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BenefitsLink Retirement Plans Newsletter

June 21, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

DC/401(k) Valuation & Compliance Testing Software Support Specialist
for Actuarial Systems Corporation in ANY STATE

DB/DC Specialist
for Novak Birks, PC in MO

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Webcasts and Conferences

Distribution and Taxation: Navigating the Maze -- Web Seminar
July 30, 2013 WEBCAST
(SunGard Relius)

What Retirement Plan Professionals Should Know About the Health Care Reform Law
July 11, 2013 in GA
(ASPPA Benefits Council of Atlanta)

FASB Education Session: Pensions And Other Postretirement Benefits
June 26, 2013 WEBCAST
(Financial Accounting Standards Board (FASB))

What to Expect from an EBSA Investigation
July 9, 2013 in IL
(ASPPA Benefits Council of Chicago)

Taking the Mystery Out of Retirement Planning Workshop
July 25, 2013 in TX
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

Getting It Right - Know Your Fiduciary Responsibilities
July 25, 2013 in CA
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

Health Benefits Laws Compliance Assistance Seminar
July 16, 2013 in VA
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

View All Webcasts and Conferences


[Official Guidance]

Text of Proposed Amendments to ERISA Class Prohibited Transaction Exemption to Remove Credit Ratings Pursuant to Dodd-Frank
"The proposed amendments relate to the use of credit ratings as standards of credit-worthiness in [specifically listed] class exemptions.... [The Dodd-Frank Wall Street Reform and Consumer Protection Act] requires the [DOL] to remove any references to or requirements of reliance on credit ratings from its class exemptions and to substitute such standards of credit-worthiness as [it] determines to be appropriate." (Employee Benefits Security Administration, U.S. Department of Labor)


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

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Proposals, Testing, Valuation, IRS/DOL/PBGC Forms, Plan Documents
Includes Graded, 412(e)(3), Cash Balance, Combo Plans
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[Guidance Overview]

DOL Considers Requiring Lifetime Income Information on DC Plan Statements
"Two frequent concerns have been expressed to the DOL by the retirement plan community: (i) the expense to plan sponsors of providing uniquely personal information on the benefit statements; and (ii) litigation exposure for the plan fiduciaries from plan participants and beneficiaries where actual assets do not meet expectations based on the lifetime income disclosures. The DOL believes these concerns are overstated." (McGuire Woods LLP)

Text of Retail Investor Protection Act (H.R. 2374) as Approved by Committee (PDF)
Introduced June 12, 2013; as marked up and favorably reported out of committee by a vote of 44 to 13 on June 19. Excerpt: "[T]he Secretary of Labor shall not prescribe any regulation under [ERISA] defining the circumstances under which an individual is considered a fiduciary until the date that is 60 days after the [SEC] issues a final rule relating to standards of conduct for brokers and dealers ... The Commission shall not promulgate a rule pursuant to paragraph (1) before -- (A) identifying if retail customers (and such other customers as the Commission may by rule provide) are being systematically harmed or disadvantaged due to brokers or dealers operating under different standards of conduct than those standards that apply to investment advisors under section 211 of the Investment Advisers Act of 1940 [and] (B) identifying whether the adoption of a uniform fiduciary standard of care for brokers or dealers and investment advisors would adversely impact retail investor access to personalized investment advice[.]" (Committee on Financial Services, U.S. House of Representatives)

Ninth Circuit Declines to Apply Presumption of Prudence Where Plan Terms Did Not Require or Encourage Investment in Employer Stock
"There's an inherent tension between Congress' mandate in ERISA that fiduciaries act prudently in making investment decisions, and its desire to permit employers to provide loyalty incentives such as employee stock ownership.... Although broad application of the presumption of prudence may still sound a death knell for stock-drop claims in some circuits, the Ninth Circuit's (like the Second Circuit's) restrictive application of the presumption has laid fertile ground for continued stock-drop litigation. Given ERISA's venue rules, the reasoning of the Harris and Taveras courts demonstrates that fiduciaries may need to be prepared to clear a high hurdle in establishing that a plan that merely permits investment in employer stock 'encouraged' its fiduciaries to so invest." (Seyfarth Shaw LLP)

Terms of Plan Prevented Rebuttable Presumption that Fiduciaries Acted Prudently in Offering Employer Stock to Participants
"The Court acknowledged its previous decisions adopting the presumption of prudence, which has also been adopted by the Second, Third, Fifth, Sixth, Seventh, and Eleventh Circuits. However, the Ninth Circuit concluded that the presumption did not apply in Amgen's case because the terms of the plans did not 'require or encourage' that an employer stock fund be offered as an investment option. In addition, the Court held plaintiffs had adequately alleged that Amgen was a fiduciary for purposes of the decision to continue offering the stock fund, notwithstanding its appointment of a trustee for the plans." (Jenner & Block)


