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October 1, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs


Webcasts and Conferences

Affordable Care Act 101 Webinar
October 10, 2013 WEBCAST
(U.S. Small Business Administration (SBA))

ERISA Workshop 2013 - Portland
October 31, 2013 in OR
(SunGard Relius)

ERISA Workshop 2013 - San Francisco
November 1, 2013 in CA
(SunGard Relius)

Independent Contractors: Overcoming the Legal Perils and Challenges (NY CLE Program)
October 17, 2013 in NY
(WEB (Worldwide Employee Benefits Network), New York Chapter)

Should Employers Pay or Play? Podcast
October 15, 2013 WEBCAST
(Bloomberg BNA)

Legislative and Regulatory Update Defined Benefit Plan Issues
October 15, 2013 WEBCAST
(American Society of Pension Professionals & Actuaries (ASPPA))

Protecting Qualified Plans & Spousal Rights
October 17, 2013 in OH
(ASPPA Benefits Council of Cleveland)

View All Webcasts and Conferences


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

OIG Recommends EBSA Provide Guidance and Oversight for ERISA Plans Holding Hard-to-Value Alternative Investments (PDF)
"[OIG] recommended the Assistant Secretary for Employee Benefits Security take the following actions for plans holding hard-to-value alternative investments: (1) propose and formalize guidance and evaluate the ERISA Council recommendations, (2) improve procedures in enforcement reviews, and (3) improve Form 5500 data collection, analysis, and targeting. In response, EBSA stated that it did not believe the trillions of dollars of plan assets invested in alternative investments and hard-to-value assets pose significant valuation concerns, that ERISA already provided sufficient guidance, that its investigative procedures were sufficient, and that the Form 5500 already focuses on asset valuation. EBSA agreed to further consider the OIG recommendations, but did not provide any explicit corrective actions." [Full 47-page report is available here.] (U.S. Department of Labor, Office of Inspector General -- Office of Audit)  


[Advert.]

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]

Interpretation of Code Section 415(b) Related to Reduced Early Retirement Benefits and Qualified Joint and Survivor Annuities (PDF)
"According to the 2013 Gray Book [of the American Academy of Actuaries]... the early retirement reduction factor and the optional form factor apply to the accrued benefit (rather than the formula benefit), which must be limited to the Section 415(b) limit applicable at the plan's normal retirement age.... [This] interpretation ... could significantly and unexpectedly limit the benefits that plans can pay to some participants. Although the Gray Book is not authoritative, it does reflect the views of certain U.S. Treasury and IRS staff." (Gabriel, Roeder, Smith & Company)  

International Paper Pays $30 Million Over 401(k) Claims
"After seven years of litigation, International Paper Co. and 10 current and former employees agreed to a $30 million settlement that covers about 70,000 participants in the company's 401(k) plans. The company agreed to distribute the money among individual workers' and former participants' accounts as well as put the plan's administration out for bid." (The Wall Street Journal; subscription may be required)  

International Paper Settles Excessive Fee Case
"IP agreed to the following affirmative relief for the next 4 years: IP will not prohibit employees from transferring their investments out of the Company Stock Fund; IP will not offer retail mutual funds; IP will not allow the Plans' recordkeeper to be paid on a percentage of assets basis; IP will not profit from the Plans; IP will competitively bid the Plans' recordkeeping services; IP will rebate to the Plans relationship discounts offered as a result of Plan investments; IP will provide the Plans with revenue earned from securities lending; and IP will introduce a passively managed (index) large cap stock option in the Plans' core lineup." (FRA PlanTools, LLC)  

Office of Financial Research Report on Asset Management and Financial Stability (PDF)
"The Financial Stability Oversight Council (the Council) decided to study the activities of asset management firms to better inform its analysis of whether -- and how -- to consider such firms for enhanced prudential standards and supervision under Section 113 of the Dodd-Frank Act. The Council asked the Office of Financial Research (OFR), in collaboration with Council members, to provide data and analysis to inform this consideration. This study responds to that request by analyzing industry activities, describing the factors that make the industry and individual firms vulnerable to financial shocks, and considering the channels through which the industry could transmit risks across financial markets." (Office of Financial Research, U.S. Department of Treasury)  

