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DOL Secretary Perez to Lawmakers: I'll Walk You Through Changes to DOL Fiduciary Rule
"Mr. Perez assured [the House Education and Workforce Committee that] the agency has reviewed more than 300,000 comments about the rule, which was introduced last April, and addressed concerns.... 'I look forward to debriefing you and explaining to you: "Here was the proposed rule. Here are the comments we got. Here are the changes we made," ' Mr. Perez told Mr. Roe, a member of the committee. 'I commit to you we will do that with you and anyone else who has an interest.' ... But Mr. Perez also pushed back against legislation, such as a bill Mr. Roe wrote, that would halt the DOL rule and replace it with a best-interests advice standard that differs from the DOL regulation's approach."
(Pensions & Investments)
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How Much Have 401(k) Fees Declined?
"[T]he average total plan cost for a small retirement plan (defined as 100 participants and/or $5,000,000 assets) declined from 1.29 percent to 1.28 percent over the past year. The average total plan cost for a large retirement plan (1,000 participants and/or $50,000,000 assets) declined ... from 1.03 percent to 0.97 percent."
(401K Specialist)
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The Latest Excessive Fee Suit: Excessive Participant Mailings
"The complaint ... alleges that TIAA's duplicative mailing practices resulted in unnecessary, unreasonable and excessive costs in the millions of dollars paid by the plans -- expenses that it says were not disclosed to participants in violation of ERISA.... The suit claims that [one participant] receives 15 separate mailings of account each month, and that TIAA was aware of the problem for years, '...yet has failed to take any remedial steps, despite repeated promises to correct the problem, and continues to waste literally millions of dollars on unnecessary mailings.' " [Lefkowitz v. TIAA, No. 1:16-cv-01932 (S.D.N.Y. filed Mar. 16, 2016)]
(National Association of Plan Advisors [NAPA])
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Sequoia Firm's Valeant Stake Brings Pain in Retiree Lawsuit
"When Valeant Pharmaceuticals International Inc.'s stock tumbled 51 percent on Tuesday, nobody lost more than fund manager Ruane Cunniff & Goldfarb Inc., which saw $1.26 billion in value wiped out in a day.... On Monday, a retiree whose money was managed by Ruane Cunniff filed a lawsuit accusing the firm of conflict of interest, self-dealing and breach of trust. Those sins, the retiree alleged in a proposed group suit, fueled an environment that gave short shrift to participants of a retirement plan for employees of a company called DST Systems Inc.... A nontransparent fund managed by Ruane Cunniff was packed with shares of Valeant -- as much as 30 percent of its holdings, according to the complaint[.]" [Cooper v. Ruane Cunniff
& Goldfarb Inc., No. 1:16-cv-01900-WHP (S.D.N.Y. filed Mar. 14, 2016)]
(Bloomberg)
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What Should a Retirement Plan IPS Contain?
"In addition to the overall goals and objectives for the plan, your [investment policy statement (IPS)] should define your investment philosophy in at least general terms.... A clear chain of command and responsibility should to be established.... Your IPS should clearly describe how your investment strategy and plan are constructed.... Your IPS should describe the review standards you will use in sufficient detail that someone totally unfamiliar with you can understand how you approached the job.... Your IPS should lay out clear procedures for removal and reinvestment of plan options."
(Fiduciary Plan Governance, LLC)
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FINRA CEO Says Fiduciary Standard Makes Sense
"In [a] perfect world, you'd eventually have a common standard under securities laws that could be enforced by regulators. The DOL's standard can really only be enforced by attorneys generals as the DOL doesn't have enforcement authority over the [best interest contract exemption]. And it would have common standards across retirement accounts and other accounts."
(On Wall Street)
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DOL Fiduciary Rule May Spur Product Innovation
"Changes brought on by the rule could transform the burgeoning retirement advice market, which Cerulli estimates will total about $28 trillion in assets by 2020. Among the possible changes, Cerulli anticipates that brokerage firms will use new technologies to serve smaller accounts on a fee basis while insurance companies will be forced to lower variable annuity expenses and commissions."
