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August 7, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

ERISA Attorney
for USI Consulting Group in CT

Technical Director, Product
for Nationwide in OH

Benefits Supervisor
for Sonepar USA in SC

DC Administrator
for TPA Firm in Center Valley, PA in PA

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Webcasts and Conferences

Supreme Court Invalidates DOMA: Impacts for Employer-Sponsored Plans
July 25, 2013 WEBCAST
(Thomson Reuters / EBIA)

Interaction of Health Care Reform with Other Laws: What Employers and Advisors Need to Know -- Webinar
September 18, 2013 WEBCAST
(Lorman Education Services)

Small Business Health Insurance Options Program (SHOP) Overview -- Webcast
August 22, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

What the New Healthcare Law Means for Your Small Business -- Webcast
August 15, 2013 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

2013 Webinar: HSA Basics
August 15, 2013 WEBCAST

"Rate Shock" - Or Not? -- Webcast
August 13, 2013 WEBCAST
(Alliance for Health Reform)

ACA Implementation With Gail Wilensky And Tim Jost -- Podcast with Chris Fleming
August 21, 2013 WEBCAST
(Health Affairs)

Governance of Tax-Qualified Retirement Plans -- Recorded Webinar
August 22, 2013 WEBCAST
(Bryan Cave LLP)

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

Text of PBGC Approval of Amendment to Special Withdrawal Liability Provisions in The I.A.M. National Pension Fund National Pension Plan (PDF)
"Based on the facts of this case and the representations and statements made in connection with the request for approval, PBGC has determined that the plan amendment modifying special withdrawal liability rules [1] will apply only to an industry that has characteristics that would make the use of special withdrawal liability rules appropriate, and [2] will not pose a significant risk to the insurance system. Therefore, PBGC hereby grants the I.A.M. Fund's request for approval of a plan amendment modifying special withdrawal liability rules applicable to [employers whose employees work under a contract or subcontract with federal or District of Columbia government agencies regulated by the Service Contract Act, 41 U.S.C. 351 et seq.], as set forth herein. Should the I.A.M. Fund wish to amend these rules at any time, PBGC approval of the amendment will be required." (Pension Benefit Guaranty Corporation)  


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[Guidance Overview]

Compensation of Self-Employed Participants for Purposes of Qualified Retirement Plans
"Some of the more common issues ... include: [1] Failing to net guaranteed payments with the partner's or LLC member's share of the distributive income or loss. [2] Failing to report the net income from all related entities that participate in the retirement plan. This occurs, for example, when there is a structure of related LLCs for tax purposes and the members receive income or losses from more than one of the entities and these amounts are not netted for purposes of determining earned income for purposes of their retirement plan. [3] Failing to have related self-employed businesses adopt the retirement plan so that earned income from all businesses is considered for the plan." (EisnerAmper)  

[Guidance Overview]

There's No Failing in Cross-Tested Plans
"Unlike plans which are designed to automatically satisfy nondiscrimination (e.g., nonintegrated, integrated), a small change in the employer's demographics in a cross-tested plan (e.g., replacing a younger nonhighly compensated employee [NHCE] with an older NHCE or hiring a young highly compensated employee [HCE]) can cause an allocation formula that passed the previous year to fail in the current day.... Fortunately, the regulations provide several options for 'rescuing' the plan from failure." (SunGard Relius)  

Pension Plan Asset Managers: Are You Ready for Swap-Trading Requirements?
"[K]ey steps asset managers should take to prepare for clearing and other regulatory requirements include: [1] Classifying financial instruments traded. New Dodd-Frank derivatives regulatory requirements apply only to 'swaps,' 'security-based swaps' and 'mixed swaps.' [2] Determining the extent to which the regulations apply to the entity whose assets they trade as well as to the counterparties with whom they trade. [3] Considering the implications of reporting requirements as well as the public transparency of swap transaction data. [4] Preparing to clear specified swaps before the September 9, 2013 deadline." (BNY Mellon)  

Insurers Get Shot at $3 Trillion in Sen. Hatch's Pension Proposal
"The bill would give insurers a new avenue of growth as they've struggled to properly price annuities amid rock-bottom interest rates and stock-market swings ... It would also boost sales of a relatively new insurance product known as a deferred-income annuity, which can accept multiple premiums during a career and guarantee lifetime payouts at a future date." (Bloomberg)  


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Equity Returns Push Up July Funding Index
"July's strong equity markets drove up funding index results for the third consecutive month. The May/June results were largely driven by interest rate increases, but the pattern of corporate bond yield increases did not continue into July. The Towers Watson Pension Index increased 2.2% in July to 73.0 and is now up more than 17% for the year. The index is also up 25% from the all-time low level reached in July 2012." (Towers Watson)  

