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March 25, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

401(k) Plan Administrator
for Asperia in MA

Pension Actuary
for Asperia in MA

for Benetech, Inc. in ANY STATE

Qualified Plan Administrator
for DST Systems, Inc. in MO

Director, Negotiated Benefits Department
for United Food and Commercial Workers (UFCW) International Union in DC

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Webcasts and Conferences

Employee Plan Compliance Resolution Systems (EPCRS) 2013
Nationwide on June 21, 2013 presented by McKay Hochman Co., Inc.

2013 403(b) Update
Nationwide on April 10, 2013 presented by McKay Hochman Co., Inc.

View All Webcasts and Conferences

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[Guidance Overview]

DB Contribution Relief Comes with a Catch (PDF)
"At first blush, MAP-21 would appear to make pension plan contributions less likely in the near term. However, it also makes pension deficits more expensive by hiking the PBGC's underfunding charge (the variable rate premium). The rise to nearly 2% on each dollar of deficit may encourage sponsors to voluntarily fund their plan even if not required to do so under MAP-21's higher discount rates. By comparison, the rise in the per-head charge (the fixed rate premium) is of less concern." (NISA Investment Advisors; free registration required)


Register Today! 401(k) Investment Lineup: SF 4/16 - Dallas 4/18 - CHI 4/23 - NY 4/25

Sponsored by Pensions & Investments

Free registration for qualified plan sponsors. Sponsored by Pensions & Investments - learn how to design a 401(k) offering that helps your participants generate lifetime retirement income.

Trial of Bankrupt California City Has Attention of Public Pension Plans Nationwide
"[T]here is a looming, larger question that has pension funds around the country nervous: Will a victory by bondholders in Stockton pave the way for cuts in its workers' pensions and its payments to CalPERS, which, in turn, could lead to the demise of other public pension plans?" (The New York Times)

City of Stockton: We Asked CalPERS for Help
"In the past year, city officials twice asked the California Public Employees' Retirement System (CalPERS) for help, and twice the state pension fund manager rejected their pleas. Stockton either couldn't show that it qualified for a hardship exemption, or CalPERS said the law prevented it from lending a hand to the city as it teetered on the brink of financial ruin and then plunged into bankruptcy.... Creditors argue that Stockton doesn't deserve Chapter 9 protection, in part because the city didn't negotiate a reduction in costs with CalPERS before filing for bankruptcy." (Recordnet.com)

CalPERS to Hike Minimum Contribution Rates 50 Percent Over Six Years
"The CalPERS board [has] tentatively approved an employer rate hike of roughly 50 percent over the next half dozen years, replacing a policy that kept rates low during the recession with a plan to reach full funding in 30 years.... The CalPERS funding level has not recovered from a $100 billion loss during the deep economic recession and, under the current rate policy, is not projected to reach full funding in 30 years. The CalPERS investment fund, expected to provide about two-thirds of future pension payments, peaked at $260 billion in the fall of 2007, dropped to $160 billion in March 2009 and was back up to $256 billion last week." (CalPensions)

Ninth Circuit Decision is Important for 401(k) Plan Sponsors, Participants and Service Providers
"[T]he Ninth Circuit affirmed the conclusion that a breach had occurred by not using the 'institutional' share class rather than the 'retail' share class of the mutual funds selected ... The fact that Edison used an investment consultant to make its selections does not matter, because the consulting firm is the fiduciary's 'consultant, not the fiduciary' ... Edison was not reasonably justified in relying upon its consultant's conclusions because it never demonstrated that Edison or its consultant considered the different share classes." (James E. Arnold & Associates LPA)


Register Now for the 2013 Employee Ownership Conference - April 24-26

Sponsored by National Center for Employee Ownership

Registration prices increase after April 2 -- conference on ESOPs and equity compensation includes 88 panels and many additional interactive sessions, film screenings, keynote addresses and more. April 24-26, 2013, Preconference April 23 - Seattle, WA

Ninth Circuit Joins Circuit Splits in ERISA Section 404(c) Opinion and Defers to DOL Interpretation of Safe Harbor
"Edison did not violate its duty of prudence under ERISA by including 'retail' mutual funds, a short-term investment fund (STIF) akin to a money market (as opposed to a stable value fund) and a unitized fund for employees' investment in the company's stock in the plan. However, it was imprudent in deciding to include retail-class shares of three specific mutual funds in the plan because it failed to investigate the possibility of institutional-share class alternatives." (Practical Law Company)

Fidelity-BlackRock Deal May Speed ETFs in Retirement Accounts
"The new deal could push more employers to work with Fidelity in including a self-directed brokerage option within their plans ... 'To the extent that iShares will be more readily available without transaction fees in those accounts through Fidelity, we think [self-directed brokerage accounts] will become a more attractive option for retirement investors.' according to BlackRock." (ETF Trends)

