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Employee Benefits Jobs
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Webcasts and Conferences
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Transcript of Oral Argument Before the Supreme Court in Tibble v. Edison International (PDF)
71 pages. "[Justice Scalia, to counsel for Petitioners:] 'You're going to ask every Federal district court not only to determine whether a particular purchase was sensible or not, but to say year by year whether you've done a careful enough review.... I just don't think courts are capable of doing that.' ... [Justice Kagan, to counsel for Respondents:] 'Now, really, are you saying what kind of disruption could be worth, on an ongoing basis, for people who have invested in funds for 30 and 40 years and where there's a significant difference in fees, what kind of disruption could be worth the price of that? ... They don't like changes. They would rather have fees?' " [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1,
2013; argued Feb. 24, 2015)]
(Supreme Court of the United States)
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Supreme Court Wrestles with Issues in Tibble v. Edison
"The mainstream media ... interpreted yesterday as hinting at a victory for the plaintiffs. But let's be clear: that's not necessarily a clear cut outcome.... Very unlikely they affirm the Ninth Circuit's test but almost as unlikely they simply reverse without providing guidance on what the duty to monitor looks like. So that leaves us somewhere in the middle[.]" [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; argued Feb. 24, 2015)]
(Fiduciary Matters Blog)
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Supreme Court Appears Receptive to Investors in Tibble v. Edison 401(k) Case
"The Supreme Court's hourlong oral argument largely proceeded on the assumption the appeals court applied the time limit too strictly. Justice Samuel Alito said both sides in the case seemed to agree that such lawsuits are 'not categorically barred.'... Jonathan Hacker, a lawyer for Edison, said it can't be the case that companies have to 'constantly look and scour the market for...cheaper investment options,' for retirement-plan participants. 'Well, you certainly do, if that's what a prudent trustee would do,' Justice Anthony Kennedy responded." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; argued Feb. 24, 2015)]
(The Wall Street Journal; subscription may be required)
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Supreme Court Hints at New Monitoring Rules for 401(k) Plan Investments
"U.S. Supreme Court justices suggested they will require 401(k) plans to periodically monitor the investment options they offer, in a case that may give investors more power to sue over excessive fees. Hearing arguments Tuesday in Washington, the justices indicated they will revive claims that Edison International's 401(k) plan should have shifted investors from the retail class shares of three funds into identical institutional class shares that carried lower fees. Several justices scoffed when Edison's lawyer argued that a switch of investments might have confused the workers who participate in the plan." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; argued Feb. 24, 2015)]
(Bloomberg)
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[Advert.]
PPA Pre-Approved Plan Workshop – 2-day program
Corbel or PPD document - Line-by-line review using the prototype volume submitter 401(k) Adoption Agreement. Also a review of the basic plan document, including completion of check-box and blank line options. 13 CE hrs. Register Now.
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If You're Saving for Retirement, This Matters to You
"What's the difference between a doctor, a lawyer, and a financial adviser? It may sound like a bad joke, but it's a dead serious question. When you go to a doctor or a lawyer, you expect that the advice you get is in your best interest. That's because lawyers and doctors have an obligation to look out for what's best for you. Right now, the same simply doesn't hold true when it comes to saving for your retirement.... That's simply not fair, and we are working to change it."
(U.S. Department of Labor [DOL] Blog)
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Conflicts Proposal Sent to OMB, Many Investment Roles May Be Affected
"Contrary to widespread rhetoric, it is important to keep in mind that this rule will not only affect broker-dealers; it could impact any RIA affiliated with a broker-dealer or retirement plan service provider. Even fee-only RIAs may have to adapt their business models -- particularly to the extent if they serve as or rely upon solicitors for investment managers.... It is also expected that the DOL will seek to modify its position on IRA rollovers.... Given that the SEC and FINRA have already thrown their hats into the IRA rollover arena, we anticipate that it will not get any easier to assist plan participants in this regard."
