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July 23, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

PT Benefit Enroller Specialist - English and/or Bilingual
for Total Benefit Concepts in ANY STATE

Installation Coordinator
for Ascensus in MN, PA

401k Client Relationship Manager
for Burnham Gibson Financial Group, Inc. in CA

ERISA Attorney / Assistant General Counsel
for Transamerica in IA

Benefits Tax Associate
for Boutique Benefits Firm in DC

for Saunders Financial in FL

Recordkeeping Team Leader
for Verisight, Inc. in CA

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Webcasts and Conferences

Evaluating Your Third-Party Administrator: Are You Getting What You're Paying For? -- Webinar
August 14, 2013 WEBCAST
(Lorman Education Services)

Webcast: PPA DC Restatements - What to Expect
August 27, 2013 WEBCAST
(National Institute of Pension Administrators)

Getting It Right - Know Your Fiduciary Responsibilities Webcast
August 7, 2013 WEBCAST
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

Unraveling DOMA: How the Supreme Court's Windsor Decision Affects your Employee Benefit Plans -- Recorded Webinar
August 5, 2013 WEBCAST
(Nixon Peabody LLP)

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[Official Guidance]

Proposed Prohibited Transaction Exemptions for Sales of Auction Rate Securities Involving UBS
"The Applicant represents that, in certain instances, UBS may have previously advised or otherwise caused a Plan to acquire and hold an Auction Rate Security. In connection with UBS's role in the acquisition and holding of ARS by various UBS clients, including the Plans [listed in the proposed PTE], UBS entered into Settlement Agreements with certain U.S. states and federal authorities (as described below), and UBS requests exemptive relief for three categories of ARS transactions: (a) Where UBS is required under a Settlement Agreement to send to Plans a written offer to acquire the ARS (i.e., a Settlement Sale); (b) where, under Section 15 of the Texas Settlement, UBS is required to purchase Auction Rate Securities from certain specified categories of holders who contact UBS (i.e., a Section 15 Texas Settlement Sale); and (c) where UBS initiates an ARS sale by sending to a Plan a written offer to acquire the ARS, notwithstanding that such offer is not required under a Settlement Agreement (i.e., an Unrelated Sale)." (U.S. Department of Labor)


2013 Advanced Pension Conference in Chicago August 28-30

Sponsored by SunGard's Relius Education

Why Attend: 19 CE hours, 5 general sessions and 21 breakout topics including the impact of same gender marriage rulings, deeper registration discounts, access to ERISA expert panel, and IT'S CHICAGO! Early fee ends July 29, register now.

[Guidance Overview]

DOL Extends Deadline for Sending 2013 and 2014 Comparative Charts
"[As] a practical matter, [a] plan administrator could choose a date between August 25, 2013 and February 25, 2014 that correlates to the timing of other disclosure notices or is more likely to attract the attention of their participants and beneficiaries and that date would become the 'annual' deadline under the regulation that would apply for future annual disclosures." (Practical Law Company)

[Guidance Overview]

DOL Provides Relief From Required Annual Fee Disclosure
"[If] the plan administrator reasonably determines that doing so will benefit plan participants and beneficiaries, it may provide the 2013 comparative chart no later than 18 months after the first comparative chart was provided (i.e., the one provided no later than August 30, 2012).... For plan administrators that already furnished the 2013 comparative chart, the FAB permits such plan administrators to furnish the 2014 comparative chart using the same re-set rule that is available for the 2013 comparative chart.... [The DOL] is considering replacing the hard deadline at the end of the 12-month 'at least annually' period with a 30-day or 45-day window during which such charts could be provided." (Proskauer's ERISA Practice Center)

[Guidance Overview]

DOL Issues Fee Disclosure Relief
"[The] relief may be limited, because the FAB 2013-02 applies only to the 'comparative chart' disclosure requirement. Under the FAB, a plan administrator is considered to satisfy the 'at least annually thereafter' requirement if the 2013 comparative chart is furnished no later than 18 months after the date that the prior comparative chart was provided. This will allow those plan administrators who have not yet provided the comparative chart the opportunity to 'reset' the timing to align with other year-end participant notices." (Ferenczy + Paul LLP)

[Guidance Overview]

Employee Plan Fix-It Programs and How to Use Them (PDF)
18 presentation slides. Excerpt: "Why Use These Programs? IRS and DOL are increasing audit activity; Some problems may be self-corrected; Higher penalties apply if the plan sponsor doesn't find the problem first; Electronic filing of 5500's means that there will be faster followup if return indicates noncompliance." (Osler, Hoskin & Harcourt LLP)


PSCA's 2013 National Conference, Sept. 9-12, in Scottsdale, AZ

Sponsored by PSCA (Plan Sponsor Council of America)

Join leading defined contribution plan experts for keynotes presentations, workshops, roundtables, and networking opportunities at the premier industry conference of the year. Use discount code BLMDISC for an additional $150 off your registration.