Milliman Pension Funding Index, August 2013
"The 100 largest U.S. corporate defined benefit pension plans saw their funding status improve by $23 billion during July. Robust investment gains of 2.04% helped cause the deficit [to drop] to $158 billion in July from $182 billion at the end of June. The last time the pension deficit was below $200 billion was on July 31, 2011, when it stood at $184.6 billion. July was the best performing month for investments so far in 2013." (Milliman)  

Public Pension Investments Up 12%, Biggest Gain in Two Years
"U.S. state and local-government pension investments gained the most in two years in fiscal 2013, overshadowed by intensifying scrutiny of underfunded municipal-retirement plans following Detroit's record bankruptcy. Public pensions booked a median gain of 12.4 percent for the 12 months through June, powered by a surge in U.S. stock prices to a record ... The funds chalked up an annualized three-year median return of 11.4 percent while their assets surpassed a pre-recession peak to reach $2.9 trillion[.]" (Bloomberg)  

Florida Retirement System DB Fund Returns Over 13% for Fiscal Year
"Florida Retirement System's defined benefit pension fund returned 13.12% on its investments for the fiscal year ended June 30, outperforming its customized benchmark by 1.11 percentage points ... In the previous fiscal year, the plan returned 0.29%, exceeding its benchmark by 0.77 percentage points. The plan had $134.2 billion in assets as of June 30, an FSBA statement said. That total is $9.65 billion more than the previous fiscal-year-end total after net distribution of $6.2 billion to participants." (Pensions & Investments)  

First Circuit Ruling on Withdrawal Liability Is Significant for Private Equity Fund Sponsors
"The District Court case that was overruled by the First Circuit Court of Appeals appeared to provide a roadmap for how to structure funds in order to avoid this treatment. Unfortunately, by reversing the District Court ruling, the Circuit Court determined that the structure of the private equity funds in this case did not avoid this treatment. If this case stands and other jurisdictions follow its lead, this could potentially have a chilling impact on the strategic options for distressed companies with these types of liabilities." (McDonald Hopkins LLC)  

Repairing the Damaged Nest Egg: How to Improve the Retirement Outlook of the Unemployed and the Underemployed (PDF)
43 pages. Excerpt: "[O]ur current retirement system is largely predicated on the assumption that workers have access to meaningful employment and that they are in a position to save and successfully self-fund a substantial portion of their retirement. In this structure, any setbacks in employment and retirement saving by un/underemployed workers, unless overcome, may lead to future generations of unprepared seniors running out of savings, adding further pressure on Social Security, Medicare, Medicaid and other social services programs for the elderly and needy." (Transamerica Center for Retirement Studies)  

Buckets, Cisterns, Asset Allocation, and Retirement
"It is useful to be able to visualize what funding retirement is all about. Rows and columns of numbers on a spreadsheet are a great tool, but sometimes a picture is worth a thousand columns. This article provides an overview of three ways to visualize what's going on when you think comprehensively about all of your financial assets for retirement." (Seeking Alpha)  

SSA Describes Pension Plan Participation Among Married Couples
"Because couples usually share income, viewing them as a unit provides a better picture of potential access to income from retirement plans.... We find that in 20 percent of couples, neither spouse participated in a pension plan; in 10 percent, the wife was the only participant; and in 37 percent, the husband was the only participant." (Social Security Administration)  

Social Security Income Measurement in Two Surveys (PDF)
"Using Social Security Administration (SSA) records, [this study examines] Social Security income as reported in two Census Bureau surveys, the Survey of Income and Program Participation (SIPP) and the Current Population Survey (CPS).... [The authors] find that the Social Security benefit recorded in the CPS closely approximates the gross benefit recorded for CPS respondents in SSA's records, but the Social Security benefit recorded in the SIPP more closely approximates SSA's record of net benefit payments (after deducting Medicare premiums)." (Social Security Administration)  

Unum Plans to Freeze Its Pension Plan
"The company had announced in June that it would freeze its U.S. defined benefit pension plan effective Dec. 31. Beginning Jan. 1, 2014, the company will increase its 401(k) match to 5% of base salary from 3% and add a new non-elective contribution of 4.5% of earnings for all eligible employees. As of Dec. 31, the fair value of plan assets for the U.S. plan totaled $1.35 billion and projected benefit obligations totaled $1.97 billion, for a funding ratio of about 69%[.]" (Pensions & Investments)  


