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BenefitsLink Retirement Plans Newsletter

May 20, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Assistant Vice President, Pension
for Associated Third Party Administrators in CA

Health Benefits Analyst
for The Segal Company in CT

Relationship Manager - Corporate Retirement Plans
for Plancorp, LLC in MO

Service Account Manager
for Administrative Systems, LLC (ASI) in CA

Retirement Services Consultant
for CUNA Mutual Group in WI

DB/DC 401(k) Administrator
for Nicholas Pension Consultants in CA

401k Sales
for National Qualified Plan Provider in ANY STATE, CA, OR, WA

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Webcasts and Conferences

Executive Compensation in ESOP Companies
August 20, 2013 WEBCAST
(National Center for Employee Ownership)

The Ongoing S Corp ESOP: Traps for Unwary
August 27, 2013 WEBCAST
(National Center for Employee Ownership)

Understanding the Health Insurance Marketplace
June 13, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

"What to Expect from a DOL Audit"
May 23, 2013 in IL
(Great Lakes NIPA Study Group)

International Equity Compensation
August 28, 2013 WEBCAST
(National Center for Employee Ownership)

Health Insurance Marketplace 101
June 5, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

First Look: bswift 2013 Wellness & Benefits Benchmarking Study
June 19, 2013 WEBCAST
(Employee Benefit News)

"Fundamentals of 401(k) and Other Qualified Plans" - a 3-day Seminar, Atlanta
June 19, 2013 in GA
(SunGard Relius)

View All Webcasts and Conferences


Sens. Harkin, Alexander Initiate HELP Committee Investigation into Pension Lenders
"As an initial matter [the Committee is] seeking [National Association of Attorneys General (NAAG)]'s assistance in identifying the number of victims of improper and/or deceptive pension purchasing schemes and information about any enforcement actions taken. We also seek NAAG's assistance identifying which companies are offering these products and where they are incorporated as well as how these arrangements are structured." (Committee on Health, Education, Labor & Pensions, U.S. Senate)


DATAIR! Smart By Design -- More Choices -- Less Cost

Sponsored by DATAIR Employee Benefit Systems, Inc.

Proposals, Testing, Valuation, IRS/DOL/PBGC Forms, Plan Documents
Includes Graded, 412(e)(3), Cash Balance, Combo Plans
(888) 328-2474    Sales@DATAIR.com    www.DATAIR.com

Before It's Too Late: A Retirement Security Newsletter from Phyllis Borzi, May 20, 2013
"How do I make sure I don't run out of money in retirement? It is one of the most common questions -- and fears -- that arise.... A retirement account balance may seem like a very large amount of money, but seeing that broken down to an estimated lifetime stream of payments can be sobering." (Employee Benefits Security Administration)

California Pension Ballot Measure Wave Crests, Court Slog Remains
"One of the first local ballot measures aimed at cutting public pension costs, a cap on Pacific Grove payments to CalPERS approved by voters three years ago, was ruled unconstitutional by a Monterey County superior court judge ... [who found] that Measure R violated the contract clause of the state constitution, reaffirming the view that pensions promised on the date of hire are a 'vested right' that can't be cut without providing a new benefit of equal value." (CalPensions)

How the Selection of a Financial Adviser Can Go Wrong
"[L]et's say you take a financial problem, or your retirement goals, to two or three financial advisers. New studies show that you're unlikely to get the same, or even similar, recommendations about what investment products to buy or what strategy to pursue. And that could make a big difference in your financial future... [R]etirement-savings recommendations vary greatly based on the type of firm for which a financial adviser works." (The Wall Street Journal)

Improving Retirement Savings Options for Employees (PDF)
"The core principles of trust investment law ... establish a presumption in favor of passive (index) investing and against active investing ... The key question is what this presumption implies for a situation where plan participants are allowed to exercise control over their accounts -- control explicitly endorsed by ERISA.... [P]lan fiduciaries' duty to protect participants from poor investment choices does not simply evaporate in this context." (U. of Pennsylvania Journal of Business Law Review)


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European Pension Plans Remain Focused in Managing Volatility
"[P]lans in the UK had made a meaningful shift out of equities over the last 12 months, with the average equity allocation falling from 43% to 39% (the comparable figure was 68% in 2003). UK schemes have traditionally been among the most equity-heavy in Europe, but now sit behind Ireland, Belgium and Sweden in terms of equity exposure." (Mercer)

Schwab Eliminates Class Action Waivers
"Effective immediately, Schwab is modifying its account agreements to eliminate the existing class action lawsuit waiver for disputes related to events occurring on or after May 15, 2013 and for the foreseeable future. While the company believes that dispute resolution is best handled via FINRA arbitration, we have chosen to voluntarily remove the waiver going forward until the issue is resolved by the appropriate regulatory and/or court decisions." (Schwab)

