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June 5, 2014          Get Health & Welfare News  |  Advertise
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Employee Benefits Jobs

Retirement Plan Administrator
PlanTech, LLP
in ANY STATE

Defined Contribution Administrator
Well-Established Actuarial/TPA Fee-Basis Consulting Firm, Miami, Florida.
in FL

Relationship Manager
The Principal Financial Group
in MA

Benefits & Compensation Attorney
Dorsey & Whitney LLP
in MN

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Webcasts and Conferences

Federally-facilitated Small Business Health Options Program (FF-SHOP) Series III - Update and Issuer Q&A
June 17, 2014 WEBCAST
(Centers for Medicare & Medicaid Services (CMS))

Preparing for and Surviving a Plan Audit
June 24, 2014 WEBCAST
(Millennium Trust Company, LLC)

The What and When of the Affordable Care Act: Preparing for 2015
June 25, 2014 WEBCAST
(McGladrey LLP)

Disclosures Under the ACA
July 10, 2014 WEBCAST
(American Bar Association [ABA])

Fundamentals of 401(k) and Other Qualified Plans 2014
July 16, 2014 in GA
(SunGard Relius)

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official guidance, jobs, webcasts and more.

Internal Controls for Retirement Plans
"The fundamental tenets of good internal controls are segregation of duties, reporting & reconciliation, and oversight of outsourced administration functions. These issues can become particularly complicated because so much of today's plan operations are outsourced to third party service providers. Good internal controls can eliminate or reduce errors in plan operations and reduce the amount of time the administrator spends with any plan auditors or regulatory bodies examining the plan." (Multnomah Group)  


[Advert.]

NTSA 403(b) Summit on June 22nd in Washington DC

Sponsored by ASPPA

Join the leaders of the 403(b) industry on June 22nd to learn how to keep choice alive for your clients.



Fiduciary Best Practices: Investment Diversification for Self-Directed Accounts (PDF)
"Fiduciaries have the responsibility to provide participants with an adequate fund line-up in order to allow participants to diversify their retirement savings.... Because of the law of diminishing returns, 15-20 funds are adequate for proper diversification. Additionally, 7 asset classes may allow for the best diversification opportunity along with a real estate investment component. Further more, the number, style, and size of funds should be organized so that investors would still be diversified if they evenly divide their capital." (Ekon Benefits)  

DOL Delays Issuance of Target Date Fund Regulation, Requests Further Comments (PDF)
"[T]his will be the second time DOL has reopened its comment period in reaction to actions by the SEC. Plan sponsors, services providers, and market participants have until July 3, 2014 (just 30 days) to submit their comments to DOL." (Groom Law Group)  

Plan Sponsors Should Read Details In Fiduciary Warranties to Dodge 'Gimmicks'
"Fiduciary warranties are products offered by providers to participant-directed plans that purport to lessen a fiduciary's risk exposure to lawsuits filed by participants.... [P]roviders often carefully word their warranties to avoid claiming fiduciary status... More than half of plan sponsors -- 52 percent -- thought that a fiduciary warranty would protect them from a participant lawsuit[.]" (Bloomberg BNA)  

A Surcharge Is Not a Contribution -- At Least Not for Withdrawal Liability
"The [district court] judge reasoned that while the term 'contribution rate' is undefined in ERISA, there is a definition of 'obligation to contribute' that is directly tied to a collective bargaining agreement. The court found that since the surcharge was not part of collective bargaining, and although required under ERISA (through the PPA), it would not be an actual 'contribution.' Based on this decision, it looks like an employer would have the ability to ask the plan to revise its calculation under a Section 4219 request for review." [Bd. of Trustees of the IBT Local 863 Pension Fund v. C&S Wholesale Grocers, Inc., No. 12-7823 (D.N.J. Mar. 19, 2014)] (Fox Rothschild LLP)  


[Advert.]

Learn, Network and Sell at the SPARK National Conference

Sponsored by SPARK

Join senior executives from leading retirement services firms for unequaled networking, educational and sales opportunities. Gain insights into the latest market trends, business strategies, regulatory and legislative issues, and product developments. June 15-17. Register now.



Demographic and Geographic Differences in Retirement Plan Participation
"The percentage of workers who participate in a retirement plan increases with age ... Being white, having attained a higher level of education, or being married also are associated with greater probabilities of participating in a retirement plan.... Workers living in states in the South and West, such as New Mexico, Florida, Nevada, Texas, and Arizona, are less likely to participate in a plan." (Contingencies (published by the American Academy of Actuaries))  

Boosting Retirement Confidence
"Of those who do not have a retirement plan, 69% are not too confident or not at all confident [about a comfortable retirement].... It may well be that a good portion of that 69% has 401(k) or similar retirement savings vehicles available at their employers, but they are not utilizing them.... [E]mployers need to be continually encouraging their employees and educating them on the power of 'starting early,' the benefits of tax-deferred growth, and how they are leaving money on the table if there's a match." (Milliman Retirement Town Hall)  

Work in Retirement: Myths and Motivations (PDF)
"Over seven in 10 pre-retirees say they want to work in retirement. In the near future, it will be increasingly unusual for retirees not to work.... While some work primarily for the money, many others are motivated by important nonfinancial reasons... Nearly three out of five retirees launch into a new line of work, and working retirees are three times more likely than pre-retirees to be entrepreneurs." (Merrill Lynch)  

