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Compensation Benefit Planning, Inc.
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Plan Audit Quality - Top DOL Initiative
January 14, 2016 in CA
(Western Pension & Benefits Council - Orange County Chapter)

8th Annual ABCs of Pension Plans
January 21, 2016 in CA
(Western Pension & Benefits Council - Orange County Chapter)

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[Official Guidance]

Text of 2016 PBGC Estimated Premium Instructions (PDF)
57 pages. "The key changes to note for 2016 relate to changes in premium rates: [1] Flat-rate Premiums -- The per-participant flat-rate premium rate for single-employer plans is $64 up from $57. For multiemployer plans the rate is $27 up from $26. [2] Variable-rate Premium -- The rate per $1,000 of unfunded vested benefits is $30, up from $24. [3] Cap on Variable-rate Premium -- The MAP-21 Cap on the Variable-Rate Premium cap is $500 times the number of participants, up from $418 times the number of participants. In addition, the instructions for 'Risk Transfers', 'Final premium filing', 'Transfers from other plans', and 'Transfers to other plans' have been clarified." (Pension Benefit Guaranty Corporation [PBGC])  

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[Guidance Overview]

IRS Releases 2015 Cumulative List of Changes in Plan Qualification Requirements
"The Cumulative List sets out the changes to employee benefit plan requirements that the IRS will review when it determines if a plan has been properly updated. The 2015 Cumulative List applies to plans that are submitted for a determination letter during Cycle A (from February 1, 2016 to January 31, 2017)." (Practical Law Company)  

2015 Pension Plan Report Card: Underwhelming Grades (PDF)
"2015 was a year of volatility. Interest rates dipped during January, gradually increased through the summer, and have remained fairly steady since beginning of year levels. Equity markets have also been volatile highlighted by the large drop in value during September and the rebound in October. The combination of these asset and liability drivers should result in slight improvements in funded status although month-to-month changes have bounced around considerably. Once again, major pension legislation was passed providing fun ding relief but adding PBGC costs. This article reviews how the economic changes along with legislative and industry updates will shape the corporate pension plan landscape going into 2016." (P-Solve LLC)  

The Effect of the Current Population Survey Redesign on Retirement Plan Participation Estimates (PDF)
12 pages. "The Census Bureau redesigned the income questions starting in 2014 ... While the redesign of the survey did capture more income, especially pension income, it also significantly lowered the survey's estimates of retirement plan participation among those most likely to participate. Furthermore, these new CPS participation results trended downward in contrast to other surveys on retirement plan participation. The unexplainable decreases in the participation level after the CPS redesign and the conflicting time series of the participation levels in CPS relative to other surveys raise doubts about the use of CPS data to assess future retirement plan coverage policies." (Employee Benefit Research Institute [EBRI])  

Fidelity Sued Anew Over 401(k) Fees, Investment Strategy
"According to the complaint, Fidelity responded to losses incurred during the 2008 financial crisis by adopting an overly conservative investment strategy meant to appease the company's 'wrap providers' -- which include AIG Financial Products, JP Morgan Chase Bank and State Street Bank -- at the expense of the workers investing in one of Fidelity's stable value funds. Fidelity then attempted to conceal these missteps by reporting a misleading benchmark that made the fund look more competitive than it actually was, the complaint alleged. Fidelity also charged excessive fees in connection with the fund and allowed its big-bank wrap providers to more than double their fees, the complaint alleged." (Bloomberg BNA)  

Understanding a 401(k) Plan's Fiduciary Hierarchy Can Make It Easier for Employers to Meet Fiduciary Responsibilities
"An org chart of this hierarchy can be found [in this article]. It includes both fiduciary and ministerial (non-fiduciary) roles.... Because employers have an ongoing responsibility to monitor their 401k providers -- to be sure providers are doing their job at a reasonable fee -- they hold the top positions in the fiduciary hierarchy. For this reason, employers should hire providers that are easy to monitor." (Employee Fiduciary)  

No Fiduciary Rule Relief in Budget Bill
"One retirement plan provision that did make it into the final bill: a provision that would allow a taxpayer to roll over amounts from an employer-sponsored retirement plan (e.g., 401(k) plan) to a SIMPLE IRA, provided the plan has existed for at least two years. The provision applies to contributions made after the date of enactment." [The full text of the 2,009-page bill is available online.] (American Society of Pension Professionals & Actuaries [ASPPA])  