It's a Matter of When, Not If: Validity of Class Action Waivers in ERISA Plans To Be Tested
"[Why does Schwab's decision to withdraw the class action waiver clause from their brokerage account agreements] matter for ERISA plans? The opportunity to test on a nationwide preclusive fashion whether class action waivers are valid will be too tempting for those that have a vested interested in seeing it happen." (PlanTools, LLC)

Stock Market Surge Buoys Michigan Public Employee Pension Plan Funding
"Public pension plans in Michigan -- hammered by stock market declines in the poor economy and mismanagement in some cases -- are now seeing their investment portfolios growing at the best rate in years.... Many public pension plans around the state ... have been severely underfunded in recent years. For instance, Wayne County's pension plan dipped below 50% funded, while the Michigan State Employee Retirement System hovered at 65.5% funded." (Detroit Free Press)

Massachusetts Eyes Lump-Sum Pension Swaps
"State investigators have contacted the firms seeking information on whether the companies do business in Massachusetts and how the lump-sum offers are marketed. Massachusetts is concerned that the amounts offered are significantly less than the value of the future income.... The state also wants to know if the deals are structured as securities." (Investment News; free registration required)

For Most Retirement Plans, the Great Recession Rate Has Not Resulted in Lower Matching Contributions
"An analysis of more than 9,000 retirement plans ... found about three-quarters of companies (72%) maintained or added employer contributions over the past five years. Only 12% terminated and did not reinstate their matching contributions, and 5% suspended their match, but have reinstated it." (PLANADVISER.com)

Why Moody's Changed Its Pension Analysis (Video)
"Tim Blake of Moody's Investors Service discusses why the firm changed the way it determines pension liabilities and how cities and states are handling pension issues." (Bond Buyer Online)

Are Millennials Ready for Social Security Reform?
"[M]illennials are getting an early start on retirement saving ... First, they have watched their baby boomer parents struggle to prepare for retirement.... Second, this age group is not relying heavily on the solvency of Social Security. In fact, less than half of those surveyed plan on relying on public programs for retirement income." (National Center for Policy Analysis)

Product Providers Must Adapt to Changing Advisor Needs
"Asset managers and other financial product providers got a warning [at the recent IRI Marketing Forum]: The needs of financial advisors and their clients are changing, and it's the providers that need to adapt." (Financial Planning)

Five Steps Toward Fixing the Hole In Your Retirement Plan
"What's left for working Americans who expect to retire is a real puzzler. How can an individual replicate the predictability and solidity of a pension-style plan sized down to one? Is it even possible? The answer is yes, but it takes a fundamental re-imagining of the purpose of saving and retirement." (Forbes)

Hawaii-Bound Pension Trustees May Face Removal by Detroit Emergency Manager
"Four trustees of Detroit's two public pension funds are heading to the Hilton Hawaiian Village Waikiki Beach Resort in Honolulu. The taxpayer-backed pension funds are covering their $22,000 travel tab at a time when the funds are facing claims of mismanagement and said to be at least $600 million underfunded." (Detroit Free Press)

Does Automatic Enrollment Actually Increase Participant Savings?
"Are there those who once might have filled out an enrollment form and opted for a higher rate of deferral (say to the full level of match) that now take the 'easy' way and allow themselves to be automatically enrolled at the lower rate adopted for most automatic enrollment plans? Absolutely. However, as the EBRI data show -- and, for anyone paying attention, have shown for years now -- the folks most likely to be disadvantaged by that lack of action are higher-income workers." (Nevin Adams via EBRI)

The Impact of an Advisor on Retirement Savings Levels (PDF)
"[T]he savings targets set by those in the lowest-income quartile who had sought the input of a financial advisor were associated with a lower risk of running short of money in retirement by anywhere from 9 to nearly 13 percentage points, depending on family status and gender.... As for those who 'guessed' at those retirement savings targets, the analysis also finds that for all four income quartiles, those who did so ... were less likely to choose an adequate target." (EBRI)

Proposed Bill Aims to Protect ESOP Appraisers
"H.R. 2041 [would] modify the definition of fiduciary under [ERISA] to make clear appraisers of [ESOPs] are not ERISA fiduciaries.... This bill is a response to the [DOL's] proposed ... regulation mandating all private ESOP company appraisers be ERISA fiduciaries.... Leaders at the DOL say a new proposal will be issued sometime in 2013. It is expected DOL will not alter the proposed regulation's mandate[.]" (The ESOP Association)

Seventh Circuit Addresses Whether Financial Service Provider Is ERISA Fiduciary
"The DOL argued that AUL exercised its contractual right by not exercising it every time it invested plan assets in a fund that was more expensive than another fund that it could have chosen. The court rejected this 'non-exercise' theory of exercise as unworkable and unprecedented. Instead it found that an omission was insufficient to satisfy the requirement that the individual exercise authority or control over plan assets." (Alston & Bird, via Employee Benefit News)

