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Employee Benefits Jobs
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Webcasts and Conferences
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Hand-picked links to the web's best news articles,
official guidance, jobs, webcasts and more.
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Leaving Your 401(k) Past Behind: Concerns Over Terminated Participants with an Account Balance (PDF)
"The most obvious reason to minimize the number of terminated participants with a balance has to do with cost.... [A]dvisors are in a perfect position to take the lead in developing a process to address this issue.... Step 1: Review with your TPA or bundled provider the rules in the plan document that pertain to participant force-outs.... Step 2: Request from your recordkeeper a list of all terminated participants with a balance, preferably in a spreadsheet format.... Step 3: Work with the plan sponsor to draft a notice to participants that are eligible for force-outs ... Step 4: ... [C]ompose a letter along with communication materials to send that outlines the advantages of control and investment flexibility with an IRA rollover."
(Robert J. Leahy, CEBS, AIF, via fi360)
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Annual Survey of Public Pensions: State- and Locally-Administered Defined Benefit Plan Data
"The Survey of Public Pensions: State- and Locally-Administered Defined Benefit Data provides revenues, expenditures, financial assets, and membership information for the defined benefit public pension systems. Data are shown for individual pension systems as well as at the national, state, and local level. There were 227 state-administered and 3,771 locally-administered defined benefit public pension systems, all of which are represented here. The 2012 survey covered fiscal years that ended between July 1, 2011 and June 30, 2012 and does not reflect data for the entire calendar year of 2012."
(U.S. Census Bureau)
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Private Education 403(b) Plans: Better Services -- If You Know How to Get Them
"Many [private educational] institutions have already accepted the increased responsibility and regulatory burden of the [403(b)] plan document requirements implemented by the IRS in 2009. This new obligation to assess fee reasonableness is another step in the evolution to a more regulated environment for 403(b) plan sponsors. The Labor Department's rules compel institutions to engage in and to keep a written record of the fee evaluation process. If they don't, they risk the consequences."
(Fiduciary Plan Governance, LLC)
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What if Trust Law Cannot Support the Moench Presumption?
"The extent, nature and degree to which the Supreme Court grapples with these two issues -- whether either the terms of the statute or the scope of trust law can support the presumption -- will tell a very interesting tale, by illustrating whether the presumption's status is actually driven by the legal foundation crafted by the statute and trust law or, instead, by an outcome driven need to balance the securities law regime with the dictates of ERISA. If the presumption is found valid, one will need to look closely at whether the Court was able to properly base that conclusion in the historical intricacies of trust law or in the statute's language. If so, then the presumption can be understood to follow naturally from existing law; if not, then the presumption must be seen, as many have argued it is, as simply a convenient judicial fiction, one not properly founded on either trust law
or statutory language, used to balance conflicting legal obligations imposed by distinct statutes."
(Stephen Rosenberg of The McCormack Firm, LLC)
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Pension Risk Perspective: Insight for Corporate Defined Benefit Plan Sponsors (PDF)
"The more recent view of pension risk management focuses on the funded status of a plan. This view contemplates both the assets and liabilities of a plan together, and how they behave relative to one another. When pension risk is viewed this way, various approaches can be utilized to manage contribution and/or funded status volatility. The approaches take several forms, from the design of plans to investment strategy to liability transfers."
(Milliman)
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Why Frequently Cited Average Pension Numbers Are Misleadingly Low
"Most analyses of average benefits include the implicit assumption that the pension benefit cited is for a full career (30 years or more) of service. Including the pension amounts of those who have not worked a full career produces an average value that is much lower than what those who have worked a full career are receiving.... [If] beneficiaries aren't accurately identified and segregated from active service retirement amounts, the resulting average will be skewed downward.... Another potential error is when one employee's pension is reported in fragmented parts, to account for either a divorced spouse receiving a portion of their pension, or even in cases where the retiree changed departments and received a pension amount under two or more different formulas."
(UnionWatch)
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Fidelity Quarterly Data on Retirement Savings
"Analysis shows that during the past year, one in five workplace plan participants increased their personal savings rate, a record high... [A]verage 401(k) balance is $88,600 at the end of the first quarter 2014, up more than 9 percent from $80,900 one year earlier. The balance is up 92 percent over the 5 years since the first quarter of 2009 -- the market low of the economic downturn -- when it was $46,200. For pre-retirees age 55 and older, the average balance is $165,000. In addition, Fidelity Individual Retirement Account average balances rose to $89,500, up 11 percent from $80,500 one year earlier."
(Fidelity)
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Deferring Commencement of Social Security Benefit is OK But Deferring Retirement is Better
"Deferring receipt of Social Security may be able to get you a little more retirement income (depending on assumptions employed and actual experience), but if you really want more retirement income, you need to defer both your retirement and Social Security benefit commencement date. This strategy works for you in two ways -- it should increase your accumulated retirement nest egg and it reduces the expected payout period."
(Kenneth A. Steiner, FSA Retired)
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Seven of the Biggest 401(k) Problems and Their Solutions
"For all the apparent problems, there also exist several opportunities that await forward thinking regulators and legislators, experienced practitioners and creative thought leaders.... [1] Lack of Saving ... [2] Financial Illiteracy ... [3] Everything's Too Confusing ... [4] Plan Sponsors Still Don't Understand Fees ... [5] Market Uncertainty ... [6] Not Enough Financial Planners... [7] Lack of a Fiduciary Standard."
(Fiduciary News)
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Lifetime Income: Participant Needs, Retiree Risks and Retirement Solutions
"There is no fiduciary requirement to provide post-retirement help in a 401(k) or 403(b) plan; but when plan sponsors decide to do so, they face a perceived impediment -- fiduciary responsibility.... The DOL regulation says a fiduciary needs to be able to conclude that, at the time he makes the selection, the insurance company is financially able to make all future payments. (This decision needs to be monitored over time as well, unless the product is going to provide for payments starting immediately.... ) Unfortunately, though, the safe harbor doesn't specify the information you need to look at."
(Drinker Biddle)
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De-Risking Your Retiree Pensions? Verizon Court Affirms Plan Sponsor Rights to Shed Obligations
"The selection of an annuity provider is a fiduciary function, but Verizon was able to prevail on this issue because it had retained an independent fiduciary in advance to represent the participants in connection with the annuity purchase and to ensure its compliance with ERISA requirements.... The almost $1 billion dollars paid from plan assets to Prudential as expenses were permissible and were not required to be paid directly by Verizon. They were not on their face unreasonable administrative expenses, given the $8.4 billion total cost of the transaction[.]" [Lee v. Verizon Communications, No. 3:12-CV-4834-D (N.D. Tex. Apr. 11, 2014)]
(Osler, Hoskin & Harcourt LLP)
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Utilization of MAP-21 Pension Funding Stabilization in 2012 (PDF)
"Plans with greater participant counts, higher proportions of inactive participants, and lower funding ratios were more likely to have the stabilization provisions applied to the determination of their funding requirements. Of the plans that had the stabilization provisions applied to the determination of their funding requirement, 59 percent received contributions in excess of the required amount for 2012.... Sponsors can effectively reserve credit for the reduced 2012 funding requirements and apply the credit to future funding requirements. As a result, the reductions caused by the stabilization provisions may have value to sponsors regardless of the amount of contribution deferral utilized in 2012."
(Society of Actuaries)
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