Just Passing Through? 'Radical' Plan Would Overhaul U.S. Income Tax Treatment of Partnerships
"Congress is debating the biggest rewrite of U.S. partnership rules in 60 years, which may lead to higher taxes for some registered investment advisory firms, real estate and finance businesses -- or prompt them to restructure operations to avoid new costs. The more dramatic of two options from Dave Camp, the top Republican tax writer in Congress, would remove some of the flexibility that has made partnerships attractive legal structures for advisers, real estate investors and hedge funds." (Investment News; free registration required)

Financial Education and Choice in State Public Pension Systems
"[Results of the first National Public Pension Plan Financial Education Survey] indicate that some form of education or advice is offered by every surveyed plan and that the sponsoring entity is actively involved in the development of the programs. However, it appears that legal uncertainties related to advice and education may be a problem for a few plans." (National Bureau of Economic Research; purchase required for full document)

NCAA Bracket Gambling and 401(k) Savings
"This is where corporate America needs to intervene with financial wellness campaigns.... [F]or each employee who elects to contribute $100 into the 401(k) plan instead of betting on the tournaments, the company gives a discretionary match for $100.... Wouldn't the visual of turning $100 bet into a $15,811 payday get employees attention[?]" (Benefits of HR)

401(k) Plans May Be Sitting Ducks: Will Regs Compel DC Fiduciaries to Examine Their Own Conflicts of Interest?
"This ... regulation raises several challenging questions that sponsors and fiduciaries must answer: [1] Does a competitive fee necessarily provide good value? [2] How should value be defined? [3] Did many of the providers' conflicts of interest go unaddressed because ignoring them enabled sponsors and fiduciaries to conceal their own conflicts of interest with participants? ... [S]ponsors and fiduciaries should realize that it is in their best interest to not only seriously address these questions, but also to document the steps they are taking to resolve them." (Investment Horizons, Inc.)

Monitoring Service Provider Compensation Is Continued Focus of Audits and Litigation (PDF)
"[T]he fiduciary should re-evaluate the total compensation paid for plan services in light of [any] new information. If the additional income is significant, it may cause the current fee structure to no longer be 'reasonable'. At that point, further action on the part of the fiduciary may be necessary to reduce other fees to bring the total compensation in line. Depending on the length of time involved and the amount of the undisclosed compensation, it may be necessary to restore earnings back to the participants." (Buck Consultants)

Ins and Outs of Participant-Directed Retirement Plans: Accumulation and Distribution of Benefits (PDF)
35 presentation slides. Excerpt: "The concern is twofold: [1] Will participants have enough money when they retire (benefit adequacy)? [2] How will participants withdraw their money, so that they do not exhaust their accounts or IRAs before they die? ... While plan sponsors can use a variety of means to improve benefit adequacy, the most efficient and effective efforts have been 'automatic:' Enrollment; Deferral increases; and QDIA investing." (Fred Reish)

The Moral Hazard of Uninformed Consent by a 401(k) Plan Sponsor (PDF)
"While the notion of voluntary informed consent is a familiar concept in bio-medical ethics, this column applies this patient-physician issue to the 401k advisor-plan sponsor relationship. This article explores the conditions necessary for ethical decision making, particularly the distinction between information and knowledge, and argues that a moral hazard often exists in both relationships.... The moral hazard lies in the fact that between the DOL, the service provider and the plan sponsor, the plan sponsor has the least amount of knowledge, but faces the greatest potential risk." (Thomson Reuters Journal of Compensation & Benefits)

Presumption of Prudence Not Applicable Because Plan Did Not Require or Even Strongly Encourage Investments in Employer Stock
"[T]he judge who vigorously dissented from the Second Circuit's adoption of the Moench presumption is the author of this opinion defining when the presumption should not apply. In response to this decision, plan sponsors may want to review their plan documents to see whether they sufficiently 'require' plan fiduciaries to provide any employer stock fund offered." [Taveras v. UBS AG, 2013 WL 692535 (2d Cir. 2013)] (Thomson Reuters / EBIA)

Rochester Diocese Pension Fund Falling Short
"Battered by years of historically low interest rates, the pension fund for current and retired lay employees of the Roman Catholic Diocese of Rochester is underfunded to the point that its obligations nearly double its assets, raising concerns about the future of those benefits. Diocesan financial records for the fiscal year ending in 2012, the most recent year for which records are available, show the fund is only 53 percent funded, with $120 million in future payouts and assets of about $64 million." (Democrat and Chronicle)


