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Hand-picked links to the web's best news articles, official guidance, jobs, webcasts and more.
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[Official Guidance]
Text of Social Security Notice of Discontinuation of the Letter Forwarding Service
"In recent years, the internet offers a rapid expansion of locator resources via free social media Web sites and for pay locator services. The public now has widespread access to the Internet and the ability to locate individuals without relying on our letter forwarding services. Based on the availability of the alternative locator resources and the effects it would be as a cost saving measure, we are discontinuing the letter forwarding service. This decision is in line with the Internal Revenue Service, which successfully eliminated part of its letter forwarding workload as of August 31, 2012."
(Social security Administration)
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PBGC Announces 'My PAA' is Ready for 2014 Premium Filings
"My PAA has been updated to reflect recent changes to the premium regulation (first effective for 2014 plan years) as described in the 2014 premium filing instructions. Comprehensive filings for plan years beginning in 2014 may now be electronically submitted via My PAA. Information about how to e-file via My PAA (e.g., Demos and FAQs) is on the Online Premium Filing with My PAA page ... A reminder[:] the new rules have no impact on premium filings for plan years beginning in 2013 (e.g., small calendar plans whose 2013 premium filing is due April 30th, 2014)."
(Pension Benefit Guaranty Corporation [PBGC])
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Text of CBO Cost Estimate for PBGC Proposals in the President's 2015 Budget (PDF)
"The President's Budget proposes to give PBGC the authority to set premium rates in both the single employer and multi-employer programs, but does not specify how to allocate the premium increase across the two programs. For this estimate, CBO assumed that 75 percent of the increase would be for the single employer program and 25 percent for the multi-employer program. CBO projects that the multi-employer revolving fund will be exhausted in 2021."
(Congressional Budget Office)
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Is a DB Plan Right for Your Organization?
"The decision to move away from DB plans raises two key questions: [1] Are those organizations that have abandoned their DB plans missing out on significant workforce planning opportunities? [2] If an organization that sponsors a DB plan lowers its financial risks through, for example, liability-driven investing, would it gain the workforce management advantages of a DB plan and the costs and risks similar to a DC plan? ... This paper outlines how various employees would fare based on participation in a DB plus DC versus a DC-only plan. It also provides information to address whether the workforce planning advantages of DB plans justify the cost and risk of plan sponsorship."
(Towers Watson)
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The Risks of Derisking DB Plans
"Assets that left the plan early in 2012 and 2013 missed out on the double-digit return potential of those years. When participants are offered a lump sum election opportunity, those in poor health are more likely to accept the offer ... Thus, the plan may be subject to more unfavorable mortality experience ... [A] lump sum transaction is likely to decrease a plan's funded status ... and will have to maintain a certain funding level in order to avoid lump sum restrictions. The lower funded status will generally result in higher plan sponsor contribution costs. It may also result in a higher PBGC variable-rate premium."
(Milliman, via Actuarial Digest)
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Helping Plan Participants to Choose Between Annuities and Lump Sums
"If his main retirement goal is to be happy, have him take the pension or a similar lifetime annuity. A 2012 report ... found that among retirees of similar wealth and health, those with annuitized incomes were happier than those without annuities. Any financial adviser worth her credentials would argue that this happiness is likely to be short-lived, though.... There's another angle. Pensions don't generate commissions or asset management fees; rollovers do. So how do you help clients make informed decisions and manage the inherent conflict of interest?"
(Reuters)
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Knowing Your Account Value Isn't Enough
"The rule of thumb in the retirement industry is that, assuming you remain well invested, you can withdraw about 4%-5% of your initial savings each year and have a good chance that the money will last for the rest of your life.... But only 27% of our survey participants got that right ... More than one-fourth said they didn't know, and about half guessed too high.... More than one-third of our respondents said you could withdraw 10% or more."
(Alliance Bernstein)
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Best Practices for Investment Menus in 401(k)/403(b) Plans
"[1] Offering 12 to 15 core fund options, which do not include managed fund choices; [2] A set of professionally managed investment options ... with the most common offering being target date funds; ... [3] At least 4 conservative fund choices ... Although the average number of investment options offered in 401(k) plans has risen to 15 ... the average number of investment funds used by participants has remained consistent over time at 3."
(Lawton Retirement Plan Consultants)
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Examining Perceptions and Expectations Among Target Date Investors and Non-Investors (PDF)
12 pages. Excerpt: "The gap in confidence levels between [target-date fund (TDF)] investors and non-TDF investors suggests that TDFs are doing what they are supposed to be doing: providing a diversified investment option for plan participants that reallocates over time to make investment planning easier to execute--- and retirement goals easier to reach.... TDF investors report contributing a full 2% more of their pay to their retirement plans than non-TDF investors. In fact, 42% of TDF investors report contributing over 10% of their income (vs. 23% of non-TDF investors)."
