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April 19, 2013          Get Health & Welfare News  |  Advertise  |  Unsubscribe
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Employee Benefits Jobs

Vice President, Investment Advisory Services
for Sapers & Wallack, Inc. in MA

Voluntary Benefits Support Specialist
for Northwestern Benefit Corporation of Georgia in GA

Manager, Client Services
for The Newport Group in NC

Staff Attorney (Announcement No.: 20130226)
for DC Retirement Board in DC

Defined Contribution - Client Service Associate
for Milliman in CO, TX

Project Manager - Benefits Administration
for Publix Super Markets, Inc. in FL

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Webcasts and Conferences

Smoking Discrimination in the Workplace: On and Off the Clock
Nationwide on May 21, 2013 presented by Lorman Education Services

Department of Labor Legislative and Regulatory Update with Phyllis Borzi Webinar
Nationwide on May 6, 2013 presented by Worldwide Employee Benefits Network (WEB)

Conflicted Fiduciaries: Successful Management of ERISA's Permitted Dual Obligations Fiduciaries
Nationwide on May 16, 2013 presented by ABA Joint Committee on Employee Benefits

View All Webcasts and Conferences

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[Official Guidance]

Text of IRS Notice 2013-17 Providing Relief from the Anti-Cutback Requirements for Certain ESOP Amendments (PDF)
"This notice addresses circumstances in which an ESOP that satisfied the diversification requirements of Section 401(a)(28)(B)(i) by allowing distribution of a portion of a participant's account has become subject to the diversification requirements of Section 401(a)(35)... The relief provided by this notice allows amendment of the ESOP to eliminate all in-service distribution options previously used to satisfy the diversification requirements of Section 401(a)(28)(B)(i). The relief applies to amendments that are both adopted and put into effect under a plan by the last day of the first plan year beginning on or after January 1, 2013, or by the time the plan must be amended to satisfy Section 401(a)(35), if later." (Internal Revenue Service)


DATAIR! More Choices -- Better Guidance -- Less Cost

Sponsored by DATAIR Employee Benefit Systems, Inc.

Documents, SPDs, Amendments, Administrative Forms
401(k)/Profit Sharing, 403(b), DB and Cash Balance Plans
(888) 328-2474††††Sales@DATAIR.com††††www.DATAIR.com

[Official Guidance]

Transcript and Video of IRS Phone Forum on Employee Plans Compliance Resolution System Changes
"The goal of EPCRS is to enable plans to correct failures and to preserve the tax favored status of their plans under 401(a), 403(b), 408(k), or 408(p); 408(k) deals with SEP/SARSEP plans and 408(p) deals with SIMPLE IRA plans. There are, however, some updates in the new Rev. Proc. 2013-12." (Internal Revenue Service)

[Guidance Overview]

DOL Issues Guidance on MAP-21 Annual Funding Notice (PDF)
"MAP-21 required the DOL to modify the annual funding notice to include additional information ... in a prominent manner, for example, on a separate first page before the remainder of the notice.... FAB 2013-01 provides a supplement to the DOL annual funding notice that plan administrators may use to comply with the new MAP-21 requirements. Use of the MAP-21 supplement is not mandatory.... However, pending further guidance, use of an appropriately completed MAP-21 supplement, together with the model annual funding notice, will satisfy the content requirements." (Prudential)

[Guidance Overview]

DOL Publishes Tips for Target Date Fund Fiduciaries
"DOL's emphasis on an 'objective process' is important. With respect to ERISA's fiduciary rules, process is key. Stated simply, the fiduciary needs a clear understanding of what sort of TDF it wants and that the TDF it selects meets those criteria." (October Three)

[Guidance Overview]

Are Your 401(k) Plan's Target Date Funds On-Target?
"The DOL suggests that responsible fiduciaries review the following: [1] prospectuses and investment return information; [2] fees and investment expenses, which may vary significantly; [3] the fund's principal strategies and risks; and [4] the fund's asset allocation, and how that will change over time ... The DOL also suggests reviewing how the fund's characteristics align with employee ages and likely retirement dates, and possibly discussing individual information such as salary levels and turnover rates with prospective target date fund providers." (Osler, Hoskin & Harcourt LLP)


Learn, Network and Sell at the SPARK National Retirement Industry Conference - June 16-18, Washington DC

Sponsored by SPARK (Society of Professional Asset Record Keepers)

Join top industry recordkeepers, asset managers, TPAs, advisors, marketing and sales executives for unequaled educational and networking opportunities. Learn the latest market trends, business strategies, regulatory and legislative issues, and product developments.

