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Employee Benefits Jobs
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Webcasts and Conferences
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[Official Guidance]
Text of PBGC Premium Rates for 2015
"The per-participant flat premium rate for plan years beginning in 2015 is $57 for single-employer plans (up from a 2014 rate of $49) and $13 for multiemployer plans (up from a 2014 rate of $12).... For plan years beginning in 2015, the variable-rate premium (VRP) for single-employer plans is $24 per $1,000 of unfunded vested benefits (UVBs), up from a 2014 rate of $14. This $10 increase was provided in The Bipartisan Budget Act of 2013. The VRP rate is also subject to indexing, but due to statutory rounding rules, indexing had no effect on the 2015 VRP rate. For 2015, the VRP is capped at $418 times the number of participants (up from a 2014 cap of $412). Plans sponsored by small employers (generally fewer than 25 employees) may be subject to an even lower cap. Multiemployer plans do not pay a VRP. The Bipartisan Budget Act of 2013 calls for the VRP rate to increase another $5 starting
with 2016 (on top of indexing)."
(Pension Benefit Guaranty Corporation [PBGC])
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[Advert.]
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[Guidance Overview]
Lifetime Income Guidance on Target-date Funds (TDFs) Issued by IRS and DOL
"The IRS provides an example of a TDF series that would be eligible for relief ... These requirements include ... [1] The investment manager managing the TDF series is an ERISA Section 3(38) manager that acknowledges in writing that it is a fiduciary of the plan ... [2] The TDFs are designed to provide varying degrees of long-term appreciation and capital preservation through a mix of equity and fixed-income exposures based on generally accepted investment theories ... [3] Each TDF is available only to participants who will attain normal retirement age within a limited number of years around the target date for the fund.... [4] Each TDF is intended to be a QDIA[.]"
(Practical Law Company)
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SOA Pension Plan Mortality Tables and Mortality Improvement Scale: RP-2014 Finalized
"The Society of Actuaries' Retirement Plans Experience Committee (RPEC) has released the final report of the RP-2014 Mortality Tables. The primary focus of this study was a comprehensive review of recent mortality experience of uninsured private retirement plans in the United States. The RP-2014 mortality tables presented in this report and the Mortality Improvement Scale MP-2014 presented in the companion report form a new basis for the measurement of retirement program obligations in the United States. RPEC released an exposure draft of this report in February 2014 and solicited comments on it through the end of May 2014."
(Society of Actuaries)
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Treasury, IRS Give Green Light for Annuities in 401(k) Target Date Funds
"Treasury Department and IRS approval on Friday of the use of annuities in target date funds in 401(k) plans, including as a default investment, will make lifetime-income features more popular and help ensure that droves of baby boomers don't outlive their nest egg ... Treasury will permit deferred annuities to be offered at prices that vary with a participant's age. That means discrimination rules would no longer apply if the plan includes both people who are younger than the age limit for the annuity and those who qualify for the annuity."
(InvestmentNews)
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Advisor Considerations for Rollover Discussions (PDF)
"[DOL] Advisory Opinion 2005-23A specifies that if a financial advisor is not already a plan fiduciary, then making distribution or rollover recommendations to plan participants WOULD NOT make the advisor a fiduciary, even if investment recommendations are included. However, if a financial advisor is already a plan fiduciary, then making distribution or rollover recommendations to plan participants WOULD subject such recommendations to a fiduciary standard and, therefore, could give rise to conflicts of interest and, potentially, prohibited transactions."
(Retirement Learning Center, LLC)
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Detroit Pension Debt Holders End Last Objection to Plan
"Detroit's pension debt holders dropped the last major objection to the city's $7 billion debt-cutting plan, as the biggest U.S. municipality to file bankruptcy began its last push to leave court oversight.... The pension debt investors hold about $1 billion in debt that was raised by the city to shore up its retirement system in 2006. It will be canceled under the plan, and the investors and bond insurers that guaranteed it will be given $141 million in new notes and land instead."
