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May 13, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Benefits Underwriting Analyst
for Northwestern Benefit Corporation of Georgia in GA

Benefits Manager
for Chemeketa Community College in OR

Client Service Representative
for Associated Pension Consultants in CA

Sales and Marketing Consultant
for FACTS, Inc. in IN

Vice President, Sales
for Prudential in NY

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Webcasts and Conferences

Capital Forum on Pensions
June 19, 2013
(Western Pension & Benefits Council - Sacramento Chapter) in CA

NYU 66th Annual Conference on Labor: Regulation of Compensation
June 6, 2013
(New York University School of Law) in NY

401(k) Rekon is coming to Sacramento, CA
May 15, 2013
(401(k) Rekon) in CA

Chicago Regional
May 13, 2013
(Women in Pensions Network) in IL

Voluntary Fiduciary Correction Program Workshop
May 30, 2013
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA)) in CA

The Future of Employer-Sponsored Insurance Webinar
May 29, 2013
(National Institute for Health Care Management Foundation) WEBCAST

"Fundamentals of 401(k) and Other Qualified Plans" - a 3-day Seminar, Denver
June 12, 2013
(SunGard Relius) in CO

View All Webcasts and Conferences


[Guidance Overview]

DOL Moves Closer to Lifetime Income Disclosure Rules for Defined Contribution Plans (PDF)
"Although displaying both the current and projected information should be useful to participants and is a terrific start, providing these numbers within the context of all of the employee's expected sources of retirement income and as a range of outcomes provides a more accurate picture of retirement readiness. Additionally, visually presenting the impact of potential actions, such as increasing contributions, may improve the chances of employees acting on that information to improve their prospects for retirement." (Buck Consultants)


FREE Webcast: New IRS Pre-Approved 403(b) Plan Program Explained

Sponsored by ASC

In this free webcast, John Griffin, JD, LLM summarizes what you need to know about this new IRS 403(b) pre-approval program. Join us May 29th. Click here to learn more and sign up today!

DOL Seeks Input on Guidance Regarding Lifetime Income Illustrations (PDF)
"EBSA hopes that providing defined contribution plan participants with 'a lifetime income illustration might spur better planning for the future.' EBSA's goal is to illustrate for workers what their lump-sum retirement savings would actually 'look like when they are spread out over all the years of retirement.'" (Benefits Bryan Cave)

DOL Requests Comments on Proposed Rule for Illustrating Lifetime Income on Benefit Statements
"These particular proposed rules ... focus more narrowly on the need to highlight the income replacement purpose of plan benefits and motivate workers to save more. Presumably to signal some flexibility in achieving those goals, the notice pledges that the DOL will consider reasonable alternatives to direct regulation, including other ways to provide participants and beneficiaries with 'constructive and helpful lifetime income illustrations.'" (Thomson Reuters / EBIA)

Public Pension Plans Need to Know About Treasury Department's Office of Foreign Assets Control (PDF)
"[P]ublic retirement systems must ensure that internal investment programs include screening procedures that identify transactions possibly involving [specialty designated nationals, who are individuals and companies owned or connected with sanctions targets, among whom are Iran, Cuba, Sudan and Syria,] so that such transactions may be examined with closer scrutiny and blocked, as appropriate.... [P]ublic retirement systems should ensure that outside managers and custodians re aware of the need for OFAC compliance[.]" (Groom Law Group)

Do We Already Have a Universal Fiduciary Standard for Stockbrokers?
"Footnote 11 [of the new suitability rule, FINRA Rule 2111,] is significant in that it referenced previous enforcement and disciplinary proceedings which addressed a stockbroker's duties in terms of a customer's 'best interests' ... [T]he prohibition against the broker putting his or her interests before those of a customer sound very familiar to language requiring that a ERISA fiduciary always put a client's interests first[.]' (The Prudent Investment Adviser Rules)


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No Fiduciary Rule Would Be Better Than a Bad One, NAPFA Official Says
"[NAPFA] is concerned about the parameters of a potential fiduciary-duty rule that are outlined in a document the SEC released earlier this year to gather data for a cost-benefit analysis.... The law states that the standard should be no less stringent than the one advisers already meet -- that they always must act in the best interest of their clients.... [NAPFA is concerned that] the SEC could be poised to lower standards for investment advisers rather than raise them for brokers." (Investment News; free registration required)

Plan Sponsors Embracing Social Media
"While many providers continue to dedicate more time and money to more traditional forms of communication and outreach, such as e-mail or direct contact with an adviser or firm representative, plan sponsors are more often linking to plan providers through websites or blogs (39%), LinkedIn (24%), and Facebook (22%) to share or seek news and opinions related to 401(k) plans and providers." (PLANSPONSOR.com)

