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November 6, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Senior Benefits Manager
Wood Group
in TX

Actuary or DB Plan Reviewer
MGKS, Inc.
in AZ

Analyst 3 - Benefits (Retirement Plans)
E. & J. Gallo Winery
in CA

Employee Benefits Analyst
Ice Miller LLP
in IN

Senior Defined Contribution Analyst
A Full Service Qualified Plan Administration Firm
in OH

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Webcasts and Conferences

Affordable Care Act 101
November 7, 2013 WEBCAST
(U.S. Small Business Administration (SBA))

Defined Benefit and Cash Balance Plans
November 12, 2013 WEBCAST
(United Retirement Plan Consultants, Inc.)

Teleconference: IRS Issues Long-Awaited Rollover Guidance for FSAs
November 13, 2013 WEBCAST
(Employers Council on Flexible Compensation (ECFC))

Affordable Care Act 101
November 14, 2013 WEBCAST
(U.S. Small Business Administration (SBA))

ERISA Litigation Update
November 19, 2013 in CA
(Western Pension & Benefits Council - San Diego Chapter)

Practical Considerations for Issuing Equity as Compensation - Recorded
November 20, 2013 WEBCAST
(DLA Piper LLP)

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 Maximum Insurance Benefit Increases for 2014
"Beginning in 2014, the maximum yearly guarantee for a 65-year-old retiree will be almost $59,320 -- a 3.2% increase from the $57,500 rate in 2013.... The increase is not retroactive and applies only to single-employer pension plans. The maximum guarantee limit for participants in multiemployer plans is $12,870 with 30 years of service, which has been in place since 2001." (Pension Benefit Guaranty Corporation [PBGC])  


Free Webcast: What You Need to Know About PPA Restatements

Sponsored by ASC

PPA Restatements are around the corner! On November 14th, join ERISA attorney, Charles Lockwood, J.D., LL.M., for a discussion about the PPA document restatement process. Click here today to register.

Do Money Managers Like BlackRock and Fidelity Pose a Risk to the U.S. Financial System?
"BlackRock Inc. and Fidelity Investments will be studied by U.S. regulators who are in the early stages of reviewing whether asset managers pose a potential risk to the financial system ... [the Financial Stability Oversight Board's] preliminary talks may presage months of wrangling between the industry and officials charged with trying to prevent a repeat of the 2008 financial crisis. Asset managers are among non-bank financial companies that the council is empowered by law to evaluate to determine whether their failure could threaten the entire system and thus require Federal Reserve oversight. BlackRock, Fidelity and the mutual-fund industry's trade group have said money managers aren't a threat." (Bloomberg)  

Cincinnati Voters Say Loud 'No' to Pension Reform
"Cincinnati voters overwhelmingly rejected Issue 4, a major overhaul of the city's troubled pension system ... The amendment would have required the city to pay off its $872 million unfunded liability in the current pension system within 10 years.... [c]hanged City Hall's public pension plan for newly hired employees from a defined benefit plan to a defined contribution plan ... [and imposed] contribution caps for the city and made cost of living adjustments compatible with actual increases in the Consumer Price Index, with a cap at 3 percent annually." (WCPO Cincinnati)  

New York Is Investigating Consultants to Pension Funds
"[S]tate financial regulators have subpoenaed about 20 companies that help New York's pension trustees decide how to invest the billions of dollars under their control ... [The] subpoenas seek information like the consultants' pitchbooks on various investment proposals, their compensation practices, their relationships with money managers and their methods of tracking investments that do not trade on public markets.... [R]egulators appeared to be trying to learn whether any consultants were being paid by the firms they recommended, including in-kind payments or job offers." (The New York Times; subscription may be required)  

How 401(k) Lawsuits Are Bolstering Your Retirement Plan
"Jerome Schlichter, the St. Louis attorney credited with literally making a federal case out of 401(k) fees, just filed his 14th class action against a company he claims mismanaged its employees' retirement savings. The lawsuit ... against Massachusetts Mutual Life Insurance Co, states that the firm 'larded' its 401(k) program with overpriced and inferior investments and engaged in 'blatant self-dealing' by making money selling its own services to the plan.... Mike Alfred, co-founder and chief executive officer of Brightscope ... says 401(k) fees have been coming down for years, thanks to pressure from Schlichter." (Reuters)  