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The Retirement Savings Gap: Time to Panic?
"[T]wo-thirds of households aged 55 to 64 with one or more earners have less than one year of income in retirement accounts. The average retirement savings for near-retirement households stood at $12,000. This is well below benchmarks set by the financial services industry." (Financial Planning)

DC Plan Participants Favor Target Date, International Equity Funds
"[P]articipants lightened up on U.S. equity investments even as the Russell 3000 Index of U.S. stocks gained 16.4 percent for the year. U.S equities remained the largest asset class at 31.1% of holdings, but fixed income saw inflows of 9.2% for the year despite lower yields ... Target retirement date funds dominated asset inflows in the DC plans ... growing from 11.9% to 14.6% of participant allocations during 2012. International equity, meanwhile, grew from 5.9% to 7.6% of allocations in the tracker universe." (Financial Planning)

$35 Million: Cigna and Prudential Settle In-House 401(k) Plan Lawsuit Alleging Excessive Fees
"A significant part of plaintiffs' claims had to do with an investment of over $1 billion in stable value assets invested in Cigna's general account, a practice the plaintiffs alleged was imprudent and self-serving. Generally, the allegations here resemble those in other cases that have previously settled, such as Kanawi v. Bechtel Corp., Martin v. Caterpillar, Inc., and Will v. General Dynamics Corp, which all involved in-house plans and self dealing." (Plan Tools, LLC)

Banks Vie to Run Wal-Mart's $15 Billion Retirement Plan
"While Wal-Mart accounts are much smaller than the average retirement account, the sheer size of the company makes it a coveted -- and closely watched -- client in the retirement industry. It could not be learned when Wal-Mart last conducted a similar review, but retirement plan administration mandates rarely come up for grabs." (Reuters)

Truth in Numbers? A Brief History of Cuts to the Employees' Retirement System of Rhode Island
"Rhode Island was slower than most other states to fund its pension system.... [W]orkers -- many not covered by Social Security -- contributed more toward these benefits than their counterparts in other states. While workers shouldered most of the cost of current benefits, employers failed to pay even their full (smaller) share, leaving ERSRI among the most underfunded plans in the country. Between 2005 and 2010, three rounds of cuts reduced pension benefits for a prototypical 30-year employee by 23 percent." (Economic Policy Institute)

DC Participants Sold Stocks in 2012 Despite Strong Equity Returns
"Domestic equity overall remained the largest asset class at about 31.1%, nearly flat from the end of 2011 due to investment gains, but large-, mid- and small-cap strategies all saw outflows for the year. Small-cap strategies experienced nearly 5% in outflows while large- and midcaps had less than 1% in outflows." (Pensions & Investments)

Detroit Emergency Manager Orders Investigation into Pension Plans
"Detroit Emergency Manager Kevyn Orr has signed an order opening a joint investigation by the Inspector General and Auditor General into possible waste, abuse, fraud and corruption associated with Detroit's two employee benefit programs. This emerges as the Emergency Manager's staff is holding two closed door meetings with employees and retirees telling them how their benefits could be cut in the future.... The two employee pension funds are underfunded by $3.5 billion and retiree health care is underfunded by $5.8 billion." (WXYZ.com (ABC Detroit))

Benefits in General; Executive Compensation

[Guidance Overview]

What Kinds of Expenses Can Be Paid from Plan Assets? (PDF)
[Very nice 5-page chart.] "The assets of an employee benefit plan can be used to pay certain of its expenses while other types of expenses may not be paid from plan assets. The chart below is designed to be used by plan sponsors to assist them in evaluating whether expenses incurred by their plans can be paid from the plans' assets." (Groom Law Group, via Practical Law Company)

[Guidance Overview]

Time to Assess the Independence of Your Compensation Committee's Outside Counsel and Other Advisers
"Based on informal guidance from the SEC staff, it would be advisable to consider whether outside counsel may be deemed to be providing indirect advice to the committee, based on the particular facts and circumstances, thereby triggering the independence assessment requirement. Some examples of potential indirect advice to the committee may include advice regarding: design of stock or bonus plans and awards for executives, preparation of executive employment or severance agreements, assistance with proxy statement compensation disclosures or compensation plan proposals and other regular securities or tax law advice. The SEC has stated that the independence assessment is required of any consultant, outside counsel or adviser that provides advice to the committee, whether or not limited to advice on executive compensation." (Benefits Bryan Cave)

Considering an Acquisition? Begin Total Rewards Planning Now
"Acquisitions mean big changes for numerous stakeholders. The implications for a target company's total rewards structure can be profound, requiring the buyer to tweak metrics, replace certain awards and often realign the performance management framework to support an integrated post-acquisition rewards structure.... It's crucial to have a disciplined methodology for addressing potential issues." (Society for Human Resource Management)

Press Releases

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