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August 14, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Client Service Representative, Employee Benefits
for e3 Financial in CA

Defined Contribution Client Manager
for Milliman in CA

Defined Contribution Compliance Specialist
for The Guardian Life Insurance Company of America in MA

401k Administrator
for The Guardian Life Insurance Company of America in MA

Pension Administrator
for AFC Pensions, Inc. in MA

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Webcasts and Conferences

"Fundamentals of 401(k) Plans Web Series" New Format, September - October, 7 segments
September 9, 2013 WEBCAST
(SunGard Relius)

Free Work Comp Webinar: Controlling Work Comp Costs What Employers Need to Know
October 24, 2013 WEBCAST
(Davidson Marketing Group -- FutureOffice Network)

Worker Classification: What's New and What You Need to Do
September 12, 2013 WEBCAST
(ABA Joint Committee on Employee Benefits)

ERISA Basics National Institute
October 16, 2013 in IL
(ABA Joint Committee on Employee Benefits)

View All Webcasts and Conferences


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

PBGC Interest Assumptions for Benefits Payable in Terminated Single-Employer Plans, September 2013
"The September 2013 interest assumptions under the benefit payments regulation will be 1.50 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for August 2013, these interest assumptions represent a decrease of 0.25 percent in the immediate annuity rate and are otherwise unchanged." (Pension Benefit Guaranty Corporation)  


[Advert.]

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) 328-2474Sales@DATAIR.comwww.DATAIR.com



Women Lag Behind Men in Saving for Retirement
"[A]nalysis of more than 140 defined contribution plans representing 3.5 million eligible employees shows that while women are participating in their employers' defined contribution plans at the same rates as men, they save less -- an average of 6.9 percent of pay, compared to 7.6 percent for men. In addition, nearly a third (31 percent) of women contribute below the company match threshold, compared to just a quarter of men. As a result, women have average plan balances that are significantly less than men, consistently across all salary ranges. Overall, the average plan balance for women is $59,300, compared to $100,000 for men." (Aon Hewitt)  

Text of Michigan Court of Appeals Ruling that Law Requiring State Employee Pension Plan Contributions Is Unconstitutional (PDF)
"[W]e conclude that the ratifiers [of the State constitution] in 1963 would have considered 'rates of compensation' to include fringe benefits provided to civil service employees, and that would include the pension plan offered as part of the compensation package. Changing the nature of the plan changes the nature of the benefit, and thus it amounts to a change in the rate of compensation or in the conditions of employment. This is within the authority of the Commission, not the Legislature, and therefore MCL 38.35a and MCL 38.50a are unconstitutional." (State of Michigan Court of Appeals)  

Michigan Appeals Court Affirms Unconstitutionality of Law Requiring Pension Plan Contribution by State Employees
"The law affected close to 18,000 state workers hired before 1997, or about 32% of the current workforce ... State workers hired since then have gone into a 401(k) type pension plan, not a plan that guarantees certain defined benefits after retirement. Gov. Rick Snyder and the Legislature approved the change as a way to cut the pension plan's unfunded liability. State workers who didn't want to pay the extra 4% would have to move to the defined contribution pension plan." (Detroit Free Press)  

Renaming the Outcomes of a Monte Carlo Retirement Projection
"When crafting a retirement plan using Monte Carlo analysis, the general goal is typically to craft a plan with a probability of success that's comfortably high and a corresponding probability of failure that is 'acceptably' low.... [A] recent survey from Allianz found that fear of running out of money ranked even higher than fear of death (61% versus 39%, respectively)! ... [M]ost people can indulge in some flexibility and make adjustments by choice before a total catastrophe occurs, which actually goes a long way to stave off the potential of a more severe 'involuntary' adjustment in the future." (Michael Kitces in Nerd's Eye View)  


[Advert.]

ACI's 6th Annual ERISA Litigation Conference -- October 24-25 -- New York

Sponsored by ACI (American Conference Institute)

Advanced forum designed to bring together the nation's leading in-house experts and outside counsel for a two-day seminar geared towards developing winning litigation strategies and exploring new and emerging theories of liability from the plaintiffs' bar.



Second Quarter Returns Essentially Flat for BNY Mellon U.S. Master Trust Universe
"The median return of the BNY Mellon U.S. Master Trust Universe for the second quarter of 2013 was down slightly at -0.05%, the first negative result since the second quarter of 2012. For the twelve months ending June 30, 2013, the median plan returned +11.59%.... 47% of plans in the BNY Mellon Master Trust universe returned positive results during the quarter. Over the prior 12-month period, 99% of plans were in the black. 36% of plans matched or outperformed the custom policy return for Q2. For the full year, 21% of plans outperformed the custom policy." (BNY Mellon)  

Advisers Warning Clients On 401(k) Loans
"The fact that account holders who take out 401(k) loans are paying themselves back with interest may be blinding them to the far-reaching drawbacks ... [C]ontribution rates tend to be lower as the loans -- which often range from 5 years to 20 years -- are paid back. Worse yet, those who lose their jobs are generally given just 60 to 90 days to repay the loans. If they default, those younger than 59 1/2 years old face a 10% early withdrawal penalty in addition to income taxes." (The Wall Street Journal; subscription may be required)  

