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December 3, 2013          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Director of Operations
IUPAT Industry Pension Fund
in MD

Pension Administrator
Al Minor & Associates, Inc.
in OH

Associate Attorney
Ferenczy + Paul LLP
in CA, GA

Pension Automation Specialist
Kravitz, Inc.
in ANY STATE

You are Catching Fire: DC Retirement Plan Consultant
A Consulting Third Party Administrator
in ANY STATE

ERISA Compliance Associate
MBM Advisors, Inc.
in TX

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Webcasts and Conferences

Ethics
December 5, 2013 WEBCAST
(National Institute of Pension Administrators)

End of the Year Tax Planning for Tax Advisors using 412(e)(3) Plans
December 5, 2013 WEBCAST
(National Pension Partners)

Defined Contribution Plan Overview
December 10, 2013 WEBCAST
(NH Hicks)

U.S. v. Windsor on DOMA: How Does It Affect FSAs, HRAs, and Other Employee Benefit Programs?
December 11, 2013 WEBCAST
(Employers Council on Flexible Compensation (ECFC))

Qualified Plan Essentials Plus Series
December 11, 2013 WEBCAST
(McKay Hochman Co., Inc.)

Form 1099-Rs - A Reality Check
December 17, 2013 WEBCAST
(National Institute of Pension Administrators)

Getting It Right Know Your Fiduciary Responsibilities
January 7, 2014 in NY
(Employee Benefits Security Administration (EBSA), U.S. Department of Labor)

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]

Issuing a Revised 401(k) Safe Harbor Notice
"Although the regulations do not address the issue of providing a revised notice, neither do the regulations prohibit such a notice. Accordingly, we believe a plan sponsor has the option of issuing a revised notice to participants as long as the notice is timely. In fact, in light of the IRS issuing the regulations less than one month before the December 2 safe harbor deadline for a calendar year plan, we expect the IRS would be even more understanding regarding the issue." (SunGard Relius)  


[Advert.]

2014 Advanced Pension Conference in Orlando February 5-7

Sponsored by SunGard's Relius Education

Register by January 6 and save $150. Sessions cover 457 plans, TPA contracts, forfeiture allocation options, 403(b) preapproved plans, auto-enrollment options, partial termination, correcting safe harbor, changes to forms and notices, and more. 19 CE hours.



Detroit Is Ruled Eligible for Bankruptcy, No Special Protections for Pensions
"Judge Steven W. Rhodes of the United States Bankruptcy Court, found that Detroit was insolvent and that the pension checks of retirees could be cut during a bankruptcy proceeding, a crucial part of his decision.... Judge Rhodes ruled Tuesday that Michigan's protections for public pensions 'do not apply to the federal bankruptcy court,' adding that pensions are not entitled to 'any extraordinary attention' compared with other debts.... Labor agreements, including pensions, are subject to changes during a bankruptcy proceeding, the judge said, but the court 'will not lightly or casually exercise the power to impair pensions.'" (The New York Times; subscription may be required)  

Detroit Retirees Got Extra Interest After Their Guaranteed 7.9%
"Money for pensions and the annuity plan was commingled. If the pension's return fell below 7.9 percent, enough was credited to the annuity fund to meet the guaranteed rate ... The bonus interest applied to employee savings was 'effectively robbing the general retirement system of precious funds' to sustain traditional pensions ... [Although] the pension fund lost 24 percent of its value in 2009, it still guaranteed the savings plan's 7.9 percent return." (Bloomberg)  

Funded Status of U.S. Corporate Pensions Rises to 93.9 Percent in November
"For U.S. corporate plans, assets increased 0.4 percent and liabilities fell 1.8 percent. The decline in liabilities was due to a 15-basis-point increase in the Aa corporate discount rate to 4.85 percent. Plan liabilities are calculated using the yields of long-term investment grade bonds.... On the public side, the typical defined benefit plan in November did not achieve excess return over its annualized 7.5 percent return target, ISSG said. Public plan assets must earn at least 0.6 percent each month to keep pace with the 7.5 percent annual target." (BNY Mellon)  

IRS on the Lookout for Rollover, Valuation and Related Abuses
"[A recent Tax Court decision, Ellis v Commissioner,] should serve as a caution to anyone who might consider using accumulated retirement assets to start a business. The real scrutiny began roughly five years ago with an IRS compliance initiative targeting ROBS arrangements.... The IRS is also interested in IRA and employer plan asset valuation in more general terms.... [T]he IRS intends to collect more detailed information on the presence of such assets in tax-advantaged retirement savings arrangements. The objective can only be to ensure that such assets are not mis-valued in an attempt to avoid proper taxation." (Ascensus)  


[Advert.]