CBO Projections of PBGC Provisions of the President's FY 2014 Budget Proposal
Contains a year-by-year projection of the federal funding needed by the PBGC through 2023 based upon current law, and a comparison to year-by-year projections if the law were changed to allow PBGC to set its premiums. (Congressional Budget Office)

Senate Bill Would Accelerate Required Minimum Distributions to Most Beneficiaries
"The Student Loan Affordability Act would require the retirement savings accounts to be distributed within five years of the death of the account holder, unless the beneficiary is within ten years of the account holder's age, an individual with special needs or disabled, a minor, or the account holder's spouse. This provision saves taxpayers approximately $4.6 billion over ten years." (Committee on Health, Education, Labor & Pensions, U.S. Senate)

Presumption of Prudence Allowed Stock Drop Case to Be Dismissed on Pleadings
"The Seventh Circuit's opinion includes a remarkable discussion of the overvaluation and excessive volatility theories that are the foundation of fiduciary breach claims in stock drop cases. That discussion leads the court to have 'fundamental doubts' as to whether ERISA fiduciary breach claims can ever be sustained -- at least in the absence of allegations of misrepresentation or other wrongful conduct -- when the employer's stock is publicly traded in an efficient market and employees have other investment options which they can substitute with relative ease." (Thomson Reuters / EBIA)

The Retirement Exchange: A New Plan, or a Twist on the Multiple Employer Plan?
"In the exchange, the document that governs the plan is in the name of each individual employer, not the overarching plan sponsor as is the case with MEPs ... A rogue employer with a 'defective' plan is segregated from the rest of the plans ... A toxic plan infecting others 'does not exist in the exchange.'" (InsuranceNewsNet.com)


Common Sense Redux: The Legal and Economic Imperative Behind the DOL/EBSA's 'Definition of Fiduciary' Re-Proposed Rule
"[1] Absent Preemption under ERISA, Fiduciary Duties would already be applied to Retirement Advisors under State Common Law. [2] Thoughts on the Present State of Affairs for American Consumers. [3] The Application of Fiduciary Standards is Consistent with Capitalism. [4] Examining Several Arguments." (Ron Rhoades, via Scholarly Financial Planner)


Financial Planning Coalition Urges Improvement to Investment Adviser Oversight
"There is widespread agreement on the need to provide greater protection to American investors from financial fraud. The adoption of a fiduciary standard that includes broker-dealers when providing personalized investment advice would help restore and strengthen public trust in financial advisers -- both investment advisers and broker-dealers. Any legislation that creates additional obstacles to SEC rulemaking could needlessly delay or weaken critical investor protection measures such as the fiduciary standard, however unintentionally." (Certified Financial Planner Board of Standards, Financial Planning Association and the National Association of Personal Financial Advisors)


Statement of Senator Tom Harkin on Improving Retirement Security
"I know from my constituents that the dream of a secure retirement is growing fainter and fainter.... [M]ost Americans are deeply worried that they will not have enough money to live on when they stop working. They're right to be deeply worried.... That's why I put out a proposal to ensure that every working person has automatic access to a secure retirement plan." (Committee on Health, Education, Labor & Pensions, U.S. Senate)


How Much Income Will Your 401(k) Provide?
"The [DOL] is developing rules that would require workers to get estimated income illustrations from their defined contribution pension plans so they can understand more thoroughly how long their retirement savings might last. The department is asking for input from retirement planning specialists, employers, workers and others as it looks for ways to educate people and help them save more effectively for retirement.... With each passing decade, workers increasingly are asked to shoulder the responsibility for their retirement as the share of employers offering traditional pension plans shrinks." (AARP)

Benefits in General; Executive Compensation

Key Issues in the IRS Audit Report on Tax-Exempts and Reasonable Compensation (PDF)
"Key areas of IRS interest include: The role of the board or compensation committee in determining the peer group and selecting survey sources; Whether the organization has a compensation policy; Whether all items of compensation (such as country clubs and personal auto use) are appropriately included in income." (Towers Watson)

Baker & McKenzie Compensation and Benefits Quarterly Update
Articles include: PBGC Issues Proposed Rule on Reportable Events; HIPAA Final Rule Issued; Time to Review Medical Plans in Light of Supreme Court Decision; New PPACA Guidance on Expat Plans; FATCA and FBAR Compliance Deadlines Approaching for 2013; IRS Prevails on Application of Section 409A to Discounted Stock Options; Federal District Court Reinforces that Typical Equity Plans are not Subject to ERISA; Target Stock Option Deductions May No Longer Be Available to Acquiring Corporations; Same-Gender Marriage, DOMA and Employee Benefits. (Baker & McKenzie)

Executive Compensation Calendar: When Should You Work on Specific Projects?
"Polls and surveys usually show June and July as the slowest months of any compensation professional's year. This is especially true for those who focus on executive compensation. This post lays out when you may want to focus on some of the high priority executive compensation topics that must be tackled every year. You may find that making your June and July just a little busier, will make December through March so much easier." (PayScale)

Press Releases

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