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[Guidance Overview]
DOL Clarifies Proper Use of Economically Targeted Investments
"The [DOL] recently revised its guidance on economically targeted investments (ETIs), which are investments that support environmental, social or corporate governance (ESG) goals. The revision is intended to correct possible misperceptions about earlier guidance that might be discouraging pension fiduciaries from selecting such investments. This latest guidance reaffirms that fiduciaries may not choose ETIs with lower expected returns than non-ETIs with similar risk characteristics, but they may take into account social, environmental or governance advantages where expected returns and risks are comparable."
(Towers Watson)
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Plan Sponsors Can Learn Several Powerful Lessons from Recent Wear-Away Case (PDF)
"It is important that key players in a company's retirement plan understand their roles as fiduciaries and the implications of being one. Periodic training is a must.... Plan provisions, especially plan changes, must be communicated clearly. There can be no sugar-coating adverse news for participants ... As soon as you become aware of a lawsuit against the plan, make sure you send a memo to all affected departments advising them not to destroy any documentation that could be related to the case." [Osberg v. Foot Locker, Inc., No. 07-cv-1358 (S.D.N.Y. Sept. 29, 2015)]
(ERISAdiagnostics, Inc.)
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Understanding Re-Enrollment: Benefits for Participants and Plan Sponsors
"How TDFs are implemented ... can have a significant impact on whether employees use the particular investment option.... [P]lan sponsors that conduct a re-enrollment typically see a 55% to 85% adoption rate of TDFs. By contrast, plans that just add TDFs as a new option in their lineups see an adoption rate of less than 5%, even a few years later."
(J.P. Morgan Asset Management)
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An Easy Button for DC Plans?
"[Is] re-enrollment right for your plan? Some questions to ask: Are a large percentage of my plan's assets in single asset class investment options? Has my plan been in existence for a long time? Ten years? Twenty years? Am I concerned that my participants are more worried about health care planning than retirement planning? Are they disengaged from retirement planning? Have the results from participant education campaigns fallen short of expectations?"
(Manning & Napier)
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Government Wields the Stick: DOL Guidance and State-Based IRA Programs
"The state plans have potential to scoop in employees who work for an employer that already sponsors a plan. The employee may not be covered by the plan because they are in a waiting period or because of some other good reason. An employer who has already established a plan might end up needing to comply with ERISA (for its own plan) and state law (for the state savings arrangement).... Employers with big multistate workforces would be well-served to monitor legislation in states like Illinois, California and Oregon to ensure appropriate legislation and administrative rulemaking."
(Dorsey ERISA)
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DOL Fiduciary Rule Under Two-Pronged Congressional Attack
"The idea of attaching an anti-fiduciary-rule rider to the federal appropriations bill in the House has been floated since at least November. The Senate has also signaled its intent to choke the DOL's rulemaking by controlling the agency's budget. In June, the Senate Appropriations Committee on a party-line vote approved annual spending legislation to reduce the DOL's funding and block the conflict-of-interest rule."
(Bloomberg BNA)
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Committee Hears Arguments for Action Against Fiduciary Rule
"One of the takeaways from the hearing, [said former EBSA Assistant Secretary Brad Campbell], is the bipartisan concern in Congress that the DOL's proposal has some serious problems. 'The question will be, does that translate into Congressional action in the upcoming omnibus bill?' he says. Possibilities range from defunding the DOL's ability to pursue the rule to asking for another round of comments, to rifle-shot bits of legislation that would direct the DOL to do or not do certain things, Campbell says, noting the DOL's fiduciary proposal is just one of many issues."
(PLANSPONSOR)
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Almost Missing a Tax Break on Employer Stock in a 401(k)
"A 57-year-old executive wanted to retire this year. He had 401(k)s worth about $1 million in total from his past and current employers, and he was concerned that his adviser was too quickly pushing him to roll the accounts into an individual retirement account.... One issue was that rolling the money into an IRA would limit the executive's ability to tap the money over the next few years.... The bigger problem was that the approach could potentially land the man with a higher tax bill. The man had worked at a local power company for 40 years, and his 401(k)s were largely composed of highly appreciated company stock."
(The Wall Street Journal; subscription may be required)
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Pre-Retiree Expectations Do Not Match Retiree Experience
"Reflecting on their working years, many retirees say they: [1] Wish that they would have saved more on a consistent basis (76%); [2] Wish they had been more knowledgeable about retirement saving and investing (68%); [3] Would have liked to have received more information and advice from their employers about how to achieve their retirement goals (53%); [4] Waited too long to concern themselves with saving and investing for retirement (48%); and [5] Should have relied more on outside experts to monitor and manage their retirement savings (41%)."
(planadviser)
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The Retirement Generation Gap
"Many 50-somethings have only limited retirement nest eggs: [a recent study] found just $135,000 in median savings in retirement accounts for that age cohort. That may explain why their worries about retirement tend to relate to outliving their savings.... Retirees tend to be less worried about running out of money and more concerned about experiencing cognitive decline and being unable to find meaningful ways to spend their time[.]"
(CNBC)
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Retirees Outnumber Active Employees in Public Pension Plans
"For the first time, the number of retired and inactive members in the nation's 100 largest public pension plans is greater than the number of active employees ... In 2015, there were 12.6 million retired/inactive members (former employees) covered by the plans versus 12.5 million active employees ... The 12.6 million versus 12.5 million may seem like a small differential. However, on the retiree side, it reflects a big jump from four years earlier[.]"
(InsuranceNewsNet.com)
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Benefits in General; Executive Compensation
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[Guidance Overview]
DOL Proposes to Bring ERISA Disability Denials in Line with the ACA
"Plans should consider the effect of this proposal on their arrangements with claims administrators and third-party vendors.... [M]any claims administrators contract with outside vendors to identify factors that warrant rescinding disability coverage. Coupled with other provisions in the Proposed Rule, the outside vendor's determination may constitute an adverse benefit determination and the information it considered in rendering its determination may have to be produced to the claimant."
(Proskauer's ERISA Practice Center)
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2015 MassMutual Generations@work Study Research Results (PDF)
13 pages. "The most desirable employer-provided benefit is vacation days, ahead of key financial benefits like better 401(k) matches or no healthcare premiums.... Men are more likely to say they think it's easy to manage their finances and claim to be less distracted by their finances than women are. Men also have a stronger preference for financial benefits than women do, while women have a stronger preference for lifestyle benefits ... What benefits Americans say are most important to them varies widely by gender, generation and ethnicity."
(MassMutual)
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