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Employee Benefits Jobs
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Webcasts and Conferences
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[Advert.]
On-site Private Seminars
Let us bring the seminar to you. Customize your program and choose the topics your staff needs. We provide tailored content to your staff's knowledge and experience level, plus we help you save on staff travel expenses. Learn more about our private seminars.
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[Guidance Overview]
Puerto Rico Plans and Insurance Company Separate Accounts Permitted in U.S. Group Trusts (PDF)
"Rev. Rul. 2014-24 removes uncertainty for group trusts when they accommodate insurance company separate accounts and Puerto Rico qualified plans. Plan sponsors will be able to enjoy providing the same investment options to both U.S. and Puerto Rico plans, which should ease administration and lower fees. For Puerto Rico plans in group trusts, the ruling also signals the end to the transition period and the coverage testing relief."
(Buck Consultants at Xerox)
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PBGC Coverage May No Longer Apply to Puerto Rico-Only Qualified Retirement Plans
"Since few Puerto Rico plans have made an election under ERISA Section 1022(i)(2) due to the strict U.S. laws applicable to such arrangements, this new PBGC position will affect a number of Puerto Rico-only defined benefit plans. PBGC officials also stated that if the PBGC determines that a plan is not covered under Title IV of ERISA, it may refund up to six years of premiums."
(Bloomberg BNA)
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Court of Appeals Revives Lehman Brothers Stock-Drop Lawsuit
"The appeals court affirmed [the district court] decision last year but in a case involving Fifth Third Bancorp, the Supreme Court unanimously ruled the presumption of prudence does not apply to lawsuits over retirement plan investments. In light of that decision, the 2nd Circuit issued a brief order requiring [U.S. District Judge Lewis] Kaplan to revisit the case to determine whether the claims should move forward."
(Reuters)
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Four Ways Your 401(k) Participants Can Save More
"Many studies ... indicate that workers should save at least 12% to 15% of their income each year. It is likely that most of your 401(k) plan participants are not saving anything near this amount.... [Here] are four ideas on your 401(k) plan participants could save more: Make a budget ... Raise your 401(k) savings rate with each salary increase.... Collect the full company match.... Invest appropriately for your age and risk tolerance."
(Lawton Retirement Plan Consultants)
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[Advert.]
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CalPERS Audit Finds Loose Controls, But No Illegal Spiking
"Many employers, in contract bargaining with unions, agree to pay [each employee-member's mandatory contribution] to CalPERS, often around 8 percent of pay, in addition to the much higher employer contribution. A provision in the 1993 bill allows this 'employer paid member contribution' to be counted as pay during the final year on which pensions are based.... Most of the recent well-publicized spiking cases, and related court action, has been in the 20 independent county systems, for which anti-spiking legislation similar to the 1993 CalPERS measure failed, SB 2003 in 1994."
(Calpensions)
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California State Controller's Review of CalPERS Pension Controls and Mechanisms (PDF)
Dated September 2014. "The State Controller's Office (SCO) has completed a review of the California Public Employees ' Retirement System (CalPERS) to determine whether controls are in place to detect and prevent pension payments based on unusually large or excessive final compensation amounts, commonly known as pension spiking.... The available resources limit [CalPERS'] annual reviews to only 45, or 1.5% of the more than 3,000 reporting entities. At this current rate, pension spiking could go undetected for an extended period of time, as each reporting entity would be reviewed, at the earliest, every 66 years."
(California State Controller)
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CalPERS Responds: State Controller's Office 'Did Not Identify Pension Spiking'
"A review conducted by the State Controller's Office (SCO) 'did not identify pension spiking' among the dozen public agencies included in the review that contract with [CalPERS]. The review, which covered a 2-year period (July 2010-June 2012), recommended no material changes to the Pension Fund's efforts to audit agencies for pension spiking and acknowledged CalPERS had effective processes in place to recoup overpayments."