Is Retirement an Historical Notion?
[R]etirement as we know it today is history ... but there is also no denying Americans are bracing for a retirement crisis. Longer life expectancy, historic low bond yields, low investment returns, the demise of defined-benefit pensions, higher cost-of-living and an ongoing jobs crisis are basically condemning the current and future generations to lifelong job insecurity and pension poverty in their not-so-golden years." (Pension Pulse)


Sound the Alarm on Retirement Crisis
"With 10,000 baby boomers retiring each day, now is the time to get tough on middle- and high-income clients who are living in la-la land when it comes to their retirement expectations. Advisers have to raise the specter of downward mobility and break through the delusions to which many clients still cling." (Investment News; free registration required)


In 401(k)s, the Problem is Fees, Not Complexity
"Yes, retirement savers get a pretty nice carrot to incentivize saving in the form of tax deferral and company matches. But they also get a huge stick alongside it: punitively high fees. The Wall Street Journal reviewed comparative data and came up with the best characteristics of a well-run, affordable 401(k) plan. Total expenses, they concluded, should come to less than 1% and hopefully no more than 0.75%. Target-date funds, the kind that automatically change to lower-risk investments as a worker gets older, should cost less than 0.6%." (Forbes)


California Still Understates the Size of Its Massive Teachers' Pension Deficit
"Using the formula for analyzing pension underfunding developed by Moody's Investors Service, which assumes a more-realistic 5.5 percent rate of return, CalSTRS' pension deficit is $87 billion, or 36 percent higher than officially reported. This means that taxpayers would have to pay an additional $5.1 billion a year for the next 17 years just to make up the underfunding. This would be a near two-fold increase over the $5.8 billion taxpayers (through the state and districts, as well as the salaries they pay out to teachers) poured into the system in 2012." (Dropout Nation)


ICI Supports Senate Budget Amendments to Protect Retirement Savings Tax Incentives
"America's retirement system relies upon the mutually reinforcing components of Social Security, homeownership, defined benefit plans, defined contribution plans, individual retirement accounts, and other savings.... Limiting the tax incentives for retirement savings would undermine this system's foundation and put at risk our nation's progress on retirement security." (Investment Company Institute)


Three Ways to Solve the Retirement Crisis in the U.S.
"If you want to avert a personal or national retirement crisis, there's one surefire way to do that: Calculate how much you need to save for retirement, and get others to do the very same.... In the absence of using an online tool to calculate how much you need to accumulate in your nest egg to fund a comfortable retirement, Greenwald recommends that you consider this rule of thumb: Accumulate 20 times what you need after Social Security and any pension plan that you may have." (MarketWatch.com)

Benefits in General; Executive Compensation

[Official Guidance]

Treasury/IRS Notice 2013-22: Public Comment Invited on Recommendations for 2013-2014 Guidance Priority List (PDF)
"The Treasury Department's Office of Tax Policy and the Service use the Guidance Priority List each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance.... Taxpayers may submit recommendations for guidance at any time during the year. Please submit recommendations by May 1, 2013, for possible inclusion on the original 2013-2014 Guidance Priority List." (Internal Revenue Service)

BofA's Executives Must Hold Stock Longer under New Pay Policy
"Bank of America Corp Chief Executive Brian Moynihan will need to hold shares likely worth millions of dollars for at least a year after he retires, under a new compensation policy that the bank instituted following investor pressure. The new compensation policy also requires some other top executives to keep a minimum number of shares of the bank at least until they retire ... Previously, Moynihan, 53, only needed to hold some stock in the company until retirement, while other top executives did not have such a holding period requirement." (Reuters)

'Pay for Performance' by Executives No Longer a Punchline
"More than half of the compensation awarded to 51 CEOs last year was tied to their companies' financial or stock-market performance, according to a preliminary review of proxy statements ... In most cases, the companies must hit specified targets for the CEO to receive the promised money or equity." (The Wall Street Journal)

Seven Principles for Pay for Performance
"Corporate secretaries and corporate counsel would be well served to think about the principles with which they want to report pay for performance alignment, try to have some consistency from year to year, try to make it easy for the investors to follow it and make it easy for the investors to derive the calculations based on the reporting of the amount earned[.]" (Corporate Secretary)

Tackling Concerns of Independent Contractors in the Workforce
"[T]he Freelancers Union is one of the nation's fastest-growing labor organizations, with more than 200,000 members ... [It] doesn't bargain with employers, but it does address what is by far these workers' No. 1 concern, by providing them with affordable health insurance.... [M]any freelancers ... would rather have regular jobs, but companies will often hire them only as independent contractors. Companies find these workers less painful to dismiss and generally less costly because they rarely receive severance pay or benefits like health insurance or paid vacations." (The New York Times)

Press Releases

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