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

Plan Compliance Specialist
Lincoln Financial Group

401(k) Plan Administrator
Pension & Benefits Associates, Inc.
in CT, MA

Health & Welfare Employee Benefits Attorney
in CO, DC, TX

Account Manager for University Services Division
Garnett-Powers & Associates, Inc.
in CA

DC Plan Administrator
Capital Retirement Plan Services, Inc.
in PA

Employee Benefits Sales Producer
Corporate Synergies Group, LLC
in NJ, NY

Defined Contribution Consultant
in NC

Specialist - Qualified Plan Administration
a Leading Global Employee Benefits and Consulting Firm
in CA

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Webcasts and Conferences

Examining the IRSís Role in Implementing and Enforcing ObamaCare
October 9, 2013 in DC
(U.S. House Committee on Oversight & Government Reform)

Joint Conference Call on Compliance and Cost Implications of Security Exchange Commission
October 10, 2013 WEBCAST
(HR Policy Association)

The U.S. Supreme Court's Decision on DOMA and Related Guidance
October 17, 2013 in CA
(Western Pension & Benefits Council - Orange County Chapter)

Current Developments & "What's New" In Pensions, Ethics and Professionalism Related to Employee Benefits Practice
October 25, 2013 in CT
(National Institute of Pension Administrators-CT Chapter)

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]

SEC Approves Registration Rules for Municipal Advisors: Exempts Retirement Board Members but Includes Actuaries
"[A]ctuarial studies that are used as the basis for a municipal entity to engage in financing are not considered advisory 'if the actuarial study only uses client-provided investment return assumptions and does not make any recommendations about how such municipal entity might address an unfunded liability, including a discussion of the advisability of an issuance of municipal securities or a municipal financial product.' As a result, your actuary will not be able to advise you either to issue or not to issue a pension obligation bond, or even how to analyze the impact of a pension obligation bond, unless they register with the SEC." (Cheiron)  


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Another Participant Challenge to Defined Benefit Plan Investments: Could Your Plan Defend its Investment Program?
"[A recently-filed lawsuit] challenges U.S. Bancorp's investment of 100% of its [defined benefit plan] assets in equities from 2007 through 2010, allegedly causing the plan to lose over a billion dollars ... [The] suit targets a large group of defendants, including the former investment adviser, the trustee, the members of the Compensation and Investment Committees and those members of the Board of Directors who were not on the committees, who allegedly failed to monitor the activities of the appointed fiduciaries.... [T]his lawsuit should serve as a wake-up call now to directors who may consider themselves absolved from pension responsibility because other fiduciaries have been appointed to handle investments." (Osler, Hoskin & Harcourt LLP)  

The Moench Presumption: The Third Circuit's Standard of Prudence in Employer Stock Cases and Its Subsequent Treatment by Circuit Courts (PDF)
15 pages. Excerpt: "Six other Circuit Courts have subsequently adopted the Moench presumption. These courts, however, continue to disagree on pivotal issues, such as the procedural stage at which the presumption applies and how the presumption can be rebutted. This division among the Circuit Courts has led to the inconsistent application of the Moench presumption and is quickly resulting in an unwieldy body of law that provides neither precedent nor guidance, and encourages forum shopping by litigants seeking to challenge employer stock holdings by plans." (McDermott Will & Emery via Benefits Law Journal)  

Court Says ERISA Plan Custodian Had to Comply with State Order Attaching Plan Assets
"A recent decision by the 7th U.S. Circuit Court of Appeals serves as a reminder to plan custodians that they cannot assume that federal law will always trump state law when it comes to assignment of plan assets.... [T]he court held that Merrill Lynch, as a custodian holding ERISA plan assets, had 'no choice' but to comply with a state court order freezing payment of plan benefits and it dismissed a federal suit brought by the plan's administrator seeking to block the state court action." [Johnson vs. Merrill Lynch, Pierce, Fenner & Smith, Inc., 719 F.3d 601 (7th Cir. 2013)] (Proskauer's ERISA Practice Center)  

Fiduciary Rules Will Cost Millions in Compliance
"[B]roker-dealers are worried that the proposed changes to the fiduciary standard could cost them up to $8 million to set up compliance systems and about $2 million a year to maintain. That's per broker-dealer.... [F]irms said they would need to develop and furnish a broker-dealer relationship guide, which would include a disclosure form, to a combined total of approximately 50.6 million retail customers." (BenefitsPro)  