S&P 1500 Pension Deficits Remain Above Year-End 2013 Levels
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies remained relatively unchanged at 84% as of the end of May 2014. Small gains in equity markets were largely offset by growth in plan liabilities due to further declines in interest rates used to calculate corporate pension plan liabilities. The collective estimated deficit of $343 billion as of May 31, 2014, is down $17 billion from the estimated deficit of $360 billion as of April 30, 2014, and up $107 billion from the beginning of the year[.]" (Mercer)  

Findley Davies Pension Indicator, May 2014
"This tool was developed to allow employers to mitigate their risk exposure by monitoring the estimated changes to their pension plan's funded status as it is reported for financial statement purposes under U.S. GAAP. [Tables] provide the percentage change in the funded level of the plan: year-to-date, month-over-month, and 12-month change as of May 31, 2014 based on the investment mix and plan type." (Findley Davies)  

The Funding of State and Local Pensions: 2013-2017
"Despite a strong stock market, the funded status of public plans in 2013 remained unchanged at 72 percent for two reasons: actuarial smoothed assets grew modestly, and CalPERS, one of the nation's largest plans, significantly revised its reported funded ratio. Funded levels among plans vary significantly. An encouraging sign is that many sponsors appear to be paying a larger share of their annual required contribution. There is slight improvement in 2013 at the top: 6 percent are 100 percent funded or better; 28 percent are more than 80 percent funded. Going forward, the funded ratio is projected to gradually move above 80 percent, assuming expected stock market returns." (Center for Retirement Research at Boston College, via Center for State & Local Government Excellence)  

City Sues Kentucky Retirement Systems Over Alternative Investments
"The lawsuit ... alleges the board 'invested funds of the [County Employees Retirement System (CERS)] in investments that are not permitted by state statutes in the Commonwealth of Kentucky' and 'invested an unreasonably large percentage of CERS assets in high-risk investments which are not appropriate investments for fiduciaries under the common law of Kentucky.' The management fees tied to these investments over the past five years exceeds $50 million, the city alleges[.]" (Pensions & Investments)  

Private Education 403(b) Plans: Unique Challenges and a Changing Landscape
"[403(b) plans] typically stand alone as the only retirement benefit plan offered to private education employees, and are therefore expected to do the work of two plans.... [The IRS and DOL] are exercising their powerful authority over these plans and are taking clear aim at them.... [403(b) plans] teem with multiple mutual fund investments and vendors.... [T]here is still a higher expectation of on-site participant service availability for 403(b) plans than there is for its 401(k) plan counterpart.... Utilization of open investment platforms can solve [the foregoing] challenges[.]" (Fiduciary Plan Governance, LLC)  

U.K. Pensions Industry Lambasts 'Collective Defined Contribution' Plans
"In a ceremonial speech delivered by Queen Elizabeth, the government confirmed plans for collective defined contribution (CDC) [plans], part of an overhaul of UK pensions that will also remove the need for retirees to buy annuities with their savings. But the plans for CDC [plans] -- which the government has named Defined Ambition schemes -- were lambasted by the pensions industry, which warned they would add to a welter of reforms that the industry may struggle to deal with." [Editor's note: A useful explanation of CDC plans, prepared by the Pension Rights Center, is online.] (Reuters)  

[Opinion]

Disclosures and Knowing Consent
"Any sentient human being with any knowledge of this long-running fiduciary wrestling match knows that this (relatively) newfound mantra of deep concern for the well-being of Main Street investors (whether at the individual retail level or the retirement plan level) has little to do with the well-being of Main Street investors. Rather, it has just about everything to do with the well-being of many Big Stockbrokerage Firms/Big Insurance Companies/Big Consulting Firms/Big Mutual Fund Companies, et al. that manufacture and distribute high-cost products and services to Main Street investors. The president of a large 'diversified financial services company' let the proverbial cat out of the bag when he said recently that he didn't think that any DOL proposal to redefine the meaning of fiduciary was 'healthy for the industry.'" (W. Scott Simon, for Morningstar Advisor)  

[Opinion]

What Is a Pension Plan's Return Objective?
"[T]he current approach to pension expense, which dates from 1985, is a truly bizarre calculation. One of its oddities is that if you earn less than the [Expected Long Term Rate of Return on Assets], the impact of doing so does not show up in the earnings statement for quite a long time (if at all) thanks to a series of corridors and other smoothing mechanisms. The upshot of the bizarre calculation is that it's almost impossible to meaningfully measure the risk of different investment strategies in terms of their impact on earnings." (Russell Investments)  

[Opinion]

Text of Letter to PBGC Concerning Overly Expansive Interpretation of ERISA Section 4062(E)
"[T]he PBGC's enforcement of section 4062(e) reflects a policy position that in our view is not consistent with the law.... This enforcement is costing businesses hundreds of millions of dollars, diverting assets from business investments and jobs.... [In] some cases, the PBGC's actions are preventing important business transactions from occurring at all, stopping companies from selling unneeded or unprofitable facilities and from achieving efficiencies by consolidating operations." (American Benefits Council; ASPPA College of Pension Actuaries [ACOPA]; Committee on Benefits Finance, Financial Executives International; and The Committee on Investment of Employee Benefit Assets [CIEBA])  

Benefits in General; Executive Compensation

Text of Notice of Nominations for Vacancies on EBSA Advisory Council on Employee Welfare and Pension Benefit Plans
"The terms of five members of the Council expire at the end of this year. The groups or fields they represent are as follows: [1] Employee organizations; [2] employers; [3] investment management; [4] corporate trust; and [5] the general public.... Nominations (including supporting nominations) must be received on or before August 1, 2014." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor)  

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