[Guidance Overview]
DOL's Recent Guidance on State-Run Retirement Programs, Part I: The Proposed Rule on State-Sponsored IRAs
"[T]he proposed rule sets forth certain parameters under which states may sponsor IRAs without the DOL considering the programs to be employee pension benefit plans under ERISA. While the DOL has not promised that its proposed rule will ward off all claims of ERISA preemption, the intent is to build a case for deference in favor of the DOL's rules should the principles be tested in the courts."
(Morgan Lewis)
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Actuarial Practice Note (Exposure Draft): Variable Annuity Plans (PDF)
41 pages. "[This practice note provides] information to actuaries on current and emerging practices for measuring obligations of defined benefit pension plans that include variable annuity benefits. Cash balance plans that credit market rates of return are closely related, but are not addressed in this practice note.... This practice note addresses several topics that have not yet been formally and explicitly addressed by the [IRS, DOL, FASB] and the [Actuarial Standards Board (ASB)]."
(Pension Committee of the American Academy of Actuaries)
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Best Practices in Setting Up a Retirement Plan Investment Committee
"Although they will differ from one organization to the next, best practices suggest an investment committee's responsibilities and duties include: [1] developing an investment policy statement; [2] establishing a formal process to manage the plan's investment strategy; [3] determining and implementing investment decisions; [4] establishing procedures for selecting and monitoring investment options; [5] selecting and removing fund managers and evaluating their performance; and [6] reviewing investment management fees."
(Strategic Benefit Services)
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401(k) Industry Howls as DOL Lets State Governments Become DC Providers with Advantageous Exemptions
"The good news is that states will bring more competition to a defined contribution industry that badly needs it. But if that competition exists on a less-than-level playing field, it starts to feel like a government subsidy ... The lack of outcry about a proposed system ... speaks loudly to how baffling all this is to observers.... Advisors and their watchdogs are not yet of one mind about the Obamacare-evoking government 401(k) providers: They see a way to bring unadvised assets out from under the mattresses but are also leery that a monster is being created."
(RIABiz)
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Is DOL Out of Bounds with Proposed Fiduciary Rule?
"Former House Financial Services Committee Chairman Spencer Bachus as well as the [SEC's] former inspector general, David Kotz, agreed Tuesday that the [DOL] is out of bounds by moving forward on a rule to amend the definition of fiduciary for retirement advice. 'From a statutory standpoint, the DOL has no jurisdiction' to regulate investment and retirement products by amending the definition of fiduciary under [ERISA, Bachus said.]"
(ThinkAdvisor)
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Money Market Reform: Understanding the Impact on Defined Contribution Plans
"[P]lan fiduciaries must evaluate any trade-offs among the three goals of the conservative asset class -- stability of principal, liquidity and yield. Along with money market funds, conservative offerings include stable value funds, ultra-short bond funds and other hybrid solutions. With longer maturities, these offerings provide higher yields than MMFs with slightly greater risk."
(J.P. Morgan Asset Management)
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Aon Hewitt 401(k) Index and Observations, November 2015
"November was another slow trading month in defined contribution plans with no days of above-normal trading activity.... Participants favored fixed income over equities when they made trades. In November, 60% of the trading days showed more inflows to fixed income. After combining contributions, trades, and market activity, the overall equity allocation in participants' accounts rose to 65.6% at month-end, up slightly from 65.5% at the end of October."
(Aon Hewitt)
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Reforming Retirement Income: Annuitization, Combination Strategies, and Required Minimum Distributions
"Retirees who rely solely on a strategy of drawing down assets run the risk of outliving their savings. Life annuities mitigate this risk by offering guaranteed income for life.... A combination strategy of asset withdrawals and purchases of immediate life annuities provides the best balance of lifetime income and flexibility, but current tax rules do not favor such a strategy."
(Mercatus Center, George Mason University)
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Keeping Your (or Your Client's) Safe Withdrawal Rate (SWR) Approach on Track
"[T]he retiree can always smooth her spending either by smoothing the spending budget or by spending more or less than the spending budget determined using the Actuarial Approach without smoothing. The key advantage of the Actuarial Approach over an approach such as the Safe Withdrawal Approach is that you always know how much you can spend to keep your current assets in balance with your current liabilities (the present value of future spending budgets based on reasonable assumptions and desired spending goals)."
(Ken Steiner, FSA Retired)
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Can You Afford to Retire Early?
"What happens if you don't die when the tables say you should but end up living another decade...or two? What happens if shortly after you retire the stock market decides to start over at its 2008 levels? What happens if you get hit by a bus the day after you retire, and you require round-the-clock nursing for the foreseeable future? ... Here are some things you can do to calamity-proof your plan for early retirement[.]"
(Certified Financial Planner [CFP] Board of Standards, Inc.)
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Planning for the Dementia Factor in Retirement: Options to Consider If an IRA Beneficiary May Develop a Mental Disability
"John wants to name his wife Susan as the primary beneficiary of his IRA and to name their children as contingent beneficiaries. The expectation is that, upon John's death, Susan, as surviving spouse-beneficiary, would roll the IRA over into her own IRA, and name the children as beneficiaries of the rollover IRA. But both spouses are concerned that following John's death Susan might have dementia, and not be legally competent to roll over the inherited IRA or file a new beneficiary designation. Is there a way that Susan can, now, prior to John's death, pre-elect the spousal rollover and name the children as beneficiaries of her (not yet created) rollover IRA? If that cannot be done, can John at least designate that benefits still in his IRA after Susan's death will pass to their children?"
(Natalie Choate, in Morningstar Advisor)
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[Opinion]
Reacting to Our Failure to Effect Sound Retirement Policy
"The states deserve a lot of credit for attempting to assist American workers ... These additional programs will only contribute to a confusing and highly-regulated landscape making it even more difficult for employers and employees to properly decide on the best option for saving for retirement. It's time to convene a meaningful effort to re-establish a well-reasoned and beneficial retirement policy ... This would be a large undertaking, but so was the development of ERISA more than forty years ago."
(Sheldon Smith and Chris Rylands, Benefits Bryan Cave)
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Benefits in General; Executive Compensation
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Executive Compensation-Related Corporate Governance Practices at the Top 250 Companies as of March 31, 2015 (PDF)
15 pages. "Ninety percent of top 250 companies have a clawback policy that covers one or more named executive officers (NEOs); 78% of top 250 companies have a clawback policy that covers a broader group of executives. Clawback policies for 78% of top 250 companies cover both cash and equity incentive compensation. The prevalence of clawback trigger definitions was approximately equal for those that include 'financial restatement (no fraud or misconduct required)' (38%) and 'financial restatement due to fraud or misconduct on part of the executive' (39%)." [The Top 250 companies represent the largest U.S. companies in the Standard & Poor's 500 Index by market capitalization.]
(Frederic W. Cook & Co., Inc.)
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Press Releases
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