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New Focus on Showing Risk as CalPERS Rates Go Up
"A new CalPERS projection shows employer rates for the largest group of state workers increasing 27 percent over the next six years -- but the focus is on the risk of how much things can change. As the giant pension fund begins to take a bigger bite of state and local government budgets, employers will get more information about rates and a kind of mixed message. The goal is make rates more predictable for employers, avoiding shocks and allowing time to adjust budgets, while also encouraging employers to think about risks that could change the rates." (Calpensions)  

Actively Managed Mutual Funds Fall Short Again
"In the 10 years that ended June 30, $10,000 invested in the average fund that owns a diversified mix of large-capitalization, or blue-chip, U.S. stocks grew to $18,840. But the same amount invested in the Vanguard 500 Index fund, which tracks the Standard & Poor's 500 index, grew to $20,002 ... Over 25 years the numbers are more striking. A $10,000 investment in the Vanguard 500 fund grew to $99,503, or nearly $24,000 more than the value of the average large-cap fund in that period." (Los Angeles Times)  

How to Get Your 401(k) Ready for Retirement
"Here's a six-step plan to address your 401(k) if you're within, say, 10 years of retirement: [1] If you haven't done it lately, review your 401(k) investment mix.... [2] Beware of the rate sensitivity of fixed-income funds you own in your 401(k).... [3] Look for greater variety within your 401(k).... [4] Use IRAs and other accounts to complement your 401(k).... [5] Check whether your 401(k) plan includes a brokerage window, or self-directed account.... [6] Consider getting professional advice." (The Wall Street Journal; subscription may be required)  

Political, Popular Obstacles Block Public Employee Pension Changes
"While no other city is expected to join Detroit in bankruptcy court anytime soon, similar problems brought on by waning industries, crushing debt and surging pension costs plague city halls from Providence, R.I., to California, and in response mayors are proposing big changes to what was long the biggest perk of a government job: a good and reliable pension.... Efforts to cap existing pensions, however, are often seen as a betrayal to workers who took a city job in part because of a promised pension." (CNBC)  

Detroit Pension Funds' 13th Check Approved by Judge, But Retirees Shouldn't Count the Money Yet
"Detroit's controversial 13th check got new life [on October 4] when an administrative law judge ruled that one of the city's two pension funds must be given the right to make retroactive bonus payments to retirees and active employees for 2011 and 2012. The recommended order ... is largely symbolic for now because U.S. Bankruptcy Judge Steven Rhodes may still block the payments.... [Judge Doyle] O'Connor acknowledged that his opinion might not mean much, saying it 'may well offer little more solace than an assurance of a full ticket-price refund offered while still on the sharply tilting deck of the Titanic.'" (Detroit Free Press)  

Law Shields Churches, Leaves Pensions Unprotected
"Because of a legal loophole, there are actually parallel pension systems. One comes with safeguards. The other, while it may be backed by good faith and honorable intentions, has no safety net. Congress set it up that way by crafting an exemption in benefits law to protect churches from government interference in their finances. But the exemption applies to religiously affiliated employers like hospitals and service agencies, including some that have let pension funds dwindle." (Associated Press, via Miami Herald)  

Australia's 'DIY' Pension Funds Ring Regulatory Alarm Bells
"Risky, high-yielding debt is being sold to Australian retail investors who manage their own pension savings, a move that underlines growing risks associated with the country's $1.5 trillion private pensions system ... About A$500 billion ($469 billion), or almost a third, of pensions are self-managed by individuals who avoid paying fees to professional managers and often spurn investment advice, making them an easy target for those marketing risky securities." (Reuters)  

Longevity Risk Management, Corporate Finance, and Sustainable Pensions
"The emergence of new instruments for hedging longevity risk means that a complete toolkit is now available for managing these plans in a way that is sustainable over the long term. Decisions to hedge or eliminate longevity risk need to be made in a holistic framework. For corporate pension plans this means taking account of the corporate finance perspective, as well as the interdependencies between the sponsor and the plan." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)  