U.S. Treasury Says Money Managers May Pose Herding Threat
"The Treasury Department said money managers could pose threats to the U.S. financial system when reaching for higher returns, herding into popular asset classes or amplifying price movements with leverage. Companies overseeing a combined $53 trillion in assets, led by fund giants BlackRock Inc. and Vanguard Group Inc., can contribute to asset price increases and magnify volatility during sudden shocks, a report by the Treasury said today. Gaps in data, particularly on investments managed for institutions, limited the study's ability to identify additional risk." (On Wall Street)  

Nearly Half of Americans Struggle to Find Trusted Financial Advice
"Forty-eight percent of Americans say it is hard to know which sources of financial advice can be trusted.... Gen X ... leads all age groups in seeking advice on retirement..... Gen Y is the most likely to say that it's a little or not at all informed about retirement planning ... In 2013, 63 percent of Americans who received financial advice sought information on saving for retirement, as opposed to 52 percent in 2012, an increase of 11 percentage points." (TIAA-CREF)  

Pennsylvania Pension Reform Could Involve Lots of Borrowing
"A renewed effort to overhaul the retirement system for state workers and public school employees will focus on putting new hires into a new pension system while authorizing Pennsylvania to borrow billions on the bond market to staunch the rising unfunded liability threatening to swamp the state budget.... Combined, Pennsylvania's two pension funds have an unfunded liability of about $45 billion." (Philadelphia Inquirer)  

Plan Sponsor Alert: Behavioral Finance Reframing Future of 401(k)
"For more than a generation, 401k plan sponsors and every other ERISA fiduciary have framed their due diligence duties in terms expressed by Modern Portfolio Theory. It appears, however, behavioral financial is, even now, reframing the future of the 401k.... Since existing frameworks can lead investors 'astray,' the objective of much of the relevant research in behavioral finance and economics is to find a systematic solution that would offer plan investors an easy course correction." (Fiduciary News)  

Doubts Raised on Value of Investment Consultants to Pensions
"A new study by professors at the University of Oxford is causing a stir in the staid pension investment industry, highlighting the subpar performance of most consultants and, more important, the lack of disclosure that would allow the public to even know about it. The study demonstrates, perhaps for the first time, that the investment consultants that pension funds rely on to advise them about what funds and investments they should make -- resulting in tens of millions of dollars in fees each year -- are, as one of the authors of the survey says, 'worthless.'" (The New York Times; subscription may be required)  

Rising Interest Rates Redefine Options for Frozen DB Plans
"Tired of financial market volatility and funded status risk, many pension plan sponsors have already 'frozen' their DB plans and considered the possibility of terminating their plans when interest rates increase significantly (thereby decreasing liabilities). That inflection point appears to be on the horizon. Just past the halfway point in 2013, interest rates have increased by over 70 basis points since the start of the year.... This raises the question of whether or not it's a good idea to go ahead and terminate a DB plan." (Milliman)  

Cypen & Cypen Newsletter, September 26, 2013
Article titles include: Moody's Proposes Making Pension Liabilities a Bigger Factor in Bond Ratings; The Social Security Windfall Elimination and Government Pension Offset Provisions for Public Employees in the Health and Retirement Study; Not Quite as Simple as It Seems: Exercise Caution When Using a Pre-approved "Governmental" Retirement Plan; Encouragement To Retire Was Not Age Discrimination; and U.S. Census Bureau Releases Quarterly Survey of Public Pensions. (Cypen & Cypen)  

State Hybrid Retirement Plans
"While most states have chosen to retain their defined benefit plans ... some also have looked to so-called 'hybrid' plans that combine elements of traditional pensions and individual account plans.... [T]his brief examines two broad types in use in the public sector.... Despite variability among these plans, most contain the core features known to promote retirement security: mandatory participation, shared financing between employers and employees, pooled assets invested by professionals, a benefit that cannot be outlived, and survivor and disability protections." (National Association of State Retirement Administrators [NASRA])  