(CalPERS)
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Dudenhoeffer Focuses on Public Companies, So May Have Little Application to ESOPs of Private Companies
"The Dudenhoeffer ruling was largely limited to the world of public ESOPs, with very little consideration of the particular challenges facing fiduciaries of private ESOPs ... One possible explanation for Dudenhoeffer's strict public ESOP focus is the fact that stock-drop claims -- in which plan participants sue fiduciaries for failing to dump employer stock that has declined in value -- haven't been a big issue in the private ESOP world ... That's because fiduciaries of private ESOPs have fewer options when faced with declining stock price[.]"
(Bloomberg BNA)
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Design and Operation of Retirement Income Solutions in DC Plans: An Analysis of Alternatives
54 pages. "The goal of this paper is to further the discussion about the design and implementation of retirement income solutions in DC plans, to encourage plan sponsors to better meet the retirement security needs of millions of workers who do not participate in defined benefit plans. This paper provides alternatives and does not recommend specific solutions. The intended audience for this paper is policymakers and government regulators and those individuals and organizations who actively participate in discussing these topics with decision-makers at the government, financial institutions, and plan sponsors."
(Stanford Center on Longevity [SCL] and the Society of Actuaries' Committee on Post-Retirement Needs and Risks [SOA-CPRNR])
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Lessons from Efforts to Manage the Shift Away from DB Plans to DC Plans in Australia, the United Kingdom, and the United States
"While defined contribution plans provide employees with some advantages over defined benefit plans (e.g., portability, early vesting, greater autonomy), they also force employees to manage certain risks (longevity risk, investment risk) that they are ill prepared to manage. In addition, the differences in the way funds in defined contribution plans and defined benefit plans are managed affects the distribution of funds within financial markets that is potentially damaging to the economy.... These factors played a role in the recent financial crisis and, if left unaddressed, may contribute to future financial crises."
(Elizabeth F. Brown, Georgia State University -- Department of Risk Management and Insurance)
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CBO Cost Estimate for S. 2511, a Bill to Amend ERISA to Clarify the PBGC Definition of Substantial Cessation of Operations
"CBO estimates that S. 2511 would reduce the contributions that plan sponsors are required to make to their plans as a result of terminating operations, leading to increases in revenues and decreases in direct spending (including the effects on offsetting receipts, which are recorded as an offset to direct spending). CBO estimates that enacting S. 2511 would, on net, decrease direct spending by $15 million over the 2015-2024 period. The staff of the Joint Committee on Taxation (JCT) estimates that enacting the bill would increase revenues by $14 million over the 2015-2024 period. In total, CBO and JCT estimate that enacting S. 2511 would reduce deficits by $29 million over the 2015-2024 period."
(Congressional Budget Office [CBO])
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Fee Equality: Leveling the Playing Field for Participants (PDF)
"Employers don't usually intend to charge fees unfairly, but may be surprised to know that fees are often inadvertently structured inequitably. Fee equalization can eliminate fee imbalances across the participant base to help plan sponsors embed fundamental fairness into the plan. In this paper, [the authors] examine the ways in which traditional fee structures create imbalances among participants and consider ways to equalize fees.
(Arnerich Massena)
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Global Benefit Attitudes Survey Reveals Retirement Confidence
"[In] most economies, a majority of employees are confident of being able to afford 15 years of retirement. But confidence declines substantially when employees are asked to look further into the future. In developed economies, typically two-thirds of respondents believe their financial resources will support 15 years of retirement, but less than half are confident when considering 25 years into retirement."
(Towers Watson)
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Aon Hewitt 401(k) Index Observations, August 2014
"August trading activity continued to be light in defined contribution plans, with only 0.020% of balances transferring. This marks the tenth consecutive month that trading activity was below 0.03%. Total transfer activity was $214 million or 0.13% of total assets, with zero days in August having above normal trading activity."
(Aon Hewitt)
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Actuaries Weigh Income Options for DC Plans
"Structured income solutions should be a part of DC retirement plans, according to a [recent paper from the Stanford Center on Longevity and the Society of Actuaries' Committee on Post-Retirement Needs and Risks] ... and the qualified default retirement income alternative (QDRIA) is one possibility. DC plan participants face another important challenge as they approach and enter retirement -- turning their savings into a reliable source of retirement income. A good solution would be implementing some form of income product within DC plans, according to the ... paper."