Distributional Analysis and Pension Tax Provisions
"[T]his analysis reflects only the reduction in income tax liability, and an employee with no income tax liability who receives an employer contribution is considered to have received no benefit from this tax incentive.... 71 percent of the benefit is going to families with AGI of less than $150,000. Analysis of the distribution of the individual income tax burden shows this group pays only 44 percent of income taxes." (American Society of Pension Professionals & Actuaries)

Has Public Employee Pension Reform Gone Too Far?
"Nearly every state in the union and scores of localities have reacted in recent years to their growing unfunded public pension liabilities with reforms that aim to soften that financial burden in the coming decades. The changes have ranged from reducing benefits for current retirees to raising the retirement age to establishing new (read: cheaper) plans for incoming public employees. But have some of these reforms gone too far? Might governments now be putting themselves in a position where they can no longer attract the best person for the job?" (Governing)

Text of Moody's Adjustments to U.S. State and Local Government Reported Pension Data (PDF)
"Moody's will make four principal adjustments to as-reported pension plan data: [1] Multiple-employer cost-sharing plan liabilities will be allocated to specific government employers based on proportionate shares of total plan contributions; [2] Accrued actuarial liabilities will be adjusted based on a high-grade long-term taxable bond index discount rate as of the date of valuation; [3] Asset smoothing will be replaced with reported market or fair value as of the actuarial reporting date; [4] The resulting adjusted net pension liability (i.e. adjusted liabilities less assets) will be amortized over 20 years using a level-dollar method to create a measure of annual burden related to the net pension liability." (Moody's Investor Services)

Mercer U.S. Pension Buyout Index for March 2013
"[D]uring 2013, the cost of purchasing annuities for retirees has stayed broadly flat at approximately 110% of the accounting liability, an increase from the 108% of accounting liability seen at the end of 2012. However, comparing the cost of annuitization to the economic cost of retaining the liabilities indicates that the margin for buyout over the cost of retention is relatively small (110% compared to 109%) as of March 2013, indicating that buyout premiums are currently attractive for sponsors when compared with all-in retention costs." (Mercer)

Washington State Employees Question Proposed Rules Affecting Pension Calculations
"Groups that represent current and former government workers in Washington state expressed concern Thursday about a plan in the Senate that seeks to prevent sudden increases in pension values.... The bill seeks to prevent large increases in overtime or other special pay close to retirement. Since that kind of compensation can boost the value of pensions for some workers, the bill would require employers -- such as local governments -- to cover the extra pension costs of pay that jumps beyond a certain threshold." (The Seattle Times)

Plugging the Pension Gap -- With Cheese?
"[T]he British food company Dairy Crest has a roughly $128 million deficit in its pension fund as of the end of September, and to help plug that gap, the firm has transferred roughly 44 million pounds of cheese to the pension.... Apparently this isn't the first case of a large food manufacturer handing over large inventories of goods to a pension fund to help plug a gap. In 2010 the firm Diageo -- which manufactures popular spirits like Johnnie Walker and Smirnoff vodka -- gave more than $760 million in 'maturing whiskey' to its retirement fund in an effort to fill a more than $1 billion pension shortfall." (TIME)

Fiduciary Standard Debate Expected to Heat Up This Summer
"[T]he Labor Department's rule proposed rulemaking is ... widely expected to be unveiled in July. But that proposal, which will amount to a revision of the suggested rules the Labor Department offered in 2010, has come under intense opposition from some well-heeled industry groups that have warned it could effectively eliminate the commission-based model and ultimately prompt financial professionals to withdraw from the retirement-plan market altogether." (On Wall Street)

401(k) Borrowing Increases, Mainly by Pre-Retirees
"Employee borrowing from 401(k) plans increased 28% in the fourth quarter from a year earlier, according to Wells Fargo as over 60% of new loans went to individuals heir 50s and 60s.... [Of] the participants who took out loans, the greatest percentage were in their 50s (34.2%), followed by those in their 60s (28.9%) and then by those in their 40s (27.3%)." (On Wall Street)