Investing in Life Settlements
"This paper examines the nascent life settlement industry. It first provides background on the industry, reviewing its history and how it works. It discusses why it may be appealing to institutional investors, and explores in depth the myriad risks. Meketa Investment Group recommends that investors not invest in these strategies, due to the myriad risks involved and our belief that other illiquid asset classes offer better risk-adjusted return potential." (Meketa Investment Group via SSRN)

Optimistic About Their Financial Futures, Gen Y Saving Earlier and Planning Now for Retirement
"In addition to saving more aggressively and earlier, Gen Y is also optimistic about their retirement savings potential. Today, Gen Y mass affluent believe they will save on average nearly $2.5 million for their retirement, compared to those working mass affluent ages 51-64 who anticipate saving just $260,000." (Bank of America / Merrill Lynch)

Union Actuary Says U. Calif. Retirement Plan Overstates Pension Costs
"[A]n actuarial consultant hired by unions contends [one California] state pension system, the UC Retirement Plan, uses conservative methods that keep short-term pension costs high to justify employee rate increases. The consultant suggests, among other things, that the UC plan's 'conservative' investment earnings forecast, 7.5 percent, could be increased to 7.75 percent. Some critics say pension funds should use a bond-based forecast, around 5 percent or even lower." (CalPensions)

Accounting Changes Push Japanese Companies to DC Plans
"At the same time, the Tokyo stock market's recent revival could make it easier for those companies to garner the approval of employees they'll need to make those changes.... In Japan, unlike in the U.S., DB assets accumulated on behalf of active employees can be converted to DC assets, provided employees approve." (Pensions & Investments)

Exchanging Delayed Social Security Benefits for Lump Sums: Could This Incentivize Longer Work Careers?
"This paper explores whether allowing people to receive a lump sum as a payment for delayed retirement rather than as an addition to their lifetime Social Security benefits might induce them to work longer.... Our base case indicates that workers given the chance to receive their delayed retirement credit as a lump sum payment would boost their average retirement age by 1-1/2 to 2 years." (University of Michigan Retirement Research Center)

Retirement Plans Offering Company Stock Presumed Prudent
"[T]he 7th Circuit judges ... [cited] a raft of case law opposing the idea that offering company stock as an investment option for plan participants is an ERISA violation, regardless of the stock's market return.... '[T]he theory also seems to be based often on the untenable premise that employers and plan fiduciaries have a fiduciary duty either to outsmart the stock market, which is groundless, or to use insider information for the benefit of employees, which would violate federal securities laws.'" [White v. Marshall & Ilsley, No. 11-2660 (7th Cir. Apr. 19, 2013)] (Thompson SmartHR Manager)

Four Rules to Help Keep Emotion Out of 401(k) Investing
"[1] Do not base your contribution rate on how the market is performing.... [2] Do not adjust your retirement portfolio based solely on market performance.... [3] Do not take the ups and downs of investment and market moves personally.... [4] Be patient." (Smart401k)

The New Pension Reporting Standard: What It Means for Governments 401(k)
"On a basic level, GASB Statement 68 requires that the difference between a plan's assets (the plan net position) and the present value of projected benefits for past service (total pension liability) be reported as a net pension liability in accrual-based financial statements. In addition, the standard provides new guidance on how to measure a plan's assets, total pension liability, and pension expense." (The CPA Journal)


Text of Comments to EBSA on Benefit Statement Proposals (PDF)
"EBSA has decided that the safe harbor disclosure of the monthly payment associated with the Current Balance should be determined by converting the current balance to a life annuity equivalent assuming the participant has reached his or her normal retirement age ... under the plan on the date of calculation, even if the participant is much younger on such date. EBSA explains the rationale for this calculation as the payment the participant would receive today for life if he/she were old enough today (i.e., [had] reached the normal retirement date). The result of this methodology is to effectively assume no investment return on the current account balance between current age and normal retirement date.... [T]his is not the accrued benefit associated with the current balance; it is potentially misleading and not particularly helpful to someone who is trying to plan for retirement." (Kenneth A. Steiner, FSA Retired)


The Social Costs of Choice, Free Market Ideology and the Empirical Consequences of the 401(k) Plan Large Menu Defense
"Under the 'large menu defense'" courts have held that, even assuming a failure to exercise due care in selecting plan options, the employer can nonetheless claim the protection of the employee-control safe harbor under ERISA because, when the plan's menu is sufficiently large, the plan participant is deemed to have exercised legal control over the relevant investment decision.... Research has shown that large 401(k) menus result in lower participation rates, overly conservative allocations, inferior investment options and other adverse effects that, collectively, cost workers billions of dollars every year." (Mercer Bullard via SSRN)


