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Employee Benefits Jobs
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Webcasts and Conferences
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[Guidance Overview]
Final Regs on Qualified Longevity Annuity Contracts Pose Challenges for Plan Sponsors and Participants
"The goal to help individuals maintain an income stream throughout the golden years is laudable. The idea of allowing an exception to the RMD calculation for a QLAC certainly is one way to help meet that goal. However ... the final regulations contain numerous requirements and possible traps in order to achieve the requisite status under the RMD rules. Given all of these requirements and the overall complexity of explaining annuities generally to participants, it remains to be seen how quickly plan sponsors adopt these vehicles in their plans and even if they are permitted under the plan, how quickly participants embrace these products."
(Thompson Coburn)
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[Guidance Overview]
Long-Awaited Cash Balance Plan Guidance Presents Compliance Challenges and Opportunities (PDF)
"Sponsors of defined benefit plans that contain cash balance or hybrid pension formulas need to consider if plan changes will be required before 2016. The most critical compliance issue for most plans will be to determine if the plan's existing interest crediting features meet the final rules, and, if they do not, how to transition to a new, compliant regime.... Traditional defined benefit plan sponsors may conclude that the more complete regulatory framework in this area now presents a good opportunity to take advantage of a hybrid pension benefit formula."
(Groom Law Group)
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New Guidance Eases the Path to Annuities in TDFs
"[L]ongevity pooling -- which is one of the defining features of annuities -- makes providing retirement income easier because it means you only need to worry about the aggregate mortality of a large group of people, and that is much more predictable than the mortality experience of one individual. But when DC took over from DB as the new retirement superpower, longevity pooling got lost in the process. So there was a step back from the goal of providing not just a savings vehicle, but a retirement income vehicle. That's what is driving the interest in this area."
(Russell Investments)
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House Votes to Extend Multiemployer Pension Provisions
"Provisions in the House bill would extend multiemployer pension plans' ability to take an additional five years to amortize funding shortfalls in addition to a regular 15-year period, and extend through 2015 special rules for underfunded plans."
(Pensions & Investments)
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Courts May Require Disclosure of Investment Policy Statements
"The Fifth Circuit held that [ERISA's] catch-all provision should be interpreted narrowly so as to apply only to formal legal documents that govern a plan.... In adopting this approach, the Fifth Circuit generally follows the Second, Fourth, Seventh, and Eight Circuits ... In contrast, the Sixth Circuit favors disclosure where it would help participants understand their rights. The Ninth Circuit has found that documents should be provided to the extent they provide individual participants with information about the plan or benefits." [Murphy v. Verizon Communications, Inc., No. 13-11117 (5th Cir. Oct. 14, 2014)]
(Winston & Strawn LLP)
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A Guide to Communications for Participant Education
"As a plan sponsor, you must transform complexity into simplicity, and fear into action. Yet, you are faced with many communications challenges; because participants crave simplicity but defined contribution plans are inherently complex.... What to Communicate ... How to Communicate ... Measuring Success."
(National Association of Governmental Defined Contribution Administrators [NAGDCA])
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Reducing Pension Risk with Buy-Ins
"[It's] a good idea for plan sponsors to think of de-risking as a series of steps, with a spectrum of possible choices at each step, rather than as a 'once-and-done' transaction. At one end of the spectrum is a liability-driven investment strategy in which asset allocations are generally intended to match plan liabilities. On the other end is the pension buy-out, through which the liabilities and assets are transferred to an insurer. A pension buy-in, which shares aspects of both, lies between the two on the spectrum.... Buy-ins vs. Buy-outs ... How a Buy-in Works ... Accounting and Funding Status Implications ... Buy-in Decision-Making ... Buy-in Checklist."
(Treasury & Risk)
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Fee Compression Slowing, Fee Structures Changing
"[F]ees for recordkeeping and administration services continue to be overwhelmingly oriented to asset levels. Either plan sponsors have negotiated with their providers a 'revenue requirement' calculated as a percentage of assets, or vendors' revenues are determined based on revenue sharing paid by the investments available in the plan. The challenge with both models of asset-based pricing is that investment options often provide disparate levels of revenue sharing.... As a result, participant-specific recordkeeping costs differ dramatically based on asset allocation. An increasing number of plan sponsors and providers have developed solutions to 'equalize' revenue sharing amounts."
(Multnomah Group)
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Evaluating Plan Expenses: A Road Map of Possible Routes and Potholes to Avoid (PDF)
"When investigating whether plan administrative expenses are reasonable, the DOL analyzes whether: [1] there is a legitimate service being provided to the plan or participants, [2] the services provided are actually necessary for administration of the plan, [3] the same service is being provided by multiple service providers ... and [4] the cost of such service is reasonable for the size and design of the plan."
(Drinker Biddle, via BNA Pension & Benefits Daily)
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GAO Report Shines Spotlight on Key Issues for Managed Accounts in 401(k) Plans
"The GAO reviewed the offerings of eight providers of these types of investment management services and estimated that those providers represent over 95% of the managed account industry in defined contribution plan ... They identified these broad areas of concern ... [1] Providers structure managed accounts differently, which can harm participants.... [2] Managed accounts offer advantages for some participants but fees and lack of standardized reporting requirements from DOL can offset these advantages.... [3] Absent guidance, sponsors face challenges in selecting and overseeing managed account providers."
(Thompson Coburn)
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Automated Retirement Readiness Tracking: Patent Pending on Underlying Process and Technology of New Service
"Buck has developed an automated process for redoing the calculation for each person each year -- or even on demand, if a plan sponsor wishes -- to make that available to participants. The updated calculation takes into account actual investment results, changes in pay, revised assumptions as necessary and other variable factors.... The firm is also working on a 'robo-advisor' feature that will, based on all information known about the employee, automatically allocate assets across the spectrum of funds offered in the plan."
(CFO)
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Congress Docks Pensions for Senior Pentagon Brass
"Pensions for generals and admirals will be trimmed to ensure that they make no more in retirement than they earned while in uniform under an agreement on Pentagon spending for 2015 reached by Senate and House negotiators.... There was no indication that beefing up pensions had increased top-officer retention, nor any sign that the Pentagon had been losing brass over retirement pay, the Senate Armed Services Committee determined. Pensions were reduced to ensure that top brass share the burden of Pentagon cost cutting."
(USA TODAY)
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Benefits in General; Executive Compensation
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2014 End of Year Plan Sponsor 'To Do' List, Part 3: Executive Compensation
"Last chance to correct certain Section 409A document failures discovered in 2014 ... Nonqualified deferred compensation deferral elections should be made on or before December 31, 2014 ... Review whether your equity-based compensation plan has sufficient shares remaining for 2015 grants ... Public companies should familiarize themselves with new ISS approach to equity plan evaluation ... Section 6039 information statements due by January 31, 2015 ... Review grant procedures for upcoming equity-based grants."
(Snell & Wilmer)
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