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[Guidance Overview]

DOL Issues New Guidance on Economically Targeted Investments
"[IB 2015-01] clarifies that no special documentation is presumptively required to demonstrate that ETIs or consideration of ESG factors complies with ERISA. That being said, the DOL guidance notes that fiduciaries responsible for plan investments should maintain records sufficient to demonstrate their compliance with ERISA's fiduciary standards and that the appropriate level of documentation depends on individual facts and circumstances." (Morgan Lewis)  

[Advert.]

The ERISA Outline Book: an invaluable resource for retirement plan business.

Both a reference book and a study guide on qualified plans, the ERISA Outline Book is now available in a special online edition, constantly updated to reflect the very latest developments. Search, take notes and bookmark content.

[Guidance Overview]

Increased PBGC Premiums on the Horizon for DB Plans
"Prior to some last minute haggling ... the proposed budget being discussed already provided for an increase in the PBGC premium rates. However, lobbyists for the farming and agriculture industry were able to negotiate the removal of a cap on the amount of insurance provided for crop insurance, requiring revenue to be raised somewhere else.... [T]he additional revenue came on the backs of defined benefit plan sponsors by means of an additional increase in the PBGC premium rates." (McDonald Hopkins)  

DOL Takes Initiative on Missing Plan Audit Reports
"On Monday, Nov. 2, 2015, [EBSA] sent about 1,200 letters by email to filers of 2014 Form 5500 that did not properly include the report of an independent accountant.... [T]he letters are not Notices of Rejection of the Form 5500 filing and do not start the running of the statutory 45-day correction period.... However, the correspondence should be a warning that the DOL has the situation on its radar and put pressure on the plan sponsor/administrator and the benefit plan auditor to quickly wrap up the audit and file an amended 2014 Form 5500 report including the report of the independent accountant." (American Society of Pension Professionals & Actuaries [ASPPA])  

Milliman Multiemployer Pension Funding Study: Fall 2015 (PDF)
"The aggregate funded percentage for multiemployer plans was estimated to be 79% as of June 30, 2015, compared with 80% as of December 31, 2014. For most multiemployer pension plans, the 2015 investment experience through June 30, 2015, has underperformed expected returns, and that doesn't take into account the turmoil in the investment markets since then. Over one-half of the total underfunding for multiemployer plans continues to be attributable to the 200-plus plans that are less than 65% funded. With a return through June 30 of about 2%, it will take a 3% return for the last six months of 2015 to sustain the June 30 funded percentage as of December 31, 2015." (Milliman)  

Bipartisan House Members Outline Legislative Principles to Ensure Retirement Advisors Protect Clients' Best Interests
"Republican and Democratic lawmakers [on Nov.5] outlined a series of legislative principles ... [and] released the following joint statement: 'We are concerned that the Department of Labor's current fiduciary proposal may have unintended negative consequences that could harm individuals and families saving for retirement.... To protect the retirement savings of all Americans, we intend to introduce a bipartisan legislative solution.' " (Committee on Education and the Workforce, U.S. House of Representatives)  

[Advert.]

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Committed To Outcomes (C2O) is a retirement industry work group and creative co-op to elevate the conversation about our why we're here. C2O will leverage PR and social media channels while member firms share C2O original content under their own brands. Learn more.

Many Variables to Consider When Selecting Target Date Funds (PDF)
"When determining which TDFs to select, there are a number of key attributes to consider and evaluate, some of which depend on the demographics among the participants. As a group, are they close in age or is there a wide age spread? Do they have most of their savings in the plan or do they have additional investments? Is a TDF more appropriate than a balanced fund or an alternate asset allocation option?" (Bronfman E.L. Rothschild)  

Passive Management and the False Premise of Fiduciary Relief: Going Passive Is an Active Decision (PDF)
"There has been an increase in interest among [DC] plan sponsors for passive investment options that seems to be, in part, based on the false premise that fiduciary oversight requirements are nearly eliminated. Plan sponsor fiduciary responsibility may not be reduced to the extent plan sponsors believe when selecting passive funds to include in their DC line up. While there are differences in evaluating passive and active funds, this paper details certain items plan sponsors are obligated to look at, when selecting passive investment options (including both single asset class and target date funds), by ERISA requirements of selection and monitoring of plan investments." (Russell Investments)  

Spano v. Boeing Excessive Fee Case Settles for $57 Million
"The following are some selected terms of the settlement: ... Boeing agreed to hire an independent fiduciary to approve the settlement ... If a technology sector strategy fund remains as a core option in the Plan, Boeing shall obtain an opinion and recommendation of an Independent Investment Consultant on the question of whether and how to provide participants access to a technology sector strategy as a core option.... The agreement acknowledged that Boeing has a cash target for their company stock fund, and have hired a fiduciary to monitor the cash levels." (Fiduciary Matters Blog)  

