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August 2, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Plan Administrator
for PenSys, Inc. in CA

Regulatory Services Analyst
for OneAmerica Financial Partners, Inc. in IN

Benefits Specialist
for Cedars-Sinai Medical Center in CA

for Unite Here Health in IL

Distribution & Loan Specialist
for Scholz, Klein & Friends Enlightened Retirement Group, Inc. in TX

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Webcasts and Conferences

Prohibited Transactions
September 19, 2013 in PA
(ASPPA Benefits Council of Greater Philadelphia)

Fusion Forum 2013
August 21, 2013 in WA
(Pension Plan Specialists)

Getting It Right - Know Your Fiduciary Responsibilities - Part Two - Webcast
August 8, 2013 WEBCAST
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

ERISA Enforcement and Compliance: A 2013 Perspective -- Webcast
August 27, 2013 WEBCAST
(Bass, Berry & Sims)

Health Insurance Marketplaces: Different Strokes for Different States
August 9, 2013 in DC
(Alliance for Health Reform)

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  LinkedIn   Twitter   Facebook Hand-picked links to the web's best news articles,
official guidance, jobs, webcasts and more.
[Guidance Overview]

Ninth Circuit Amends Opinion in Tibble v Edison International
"Although ... the judges tweaked their opinion regarding the application of Firestone deference, the opinion remains effectively unchanged.... The judges have backed down from their very broad decision that Firestone deference to a plan administrator applies equally when violations of fiduciary duties under ERISA sections 404 and 502(a)(2) have been alleged, as when a benefits claim is filed under section 502(a)(1)(B). Instead, they now attempt to harmonize their finding that Edison is entitled to deference with cases such as the John Blair decision from the 2nd Circuit, by arguing that John Blair rejected Firestone deference only when a plan administrator is attempting to replace the prudent man standard under ERISA section 404(a)(1)(B) with the plan interpretation provision under 404(a)(1)(D)." [Tibble v. Edison International, No. 10-56406 (9th Cir. Aug. 1, 2013)] (Plan Tools, LLC)  


Don't miss the ASPPA 2013 Annual Conference at Natl. Harbor, MD!

Sponsored by ASPPA

Attend ASPPA's Annual Conference to inform Congress that they can't overlook pension issues! Registration includes: visits to Capitol Hill, 70+ sessions on topics shaping the industry, networking with 1,500+ retirement plan professionals, and more!

[Guidance Overview]

Slides for Aug. 8 IRS Phone Forum: The Importance of Good Internal Controls (PDF)
64 slides. Excerpt: "Good Internal Controls Affect an Employee Plan Audit: [1] The EP agent will evaluate the effectiveness of the plan's internal controls to determine to perform [a] A focused audit (just look at 3-5 issues) or [b] Expand the scope of the examination; [2] Good internal controls are a key factor in keeping an audit 'focused'; [3] The internal control interview helps the examiner determines whether the plan is [a] Well run or [b] Whether there are serious compliance risks that would give rise to expanding the scope of the audit." (Internal Revenue Service)  

[Guidance Overview]

An Overview of the Rules on Partial Plan Terminations
"[If] 20% or more of employees involuntarily separate from service, there is a presumption that a partial termination has occurred. The IRS continues to assert the 20% standard, even though it has not always prevailed in court.... In Revenue Ruling 2007-43, the IRS describes the process for including and excluding the participants taken into account in determining whether the 20% level has been met or exceeded." (McKay Hochman)  

Text of Amended Ninth Circuit Opinion in Tibble v. Edison International (PDF)
"At least three considerations prompt us to hold that the Firestone framework can govern issues of plan interpretation even when they arise outside the benefits context. First, while the Firestone case did not announce a holding beyond benefits, its rationale did not stem from an interpretive gloss on the welfare-benefits provision of ERISA....Second, one reason the Court in Conkright rejected an exception the Second Circuit had carved out from Firestone deference was its potential to create 'uniformity problems.' ... Third, we observe that consistently applying Firestone to the question of what a plan means, 'by permitting an employer to grant primary interpretive authority over an ERISA plan to the plan administrator,' has the virtue of 'preserv[ing] the "careful balancing" on which ERISA is based.'" (United States Court of Appeals for the Ninth Circuit)  