(Pension Resource Institute, via LinkedIn)
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401(k) Plan Benchmarking: What to Measure, and How Often?
"All [survey] respondents work in a plan sponsor role. The majority (91.7%) reported that they benchmark their defined contribution plans once per year, while the rest (8.3%) do so every five years. When the plan is benchmarked, 91.7% measure average participation rate, and the same percentage measure administrative expenses against those of peer plans. More than 83% measure average deferral percentages, and 100% consider their investment expenses compared with peer plans."
(PLANSPONSOR)
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Say What You Mean in Your Plan Documents
"[T]here is always room to make a document say exactly what is intended.... Have the document reviewed by someone who could or will be administering it. See what they think it says to do. Have the calculational elements reviewed by someone who understands how the calculations are supposed to work. And for the most controversial of them all, put something in the plan document that looks like 'the intent of this section is illustrated by the following example.' That's right. If you mean that a result is to be rounded to 4 decimal places, put it in the example."
(Benefits and Compensation with John Lowell)
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Make Sure Participants Know When Their Plan Benefits Have Been Transferred
"Southwestern and Martin agreed that Southwestern's pension plan would transfer to Martin's pension plan the assets and liabilities relating to employees who became employed by Martin. Although the pension transfer occurred, Southwestern plan participants were not notified of the transfer.... The federal district court said that the Southwestern plan (now the CEMEX plan) had to pay benefits to the employees. Because the employees had been participants in the Southwestern plan and had not received notice of the transfer, the transfer was void with respect to them. Thus, participants may receive double benefits for some of their service." [Anderson v. CEMEX, No. 2:12-00136 (D. Utah Dec. 29, 2014)]
(Stinson Leonard Street)
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Defined Contribution Plans of Fortune 100 Companies in 2013
"Aggregate plan assets grew by over 20% in 2013 -- up considerably from 13% in 2012 -- with most of the growth attributable to investment income. Several of these employers introduced the non-matching contribution to the DC plan shortly after freezing or closing the DB plan. 48% of these Fortune 100 companies had automatic enrollment, and 58% provided for automatic increases in employee contributions over time."
(Towers Watson)
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IRS Raises Issues Regarding DC DROPs
"[T]he IRS Cincinnati District Office (which is responsible for governmental plan determination letters) has raised questions as to how a DC [deferred retirement option plans (DROP)] would satisfy the IRC requirement that a plan be 'definitely determinable'. Moreover, the Cincinnati District Office is planning to request explanations from 75 governmental plans having pending determination letters as to how their DC DROPs would satisfy the definitely determinable rule."
(Gabriel Roeder Smith & Company)
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The Problem with Naming a Trust as the Beneficiary of an Annuity, and Using a Beneficiary Designation with Restricted Payout Form as an Alternative
"In the case of retirement accounts, the IRS and Treasury have created the 'see-through' trust rules that allow post-death required minimum distributions to occur based on the life expectancy of the underlying trust beneficiaries. However, in the case of annuities, no see-through trust rules exist, compelling trusts to instead liquidate inherited annuities over the far-less-favorable 5-year rule! As a result, consideration of whether to use a trust as the beneficiary of an annuity must weigh the adverse tax consequences against the favorable/desired non-tax provisions of the trust."
(Michael Kitces in Nerd's Eye View)
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State and Local Government Spending on Public Employee Retirement Systems (Updated February 2015) (PDF)
"Although some lawmakers have considered closing existing pension plans to new hires, most determined that this would increase -- rather than reduce -- costs, particularly in the near-term. Instead, states and cities have made changes to the pension plan by adjusting employee and employer contribution levels, restructuring benefits, or both. Generally, adjustments to pension plans have been proportionate to the plan's funding condition and the degree of change needed. This update provides figures for public pension contributions as a percentage of state and local government direct general spending for FY 2012, and projects a rate of spending on pensions for FY [2013]."