New Excessive Fee Case, Filed By MassMutual Employees
"Plaintiffs allege that MassMutual is a fiduciary to the plan because it served as the recordkeeper, investment manager, and primary service provider to the plan. The plan document also allegedly appoints the CEO of MassMutual as the primary fiduciary to the Plan.... Plaintiffs allege that the plan has 38 investment options of which 36 to 37 are MassMutual proprietary funds. They allege this shows no prudent process was put in place when they were selected." (FRA PlanTools, LLC)  

Case Underscores Importance of Plan Documents When Plans Hold Company Stock
"The SunTrust case and other recent cases have held that clear language in the plan documents requiring the plan to include a company stock fund is an essential key to protecting fiduciaries from potential liability. This type of language greatly reduces the likelihood that fiduciaries will be found to have breached their duties if the company's stock value declines while the stock fund remains part of the plan assets." (Mazursky Constantine, LLC)  

The Impact of Taxes on the Safe Withdrawal Rate
"[W]hile taxes do drag on the growth of a portfolio, safe withdrawal rate research also assumes that in the worst case scenarios, clients will dip into their starting principal as well ... as a result, the impact of taxes is limited, as principal liquidations remain a tax-free return of basis.... [In] scenarios where the safe withdrawal rate must be relied upon ... there is often little tax impact, for the simple reason that there aren't many (or any) big gains on the portfolio in the first place!" (Michael Kitces in Nerd's Eye View)  

Paying Fees from the Plan is Not a 'No-Brainer'!
"[T]his decision requires financial analysis, assessment of fiduciary obligations, and an examination of the Plan Sponsor's goals. Here are some of the things to keep in mind: Paying Fees from the Plan Has Fiduciary Implications.... Consider the Company's Goals and Overall Budget.... Account Charges Impact Employee Retirement Readiness." (Poyner Spruill LLP)  


Targeted Strategies to Increase Your Defined Contribution Market Share

Sponsored by Financial Research Associates, LLC

Join industry innovators, retirement platforms, advisors and consultants -- networking opportunities and in-depth sessions on latest trends, updates and information in the defined contribution investment-only industry. Mention FMP164 for 10% discount.

The Imprudent 'Asset-Silo' Approach to Pension Portfolio Investing, Monitoring, and Performance Measurement
"One task, above all others, is central to prudent pension investment oversight. That task is to ensure that a plan's investment policy, the execution of that policy, and the measurement of portfolio policy performance is explicitly ordered with respect to furthering a pension plan's funding policy. This requires a focus on the portfolio." (Herbert A. Whitehouse via 401kHelpCenter.com)  

Applying Retirement Plan Participation Provisions: What a Difference a Day Makes
"IRS officials were asked whether an employee who is hired on January 2, 2012 would become a participant on January 1 or April 1, 2013 in a plan providing for entry on the first day of the calendar quarter coinciding with or immediately following completion of one year of service.... [An] IRS senior tax law specialist in employee plans technical compliance in effect indicated that the year of service would end on January 1, 2013 by stating that the employee would become eligible to participate on that date. This answer assumes that the service requirement is satisfied on January 1, 2013. Since that date coincides with an entry date, that is the date the employee should be eligible to participate." (Benefits Bryan Cave)  

Target Maturity Funds: Report for 3Q 2013 (PDF)
"Target maturity fund returns for the quarter were very equity-like, with the average target maturity fund posting a 5.3% return, on par with the S&P 500. For the 12-month period ending in September, target maturity funds earned a respectable 12.3% ... Estimated flows into target maturity mutual funds were only $1.5 billion for the quarter, the lowest in more than a decade.... As of the end of the third quarter, total assets in target maturity funds were an estimated $577 billion, a 24% increase from a year ago." (Ibbotson Associates, Inc. via Center for Due Diligence)  

Defined Contribution Plan Participants' Activities, First Half 2013 (PDF)
"In 2013:H1, 2.1 percent of DC plan participants took withdrawals, the same pace as in 2012:H1.... Only 0.9 percent of DC plan participants took hardship withdrawals during 2013:H1, the same share as in 2012:H1.... Only 1.5 percent of DC plan participants stopped contributing in 2013:H1, compared with 1.6 percent during 2012:H1 and 1.6 percent during 2011:H1.... At the end of June 2013, 18.1 percent of DC plan participants had loans outstanding, compared with 17.9 percent at the end of March 2013, 18.2 percent at year-end 2012, and 15.3 percent at year-end 2008." (Investment Company Institute [ICI])  