IRAs Remain Linchpin of U.S. Retirement Savings, But Savvy Account Management Often Lacking
"At the end of last year, IRAs had $5.4 trillion in assets compared with $5.1 trillion in 401(k)s and other defined contribution plans. Some 40 percent of U.S. households own at least one type of IRA, which offer tax incentives to save for retirement. Many of these IRA holders are left to their own devices to manage their accounts." (Daily Journal)

Is Your Smartphone Hurting Your 401(k)?
"Northwestern Mutual released a survey this week that linked the 'immediacy' of communication technology with the difficulty that some people have with long-term planning (like saving for retirement, for example). About 31% of all respondents, and 30% of baby boomers, said that they felt distracted by the constant availability of email, messaging and other data through mobile devices. And 74% of boomers said that the faster pace of society made it harder for people in general to concentrate on long-term goals." (MarketWatch)

Expert Committee Pressing for Pension Reform in Quebec
"Some key recommendations of the Committee include: 1. Creation of a new public plan to provide 'longevity pensions' ... 2. Measures to improve the viability of registered DB pension plans.... 3. Measures to help Quebec workers save more for their retirement and provide them with more flexibility with their retirement savings." (Osler, Hoskin & Harcourt LLP)

American Federation of Teachers Identifies Managers Seen As Opposing DB Plans
"Money managers who support causes seen as being opposed to defined benefit pensions were put on the hot seat Thursday by the American Federation of Teachers, which released a list of firms that the union said were 'all too eager' to seek investments from pension funds 'while simultaneously attacking' fund participants' interests.... Firms named include AQR Capital Management, Dimensional Fund Advisors, Elliott Management, K2 Advisors, KKR & Co., SAC Capital, Third Point Capital, Tiger Global Management and Tudor Investment Corp." (Pensions & Investments)

PBGC Takes Action to Protect Pension Benefits Upon Sale of Sponsor to 'Below Investment Grade' Buyer
"The agency is stepping in because the company is being sold to a below investment grade company, potentially jeopardizing the future of the pension plan.... According to PBGC estimates, the plan is 63 percent funded with $876 million in assets to pay $1.4 billion in benefits. The agency expects to cover $497 million of the $524 million shortfall." (Pension Benefit Guaranty Corporation)

DOL Sues Duluth, Ga., Software Services Company Over 401(k) Plan
The DOL's press release asserts the following: "An investigation by the department's Employee Benefits Security Administration found that between January 2006 and August 2008 the defendants withheld $10,582 in employee contributions to the plan, but failed to segregate the contributions from the company assets as soon as they could do so and failed to forward them to the plan in a timely manner, resulting in lost opportunity costs for the plan participants." (Employee Benefits Security Administration)

World's Longest Retirements Fuel Pressure for Changes in Singapore
"Almost half a century after independence, Singaporeans now live the most number of years after leaving the workforce ... In the world's sixth-most expensive city, 41 percent of more than 1,000 residents surveyed ... said they haven't saved for retirement, with nearly half of them blaming living costs for hampering efforts." (Bloomberg)

Congress Again Joins the Fighting Over State and Local Government Pensions
"The legislation introduced by Representative Devin Nunes of California is essentially the same as the bill he offered in 2010 that languished as unions and advocacy groups for the retirement systems objected to having the federal government intervene in state and local affairs. Although state and local governments are dealing with high pension costs, which strain their already tight budgets, no one has yet asked the federal government for a bailout." (Reuters)

Proposed Legislation Would Measure State and Local Pension Liabilities by Fair Market Value
"The Public Employee Pension Transparency Act [introduced by Rep. Devin Nunes, R-Calif.] would require state and local governments to file annual reports to the Treasury secretary, which would be available on a searchable website.... Mr. Nunes said in a statement that the bill, similar to ones introduced in the last two years without final action, would offer a different way to report pension obligations that currently are 'masked by accounting practices that would never be tolerated in the private sector,' and would rule out federal bailouts." (Pensions & Investments)

Top Five Ways Gen X and Y Consumers Can Improve Their Chances for a Secure Retirement
"[1] Improve your financial knowledge.... [2] Get Help.... [3] Participate in employer-sponsored retirement savings plan or start an IRA.... [4] Steadily increase your contributions.... [5] Don't withdraw your retirement savings." (LIMRA)