(Bloomberg Businessweek)
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Experts Tell CalSTRS Earnings May Fall Short
"It's an old issue for CalSTRS. An investment banker, David Crane, was removed from the CalSTRS board in 2006 (denied confirmation by the state Senate) after repeatedly arguing that investment earnings forecasts were too optimistic. The new 'capital markets forecast' by the experts is an early step in a routine four-year CalSTRS process that will lead to a review of the 7.5 percent earnings assumption in 2016.... After the last earnings review in 2012, the CalSTRS board made a small change, dropping the forecast from 7.75 to 7.5 percent[.]"
(Calpensions)
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Girl Scouts v. Girl Scouts: ERISA Wins
"The problems began when the Girl Scouts of the United States of America (GSUSA) consolidated councils, made almost 2,000 employees eligible for a lifetime pension 'without having previously contributed to the [retirement] Plan,' and added a Voluntary Early Retirement Incentive to the plan.... The Girl Scouts of Middle Tennessee, Inc. (GSMT) sued GSUSA, the Sponsor and Administrator of the Girl Scout Councils Retirement Plan, on the grounds that GSUSA increased the liabilities of the Plan 'unilaterally and without authorization,' and sought a judgment allowing GSMT to withdraw or spinoff from the Plan. [The U.S. Court of Appeals for the Sixth Circuit affirmed] the district court's complete dismissal of all of GSMT's [state law and ERISA common law] claims[.]"
(Squire Patton Boggs)
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Pension Plan De-Risking: Senate Committee Leaders Express Concern
"The letter suggested that agencies (i) require participants and the government to receive advance notice of any de-risking, (ii) establish standards for plan sponsors choosing an annuity provider, (iii) require disclosures to retirees who are considering a lump sum distribution, and (iv) scrutinize which activities should be permissible without a full plan termination."
(Winston & Strawn LLP)
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Senior Senators Urge Government Action on Pension De-Risking
"[S]enators ... Ron Wyden, D-Oregon, chairman of the Senate Finance Committee, and Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee ... delivered [a] letter to [Treasury Department, DOL, PBGC] and the Consumer Financial Protection Bureau (CFPB), all of which have shared responsibility for enforcing retirement plan legislation.... [T]he senators are pushing the federal government to establish 'clear and specific rules' to ensure current employees and retirees participating in defined benefit (DB) pension plans have their interests protected during pension risk transfer moves."
(PLANSPONSOR)
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Benefits in General; Executive Compensation
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Sixth Circuit Declines Deference to DOL and Enforces Venue Selection Clause
"Ultimately, the majority found that the DOL's 'amicus brief in this case can only be characterized as . . . an expression of mood.' The majority then (i) noted that most courts faced with this issue found that venue selection clauses in ERISA-governed plans were enforceable and (ii) explained that if Congress wanted to prohibit such clauses, it could have done so. Further, the majority stated that '[i]t is illogical to say that, under ERISA, a plan may preclude venue in federal court entirely [via an arbitration clause], but a plan may not channel venue to one particular federal court.'" [Smith v. Aegon Companies Pension Plan, No.13-5492 (6th Cir. Oct. 14, 2014)]
(Proskauer's ERISA Practice Center)
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Sixth Circuit 'Unfriends' DOL: No 'Regulation by Amicus' for ERISA Venue Selection Clauses
"[T]he Sixth Circuit noted that the 'Secretary of Labor has been particularly aggressive in attempting to mold statutory interpretation and establish policy' by filing amicus briefs in private litigation. The court also noted that that the DOL had never before advanced its stated view on venue selection clauses through an enforcement action, regulation, or opinion letter. The DOL had voiced this opinion only once before -- in an amicus brief in a sister circuit." [Smith v. Aegon Companies Pension Plan, No.13-5492 (6th Cir. Oct. 14, 2014)]
(Seyfarth Shaw LLP)
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Press Releases
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