Melbourne Mercer Global Pension Index
"This study of retirement income systems in 20 countries has confirmed that there is great diversity between the systems around the world with scores ranging from 42.0 for Indonesia to 80.2 for Denmark.... The overall index value for the American system could be increased by: raising the minimum pension for low-income pensioners [and] adjusting the level of mandatory contributions to increase the net replacement rate for median- income earners.... The American index value fell from 59.0 in 2012 to 58.2 in 2013 primarily due to a reduction in the net replacement rate." (Mercer and Australian Centre for Financial Studies)  

Evolving Roles for Pension Regulations: Toward Better Risk Control
"[A] number of the developments in regulation [in recent years] have played a part in the shift of pension portfolios towards lower risk, that may yet cause difficulties for future pension income. These shifts also leave open a number of outstanding questions, notably whether education of consumers is sufficient, the role of longevity risk and whether regulation can be made more counter cyclical." (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)  


More Pension Lessons From Down Under?
"[S]elf-managed funds are taking off in Australia because of disappointing results of professionally managed pension funds. This is leading many unsophisticated retail investors to make poor investment choices -- like investing in risky, illiquid high-yield debt at the worst possible time -- and regulators are rightfully concerned.... Australia's pension system is not a good international model. The best models to follow are found in countries like the Netherlands, Denmark, Sweden and Canada. But even there, the trend is shifting to DC plans, which should worry us all." (Pension Pulse)  


Time to Retire the Idea of Retirement
"Rising longevity, advances in health care and increasing affluence made current conceptions of retirement possible: images of graying but physically fit couples at the beach or energetically wending their way through a golf course became regular features of Madison Avenue's ad portfolios. But America's affinity for high-end consumption that this image of the good life represents is in jeopardy.... [It] is hard to promote private savings in a culture that views consumption as society's cherished goal." (ThinkAdvisor)  


Extreme Risks and the Retirement Anomaly
"The current consensus, among practitioners if not the general population, is that people must save more for their retirement unless they are willing to work until they are very old. While a sensible course of action for an individual, can this be done in aggregate? ... In the context of humanity's entire history could the recent invention of retirement be seen as an aberration from the norm (of working till you drop, or are supported by family)?" (Pension Research Council, Wharton School of the University of Pennsylvania; free registration required)  

Benefits in General; Executive Compensation

If You Think 'It's Not Worth the Paper It's Printed On' -- Think Again
"Estoppel claims and other attempts to get equitable remedies are rampant in the wake of the Supreme Court's Amara decision ... These claims frequently depend on oral communications with benefit plan staff or allegedly vague or misleading documents.... [T]he best defense to an ERISA estoppel claim often lies in clear plan documents and communications. Well drafted documents, distributed to participants at the right time, can undercut claims of reasonable reliance upon other inaccurate statements about benefits." (Seyfarth Shaw LLP)  

Deferred Compensation Provisions Not ERISA Plans Because No Ongoing Administration Required
"Under the Supreme Court's longstanding Fort Halifax test, a plan exists only when there is a commitment to pay benefits systematically, including an ongoing administrative responsibility or scheme to determine eligibility and calculate benefits. As the dissent in this case skillfully illustrates, this definition is easier to state than to apply to a particular set of facts. Employers maintaining deferred compensation arrangements should consider up front whether ERISA applies, keeping in mind the significant advantages ERISA can confer, like protection from otherwise applicable state-law claims and larger damage awards (including possible consequential and punitive damages)." [Cantrell v. Briggs & Veselka Co., 2013 WL 4523497 (5th Cir. 2013)] (Thomson Reuters / EBIA)  

U.S. Companies Planning Modest Executive Pay Raises Next Year
"[E]xecutives can expect fairly modest salary increases in 2014, generally consistent with the levels in recent years. The survey participants granted a 2.7% average annual increase to their executives this year. For 2014, projected salary budgets put the average executive pay increase at 2.9%." (Towers Watson)  

Retail Investors Seen as Key to Firms Struggling on Say on Pay
"On average, say on pay proposals this year were approved with 89 percent of shares voted in favor, a modest increase from 2012. Yet across market caps, there were some companies that received over 90 percent support for their pay plans last year that slipped to under 70 percent support in 2013. That's a reminder ... that companies must continue to reach out and engage with their shareholders every year." (Corporate Secretary)  

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