Detroit Bankruptcy Case Heads to Wednesday Hearing on Challenges
"Concerned that retirement benefits will be slashed, Detroit retirees, workers and pension funds have filed three lawsuits ... 'Not once, did [Detroit Emergency Manager Kevyn Orr's] representatives sit down and seek to negotiate a solution with our union,' Steven Kreisberg, national director for collective bargaining for AFSCME, [said]. 'Our members and our retirees were never given the opportunity to address the serious issues of the type of cutback that the emergency manager is seeking[.]'" (Reuters)

Just How Generous Are Detroit's Pensions?
"Retired general city workers, such as librarians or sanitation workers, received average payments of $18,275 a year in 2011, according to the Detroit General Retirement System. But those who put in the most time (or earn higher salaries) can see far healthier payments. A general city employee who retired in 2011 with an average ending salary of $60,000 and 40 years of service could receive around $45,000 a year." (KTXS)

Bad Real Estate Deals Return to Haunt Detroit's Pensions
"A litany of such deals gone wrong shows how a municipal retirement system for 30,000 employees and retirees -- propped up by $1.4 billion in borrowed money -- became a cash cow for a select few. Now, these bad investments are coming back to haunt workers and pensioners as the city proposed slashing their benefits in its filing last week of the biggest municipal bankruptcy in U.S. history." (Bloomberg)

[Guidance Overview]

Update on FATCA for Non-U.S. Retirement Plans (PDF)
"[FATCA] would impose a 30% withholding on most interest and dividends paid by US payors to non-U.S. retirement plan funds beginning January 1, 2014, unless such non-U.S. plans are exempt under U.S. Treasury regulations or are specifically listed in an 'Intergovernmental Agreement' (IGA) entered into between the U.S. and the other country. There have been a number of recent developments worth noting for non-U.S. retirement plans, including a 6-month delay in the imposition of the tax, a new draft form for seeking an exemption, and new IGA listings of exempt plans for Spain and Germany." (Groom Law Group)

Top Public Pension Earner Sues City of Vernon After CalPERS Cuts His Benefit
"CalPERS last year decided to cut his pension to $115,000, concluding he'd derived some of his hefty salary improperly. So now the 78-year-old Malkenhorst is suing [the city of] Vernon to make up the difference. His lawyers are making a novel if improbable argument: Because it paid him a high salary, the city is responsible for keeping his retirement benefits at the higher level even though CalPERS balked.... It could turn into a test case for other city leaders who have seen their hefty pensions cut by CalPERS." (Los Angeles Times)

ERISA Advisory Council to Meet August 27-29
"The purpose of the open meeting is for Advisory Council members to hear testimony from invited witnesses and to receive an update from [EBSA]. The EBSA update is scheduled for the morning of August 28, subject to change. The Advisory Council will study the following issues: (1) Successful Retirement Plan Communications for Various Population Segments, (2) Locating Missing and Lost Participants, and (3) Private Sector Pension De-risking and Participant Protections. The schedule for testimony and discussion of these issues generally will be one issue per day in the order noted above." (Employee Benefits Security Administration, U.S. Department of Labor)

Rep. Richard Neal Reintroduces Retirement Savings Legislation
"The bill is to a large extent a laundry list of improvements to the current system ... [The proposal would] eliminate the 10% cap on automatic contributions and change the escalation rate -- '3%,' '4%,' etc. -- to 'at least 3% (but not greater than 10%),' 'at least 4%,' etc.... [The] proposal considerably narrows the application of section 4062(e) and would go a long way towards limiting PBGC's ability to apply this rule in what many view as an inappropriate manner.... The bill would generally require sponsors of 401(k) plans to cover employees working more than 500 but less than 1,000 hours per year for three consecutive years." (October Three)

Prof. Tamar Frankel Says DOL Should Return to ERISA's Original Definition of Fiduciary
"[U]sually investors do not know how much the brokers' fees truly cost them (and for how long). Their agreement without knowledge does not relieve fiduciaries of their duty to avoid conflicts-of-interest. But investors truly do not know what they are buying and how much they are paying. Their trust is unjustified and the brokers do not meet fiduciary duties. Perhaps they do not meet even contract duties.... [I]f a broker calls or if you see an attractive invitation, regardless of anything you see ask: 'Are you a registered adviser?' And go with those who say: Yes, in writing!" (Fiduciary News)

Retirement Savings Plans Are Not Just About Saving Anymore (PDF)
"The purpose of this paper is to provide plan sponsors and other interested parties with a broad overview of potential retirement income strategies, the considerations of prudent implementation, and general information regarding new and emerging retirement income oriented strategy. It is not intended to portray any particular strategy as superior to any other, but rather to highlight the trade-offs that plan sponsors should consider when reviewing options and provide a basic understanding of the differences that exist." (National Association of Government Defined Contribution Administrators)