(National Association of State Retirement Administrators [NASRA])
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New Jersey Gov. Christie's Budget Proposes Pension Overhaul
"The so-called Roadmap for Reform would freeze the existing pension plan and have the New Jersey Education Association [NJEA] take ownership of a new pension fund for educators. The state would be required by a constitutional amendment to fund its current obligations over the next 40 years. In exchange, the unions would agree to significant health care cost savings to offset the costs."
(Associated Press)
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A Roadmap to Resolution of New Jersey's Pension Funding Problem (PDF)
52 pages. "The approach outlined in this Report involves the following steps: [1] Freeze the existing pension plans... [2] Align future public employee retirement benefits with private-sector levels ... [3] Also align public employee health benefits with private-sector levels ... [4] Fairly realign State and local responsibility for new and sustainable pension and health benefits ... [5] Lock in fixed and certain pension funding with a constitutional amendment ... [6] Transfer the assets, liabilities and risks of the existing pension and new retirement plans to employee entities willing and able to assume this obligation[.]"
(New Jersey Pension and Health Benefit Study Commission)
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[Opinion]
As President Obama Takes the Gloves Off, Pro-Broker Groups Throw Up 'Sledgehammer' Response
" 'There are a whole lot of financial advisors that do put their clients first. There are a whole lot of hard working men and women in the field who got into the field to help people.' Those words were not spoken by Ron Rhoades, Harold Evensky or Knut Rostad. Rather, they were delivered by President Barack Obama at AARP headquarters in Washington, D.C. as he announced stricter rules on financial advisors who manage retirement savings accounts.... Sentiments like those and ones like them (Obama referred to 'selling snake oil) passing the lips of the world's most powerful politician were taken as a positive, if surreal, sign of serious progress on the fiduciary front. Yet the brokerage establishment sees these comments as fighting words."
(RIABiz)
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[Opinion]
Text of ASPPA Comment Letter to IRS on Form 5500 (Including Form 5500-SUP) (PDF)
"ASPPA recommends that the IRS delay by at least one year the implementation of the proposed changes and additional data collection for all plans to allow the time needed by service providers to accommodate the extensive data collection, programming, and other systems changes that will be required.... ASPPA recommends that the IRS simplify the line 6 inquiries relating to plan documents to ensure that filers prepare fact specific information in a uniform manner.... ASPPA recommends that the IRS provide more specific information regarding which filers are required to provide the SUP information electronically and the application of certain penalties and late filing remedies."
(American Society of Pension Professionals & Actuaries [ASPPA])
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[Opinion]
The Wrong Way to Overhaul New Jersey's Pensions: Conversion to a Cash Balance Plan
"New Jersey isn't Wisconsin in any way, shape or form. State of Wisconsin Investment Board is one of the best state pensions in the United States because they got the governance right and are following Canadian funds in managing more of their assets in-house. By contrast, New Jersey's Division of Investment outsources most of their pension assets and doles out huge fees to private equity funds and hedge funds, one of which employs Gov. Christie's wife. Also, just like elsewhere, there's way too much political interference in their state pension, which virtually ensures mediocre performance over a long period (don't look at the last four years, a monkey could have outperformed in this environment just over-weighting equities)."
(Pension Pulse)
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Benefits in General; Executive Compensation
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SEC Proposes Disclosure Rule for Hedging Transactions by Directors, Officers and Employees (PDF)
"The proposed rule implements Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and covers a much broader range of transactions than hedging policies adopted at most public companies. The proposed rule would not require a public company to prohibit hedging type transactions. It is appropriate for issuers at this time to consider the extent to which the scope of their existing hedging policies differs from the proposed rule."
(McDermott Will & Emery)
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Retention Compensation Plans -- Please Stay!
"On its face, [a] retention compensation [strategy is] another form of long-term deferred compensation; but it is different in that retention rewards are typically in place because of a specific event or set of circumstances triggering the need.... If the goal is to merely retain someone without regard to performance or engagement, they can be successful. However, if it is the only vehicle in place, such plans can be merely giveaways for tenure."
(Findley Davies)
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Press Releases
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