Boeing to Pay $57 Million to Settle Suit Over Retirement Plan
"With the settlement, nine large American companies have paid a combined $271.5 million over class-action lawsuits brought on behalf of workers by a St. Louis lawyer who has pushed major corporations for more accountability in the retirement plans they offer.... Boeing has denied the claims in the suit but has made a number of changes to its 401(k) plan ... including replacing mutual funds with lower-cost investment options." (The New York Times; subscription may be required)  

Lawsuit Alleges Intel 401(k) Cost Participants Hundreds of Millions
"Fiduciaries on Intel Corp.'s investment policy committee are being sued ... for directing hundreds of millions of participant 401(k) assets to hedge fund and private equity investments in the company's customer target-date fund. The suit also alleges participants in the company's customized Global Diversified Fund were exposed to asset allocation models that 'departed dramatically from prevailing standards employed by professional investment managers and plan fiduciaries,' according to court documents." (Treasury & Risk)  

A Hedge Fund Sales Pitch Casts a Spell on Public Pensions
"It has been just over a year since the California Public Employees' Retirement System said it would wind down its $4 billion portfolio of hedge fund holdings. High costs and complexity made the vehicles 'no longer warranted,' Calpers said at the time. Given Calpers's leadership in the public pension arena, some thought other pension managers and institutional investors would follow suit. But that does not appear to be happening, even during this, a trying year for hedge fund performance. The question is, why not?" (The New York Times; subscription may be required)  

[Opinion]

What Vanguard's New Report Does Not Say About 401(k) Plans
"The biggest difference was with participation: Women were 14% likelier to enroll voluntarily in 401(k) plans than men.... Apparently, women are more responsible than men. Color my wife surprised.... The study confirmed some prior beliefs, and learned a couple of new things along the way. But I found the story that Vanguard chose not to tell to be more compelling.... [W]hile it's better for 401(k) planning to be a responsible woman than an irresponsible man, it's far better yet to be a zombie, if the zombie's company has an automatic-enrollment feature.... The median experience, it seems, is something that looks like a moderately aggressive balanced fund. That allocation represents a considerable victory[.]" (John Rekenthaler, in Morningstar)  

[Opinion]

12 Predictions About What the DOL's Fiduciary Rule Will Look Like When Implemented
"The final rule will include all proposed carve-outs and exemptions, as well as fiduciary coverage for individual retirement accounts and rollover advice.... Some requirements in the best-interest contract exemption will be eased or clarified, including the ability to discuss investment recommendations with a client before signing the contract.... The exemption will be broadened to allow advisers with compensation conflicts to serve small defined-contribution plans if they fulfill the requirements of the exemption.... Fiduciary advisers who provide advice to a plan and/or the plan's participants on a level-fee basis will also be able to offer rollover advice to the participants without having to rely on the exemption.... The DOL will abandon the idea of a so-called 'low-cost, high-quality' prohibited-transaction exemption." (InvestmentNews)  

[Opinion]

Social Security Reform -- Some Solutions Are More Sustainable Than Others
"While reducing the 75-year actuarial deficit is a reasonable first step, there are two problems with any proposed reform options that simply reduce Social Security's 75-year actuarial deficit to zero: [1] Given the projected costs of the program, limiting the actuarial balance calculation to 75 years ignores projected annual deficits expected to occur after the end of the 75-year projection period. Over time, these deficits will emerge in the actuary's annual calculations. [2] There exists no process in current law to automatically adjust the System's tax rates to maintain a balance between system assets and system liabilities." (Ken Steiner, FSA Retired)  

Domestic Partnership Converted Retroactively to Marriage After Death Provides Basis for VA Spousal Benefits
"In a case that has obvious implications for employee benefit plans, the Veterans' Administration (VA) has just provided survivor benefits to the partner of a service member, even though the partners were not married before the service member's death.... The Obergefell decision allowed Krumbach to retroactively amend Hatcher's death certificate to show they were married. The VA then allowed the benefits to Krumbach as the surviving spouse.... [An] employer needs to give serious consideration to how it will currently treat same-sex marriages entered into before it changed its policies to recognize such marriages. [This article] focuses on steps the employer may consider to mitigate liability in the future[.]" (Calhoun Law Group, P.C.)  

Benefits Litigation Update, Fall 2015 (PDF)
Articles include: [1] Will a third wave of suits over the contraceptive mandate bring the culture wars to corporate employee benefits? [2] Okun v. Montefiore: Are your severance policies subject to ERISA? [3] The House of Representatives challenges the ACA in court; [4] Increased litigation risks for fraudulent concealment fiduciary breach claims; [5] Data breach litigation targeting employers; and [6] LeBlanc v. SunTrust Bank: beware the payroll practices exemption under ERISA. (Epstein Becker Green, for the ERISA Industry Committee)  

Financial Engines to Acquire The Mutual Fund Store to Expand Independent Advisory Services for 401(k) Plan Participants
Financial Engines, Inc.

Rally Health Launches Rally Choice, New Benefits Tool
Rally Health, Inc.

New Fellows - November 2015
Society of Actuaries

Harper Danesh Celebrates Fifth Anniversary
Harper Danesh LLC

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