Chicago Sheet Metal Workers Pension Fund Demands Overpayments Back, With Interest
"Records show that the audit found that 814 retirees were underpaid by about $6 million dollars and have been made whole. Another 589 retirees were overpaid $5.2 million. All of their errors were attributed to 'accidental and inadvertent' pension calculations made by prior pension fund employees between 1974 and 2004, under prior administrations.... Karen Friedman, executive vice president of the Pension Rights Center based in Washington [said,] 'The first question we have is what took you so long to figure this out?'" (CBS Chicago)  

The U.S. Retirement Market, Second Quarter 2013 (XLS)
Excel spreadsheet with detailed historical data and comparisons for retirement plan assets, segmented by type of plan and by type of investment. (Investment Company Institute [ICI])  

Retirement Assets Total $20.9 Trillion in Second Quarter 2013
"Total U.S. retirement assets were $20.9 trillion as of June 30, 2013, up 1.0 percent from $20.7 trillion on March 31, 2013.... Assets in individual retirement accounts (IRAs) totaled $5.7 trillion at the end of the second quarter of 2013, an increase of 0.9 percent from the end of the first quarter. Defined contribution (DC) plan assets rose 1.0 percent in the second quarter to $5.3 trillion. Government pension plans ... held $5.2 trillion in assets as of the end of June, a 1.4 percent increase from the end of March. Private-sector defined benefit (DB) plans held $2.8 trillion in assets at the end of the second quarter of 2013, and annuity reserves outside of retirement accounts accounted for another $1.8 trillion." (Investment Company Institute [ICI])  

[Opinion]

The Real Reason Why Baby Boomers Are So Far Behind In Retirement Savings
"[T]he transition of responsibility for retirement savings that took place in the 1980's was a monumental shift that no one could have anticipated or appropriately planned for.... The baby boomers are the first group to face this new retirement era and have many challenges ahead of them including the burden of saving and investing for up to 70% of their retirement, making those savings last for 20-30 years, and dealing with two of the worst economic environments in the history of investing ... Quite frankly, it's surprising the group is not further behind or hasn't completely given up." (Forbes)  

Benefits in General; Executive Compensation

[Guidance Overview]

SEC Proposes CEO Pay Ratio Disclosure Rules
"Comments on the proposed rules will be due December 2, 2013. In the proposing release, the SEC requested comments on more than 60 specific issues to help the commission evaluate the approaches taken in the proposed rules. During the open meeting at which the SEC adopted these proposed rules, the commissioners also strongly encouraged issuers, investors and other stakeholders to submit robust comments on the potential impacts of these proposed rules. The dissenting commissioners encouraged detailed and 'data-heavy' comments, along with realistic estimates of the costs of compliance." (Perkins Coie LLP)  

[Guidance Overview]

CEO Pay Ratio Disclosure Rules Issued by SEC (PDF)
"Congress was able to describe the CEO pay ratio disclosure requirement in 150 words. The SEC has taken a remarkable 162 pages to explain those words, defend the disclosures required under the proposed rule and solicit responses to 69 questions it poses on the proposed rule. Corporate boards and management are unlikely to find much to cheer about regarding the proposed rule. However, one kernel of good news is that the proposed rule will not likely take effect before 2015. For a calendar year company, this means the CEO pay ratio disclosure would first appear in its 2016 proxy." (Meridian Compensation Partners, LLC)  

U.S. Justices to Hear Quality Stores Case on Whether Severance Can Be Taxed
"The Supreme Court agreed on [October 1] to consider whether severance pay in an involuntary layoff can be subject to federal payroll taxes in a case the Obama administration says could affect $1 billion in refund claims. The administration asked the justices to hear the case after losing a dispute with agricultural retailer Quality Stores Inc.... The legal question is whether the company was required to pay the taxes under the Federal Insurance Contributions Act, which helps finance federal retirement and healthcare benefits." (Reuters)  

2013 Director Compensation Study (PDF)
"Total compensation paid to non-employee directors rose +4.5% over 2011 levels, to a median of $261,333. Pay mix for non-employee directors has remained relatively unchanged since 2007. Directors continue to receive just over half of their total compensation in the form of equity (55% in 2012), in accordance with governance best practices.... Committee chairs for each of the audit, compensation and nominating/governance committees receive additional fees (retainer plus meeting fees) at 94% of the companies studied." (Steven Hall & Partners)  

Press Releases

California Secure Choice Request for Information
California Secure Choice Retirement Savings Program

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