Social Security Policy Options, 2015 (PDF)
98 pages. "This report considers 36 policy options that are among those commonly proposed by policymakers and analysts, divided into five groups according to the elements of the Social Security program that they would modify ... The effects of an option on the Social Security system's finances are presented first, followed by a discussion of the distribution of those effects among people in various birth cohorts and according to lifetime household earnings ... By itself, no individual option presented here could create long-term stability for the Social Security program." (Congressional Budget Office [CBO])  

Women's Pension Protection Act Introduced, Could Become Bargaining Chip as Part of Larger Legislation
"[On] September 30, Senator Patty Murray (D-WA) introduced the Women's Pension Protection Act of 2015.... Generally, the bill would make two key changes: [1] Require spousal consent for lump sum distributions from defined contribution plans unless those distributions are made as part of a direct rollover (to another plan or IRA); and [2] Change the coverage rules of ERISA Section 202 and analogously Code Section 410 to require broader coverage under qualified retirement plans for part-time workers who customarily work at least 500 hours per year." (Benefits and Compensation with John Lowell)  

Retirement Plans Are Not Enough
"[A recent] study shows defined contribution plan sponsors need to consider broader financial issues that may be impeding retirement readiness ... [Y]ounger employees are more concerned with current financial challenges and making ends meet rather than saving for retirement. A mere 10% of millennials are worrying about retirement, whereas nearly 30% of baby boomers are worried about retirement savings. Many approaching retirement have debt levels that will be a drag on their retirement income." (Mercer)  

Give Yourself the Gift of Retirement Savings by Starting a myRA
"This holiday season, the U.S. Department of the Treasury encourages Americans to give themselves the gift of saving for the future with myRA (my Retirement Account) and to resolve to regularly save for retirement in 2016. Launched nationally in November, myRA is a new simple, safe and affordable savings option designed for Americans without access to a retirement savings plan at work. People can get information about myRA and sign up for an account at myRA.gov." (U.S. Department of the Treasury)  

[Opinion]

What Happens When PBGC Premium Increases Break the Current System?
"[W]hy a headcount premium? Given that PBGC's exposure is based on benefits up to a certain limit, shouldn't the flat-rate premium be based on the total insured benefits in a plan? ... [It's] understandable that PBGC would like to go to a 'variable' variable-rate premium, with lower premiums for financially strong companies and higher premiums for financially weak ones. With these dramatic premium increases, that policy is being implemented in a crude way -- all the financially strong companies will fund and only financially weak companies will remain." (PLANSPONSOR)  

Congress Passes 2015 Tax Extenders With PATH Act
"Unlike past tax extenders legislation, though, this time many of the provisions are permanently renewed. From the popular qualified charitable distribution (QCD) rules for making charitable contributions from an IRA for those over age 70-1/2, to the American Opportunity Tax Credit for college, and the deduction for state and local sales taxes, this will be the last time that these key tax planning provisions remain in an end-of-year limbo! ... The legislation also includes a few new 'tweaks', from a slight expansion of how qualified distributions from section 529 plans can be used, to the elimination of in-state-plan requirement for the coming new 529-ABLE plans for disabled beneficiaries." (Michael Kitces in Nerd's Eye View)  

Benefits, Retirement and Savings Make Up Larger Percentage of Government Employee Compensation
"Over the last 10 years, state and local government employer costs for employee benefits have increased as a share of total compensation. This can be mostly attributed to increases in retirement and savings, specifically defined benefit plans. Retirement and savings as a share of total compensation increased from 6.6 percent in March 2005 to 10.4 percent in September 2015." (U.S. Bureau of Labor Statistics [BLS])  

Accounting for Pensions and Other Postretirement Benefits, 2015
24 pages. "For fiscal year-end (FYE) 2014, the discount rate used to calculate the present value of pension obligations ranges from 1.80% to 5.00%.... At the end of 2014, only 51% of companies had a projected benefit obligation (PBO) funded status of greater than 80%. This represents a dramatic slide from the end of 2013, where 76% of companies in this report had a PBO funded status greater than 80%." (Towers Watson)  

Navera Reveals its Top 2016 Human Resources Technology Trends
Navera

John Hancock Retirement Plan Services Launches New Participant Websites
John Hancock Retirement Plan Services

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