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

Plan Information Specialist I
National Automobile Dealers Association
in VA

Retirement Benefits Specialist
Capital Strategies Investment Group
in IL

Plan Document Specialist
Kravitz, Inc.
in CA

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Webcasts and Conferences

Teleconference: Impact of Agency Guidance on HRAs, Private Exchanges, Premium Reimbursement Accounts and Pre-tax Treatment of Individual Medical Coverage
October 9, 2013 WEBCAST
(Employers Council on Flexible Compensation (ECFC))

Affordable Care Act 101 Webinar
October 17, 2013 WEBCAST
(U.S. Small Business Administration (SBA))

Effective ESOP Administrative Committees
December 3, 2013 WEBCAST
(National Center for Employee Ownership)

Gathering Ideas to Foster Innovation
December 10, 2013 WEBCAST
(National Center for Employee Ownership)

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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 Interest Rate Update for September 30, 2013
"The immediate interest rate for valuing lump sum payments for the month of October 2013 is 1.75%. The deferred interest rate I1 is 4.00%, I2 is 4.00%, and I3 is 4.00%.... The spot first, second, and third segment rates for determining the variable rate premium amount for premium payment years commencing in September 2013 are, respectively, 1.36%, 4.60%, and 5.58%.... The select and ultimate interest rates for valuing annuity benefits in single-employer plans and multiemployer plans for the month of October 2013 are 3.00% for the first 20 years following the date of plan termination, and 3.31% thereafter, respectively." (Pension Benefit Guaranty Corporation [PBGC])  


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The Retirement Readiness Imperative: Overcoming the Challenges Faced by Small Businesses (PDF)
"Among the 28 percent of small companies that do not offer a plan, only 22 percent said that they are 'very' (three percent) or 'somewhat' (19 percent) likely to offer a plan in the next two years.... However, nearly one-third (32 percent) indicated that they would be 'very' or 'somewhat' likely to consider joining a multiple employer plan offered by a vendor who handles many of the fiduciary and administrative duties at a reasonable cost." (Transamerica Center for Retirement Studies)  

Breakdown of Detroit's $1 Billion Pension Fund Payments
"The city's General Retirement System board -- which is controlled by an independent board that is challenging Detroit's eligibility to file for Chapter 9 bankruptcy--- acknowledged in an affidavit that it gave out $756.2 million in excess earnings to active employees from 1985 through 2007. It gave $195 million to retirees during that same time period and sent $445.3 million back to the city." (Detroit Free Press)  

Two Years After Bankruptcy, California City Again Mired in Pension Debt
"Less than two years after exiting bankruptcy, the city of Vallejo, California, is again facing a budget crisis as soaring pension costs, which were left untouched in the bankruptcy reorganization, eat up an ever-growing share of tax revenues. Vallejo's plight, so soon after bankruptcy, is an object lesson for three U.S. cities going through that process today -- Detroit, Stockton and San Bernardino, California -- because it shows the importance of dealing with pension obligations as part of a financial restructuring." (Reuters)  

Defined Contribution Plan Fees Continue to Decline (PDF)
"Fees related to retirement investment accounts hit another record low this year ... [R]ecordkeeping costs, the second largest component of total fees, saw the sharpest fall.... While recordkeeping fees continue to be charged primarily through revenue-sharing arrangements or asset-based fees, they continue to fall, despite rising asset balances. The price setters squeezing recordkeeping fees appear to be the bundled providers offering lower fees and plan reimbursement accounts to retain and promote their asset management businesses." (NEPC)  

A Plan for Retirement Plan Compliance (PDF)
"It should come as no surprise that something as technical and complicated as the establishment, operation and maintenance of a tax-qualified plan follows the same planning and preparedness principles that apply to life in general. Many retirement plan sponsors understand that their actions in connection with a retirement plan invoke a fiduciary level of responsibility to the plan and its participants. However, what specific actions should a plan sponsor embark on in order to satisfy that responsibility? In other words, what is an effective plan for a retirement plan fiduciary to fulfill his or her duties to the retirement plan?" (Legacy Retirement Solutions)  

How Sensitive Is Public Pension Funding to Investment Returns? (PDF)
"[T]he real return -- the nominal return net of inflation -- is the relevant concept for public plans because benefits are generally indexed for inflation both before (through salary increases) and after retirement (through cost-of-living adjustments).... [E]ven if the median long-run return equals the assumed rate -- the potential variability in returns, when combined with paying less than the full [annual required contribution (ARC)] and the funding procedures currently used by many plan sponsors, will produce less than full funding over the next 30 years." (Center for Retirement Research at Boston College)  

Solutions to 'Fiduciariness' (Part I)
"[F]iduciariness [can be defined] as a marketing technique designed by the financial services industry to lure 401(k) plan sponsors into a false sense of security about the level of fiduciary protection provided them.... The financial industry service model... poses great challenges for plan sponsors as it requires them to be responsible for multiple areas of their plans' operations and to do so at the expert level required by ERISA. Not many plan sponsors are prepared for the task.... A plan sponsor willing to assume these responsibilities under the traditional basic industry model must of necessity build a governance structure that assures completion of all required tasks by plan service providers and protects against corporate and personal liability." (Fiduciary Plan Governance, LLC)  