(planadviser)
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Broker-Dealers Oppose Application of RIA-Type Standard for Investment Advice
"[S]ome pressing for stronger rules have reacted with skepticism when groups like SIFMA express support for a uniform standard, warning that industry lobbyists are working to shield the brokerage sector from the obligations to provide advice in clients' best interest under the 1940 Investment Advisers Act. If those efforts are successful, and the SEC moves ahead with a uniform rule, advocates worry that it might be so diluted that it would actually relax the fiduciary standard that applies to advisors."
(On Wall Street)
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How Much to Contribute to Your 401(k)? It Depends.
"No two people are alike, but ... the typical 35-year-old who hopes to retire at 65 should sock away 15 percent of his earnings, starting now. Prefer to retire at 62? Hike that to 24 percent. To get the percent deducted from one's paycheck down into the single digits, young adults should start saving in their mid-20s and think about retiring at 67."
(SquaredAway Blog, by the Center for Retirement Research at Boston College)
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Could Your DC Plan Benefit from Automatic Features?
"Automatic enrollment, automatic contribution increases, and default investment funds overcome the all-too-human trait of inertia, and they are relatively easy to implement; however, before automating your plan, be aware that while adding automatic features to your plan can be beneficial to your employees and to the plan (in the form of improved testing), these features come with their own set of challenges"
(Bryan, Pendleton, Swats & McAllister)
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[Opinion]
Offering Brokerage Windows in 401(k) Plans: Don't Do It
"The fiduciary responsibility model in 401k plans produces optimal results. When appropriately implemented, fiduciary standards work fine. Sponsors and fiduciary advisors quietly add value and help participants prepare for retirement. Brokerage windows undermine the fiduciary process and devalue the beneficial work done by fiduciaries. What seems like increased choice is actually a rejection of the fiduciary process. Bottom line: the increased choice often results in a net loss versus a fiduciary solution."
(Employee Fiduciary)
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Benefits in General; Executive Compensation
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Employer Costs for Employee Compensation, June 2014 (PDF)
"In June 2014, average costs in private industry for retirement and savings benefits were $1.23 per hour worked, or 4.1 percent of total compensation. The average cost per hour worked for defined benefit plans -- retirement plans that specify a benefit typically based on age, years of service, and earnings -- was 58 cents or 1.9 percent of total compensation. The average cost for defined contribution plans -- retirement plans usually based on employer contributions to individual employee accounts -- was 65 cents or 2.2 percent of total compensation."
(U.S. Bureau of Labor Statistics [BLS])
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The Accidental Fiduciary: When a Signature is More Than Just a Name
"[T]his decision is only on a motion to dismiss ... However, the ruling from the Court does seem to suggest that at least some argument can be made that company officers could be liable for fiduciary breaches unless they can demonstrate that they did not control plan assets. Therefore, it might be worthwhile for employers as plan sponsors to actually formally [separate] plan assets [and to] limit the signatory authority on those accounts to people actually intended to be plan fiduciaries." [Perez v. Geopharma, No. 8:14-cv-66-T-33T (M.D. Fla. July 25, 2014)]
(Fox Rothschild LLP)
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Implementing an Effective Employee Benefits Communication Campaign (PDF)
"[It's] not as simple as saying we have 100 employees [so] we will need to send 100 letters; a campaign should be thought out, organized, and timely. The type of campaign and the communication medium used will depend on the size, structure, and culture of the company. The following steps detail how to plan and produce an effective campaign.... Planning ahead ... Ask the employees ... Develop your materials ... Announce the campaign ... From education to action ... Follow-up ... [T]he communications surrounding the program must be clear, concise, and maintain a positive tone while being completely honest"
(Bryan, Pendleton, Swats & McAllister, LLC)
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Press Releases
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Additional useful links:
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David Rhett Baker, J.D., Editor and Publisher
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