Premium Educational Event for Taft-Hartley Trustees

Sponsored by Financial Research Associates, LLC

Attend FRA's Taft-Hartley Benefits Summit to effectively manage your fund's investments and ensure your members' health & welfare benefits remain top-notch. Feb. 10-11, 2014 - Lake Buena Vista, FL. Mention FMP164 during registration for 10% discount.



The Impact of Market Recoveries on Retirement Preparedness (PDF)
"Sixty-five percent of finance executives believe that a significant portion of employees will have to delay retirement due to inadequate savings.... here are three important ways to improve the retirement prospects of Americans: [1] Savings: making sure individuals save enough for retirement; [2] Coverage: making sure individuals have access to a workplace retirement plan; [3] Retirement Income: making sure individuals can efficiently and prudently convert their retirement savings to retirement income." (Prudential Retirement)  

Will the Rebound in Equities and Housing Save Retirements?
"[I]mproving asset markets have only slightly lowered retirement risk because the increases in house prices have been modest, and the more robust growth in stocks mainly benefits the top third of households.... [E]ven with the market rebounds, the picture still looks worse than 2007. [E]ven substantial increases in asset values have only a modest effect on the [National Retirement Risk Index (NRRI)]. Half of American households remain at risk, and the only real solutions are to save more and/or work longer." (Alicia H. Munnell, Anthony Webb and Rebecca Cannon Fraenkel, Center for Retirement Research at Boston College)  

Detecting These Signs of Overconfidence Can Help 401(k) Investors Avoid a Fall
"The new 401k Fee Disclosure Rule, without a template approved by the DOL, leaves the participant looking only at the data out of context. Despite the DOL's warning not to look at fees alone, participants will look at fees alone -- for better or worse." (Fiduciary News)  

Should Plan Sponsors Provide Training to Their Fiduciaries?
"A representative from the Atlanta Regional Office of the DOL indicated at a recent Atlanta Bar Association meeting that DOL only requires proof of training if the plan sponsor or administrator has agreed to receive training as part of a settlement agreement following an audit. Even though training is not a requirement, the representative did add that DOL does inquire as part of a routine audit as to whether the plan sponsor/administrator has had fiduciary training. So the DOL thinks it's a best practice too." (Fiduciary Plan Governance, LLC)  

Where, Oh Where, Did the Stock Drop Cases Go?
"According to one recent study ... there has been a precipitous drop off in securities fraud filings, due in part to the strong stock market. Similarly, since a sharp drop in a company's stock price is a prerequisite to a traditional ERISA stock drop suit, less volatility probably is a significant driver of the trend.... Plan design trends may play yet another role in the recent decline of ERISA stock drop cases. According to one study ... fewer plans have employer stock funds and some of those that did have these funds are phasing them out. Fewer employer stock funds means a less target rich environment than was present even five, and certainly ten, years ago." (Seyfarth Shaw LLP)  

SEC Puts Fiduciary Duty Rule on 2014 Agenda as 'Long-Term Action'
"The [SEC] is pursuing a rule that would raise investment-advice standards for brokers -- just not in the near future.... The SEC put the rule on a 2014 [semi-annual] regulatory agenda that included 43 items.... Meanwhile, the Labor Department indicated on its 2014 priority list that in August it would re-propose its fiduciary-duty rule for investment advice pertaining to retirement plans.... Although [SEC] action isn't imminent on a proposal, one advocate noted that it is one of the few non-mandatory Dodd-Frank provisions that appears on the 2014 regulatory agenda." (InvestmentNews)  

Chicago City Pension Changes No-Go, Illinois Lawmakers Say
"City Hall has long held hope that Chicago could piggyback on whatever state pension legislation emerged, but Illinois House and Senate leaders Monday told city officials that isn't in the cards.... Chicago pension funds for city workers, laborers, police officers and firefighters are short $19.5 billion of what is needed to meet obligations. Absent changes to the pension system and a new source of revenue, the city in 2015 will have to increase payments into the police and fire pension funds by nearly $600 million, an amount equal to about one-fifth of the city's annual operating budget." (Chicago Tribune; subscription may be required)  

Oregon State Treasurer Pushes to Extend Pension Coverage to Private Sector Employees
"In order to expand Oregon's retirement net, the state's treasurer is trying to fix the public pension system and cover private workers.... Oregon State Treasurer Ted Wheeler has emerged as a champion of efforts to preserve the defined benefit retirement system.... In May Wheeler backed a measure to establish a task force to review pension possibilities for private sector workers. The issue is not on the radar screen of most state treasurers, but Oregon has a large number of small businesses and start-ups, many of which offer no pension plans to employees." (Institutional Investor)  