Revised Electronic Disclosure Rules Could Clarify Use and Better Protect Participant Choice
"GAO: (1) examined the extent to which law and regulations permit electronic disclosure to participants; (2) explored the reported advantages and disadvantages associated with electronic delivery; and (3) evaluated the weaknesses identified, if any, in the agencies' electronic delivery requirements.... GAO recommends that Labor and Treasury consider clarifying regulatory requirements and expanding participants' ability to opt out of electronic delivery." (U.S. Government Accountability Office)  

The Joys of Employee Ownership: Video
"Realityworks CFO Mary Stenvig describes how she had to educate herself from scratch on how ESOPs worked, the financial implications of the move and the company's lobbying efforts aimed at preserving tax-advantaged treatment for the employee-ownership vehicles." (CFO)  

Pension Plan Funded Status Rises Due to Asset Increases in Q3 2013 (PDF)
"During the third quarter of 2013, the funded status of the model pension plan ... increased by 6 percentage points: from 87 percent to 93 percent. This increase was driven by an asset return of 6 percent and a liability decrease of 1 percent." (Sibson Consulting and Segal Rogerscasey)  

U.K. Acts to Cap Retirement Plan Fees
"[The U.K.] government announced it was considering a ban on plans charging more than 0.75% of assets -- that's less than the average U.S. 401(k) plan.... These fees--- 0.75% or 1% of your savings a year -- add up to a lot over the course of your working life, thanks to compound interest. The British government says the difference between a 0.75% fee and a 1.5% fee could be 100,000 GBP ($160,000) by the time you retire." (MarketWatch.com)  


Protecting Investors from High Costs
"The impact of fees and other costs is a significant factor in the under-performance of actively-managed mutual funds. Higher fees and higher trading costs reduce a fund's return. Too many investors underestimate the impact of mutual fund fees. Each additional one percent of fees and expenses reduce an investor's end return by approximately 17 percent over a twenty year period." (Paladin Research & Registry)  


CalPERS' Bonus Bonanza?
"To traders who eat what they kill, seeing America's biggest public pension fund dole out twice as much in bonuses to their senior investment officers after recouping losses suffered during the recession doesn't make any sense at all. Most people would agree with him, why pay out big bonuses for recouping massive losses? CalPERS talks about the need to compete with Wall Street pay but nobody on Wall Street would still have a job if they experienced the losses CalPERS experienced during the recession." (Pension Pulse)  


Washington State Court Case Illustrates Risk of Increasing Pension Benefits for Public Employees
"[M]ore than two dozen state courts, including Washington State's, have blocked changes even to future benefit accruals if it involves decreasing them. Instead, the Washington court and other courts, led by California's Supreme Court, force a government employer to continue allowing workers to accrue benefits at the same level for their entire careers. Perversely, the courts allow states and cities to increase benefits at any time." (Public Sector Inc.)  

Benefits in General; Executive Compensation

[Guidance Overview]

Proposed CEO Pay Ratio Rules Provide Companies with Flexibility to Satisfy Dodd-Frank Mandate (PDF)
"By proposing only a brief discussion of pay ratio methodology, assumptions and estimates, the SEC appears to be somewhat sensitive to the additional costs associated with mandating a more extensive narrative of the pay ratio components or the inclusion of supplemental information regarding compensation structures and polices, neither of which is required by the text of Section 953(b). It is likely, however, that the length (and therefore cost) of such disclosure will vary significantly between companies depending on the methodology used and the number of estimates involved." (Bass, Berry & Sims via Bloomberg BNA)  

Alternative Pay-for-Performance Measures: The Importance of Understanding the Nuances
"As more companies embrace alternative pay definitions, such as realizable and earned pay, in their proxy disclosures and pay-for-performance analyses, it's important to keep in mind that these definitions can produce sharply differing results based on business and market performance.... How rewards from various incentive plans are counted differs significantly under the common definitions of earned pay (sometimes called realized pay) and realizable pay[.]" (Towers Watson)  


Text of Comments by Steven Hall & Partners to ISS on 2014 Draft Policies
"By continuing to use TSR as the sole quantitative benchmark for corporate performance and relegating an analysis of operational and financial performance metrics to the qualitative assessment, we believe that this policy puts many compensation committees in the position of having to choose between doing the right thing for the long-term value of the company and doing the right thing to secure favorable Say on Pay vote recommendations from ISS." (Steven Hall & Partners)  

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