Text of Comments by Insured Retirement Institute to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"We are concerned that including specific assumptions in the safe harbors described in the Notice will steer plan sponsors to utilize those assumptions to ensure compliance at the expense of flexibility and innovation. In lieu of the safe harbor approach, we urge DOL to adopt a rule under which plan sponsors would be required to provide lifetime income illustrations based on generally accepted investment theories and generally accepted actuarial principles. We urge DOL to include in the rule a clear statement that providing the illustrations required under the rule would be treated as education, and not as a fiduciary act giving rise to either fiduciary or plan liability." (Insured Retirement Institute)  


ASPPA Makes Recommendations on Proposed Regs for Lifetime Income Illustrations
"To enhance the current proposed rule, ASPPA recommends that a lifetime income disclosure be focused and concise. The estimates should be calculated using 3%, 5%, and 7% as the three nominal rates of return to provide useful information without overloading the benefit statement. The calculation should be done without any assumption that there will be future contributions by the employer or the employee, because future contributions are rarely guaranteed." (American Society of Pension Professionals & Actuaries (ASPPA))  


Text of Comments by Lincoln Financial Group to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"Lincoln believes that illustrations based on reasonable non-safe harbor assumptions should be permitted.... Lincoln agrees that guidance is needed on how to comply with a retirement income illustration requirement without running afoul of [FINRA] rules.... Lincoln believes that the illustrations should be required to contain either single life annuity illustrations only, or in the alternative, both single life and joint and survivor annuity illustrations, without regard to a participant's actual marital status. We do not believe the illustration should include joint and survivor annuity illustrations only on benefit statements of married participants and beneficiaries." (Lincoln Financial Group)  


Text of Comments by The Principal Financial Group to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"We believe that any regulations around these illustrations must first do no harm. Requiring formats or methodologies that are highly complicated or inflexible, we believe, would greatly hamper the use of illustrations and undermine the primary objective which is to give participants a realistic view of how well their current savings would support their lifestyle in retirement." (The Principal Financial Group)  


Text of Comments by J.P. Morgan to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"[W]e believe the proposals outlined in the ANPRM could limit the use of current income replacement calculators and stifle industry innovation. We particularly urge the Department to exercise caution in identifying a safe harbor for calculating lifetime income projections. We believe the most effective approach would be to encourage plan sponsors to provide these projections rather than mandate their inclusion on participant statements. This could be accomplished by clarifying that lifetime income projections, based on prudent methodologies and appropriate disclosure of assumptions, are educational tools and do not result in additional fiduciary liability for the plan sponsor." (J.P. Morgan Retirement Plan Services)  


Text of Comments by The Financial Services Roundtable to DOL on Lifetime Income Illustration in Pension Benefit Statements (PDF)
"The use of lifetime income illustrations on retirement account statements as a means to demonstrate different potential retirement income streams and balances upon retirement to plan participants (and their respective beneficiaries) should be an optional, not mandatory, election for plan participants and beneficiaries.... [It] remains imperative that the Department is abundantly clear in its disclosures to participants that lifetime income illustration projections are merely estimates, and not guarantees, of future retirement benefits." (The Financial Services Roundtable)  


Long Term Savings, Relying on Returns, and Retirement Date Risk
"How you save matters far less than the mere fact that you save in the early years. Making good investment decisions actually just doesn't have much material impact until someone has been compounding savings -- or at least accumulating contributions -- for a decade or more. On the other hand, the reality is that cash flows contribute to less than half the increase in the account balance by just year 10, and a fairly trivial amount overall for the entire second half of the savings time horizon." (Michael Kitces in Nerd's Eye View)  

Benefits in General; Executive Compensation

[Guidance Overview]

Same-Sex Spouse Has Right to Pension Benefits Under ERISA
"What is particularly interesting about the Court's analysis [in Cozen O'Connor v. Tobits] is the fact that Illinois does not issue marriage licenses to same-sex couples. Arguably, then, the Court could have concluded that Illinois does not recognize 'same-sex marriage' under its laws. However, Illinois does have a civil union statute. The court opined that because Illinois recognizes civil unions, it effectively recognizes same-sex marriages performed in other jurisdictions (such as Canada). The analysis under Tobits appears to not be whether the couple lives in a state that allows same-sex couples to be married, but rather, whether the couple lives in a state that effectively recognizes same-sex marriages performed in other jurisdictions." (Crowell Moring)  

Long-Term Incentive Plans at a Crossroads in the Health Care Sector
"[T]he prevalence of [long-term incentive (LTI)] plans in both hospital systems and independent hospitals is increasing. What's more, many more organizations are considering implementing these plans, and the gap in opportunity levels between systems and stand-alone hospitals is closing. Currently, approximately 30%-40% of systems and 15%-20% of independent hospitals offer an LTI plan to a select group of executives. [The authors] estimate that an additional 15%-20% of health care organizations are actively considering adding an LTI plan in the near future." (Towers Watson)  

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