Safe Harbor 401(k) Establishment Deadlines
"In general, a safe harbor 401(k) plan must be adopted before the beginning of the plan year and maintained throughout a full 12-month plan year. However, in the context of the first year that the plan or 401(k) feature is established, a plan is permitted to have a no shorter than three month plan year for purposes of the safe harbor 401(k) feature. Therefore, it is possible to establish a calendar year, safe harbor 401(k) plan as late as October 1st and still obtain the exemption from the ADP and ACP tests in relation to the remainder of the year." (Legacy Retirement Solutions)  

Former Top City Hall Official Pleads Guilty in Detroit Pension Fund Bribery Case
"George Stanton, the former chief of staff to ex-Detroit City Councilwoman Alberta Tinsley-Talabi, admitted in U.S. District Court that he accepted the bribes as a reward for supporting a proposed investment by businessman Roy Dixon, who is also facing charges. Stanton said he helped push Dixon's investment proposal before the Police and Fire Retirement System. Stanton faces up to 10 years in prison." (Detroit Free Press)  

[Opinion]

Why More Regulation for Retirement Income Is Not Always a Bad Thing
"The belief that better disclosure will lead to better outcomes is one of the foundations of the vision for what [the authors have] called 'the reinvention of defined contribution' ... It is foundational because the 401(k) system was not designed for the role it now finds itself playing: the role of being the primary vehicle for providing income to millions of Americans throughout their retirement. It stumbled into that role almost by accident: the purpose of early 401(k) plans was to allow flexible, tax-efficient deferral of bonuses for higher-paid employees." (Russell Investments)  

[Opinion]

The Assault on 401(k) Plans Continues
"Workers [between age 55 and 65] had access to 401(k)s for only part of their careers. Their balances at retirement are therefore not reliable guides for the sizes of the balances of the generation that follows them. This caveat holds particularly true because the 401(k) plan is rapidly evolving. Automatic enrollment programs into default options, sometimes supplemented by automated increases in 401(k) savings rates, have become the new normal. These changes will surely result in significantly higher ending balances for the younger generation." (Morningstar)  

[Opinion]

Detroit's Pension System Is Built on Delusions About Future Returns
"When [state] workers retire they expect a fraction of their final salary, increasing with inflation, will be paid to them every year until they die. They will get that money no matter what happens to the stock market or how long they live. That kind of certainty is very valuable.... The state governments have promised to pay out pensions no matter what happens. The problem is they don't account for the cost of that guarantee." (Quartz)  

[Opinion]

Let's Prevent Another Detroit
"[L]ocalities that do not address their pension systems now will end up driving straight over the cliff of bankruptcy. The sad irony is that those who will be most hurt by the bankruptcy process are the same public employees whom politicians claim to be protecting when they avoid serious pension reform." (Laura and John Arnold Foundation)  

Benefits in General; Executive Compensation

First Circuit Decision on Pension Plan Liability for Private Equity Firm Also May Impact Executive Compensation
"[The First Circuit's recent Sun Capital] decision has tax and securities law implication in the executive compensation area ... [1] Section 409A looks to an entire controlled group for several purposes, most notably to determine when a participant has had a 'separation from service.' [2] The deduction limitations under Section 162(m)(6) apply to all members of any controlled group that includes a 'covered health insurance provider.'... [3] Current taxation of PE funds is based on fact that they are mere passive investors in their portfolio companies not a trade or business. The Sun Capital case endangers the way PE fund executives are taxed." (Winston & Strawn LLP)  

Massachusetts Nurses Petition for Limits on Hospital Profit Margins, CEO Pay
"A series of alternative proposed Initiative Petitions were filed Thursday, August 7, with the Office of the Attorney General of Massachusetts seeking primarily to establish specified limits on operating margins achieved by many Massachusetts hospitals and on the compensation of the CEOs of such hospitals. The proposed cap on operating margins is 5% in some versions and 8% in others.... The proposed cap on CEO compensation is 100 times the amount of the compensation of the lowest-paid full time employee of the hospital." (Mintz Levin)  

Pension/OPEB 2013 Assumption and Disclosure Survey (PDF)
"[For pensions:] The 2012 median discount rate decreased 75 basis points since 2011 and 225 basis points since 2007. The 2012 median expected long-term rate of return on pension plan assets decreased 25 basis points since 2011 and 55 basis points since 2007. The 2012 median salary scale assumption is unchanged since 2011 but has decreased 25 basis points since 2007. [For OPEB:] The 2012 median discount rate decreased 71 basis points since 2011 and 236 basis points since 2007.... OPEB plan funding has changed slightly with 48% of plans being funded in 2012 compared to 50% of plans being funded in 2011 and 53% being funded in 2007." (PricewaterhouseCoopers)  

[Opinion]

There's a Big Gender Gap in CEO Pay -- Bad Negotiating Isn't the Reason.
"Of the top executives at each of the companies in the S&P 500 index, only 8 percent were women, and that these women at the top ranks of Corporate America earned 18 percent less than men.... It's true that women often don't bargain hard enough for higher pay... But consider that women at the very top of the S&P 500 are probably among the best negotiators in the world, given their day jobs. And even if some of them might feel shy sometimes about asking for more money, the idea that their unwillingness to negotiate can account for an 18 percent pay gap flies in the face of study after study showing that gender inequality isn't the result of women being scared to stand up for themselves. It's subtle biases that inform how we all -- men and women -- evaluate one another." (The Washington Post; subscription may be required)  

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