(Financial Planning)
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Text of Enrolled Actuary Program Booklet, Revised March 15, 2016 (PDF)
35 pages; covers [1] May 2016 Basic (EA-1) Examination; [2] May 2016 Pension EA-2 (Segment L) Examination; and [3] November 2016 Pension EA-2 (Segment F) Examination.
(Joint Board for the Enrollment of Actuaries [JBEA], American Society of Pension Professionals and Actuaries [ASPPA], and Society of Actuaries)
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Keep Your Employees Warm During a Pension Plan Freeze or Termination
"With the shift in focus from a pension plan to a DC plan, you can also make employees aware that they're now in control of their retirement. They control how much they contribute; they control where the funds get invested. Employees will now be the arbiter of their own retirement destiny. Through research and use of the saving and investing tools that your plan offers, they can continue to be or become informed consumers."
(Milliman Retirement Town Hall)
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What Do You Need to Know to Estimate Retirement Income?
"The [DOL] will add some options to its retirement income calculator to allow workers to factor more variables into their retirement income estimates ... The changes slated for June 2017 are in response to [a GAO] report's conclusions that DOL's retirement planning materials as currently constructed may be leading workers to over- or under-estimate how much of their preretirement income they will need to replace in order to have a comfortable retirement."
(Bloomberg BNA)
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Nearly Half of Employees Used Company Stock to Help with Personal Finances and Increase Financial Well-Being
"Forty-eight percent of employees who purchased company stock through an ESPP sold all their shares within two years ... [O]nly six percent of employees that sold all of their shares did so within 10 days of purchasing the shares.... [E]mployees in ESPPs that offer a higher discount are more likely to sell sooner -- almost 40 percent of employees with a 15 percent discount sold all their shares within 90 days, compared to 25 percent of employees in plans with a five percent discount. However, higher discounts contribute to higher employee participation rates."
(Fidelity)
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Former Presidents: Pensions, Office Allowances, and Other Federal Benefits (PDF)
29 pages. "This report provides a legislative and cultural history of the Former Presidents Act [FPA]. It details the benefits provided to former Presidents and their costs.... This report considers the potential effects of maintaining the FPA or amending the FPA in ways that might reduce or otherwise modify a former President's benefits." [Report No. RL34631, dated May 27, 2015; published online Mar. 16, 2016.]
(Congressional Research Service [CRS])
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Rich Countries Have a $78 Trillion Pension Problem
"The total value of unfunded or underfunded government pension liabilities for 20 countries belonging to the Organisation for Economic Co-operation and Development (OECD) -- a group of largely wealthy countries -- is $78 trillion ... (The countries studied include the U.K., France and Germany, plus several others in western and central Europe, the U.S., Japan, Canada, and Australia.) ... [C]orporates also failed to consistently meet their pension obligations, with most U.S. and U.K. corporate pensions plans underfunded. Countries with large public pension systems in Europe appear to have the greatest problem."
(CNBC)
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Giving Small Business a Competitive Edge: The California Retirement Savings Plan (PDF)
"Two-thirds [of California small business owners and decision makers] support a state retirement savings plan that would help California residents build their own private retirement savings ... Three-fourths of respondents agree that offering a retirement plan provides a competitive edge.... Four in five do not provide a workplace retirement savings plan, with business size or cost cited as the main reasons for not providing a plan. Over half would use a state retirement savings plan if available."
(AARP)
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[Opinion]
Recent Multiple Employer Plan Rule Changes Could Benefit Small Businesses
"According to the DOL, a state may sponsor its own multiple employer plan and allow unrelated private businesses to join.... The DOL clearly wants to give small business employees access to affordable retirement savings vehicles. If they were willing to essentially do away with the 'common nexus' requirement for state-sponsored MEPs, it's not unreasonable to think that similar changes will be made to allow private sector MEPs in the future."
(Pension Consultants, Inc.)
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials
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