Federal Employees Shying Away from Thrift Savings Plan
"The number of civilian participants enrolled in the federal employees' retirement investment plan has dropped to its lowest point in the last year.... TSP funds performed poorly in June, though they have so far rebounded in July." (Government Executive)

Majority of U.K. Pension Trustees Say Current Governance Structures Aren't Working
"Over half (56 percent) of those surveyed felt their current governance structure does not allow them to easily take advantage of market conditions to improve their funding levels, with many trustees unable to make informed and timely decisions due to a lack of resources, including limitations of time and/or expertise. Nearly two-thirds (65 percent) of respondents revealed plans to review their investment consultant within the next three years and a further 28 percent over the coming 12 months, demonstrating an appetite for change amongst trustees." (SEI)


Sen. Tom Harkin's USA Retirement Funds Proposal Unlikely to Become an Introduced Bill -- But Politics Rarely Predictable
"The concept of a new sort of 'multiple employer collective fund' is innovative. It is a creative solution to the small- and medium-sized employer fiduciary problem. To characterize that problem in its simplest terms, there is concern at DOL and amongst participant advocates that fees in the small- and medium-sized employer market are too high, investment fund lineups are 'sub-optimal', and that conflicts of interest among recordkeepers, consultants and mutual fund companies are the cause." (October Three)


Protecting Retirement for Our Country's Educators
"Maximizing participation, providing valuable financial education, creating an excellent menu of investment strategies, and minimizing expenses are the goals of most sponsors. While these objectives are straightforward, many school district plan sponsors struggle with how to implement them.... Does a greater number of investment providers result in better outcomes for 403(b) plan participants? ... Research continues to prove that excessive choice, rather than being a benefit to participants, is actually a detriment." (Pensions & Investments)


Why Target Date Funds Fail in the One Area They're Supposed to Succeed
"Target date funds are experiencing rapid growth as baby boomers approach and enter retirement, growing by an average of 30% per year ... Usually, one would expect a retail product in a fast-growing, $500 billion market to have a great reputation among the consumers buying the product and the professionals who provide, recommend and sell it. The odd thing here is that its growth may be largely attributable to ignorance. Most owners of the product don't understand basic, important features of what they own." (Ron Rhoades in RIABiz)


ERIC Applauds DOL for Providing Relief from Fee Disclosure Deadline for Self-Directed DC Plans
"We appreciate the DOL for recognizing the administrative burden and additional cost that the existing deadline for furnishing the comparative chart plan would have placed on plan sponsors ... As most plans operate on a calendar year basis, we believe it makes much more sense to permit plan sponsors to distribute these participant fee disclosures with other year-end disclosure requirements[.]" (The ERISA Industry Committee)


The Moral Hazard of 'Too Big to Jail' (PDF)
"Wall Street and FINRA ... are deepening the moral hazard for retirement plan sponsors and making it that much more difficult for plan sponsors to fulfill their fiduciary and ethical responsibilities.... By classifying plan sponsors as institutional investors who ought to know better, instead of eliminating the problem of information asymmetry, FINRA is providing Wall Street with a defense should the plan sponsor ever decide to sue its 401k vendor." (Journal of Compensation and Benefits)


The Lessons of Detroit for Private Sector Retirement Plans
"Detroit's bankruptcy, as has other municipal bankruptcies, demonstrates the importance of managing retirement risk for employers, and the manner in which the failure to do so in a timely manner can spell disaster down the road, for both the employer and its retired employees.... [C]omparing municipal pension problems with corporate, ERISA-governed retirement plans is a little bit of comparing apples to oranges, but the differences between the two scenarios can't override the key similarity and take away: that ignorance by an employer of its ability long term to continue to make pension promises without regard to a future ability to pay is not bliss[.]" (Stephen Rosenberg of The McCormack Firm, LLC)


FINRA's Scandalous Litany of Failures and Its Efforts to Redefine the True Fiduciary Standard Out of Existence
"Here we stand, more than seven decades after the creation of what is now the Financial Industry Regulatory Authority Inc., and we see that it has resisted nearly every attempt to raise the standards of conduct for its members above the low standard of suitability. The organization has completely neglected its mission to protect consumers, and instead has fostered conflict-ridden business practices and the lax regulation of its members." (Ron Rhoades in RIABiz)


The Way Out of the Broker Fiduciary Dilemma: a Professional Regulatory Organization
"If the public knows that a member of the [proposed Professional Regulatory Organization] is a professional and is held to the highest fiduciary standard, then all the mishmash of titles and credentials and consumer confusion about roles and obligations flies out the window. The brokerage firms can call their sales staff 'advisors,' 'planners' or 'demigods' on their business cards, but if they aren't members of this organization, then the public knows that they aren't professionals, just like they know that nurses are not doctors. If they ARE members of this organization, then they are living under rules which forbid them from recommending the house products and slyly recommending high-commission annuities for every financial circumstance." (Bob Veres in Inside Information)

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David Rhett Baker, J.D., Editor and Publisher
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