No Matter What Pension Bill Passes in Illinois, a Lawsuit Is Guaranteed
"Folks, there is going to be a lawsuit no matter what the Illinois General Assembly does.... So let's quit thinking that this matter won't inevitability be settled in court. The question worth asking is: What do we want to be the test case to go before the Illinois Supreme Court? Should it be a law that, if it passes constitutional muster, will solve the pension crisis once and for all, or one that will simply kick the issue down the road for some future General Assembly to address?" (Illinois Policy Institute)


For California Pensions, Math Is Already at Work
"A pension plan is not supposed to contain just enough assets to 'cut checks' to those next in line to receive them. Being fully funded is what allows the pension fund to realize the full returns intended. When a plan is only partially funded, every dollar not invested results in missed investment returns the plan was supposed to realize." (Fox & Hounds)


Retirement Income Reporting: Signs of Progress
"[S]ince the goal of most defined contribution plans is to provide financial security throughout a retiree's lifetime, then the way in which account balances are reported needs to reflect that goal. This has been coming ever since the 401(k) plan started to evolve from a supplementary savings plan into the primary retirement vehicle for a huge section of the private sector workforce[.]" (Russell Investments)


How the IRS Wrecked Your Pension
"[B]y the late 1990s, a whole lot of [multiemployer] pension plans ... didn't want to go to employers and explain why their contributions suddenly weren't tax deductible any more. But the IRS rules ... were very clear: if the fund was overfunded, you had to either stop making contributions, or increase the benefits. And the IRS refused to budge. So the pension plans increased the benefits. The [plans] emerged from the dotcom crash not only with less funding than they should have had, but also burdened with a much richer set of benefits they had to pay out." (The Daily Beast)


Retirement Savings Ideas from Washington Are Mixed Bag
"[S]everal proposals are being floated in Congress to expand retirement savings for workers who don't have access to a plan, but are currently stalled because of partisan disagreement and deficit concerns.... [A]ction at the state level could eventually push forward a federal effort. The legislative activity is further evidence that retirement plan coverage and readiness is a public care that has gathered interest in the political realm[.]" (Vanguard)

Benefits in General; Executive Compensation

[Guidance Overview]

Last Call for Changes to Compensation Committee Charters
"Every Compensation Committee Chair with whom [the author has] spoken has indicated that he/she always believed -- even before Dodd-Frank -- that the Committee had the authority to retain its own counsel and consultants. However, the stock exchange rules require that the Charter explicitly give the Committee the duty and power to review the independence of its advisers, in writing." (Winston & Strawn LLP)

ERISA Does Not Preempt Post-Distribution Suit Against Beneficiaries
"Despite [waiving any benefits from the Plans, [his ex-spouse] never named a new beneficiary for either Plan. Accordingly, the administrator of the Plans determined that the proceeds of both Plans should be paid to Andochick, because Andochick remained the named beneficiary of the Plans.... Andochick argued that ERISA preempts the waivers embodied in the marital settlement agreement. The Fourth Circuit disagreed, finding that '[a]llowing post-distribution suits to enforce state-law waivers does nothing to interfere' with the core objectives of ERISA. Therefore, the Fourth Circuit determined that Andochick should be paid the benefits from the Plans, but that the decedent's estate could seek to recoup those benefit by enforcing the marital settlement agreement in state court.'" (Herrick, Feinstein LLP)

Nonresident Employee Avoids New York Taxes on Deferred Compensation Payment
"New York is known as a state that aggressively pursues and taxes nonqualified deferred compensation earned by nonresidents while working in New York. This advisory opinion favors the taxpayer by not asserting New York taxation in a situation in which unforeseeable circumstances resulted in a change in the method of payment." (Leonard, Street and Deinard)

Sixth Circuit Finds ERISA Does Not Preempt State Law Claims Surrounding 'Invalidation' of Plan by Company Board of Directors (PDF)
"Defendants' duty not to interfere with Plaintiffs' SERP agreement with Metaldyne arises under Michigan tort law, not the terms of the SERP itself. And more to the point ... Defendants' duty is not derived from, or conditioned upon, the terms of the SERP. Nobody needs to interpret the plan to determine whether that duty exists. Thus, Plaintiffs' claim is based upon a duty that is 'independent of ERISA [and] the plan terms[.]'" [Gardner v. Heartland Indus. Partners, LP, No. 11-2327 (6th Cir. May 10, 2013)] (U.S. Court of Appeals for the Sixth Circuit)

Press Releases

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