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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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[Guidance Overview]
Some Multiemployer Plans Permitted to Apply Windsor Decision Prospectively Only
"In the case of multiemployer defined benefit plans in the yellow or red zones, amendments increasing liabilities (e.g., through benefit increases) generally are not permitted, except that amendments required as a condition for qualification or to comply with other applicable laws are permitted for plans in their funding improvement adoption period or rehabilitation plan adoption period ... The guidance clarifies that amendments required to bring a plan into compliance as of June 26, 2013 with the Windsor decision and subsequent guidance that are effective on that date are permitted amendments during the applicable adoption period, as well as permitted amendments for plans that are in their funding improvement period or rehabilitation period ... In contrast, amendments that are optional, or that apply the Windsor decision before June 26, 2013, are not permitted amendments."
(Segal Consulting)
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[Guidance Overview]
Handout for May 6 IRS Phone Forum: Plan Terminations (PDF)
61 slides. Topics include: IRS Concerns with Plan Termination: [1] Accelerated Vesting; [2] Accrual Requirements; [3] Funding Obligations; [4] Reversion of Assets to the Employer (Maybe Excise Tax); and [5] Continuing 401(a) Compliance -- Revenue Ruling 89-87.
(Internal Revenue Service [IRS])
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[Guidance Overview]
DOL Sends Message to Plan Fiduciaries: Know What You Are Paying For (PDF)
"It will be interesting to hear DOL's reaction to the potential costs involved in changing technology requirements to obtain, consolidate and verify this information. It is possible that after a few years, the process will become less intensive. However, establishing the procedures and controls necessary to ensure that correct information is received, consolidated and provided to each plan sponsor based on their plan's investment specifics is no easy task. Developing a simple guide could be a very costly undertaking."
(ERISAdiagnostics, in Thompson Pension Plan Fix-It Handbook)
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Indiana District Court Says ESOP Fiduciaries Have No Duty to Investigate False Sale Allegations
"[T]he court cited the Seventh Circuit in finding that a 'fiduciary's duty to investigate "only arises when there is some reason to suspect that investing in company stock may be imprudent -- that is, there must be something akin to a 'red flag' of misconduct."' The court, however, allowed the action to proceed against two members of the board of directors who knew of but failed to disclose potentially material information regarding the company's stock value." [Malcolm v. Trilithic, Inc., 2014 WL 1324082, No. 1:13-cv-00073 (S.D. Ind. Mar. 31, 2014)]
(Proskauer's ERISA Practice Center)
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IRS Inbound Rollover Guidance May Both Help and Hinder
"In the IRS's own words the agency states that 'These procedures are generally sufficient.' Are they not always sufficient? Are they a new minimum standard? How much latitude and judgment do plan administrators now have in determining rollover eligibility? The unintended consequence may be more uncertainty, rather than less."
(Todd Berghuis, for Ascensus)
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Are 401(k) Fees Too High? Supreme Court May Have an Opinion
"Jerry Schlichter is a 401(k) hunter. He's a litigator who sues retirement plan sponsors for charging excessive fees to participants -- and he goes after big game.... Now, one of Schlichter's pending cases may be taken up by the U.S. Supreme Court. If that happens, it would be the first time the high court has considered a case involving high 401(k) fees. A win there could force plan sponsors to take greater fiduciary responsibility for their plans."
(Reuters)
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50-State Pension Calculator for Public Sector Employees
"The pension calculator tool ... is intended to inform the pension debate, by allowing users to easily compare benefit levels across all 50 states. Simply click on a state highlighted in blue in the map ... to estimate the pension that you would collect after a career in government. The calculator will also provide an estimate of the total annuity cost, or how much you would need to save to replicate that guaranteed income stream in retirement. To compare generosity of benefits between states, click on the 'Compare States' tab."
(Public Sector Inc.)
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Emulating ERISA: Providing a Safety Net for Public K 12 Educators (PDF)
6 pages. Excerpt: "Because public K-12 403(b) plans are exempted from [ERISA] ... vendors are in many cases unregulated in key cost, investment and fiduciary areas of plan management. This leaves them in many unfortunate circumstances free to market questionable products on educators, in some cases with hidden and hefty fees.... 403(b) plans are increasingly guided by the principles of objectivity and investment diversification, even if they aren't legally bound by the same rules governing many retirement plans in the private sector. Taking this approach could generate significantly higher retirement savings for plan participants -- as much as $600,000 over the course of an educator's lifetime."
(TIAA-CREF)
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Big Retirement Savings Gains for Small Businesses: Contributions on the Rise
"[An analysis of] more than 200,000 small business accounts offering a Simplified Employee Pension Plan (SEP-IRA), Self-Employed 401(k) or Savings Incentive Match Plan for Employees (SIMPLE-IRA) [shows that] in the past year alone, the average balance in these plans increased 4 percent-and average contributions increased 18 percent.... The average contribution to these retirement savings accounts has increased across the board since 2008, with those using Self-Employed 401(k)s experiencing the largest increase of 21 percent to $21,661. Employer contributions to SEP-IRAs increased 17 percent from 2008, reaching $13,814 at the end of 2013. Average contributions to SIMPLE-IRAs increased the least, rising 7 percent to $6,162."
