to the point where the plans look more like the portfolios of an annuity provider. And in some instances, the pension plan can loom so large that the pension liabilities can swamp the market cap of the corporation." (CFO.com)

Annuity Sales at Lowest Level Since 2005
"Although fixed annuity sales have slowed down since their late 2008 and early 2009 highs, index annuities within fixed annuities reported a record high of $33.9 billion in 2012, a 5% increase over 2011, according to LIMRA." (Financial Planning)

Target Date Retirement Fund Tips for ERISA Plan Fiduciaries (PDF)
"Eight key points for plan fiduciaries to remember when choosing a TDF: Establish a process for comparing and selecting TDFs ... Establish a process for periodic review of the plan's TDFs ... Understand the TDF's investments ... Review the fund's fees and investment expenses ... Inquire about whether a custom or non-proprietary target date fund would be a better fit for your plan ... Develop effective employee communications ... Take advantage of available sources of information to evaluate the TDF and recommendations you receive regarding the TDF selection ... Document the process" (ING)

Managing Investment Responsibilities: Investment Decisions for Plan Fiduciaries (PDF)
"By establishing a defined contribution plan, businesses provide their employees with an essential pathway to potential financial security in retirement.... [P]lan sponsors retain several essential duties. Chief among these responsibilities are investment option selection and monitoring. These critical tasks require adherence to fiduciary standards of conduct. Failure to follow these standards may have serious consequences for the plan participants, organization, and plan fiduciary." (LIMRA and Transamerica Center for Retirement Studies)


Mismanaged State Employee Pensions Bill Taxpayers for Shortfall
"For years, state and local governments have been playing imaginative or patently dishonest games with their pension funds, thinking they could get away with it. But now the chickens are coming home to roost, as federal authorities have begun cracking down on corruption and mismanagement." (The Fiscal Times)


CalPERS Indictment the Tip of the Iceberg?
"If true, the allegations are very 'troubling' because they involve the highest office of the biggest and best known public pension fund in the United States.... I'm not sure that anyone will ever be asked to answer tough questions as the case will be buried. What I can tell you is that CalPERS' new CEO, Anne Stausboll, has a stellar reputation and she has implemented first-rate governance standards to make sure nothing like this ever occurs again." (Pension Pulse)


CalPERS Indictment Leaves Key Questions Unanswered
"[T]hese charges don't allege that the pair improperly influenced CalPERS to invest in a fund that it otherwise would not have invested in, or that Buenrostro personally benefited from a successful Villalobos placement. Instead, they relate Villalobos' attempts to get paid by Apollo for work he actually completed -- but for which CalPERS didn't want to acknowledge. When CalPERS staff refused to sign the verifying documents, Villalobos and Buenrostro took matters into their own hands." (Fortune)


Public Pension Fallacy #5 Will Not Go Away
"When public pension fund administrators assume their risky investments will achieve the expected return, they are failing to account for the risk that their investments will underperform expectations. Lowering the discount rate measures the cost of that risk, which comes in the form of a contingent liability on future taxpayers. Risk-adjustment through a lower discount rate doesn't involve any 'predictions' or 'assumptions' or 'projections' -- it measures the actual amounts that financial markets charge to guarantee payment of a future liability." (Public Sector Inc.)

Benefits in General; Executive Compensation

Paying Executives Today Requires Wider View of Pay and Performance
"Both pay and performance can be measured in various ways, and the methods don't always align neatly, depending on the measurement period.... The tenuous correlation between corporate financial performance and stock returns complicates companies' struggles to appropriately reward executives for meeting corporate performance goals while maintaining a strong linkage with the shareholder experience." (Towers Watson)

BLS Report of Employer Costs for Employee Compensation, December 2012
"Private industry employers spent an average of $28.89 per hour worked for total employee compensation in December 2012. Wages and salaries averaged $20.32 per hour worked and accounted for 70.3 percent of these costs, while benefits averaged $8.57 and accounted for the remaining 29.7 percent. Of total benefit costs, private industry employer costs for paid leave benefits in December 2012 averaged $1.98 per hour worked, or 6.9 percent of total compensation. Included in this amount were employer costs for vacations, holidays, sick leave and personal leave." (U.S. Bureau of Labor Statistics)

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David Rhett Baker, J.D., Editor and Publisher
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