Many 'Known Truths' About Retirement Industry Are Simply Myths
"24% of auto-enrolled participants proactively increase contribution rates within 12 months, and 23% change investment allocations ... 52% of participants don't take full advantage of the match." (New York Life Retirement Plan Services)  

The ESOP as a Solution
"Employee Stock Ownership Plans (ESOPs) can be a good choice for the right company because they can generate liquidity for the owners in a tax-advantaged form, allow the owners to retain de facto, if not legal, control, and provide employee ownership and the resultant productivity and retentive benefits to the business." (Benefits Bryan Cave)  

Senate Confirms Nominations of Stein, Piwowar to SEC with Full Term for White
"Former U.S. Senate aides Michael Piwowar and Kara M. Stein won confirmation as members of the Securities and Exchange Commission. The current SEC chairman Mary Jo White was also confirmed to a full term that expires June 5, 2019. Senators backed the nominations today by unanimous consent in the final hours before the chamber adjourned for its summer recess." (Investment News; free registration required)  

Matthew Hutcheson Sentenced to 17 Years in Prison for Theft from Retirement Plans
"Judge Nielsen made specific findings that Hutcheson defrauded more than 250 individual victims, used sophisticated means to commit his offenses, abused a position of private trust as a fiduciary and trustee for the plans, and willfully obstructed justice by committing perjury at trial and offering a fraudulent document into evidence.... 'The defendant's despicable conduct jeopardized the financial security of workers covered by these pension plans,' said Assistant Secretary of Labor for Employee Benefits Security Phyllis C. Borzi." (United States Attorney for the District of Idaho, U.S. Department of Justice)  

U.S. Census Bureau Quarterly Survey of Public Pensions: Online Time Series and Trend Charts
"The Quarterly Survey of Public Pensions ... is a quarterly survey that provides national summary data on the revenues, expenditures, and composition of assets of the largest defined benefit public employee retirement systems for state and local governments. The survey consists of a panel of 100 retirement systems, which comprise 89.4 percent of financial activity among such entities, based on the 2007 Census of Governments." [The linked page allows selection of survey results by date range (1968-2013), by type of investment, and with or without seasonal adjustments.] (U.S. Census Bureau)  

Cross-Testing: The Right Tool for Many Jobs
"With the improving economy, some companies are also beginning to pay employee bonuses again. But, along with the cost of the bonus itself comes additional payroll taxes. By using a cross-tested plan design, a company could make individualized profit sharing contributions to certain employees without incurring the cost of the payroll taxes. Not only does this option eliminate the extra payroll cost, it also helps to address increasing concerns of employee retirement readiness that are becoming more prevalent among companies. Recognizing that a bonus is meant to be a reward, and many employees appreciate cash in hand more than a contribution, some companies will split the 'bonus' amount, contributing half to the plan and paying out the other half in cash." (Preferred Pension Planning Corporation)  

Employee Ownership Update, August 1, 2013
By NCEO Director Loren Rogers. Articles include: Department of Labor Data Shows ESOPs Outperform 401(k) Plans; United Kingdom Celebrates Employee Ownership Day; Become Certified in Equity Compensation. (National Center for Employee Ownership)  

Second Quarter 2013 Pension Plan Experience
"During the second quarter of 2013, the funded status of the model pension plan ... increased by seven percentage points: from 79 percent to 86 percent. This increase was driven by a significant increase in interest rates that lowered the liability by 9 percent." (Sibson Consulting)  

Global Pension Finance Watch, Second Quarter 2013
"While second quarter portfolio returns were mixed, year-to-date returns are positive for all regions except for a near-zero result for Brazil.... Interest rate increases in the second quarter led to drops in liability values for all regions except the Eurozone. Liability values have also declined on a year-to-date basis for all regions except Japan. The liability declines are particularly significant for the U.S., Canada, Switzerland and Brazil." (Towers Watson)  

French Retirement Reforms and Intragenerational Equity in Retirement Duration
"Public debates over which lever should be preferred have been paramount in France, with concerns focusing on redistribution issues between high wage high life-expectancy and low-wage low life-expectancy workers.... [This study's] simulations show that increasing the required duration criterion -- as was done by the 1993 and 2003 reforms -- have redistributive impact as regards retirement age, while increasing the normal age -- as was done by the 2010 reform -- has a counter-distributive impact. The redistributive impact on average of the required duration criterion however only holds thanks to the fact that disabled workers -- most of them in the lowest wage quartile -- are exempted from it." (De Economist via SSRN)  