Teachers' Union Chief Tries to Veto Use of Mutual Funds Pushing Teacher Reforms
"Public pension funds are frantically chasing higher yields to reduce their roughly $3 trillion in unfunded liabilities. But don't tell that to Randi Weingarten, the teachers union el supremo, who is trying to strong-arm pension trustees not to invest in hedge funds or private-equity funds that support education reform.... To the extent that her causes interfere with getting higher returns from the best-performing investment funds, the trustees would be violating their duties and the law to take her bad counsel." (The Wall Street Journal)


To Boost Retirement Savings, Stop Giving Tax Breaks on 401(k)s
"How about this idea instead: Repeal the tax break associated with 401(k)s, IRAs, and similar tax-sheltered plans. Substitute automatic enrollment for the subsidies. Eliminating the subsidy would boost the government's budget by some $100 billion a year.... Recent economic research strongly supports the policy shift. The main beneficiary of the different approach would be average workers." (Chris Farrell, in Bloomberg BusinessWeek)


It's Hard to Predict the Future, but the Actuaries Must
"[Andy Kessler, in his article, 'The Pension Rate-of-Return Fantasy',] is taking an absurdist perspective to try to discredit all public pensions because of the severe problems of a minority of them. Based on available information, there is no rational basis for suggesting that an assumption in the mid-7% range is not achievable in the long term. The average investor could have done it last year easily." (The Wall Street Journal)


In Massachusetts: Public Workers, But Secret Pensions
"In 1986, Massachusetts' Supreme Judicial Court ruled that the MBTA pension system is not a public pension fund under state law. Seven years later, the same court ruled that the MBTA Retirement Board is a private trust that is exempt from public-records laws. The system may be private in the eyes of the commonwealth's highest court, but the MBTA Retirement Fund's 2011 annual report revealed that the taxpayer-funded authority's annual pension contributions had grown since 2007 from $30 million to more than $52 million." (Governing)


Should the Public Be Concerned by a 70% Funded Ratio for Public Pension Plans?
"The funded ratio is a snapshot measurement as of a particular valuation date and is typically calculated once a year.... While a funded ratio makes it easier to compare plans on a plan-by-plan basis, or to quickly determine if a plan is 'overfunded' or 'underfunded,' it doesn't tell the whole story needed to determine if a plan is in trouble or not." (Retirement Town Hall)


Proposed Legislation Would Expand S-Corp ESOP Opportunities
"S. 742 would amend the [Internal Revenue Code] and the Small Business Act to expand the availability of employee stock ownership plans (ESOPs) in S corporations and expand opportunities for existing S ESOP corporations. 'Needless to say, it is extremely pleasing to see these Senate leaders, representing bi-partisanship, stand up for employee stock ownership through ESOPs, in contrast to the Administration's position that ESOPs do not benefit employees, their companies, and our nation if a company has more than $5 million in revenue per year,' said ESOP Association President, J. Michael Keeling." (The ESOP Association)

Benefits in General; Executive Compensation

Retirement and Medical Benefits: Which Employees of Private Employers Have Both?
"This article uses March 2012 National Compensation Survey (NCS) data to examine private industry workers' access to medical benefits, retirement benefits, and combinations of the two benefits, by major occupation group, wage category, part-time and full-time status, union and nonunion status, and establishment size. The study finds notable differences in the patterns of access to medical and retirement benefits -- separately, and in combination -- among the various worker groups." (U.S. Bureau of Labor Statistics)

Are Compensation-Related Shareholder Proposals Primed for Comeback?
"An early review of proposals filed for 2013 shareholder meetings ... shows year-over-year growth ... Based on early filings, the majority of the 2013 proposals are concentrated in two areas: [1] Stock-retention proposals seeking the adoption of 'hold until retirement' policies requiring executives to retain a portion of stock received through equity grants until retirement (as defined by the company) [2] Proposals to limit automatic acceleration of vesting of equity upon a change in control." (Towers Watson)

BenefitsLink Turns 18
April 19 marks the 18th anniversary of the very first BenefitsLink newsletter. We're happy to still be here, working to bring you timely news and information every weekday. Dave, Lois and Holly send a big thank you to all of our readers and friends! (BenefitsLink.com)

Press Releases

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David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager

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