(ING Retirement Research Institute)
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President Obama's 2015 Budget Proposes Changes to Employer Benefits
"The budget calls for new limits for tax-preferred retirement plans, caps on tax preferences for health and retirement benefits, and higher PBGC premiums. While the full proposal is unlikely to gain legislative traction, revenue-raising provisions could be attached to other legislative proposals. The budget would establish automatic payroll deduction IRAs -- a long-standing proposal from the administration and some lawmakers."
(Towers Watson)
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Labor-Force Participation Rates of the Population Ages 55 and Older, 2013
"The labor-force participation rate for those ages 55 and older rose throughout the 1990s and into the 2000s, when it began to level off but with a small increase following the 2007-2008 economic downturn.... [A]mong those ages 65 or older, the rate increased for both males and females over that period. This upward trend in labor-force participation by older workers is likely related to workers' current need for continued access to employment-based health insurance and for more years of earnings to accumulate savings in defined contribution (401(k)-type) plans and/or to pay down debt."
(Employee Benefit Research Institute [EBRI])
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Why Plan Participants Change Their Planned Retirement Date (PDF)
"Workers who report a change in their expected retirement age in 2014 most often cite the poor economy (25 percent)... Other reasons cited included the inability to afford retirement (18 percent), a change in their employment situation (17 percent) and health care costs (12 percent)[.]"
(Employee Benefit Research Institute [EBRI])
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Unions Want to Use $100M in Federal Housing Relief Money to Plug Detroit Pension Hole
"Under the plan being discussed, Detroit Emergency Manager Kevyn Orr would get access to $100 million earmarked for Michigan from a fund the U.S. Treasury Department established in 2010 to provide relief in the wake of the housing crisis. Michigan would send the federal money to Detroit for blight reduction, as has been done in the past. Mr. Orr then could take other funding already earmarked for blight elimination and use that in a plan to help make up a $3.5 billion shortfall in the retirement system for city workers[.]"
(The Wall Street Journal; subscription may be required)
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Detroit Pension Deal Approved by One Retirement System
"The tentative settlement with the General Retirement System ... would cut pensions for general city workers and retirees by 4.5 percent and eliminate cost-of-living adjustments ... The tentative deals represent much smaller decreases in benefits than Detroit had been seeking."
(Reuters)
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CalPERS Raises Pension Contribution Requirements for State, Schools
"The State will pay a total of approximately $4.3 billion towards pensions and schools will pay $1.2 billion. These required contributions are an increase by more than $450 million for the State and $55 million for school employers over current rates. New demographic assumptions adopted by the CalPERS Board in February have the largest impact on rates for the State plan due to public employees living longer."
(CalPERS)
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Rhode Island Loses Bid to Have Pension Reform Lawsuit Tossed
"A lawsuit by retired Rhode Island public employees over the state's sweeping 2011 pension system overhaul will continue after a judge on Wednesday rejected a move by state officials to have the case thrown out. Superior Court Associate Justice Sarah Taft-Carter found that the retirees' pension benefits, for which they had previously bargained, suggested enough of a contractual relationship with the state for their claims to continue."
(Reuters)
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[Opinion]
Text of Letter from American Academy of Actuaries to Congressional Leaders on Risks of Using Pension Provisions as Revenue Offsets (PDF)
"In evaluating the current [PBGC] premium level and structure, as well as possible changes thereto, primary consideration should be given to the risks inherent in the pension system and the effects on all stakeholders. These issues are not being appropriately considered when premium-increase proposals are added to unrelated legislation as a 'pay-for' to enable other priorities. Further premium increases will increase the cost of plan sponsorship and could accelerate the rate of plan closures, plan terminations, and other sponsor efforts to transfer risks to participants, which include offering lump sum distributions to current retirees."
(American Academy of Actuaries)
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Benefits in General; Executive Compensation
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Executive Compensation Clawbacks: 2013 Proxy Disclosure Study (PDF)
18 pages. Excerpt: "This study presents [an] analysis of 2009 through 2012 year-end proxy disclosures for 100 large public companies relative to their compensation recoupment or 'clawback' policies.... Of the companies in [this] study, 92% have policies to recoup compensation if there's a restatement of financial results.... 27% require repayment in the event of a restatement without personal accountability.... Another prevalent reason for recoupment of incentives was misconduct (84%), which includes breaking a company's code of conduct or ethics policies, being convicted of a criminal offense, or other transgressions[.]"
(PricewaterhouseCoopers)
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Retirement Security Tops List of Employee Concerns
"Older DC plan-only participants are more likely to expect most of their retirement income to come from Social Security. Almost seven in 10 workers were happy with their health plans in 2007, but satisfaction rates dropped to 59% in 2013. Sixty-two percent would give up some pay for a guaranteed retirement benefit, and more than half would sacrifice pay for a more generous benefit."
(Towers Watson)
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