The Power of Diversification and Safe Withdrawal Rates: Weaknesses of the 4% Rule
"The 4% Rule keeps resurfacing like a vampire in a bad horror movie.... [The 4% Rule] (and most other Safe Withdrawal Rate approaches) have just too many weaknesses to be considered an optimal decumulation strategy.... [1] It doesn't accommodate a payout period other than 30 years without adjustment. [2] It doesn't accommodate a different investment approach without adjustment. [3] It doesn't accommodate a desire to leave a specific bequest at death. [4] It doesn't accommodate a flexible spending schedule ... [5] It doesn't coordinate with other fixed income payments such as immediate or deferred life annuities or payments from defined benefit plans. [6] It doesn't adjust for actual emerging experience." (Kenneth A. Steiner, FSA Retired)  


Comments by American Academy of Actuaries to House Ways and Means Subcommittee on Social Security, on Increasing Social Security Retirement Age (PDF)
"A change to the benefit formula can provide the same amount of benefit as results from increasing the full retirement age, but it sends a far different message to the American worker.... Increasing the early eligibility age has the beneficial result of encouraging most individuals to work longer.... Changing the reduction factors so that they are not actuarially neutral would increase the cost of Social Security and undermine the beneficial aspects of increasing the full retirement age[.]" (Donald E. Fuerst, Senior Pension Fellow, American Academy of Actuaries)  


Letter from Republican Senators to DOL on Proposed Fiduciary Definition and Its Effect on ESOPs (PDF)
"We share these myriad concerns over the proposed rule's negative impact on investors and do not want to see access to investment advice narrowed. Furthermore, we write today to also share our grave concern over the less often discussed harm it poses to our nation's [ESOP] companies.... We find it troubling that ... the success of ESOPs are seemingly ignored by [the DOL].... The Labor Department's efforts to expand the definition of fiduciary to include independent ESOP appraisers will only hurt the very employees it seeks to protect." (Senators Mitch McConnell, John Thune, Kelly Ayotte and Roy Blunt)  


Comments of Institutional Retirement Income Council to DOL on Lifetime Income Illustrations in DC Plan Benefit Statements (PDF)
"[L]ifetime income illustrations and projections should be mandated as part of the participant statements.... [W]e recognize that the projection of a future stream of income based on a defined contribution account balance is inherently uncertain. In our view, it would be a disservice to participants if this uncertainty were not explained.... [T]he regulation should mandate a set of assumptions in order to obtain consistency.... We submit that the information should be included in quarterly benefit statements provided to the participants rather than sent as a separate notice." (Institutional Retirement Income Council)  

Benefits in General; Executive Compensation

Two Federal Courts Recognize Same-Sex Spousal Rights for Residents of States Not Permitting Same-Sex Marriage
"These cases may reflect a growing trend of courts and other bodies to recognize -- at least for some purposes -- same-sex marriages validly celebrated elsewhere even if the couple's current state of residence does not recognize such marriages. Notably, the [Ohio] case provided such recognition where the state of residence provides no recognition of the relationship, and the [Pennsylvania] case did so where the state of residence merely recognizes the relationship as a civil union, which is spousal equivalent under state law but is not technically a 'spousal' relationship." (McDermott Will & Emery)  

ISS Launches 2014 Policy Survey
"In contrast to last year's policy survey, which hinted at changes in how ISS would evaluate say on pay by re-examining its peer group methodology and alternative definitions for measuring pay, it's noteworthy that this year's survey includes no questions directly related to say on pay. Instead the focus this year is on criteria under which ISS evaluates directors and equity compensation plans. Here are the details ..." (Towers Watson)  

Congratulations, You've Mastered Shareholder Say on Pay -- Now Get Ready for Shareholder Proposals on Executive Comp
"The most common shareholder proposals in 2013 have been requests for (i) adoption of a stock retention policy, or (ii) pro-rata vesting of equity awards, rather than acceleration, upon a change in control. Compensation clawback proposals were common among financial institutions. (Shareholder proposals for a mandatory say on pay vote virtually disappeared.) Not one of these proposals succeeded, and quite a few were withdrawn. The proposals with the highest 'For' voting percentage were around 45%." (Winston & Strawn LLP)  

Press Releases

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