(Fidelity)
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NCEO Employee Ownership Update for May 1, 2014
Topics include: Study Looks at Company Stock in 401(k) Plans; New Study Shows ESOP A&E Firms Have Higher Valuations Than Non-ESOP A&E Firms; Testimony by Secretary of Labor Perez on ESOPs; and Supreme Court Oral Arguments on the Presumption of Prudence.
(National Center for Employee Ownership [NCEO])
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Pension Finance Update, as of April 30, 2014 (PDF)
"April was another down month for pension sponsors, marked by declining interest rates and sluggish stock markets. Both 'model' plans ... lost ground last month, with our traditional 'Plan A' losing about 2% and the more conservative 'Plan B' dropping less than 1% during April. For the year, sponsors have now given back roughly one-fourth of 2013s 'bounty' -- Plan A is now down 5% during 2014, and Plan B is down more than 2%. [Plan A is a traditional plan (duration 12 at 5.5%) with a 60/40 asset allocation, while Plan B is a cash balance plan (duration 9 at 5.5%) with a 20/80 allocation with a greater emphasis on corporate and long-duration bonds.]"
(October Three Consulting)
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DC Assets Will Continue to Move Away from Proprietary Funds
"In 2009, McKinsey estimated that record keepers' proprietary funds represented 45% of aggregate DC plan assets, while other money managers accounted for 44% and company stock represented 11% ... [L]ast year ... record keepers' proprietary funds represented 37% of aggregate DC plan assets while other money managers accounted for 54% and company stock represented 9%."
(Pensions & Investments)
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Slowed by Judge's Ruling, San Jose Delays Key Part of Pension Reform
"In the latest setback for San Jose's landmark pension reform, city officials have agreed with their employee unions to wait at least another year to implement certain pension and pay cuts ... The provisions of Measure B that required existing employees to pay more into their pensions had been scheduled to take effect July 1 after being delayed previously."
(San Jose Mercury News)
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Bond Funds, Stable Value and 401(k) Plans (PDF)
42 slides. Topics: [1] Looking at bond risk and return; [2] The role of bond funds; [3] Should 401(k) selections be adjusted for a rising rate environment? [4] Capital preservation: Stable value - how are these changing? Money market funds - the proposed SEC reforms. What is the best option?"
(MJM401k)
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Text of Amicus Brief by CalPERS Supporting Appeals by Retirees in Detroit Bankruptcy Case (PDF)
"Vacation of this aspect of the eligibility decision is important ... because such a precedent can be, and has been, misconstrued for the broad proposition that all pensions are subject to impairment in chapter 9. This is too simplistic a view.... The fact that a municipality is in bankruptcy does not alter the State's control over the municipality vis-a-vis the Pension Clause ... Congress did not intend to provide municipal debtors with a license to ignore State laws governing their conduct simply because those laws may make it harder for them to adjust their debts. Such adjustment cannot be done at the expense of State law." [In re City of Detroit, Michigan, No. 13-53846 (Bankr. E.D. Mich.
Dec. 15, 2013)]
(CalPERS)
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Notes from Actuaries' 'Intersector Group' Meeting with PBGC, March 12, 2014 (PDF)
7 pages. Excerpt: "Twice a year the Intersector Group meets with representatives of the [PBGC] to dialogue with them on regulatory and other issues affecting pension practice.... PBGC is setting up a mechanism to review regulations once every five years for actuarial and economic assumptions that affect benefit amounts or liability assessments ... The first issue under review is how PBGC sets interest rates based on the annuity survey.... Providing additional guidance on vested benefits is pretty far down PBGC's priority list.... At the 2014 Enrolled Actuaries Meeting, PBGC will describe the proposals that have been made [for multiemployer plans] and the agency's analysis of those proposals. PBGC's current object is to provide data to promote a robust and informed debate."
(American Academy of Actuaries)
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Notes from Actuaries' 'Intersector Group' Meeting with Treasury and IRS, March 12, 2014 (PDF)
7 pages. Excerpt: "Twice a year the Intersector Group meets with representatives of [Treasury] and the [IRS] to dialogue with them on regulatory and other issues affecting pension practice.... The IRS and Treasury ... have legal concerns in addition to policy concerns in cases where a lump sum is offered to a participant who has already started receiving lifetime annuity payments.... IRS is working on a project to bring cash balance plans into the pre-approved determination letter program.... What can IRS and the Treasury Department do to quell plan sponsor, contributing employer, and practitioner fears that a potential 2015 sunset will be unworkable for red -- and yellow -- zone plans due to loss of ability to make changes to remedial plans, loss of enforcement mechanisms, and possible deficiency excise taxes?"