Employee Ownership Update for October 1, 2013
Article titles include: DOL Considering Rules to Require Defined Contribution Plans to Show Projected Lifetime Benefits; Be Careful About Deferring Pay in a Startup Company; and IRS Modifies Determination Letter Process to Clear Backlog. (National Center for Employee Ownership [NCEO])  

Harmonizing DB and DC Investment Approaches (PDF)
"While an organization's defined benefit (DB) and defined contribution (DC) retirement plans typically share the same investment committee members, these plans don't always share a consistent investment approach. DC plans frequently offer their record keeper's mutual funds, due to brand appeal or the perceived benefits of bundling investment management and administration. Yet the same plan sponsors that accept this basic DC approach often adopt a completely different institutional approach in their DB plans. Harmonizing DB and DC investment approaches may lead to improved outcomes across plans, while demonstrating fiduciaries' strong adherence to best practice governance disciplines." (Russell Investments)  

U.S. Pension Fund Fitness Tracker: Funded Status of Plans Keeps Improving in Third Quarter of 2013
"The funding ratio of the typical U.S. pension plan increased again during the third quarter of 2013, rising by more than three percentage points to 91.4% ... The improvement in funding ratio for the third quarter was driven primarily by a 3.6% increase in pension asset values. Liability values are estimated to have decreased by 0.2%[.]" (UBS, via BusinessWire)  

Canadian DB Plans' Funding Improves in Q3
"The funded status of Canadian corporate and public defined benefit plan clients of Aon Hewitt rose to 88% as of Sept. 30, up from 77% three months earlier and 69% at the end of 2012. Total assets for the more than 275 DB plans were C$119.1 billion (US$115.3 billion), and combined liabilities were C$135.9 billion. The third-quarter funded status was the highest since the 86% combined funded status reported in the fourth quarter 2009." (Pensions & Investments)  


Text of Comments by American Academy of Actuaries Pension Committee to Actuarial Standards Board on the Exposure Draft of the Proposed ASOP on Modeling (PDF)
"The exposure draft defines 'model' broadly. Indeed, the last paragraph in the background section says: 'Actuaries generally agree that almost all actuarial work involves modeling of some type....' It is unclear why this ASOP is needed in situations involving straightforward calculations. For instance, in calculating a deterministic present value using a pension valuation system or even using pencil and paper, the actuary seems to be using a model, as defined. In situations such as these, the exposure draft does not seem to have any positive effect and might instead add cost and exposure to routine work. Therefore, we believe the definition of 'model' should be scaled back so that the ASOP only applies where it provides value." (Pension Committee of the American Academy of Actuaries)  


CalPERS Investment Philosophy: 'Ten Beliefs' Are Mystifying
"On Sept. 16, the bellwether of the old-line defined-benefit plans, with $270 billion of assets, was scheduled to show all parties concerned, by means of 10 written beliefs -- the product of a process encompassing dozens of its own people -- that it possessed a dependable inner compass.... But instead of no-nonsense dictates, the remorse-driven 10 Beliefs have the circular look of a policymakers' version of a letter of intent about determining an intent that determines policy guidelines." (RIABiz)  


Comments by ABA Federal Regulation of Securities Committee to SEC on Proposed Money Market Reforms (PDF)
27 pages. Excerpt: "The Commission should reconsider whether the estimation process underlying 'mark-to-model' or 'matrix pricing' will bring greater precision or uniformity to the valuation of money market instruments than does the amortized cost method of accounting -- or less. The strength of the amortized cost method of accounting, in contrast to 'market-based' valuation, is its objectivity and uniformity across all money market funds in the industry." (Federal Regulation of Securities Committee, Business Law Section of the American Bar Association)  


Are Investment Consultants Useless?
"[E]veryone wants a piece of the U.S. public pension pie, especially consultants. They yield tremendous power and have effectively become the 'gatekeepers' for most pension funds looking to make investments to external managers. They are also the prime beneficiaries of a poor governance system which has allowed them to essentially hijack the entire investment process, recommending their clients invest with the large well-known hedge funds and private equity funds, ignoring smaller funds that typically outperform." (Pension Pulse)  


Text of Comments by ACOPA to Actuarial Standards Board on the Exposure Draft of the Proposed ASOP on Modeling
"ACOPA has serious concerns about the broad scope of the proposed standard, and finds the broad scope neither clear nor appropriate.... Too broad a scope means the application of the standard is ambiguous, which does not benefit the public and is a serious problem for actuaries attempting to comply with this and other standards. The 'covered unless proven otherwise' approach to the scope of this standard will allow third parties to contradict determinations actuaries made in good faith, and encourage costly and unnecessary litigation." (American Society of Pension Professionals & Actuaries [ASPPA] and ASPPA College of Pension Actuaries [ACOPA])  

Benefits in General; Executive Compensation

When Is It Too Late? U.S. Supreme Court Will Hear Case on Statute of Limitations Contained in Employee Benefit Plan
"The Court must decide whether a claim for benefits under [ERISA] can accrue -- and the limitations start -- even before the participant or beneficiary has exhausted the plan's claims and appeals procedures and is legally permitted to sue on that claim. This case is important for plan sponsors that have written (or are contemplating writing) a statute of limitations into their benefit plans limiting the time that participants and beneficiaries can sue the plan over a denied benefit claim, especially where that limitations period begins before final denial." [Heimeshoff v. Hartford Life & Accident Insurance Co. appeal from Second Circuit; oral argument to be heard on October 15, 2013.] (Trucker Huss)  

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