Employee Ownership Update for December 2, 2013
Topics include: Citizen's Share: A New Book on Employee Ownership; U.K. Creates Index of Public Companies with Employee Ownership; The Excellence in Ownership Awards; and Nomination Period for NCEO Board Elections Closes December 13. (National Center for Employee Ownership [NCEO])  

[Opinion]

Senators Portman and Cardin Want Treasury to Soften Nondiscrimination Rules Affecting Frozen Plans
"Legislators, when developing retirement rules have often preached that if we force companies to provide similar benefits to nonhighly compensated employees (NHCEs) as to HCEs that the companies would increase NHCE benefits to meet that bogey.... Historically, it hasn't worked that way. Faced with that situation, companies have opted to provide smaller benefits across the board, thereby lessening retirement security for most, and have found other ways to provide for their key employees." (Benefits and Compensation with John Lowell)  

[Opinion]

Wall Street's License to Steal?
"An increasing number of U.S. public pension funds are moving to emulate their Canadian counterparts, managing more assets in-house, but unless they implement independent and qualified investment boards and start paying their pension fund managers properly, it's a hopeless cause.... Nobody is going to go work for a U.S. public pension fund as part of their 'public civic duty.' You need to pay professional pension fund managers properly to attract and retain qualified staff." (Pension Pulse)  

[Opinion]

Canada's Global Buyout Kings?
"With interest rates at historic lows, everyone is playing the same game, bidding up prices of risk assets across public and private markets. This makes the job of pension fund managers that much more difficult.... Most funds are plowing into private equity. It's not 2007 all over again but if the current trend continues, it has the potential to become much worse." (Pension Pulse)  

Benefits in General; Executive Compensation

Certain Benefit Plan Changes Best Addressed Prospectively
"Perhaps the most significant change to address prospectively is the acquisition or sale of an entity or its assets. This can be a PBGC reportable event and may require fully funding a pension plan. It can be a COBRA event that affects group health coverage. Also, it can impact retirement plan nondiscrimination testing, design and reporting. If seller and buyer don't plan for the transition prospectively, it can adversely affect either or both of their plans." (Warner Norcross & Judd LLP)  

Attention Nasdaq Listed Companies: Compensation Committee Certification Required
"[An] executive compensation-related requirement for 2014 that has flown under the radar screens of many companies is that listed companies must file with Nasdaq a required form of Compensation Committee Certification.... Note, that even if company is exempt from the key independence requirements as a 'Smaller Reporting Company' or 'Foreign Private Issuer,' it must file the certification form to indicate that it is exempt." (Winston & Strawn LLP)  

CEO Pay Ratio Disclosure: Eight Things Human Resource Professionals Need to Know Now
"[1] CEO pay ratios may be surprisingly large.... [2] Companies face significant data collection challenges.... [3] There is flexibility in calculating the median employee compensation.... [4] Employees may have more access to pay information.... [5] Global employers must address data privacy concerns.... [6]  The calculation of the CEO pay ratio could have the unintended consequence of workforce manipulation.... [7] Business disruption.... [8] Uncertain Future." (Littler)  

The Great Pay Ratio Debate
"Dissenting comments from two of the SEC's five commissioners make plain the agency's ambivalence about moving forward with a rule that has drawn growing criticism for what many perceive as a departure from the agency's investor protection mandate.... Some of the commission's queasiness about the adverse impact the rule could have on competition is based on the 'potentially significant' costs it would entail for the 4,000-odd companies that it covers.... Any notion that pay ratio disclosure might compensate for benchmarking is further undermined by the fact that it would only apply to public companies' CEOs." (Corporate Secretary)  

[Opinion]

Text of Comments from Hay Group to SEC on Proposed Pay Ratio Rules (PDF)
"[T]he Commission should give further consideration to the substantial economic costs and burdens that compliance with the proposed rule will impose on small businesses (in relation to their size) and weigh these against the unknown and unsupported benefits that compliance might provide.... [T]he usefulness of disclosure would be improved and the burden on employers would be lessened by the exclusion of part-time and seasonal workers from the pay ratio calculations .... If the Commission nevertheless determines that part-time and seasonal workers should be included, the Commission should take the logical step of permitting companies to annualize the compensation of such workers." (U.S. Securities and Exchange Commission)  

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