(American Academy of Actuaries)
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Ontario Pension Plan to Double Retirement Income, Budget
"Ontario will create a provincial pension plan designed to double retirement income as savings fail to keep up with the swelling ranks of seniors in Canada's largest province.... More than 35 percent of households won't have sufficient savings to maintain similar living standards in their retirement ... [S]eniors will account for 24 percent of the province's population by 2035, up from 15 percent now."
(Bloomberg)
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Retirement Age in Australia Rises to 70 by 2035
"The Australian government increased the official retirement age to 70 by 2035.... Justifying the hike in retirement age, [Treasurer Joe] Hockey said ... 'It may be the case that my generation has to work for an extra three years ... [t]he fact is that now, as in the United Kingdom, it's probably the case in Australia, one in every three children born today will live to 100.'"
(International Business Times)
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Pillars Crumbling for Eastern Europe's Private Pension System
"Across Central and Eastern Europe, the retreat from so-called Pillar II pensions -- compulsory private pension funds intended to supplement overburdened state social security -- has turned into a rout. At one extreme is Hungary, which has closed down its private pension funds and expropriated their assets. At the milder end of the spectrum, the Baltic states have temporarily reduced the amount of pension contributions funneled into privately managed funds, using the money to plug budget gaps created by the global financial crisis."
(Institutional Investor)
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Benefits in General; Executive Compensation
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Sixth Circuit Enforces ERISA Penalty Provisions for 'Hiding' Plan Documents
"For plan administrators, 'clear notice' can be a tricky standard to try to sort out. Plan administrators should consider that ERISA clearly favors the production of documents when requested and recognize that a poorly worded request could still be enough of a request to warrant penalties. A simple solution is for administrators to avoid being accused of hiding plan documents. When responding to a request, give them what they ask for, and maybe even more[.]" [Cultrona v. Nationwide Life Ins. Co., Nos. 13-3558/3585 (6th Cir. Apr. 9, 2014)]
(Fox Rothschild LLP)
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Ohio District Court Denies Motion to Dismiss Former Part-Time Employee's Health Care Benefits Interference Claim
"[A] part-time pharmacist alleged that he was not promoted to a full-time position because his employer did not want to enroll him in its health plan. [The company] argued that the employee had no standing to bring suit under Section 510 because he was not a participant in the plan.... The court looked to the text of Section 510 ... [and] indicated the 'may become eligible' language means 'a claimant must have a colorable claim that [1] he or she will prevail in a suit for benefits, or [2] eligibility requirements will be fulfilled in the future.'" [Sanders v. Amerimed, No. 1:13-cv-813 (S.D. Ohio Apr. 25, 2014)]
(Winston & Strawn LLP)
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Why Employee Benefit Brokers Are Teaming with 401(k) Advisers
"Experts say that the [ACA] mandate, and particularly the availability of coverage for small firms via the so-called SHOP Marketplace, will likely squash profit margins for employee benefits brokers -- the experts to whom employers turn for group life, disability, dental and health benefits. That means employee benefits brokers will turn to other potential revenue streams ... [T]here will likely be more alliances between 401(k) specialists and welfare benefits brokers."
(InvestmentNews)
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Advantages to Deferring Income in an Uncertain Tax Environment (PDF)
"This article shows how you should consider recent and future tax rate changes and investment returns when analyzing whether to participate in your company's nonqualified deferred compensation plan (DCP).... The only scenarios favoring the personal investment account are based on the highest wage earners who are willing to settle for a meager 3% pre-tax return and invest their income over a short 10-year period. In all other scenarios, a DCP account provided an advantage -- in terms of the total amount accumulated after taxes are paid -- ranging from a low of 1.75% to 47.75%."
(Fulcrum Partners, LLC)
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Executive Compensation Around the World: Recent Developments and Best Practices (PDF)
"The SEC's pay ratio disclosure rules ... may also drive companies to change their rank and file pay practices for a more favorable disclosure -- for instance, giving employees more reportable cash and less unreportable welfare benefits.... Today's [compensation committee] charter will cover the independence of the committee, the fact that they need to think about pay and performance, the pay strategy, pay levels and pay programs, measures of performance, and goal-setting.... The best compensation committees will then take their planning calendar and map it against the charter to make sure everything has been covered by the time they get to the end of the year."
(Financier Worldwide, via Orrick)
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California Legislation Would Limit Corporate Income Tax Deductions Where the CEO Pay Ratio Is Too High
"The bill ... would impose a sliding scale for the current corporate income tax rate of 8.84%, fluctuating between 7% (for companies with a CEO pay ratio of 25:1 or less) up to a rate of 13% (for those with a ratio of 400:1 or above). According to a recent Bloomberg survey of the 250 companies with the highest ratios (based on government estimates of median pay), this would subject 47 large companies to the highest (13%) tax rate. And even the company with the lowest CEO pay ratio in this survey group would see its California tax rate increase to 9.5%."
(Towers Watson)
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Press Releases
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