Retirement Plans Newsletter

April 27, 2016

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Assistant Retirement Plan Administrator
Compensation Systems, Inc.
in IN

Sr. Pension Administrator III
Lafayette Life Insurance Company
in OH

Employee Benefits Compliance Counsel
Arthur J. Gallagher & Co
in LA

Managing Consultant
Securian Financial Group
in MN

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Webcasts and Conferences

Department of Labor’s New Fiduciary Rule: What do Retirement Plan Sponsors and Fiduciaries Need to Know Now?
May 10, 2016 WEBCAST
(King & Spalding LLP)

Special Delivery: Providing Participant Materials for Group Health Plans
May 10, 2016 WEBCAST
(Cowden Associates, Inc.)

New DOL Fiduciary Rule and Your 401(k) Plan: Cutting the Chase – What You Need to Know
May 12, 2016 WEBCAST
(ABD Insurance & Financial Services)

Health Benefits Laws Compliance Assistance Seminar
June 7, 2016 in KS
(Employee Benefits Security Administration [EBSA], U.S. Department of Labor)

2016 Wellness Program: More Than Meets the ROI
June 22, 2016 in MA
(New England Employee Benefits Council)

IRA Hard-to-Value Assets and Prohibited Transactions
June 23, 2016 WEBCAST
(Ascensus)

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[Official Guidance]

Text of PBGC Proposed Rule: Payment of Premiums; Late Payment Penalty Relief
12 pages. "[PBGC] proposes to lower the rates of penalty charged for late payment of premiums by all plans, and to provide a waiver of most of the penalty for plans with a demonstrated commitment to premium compliance. PBGC seeks public comment on its proposal." (Pension Benefit Guaranty Corporation [PBGC])  


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[Guidance Overview]

2016 Enrolled Actuaries Meeting 'Blue Book': Questions to the PBGC and Summary of Their Responses (PDF)
33 pages, dated Apr. 21, 2016. "[This document sets] forth the questions posed to staff of the [PBGC] at discussions on March 3, 2016, with representatives of the Enrolled Actuaries Program Committee. Included also are summaries of the responses to those questions.... [Subjects covered:] [1] Premiums ... [2] Standard Terminations ... [3] Distress or Involuntary Terminations ... [4] Guaranteed Benefits ... [5] Reportable Events ... [6] IRC Section 430(k) Liens." (Pension Benefit Guaranty Corporation [PBGC])  

Multi-Year Index of 'Blue Book' Questions to PBGC and Their Responses, from Enrolled Actuaries Meetings 1998-2016 (PDF)
First released by the Enrolled Actuaries Meeting in 1998, the "Blue Books" contain the text of questions posed to the PBGC each year by actuaries, and the PBGC's answers. This index is an alphabetical list of topics keyed to the Q&As in the Blue Books in which the topic has been addressed. The full set of Blue Books has been published by the PBGC on its website. (Conference of Consulting Actuaries, Public Plans Community)  

How to Reach Out to Missing Pension Participants
"You want lost pension participants to respond to your attempts to reach them, but you face several obstacles: [1] Someone other than the participant might read the notice. The reader might know the participant, or not. Either way, you have concerns about privacy and potential fraud. [2] The participant might read the letter but not believe it is legitimate. This could be true especially if one pension plan merged with another or the employer sponsoring the plan changed hands or changed names. [3] The participant might procrastinate, forget to respond or feel the effort of applying and supplying necessary documentation isn't worth it." (International Foundation of Employee Benefit Plans [IFEBP])  

What Moves the Retirement Readiness Needle: Quantification of Risk and Evaluation of New Proposals (PDF)
"With the United States facing an estimated national retirement savings shortfall of $4.13 trillion, how can more Americans be brought into a retirement savings plan, and how can they be persuaded to save enough to cover simulated costs in retirement? Those questions were explored by a panel of retirement experts at EBRI's 77th policy forum ... focusing on ... increasing private-sector retirement plan coverage and possible improvements to retirement plan designs ... [taking into consideration] the fact that more Americans than ever are living longer, will spend more time in retirement, and face the potential crisis of outliving their savings." (Employee Benefit Research Institute [EBRI])  


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Even 'Softer' Fiduciary Rule Will Challenge Providers
"One veteran retirement plan adviser predicts the real impact of the new DOL fiduciary rule will take shape over the long-term -- and firms' initial attempts at compliance may not represent their final approach." (PLANSPONSOR)  

Kroger Workers, Retirees Sue Failing Multiemployer Pension Fund, Trustees
"A group of participants in the Central States Pension Fund is suing the fund, its administrators and trustees for breach of fiduciary duty. The move follows a nationwide movement of retirees who have taken to protesting the troubled fund, which is set to run out of money in 2026. The plaintiffs are current and retired warehouse workers at Kroger Co., hailing from Michigan, Illinois and Kansas, whose retirement funds are invested in the Rosemont, Illinois-based Central States Pension Fund." (Cincinnati.com)  

Public Employee Pensions Doing Better Than Reported
"[A]ll 50 states and numerous localities have made changes to their pension benefit levels, financing structures or both in the past eight years. Moreover, as these changes have been implemented, aggregate funding levels have steadied to 73.2 percent in 2014 ... The data show the vast majority of state and local public pensions are doing quite well in funding pension obligations. These are the plans that don't make the headlines -- but should." (The Hill)  

U.S. Pensions Solve New Debt Equation. Answers Vary by Billions
"New accounting rules that took full hold last year prevent governments from counting on investment returns after they're broke, a technique that masked the scale of the debts they face as workers retire. But outside of their certified books, they're free to sideline it. 'There is great confusion about the numbers and what they mean,' said Robert North Jr., former chief actuary for New York City's pension funds. 'Whatever numbers are used are dependent on how they are created, what they represent and their purpose.' " (Bloomberg)  

Connecticut House Sends State-Operated Retirement Plan Bill To Senate
"[The Connecticut House of Representatives has] passed a bill that would create a quasi-public agency to administer a retirement system for Connecticut residents who currently may not have one through their employer. The bill passed at 3 a.m. on a 76 to 63 vote.... [E]mployees who work for companies that don't offer a retirement would automatically be enrolled in the plan and a contribution would be deducted from their payroll. The default contribution would be 3 percent of an employee's pay, if the employee didn't specify how much they would like to contribute." (CTNewsjunkie)  

Income of the Population 55 or Older, 2014 (PDF)
333 pages. "This report provides a broad income picture of a cross section of the population aged 55 or older, with special emphasis on income of the population aged 65 or older. The tabulations focus on the major sources and amounts of income in 2014, both separately and combined, for those age groups. The relative importance of particular sources to total income is measured for individual units, and the share of aggregate income from particular sources is measured for the aged as a whole." [Also available: all tables (XLS)] (U.S. Social Security Administration [SSA])  

[Opinion]

ICI Urges Congress to Reject DOL Fiduciary Rule
"While the Department's final rule reflects a number of modifications, the basic structure of the proposed rule remains intact. Like the proposed rule, the final rule imposes significant new liability through a complicated, back-door regulatory regime that will have the effect of limiting available advice options for many savers. As a result, implementation of the rule will make it more difficult for low- and middle-income Americans to save for retirement. Small businesses, in particular, will find it more difficult to offer their employees saving opportunities." (Investment Company Institute [ICI])  

Benefits in General

[Official Guidance]

Text of IRS IR-2016-67: IRS Provides Tax Relief to Houston Area Storm Victims; Tax Deadline Extended to Sept. 1 (PDF)
"The tax relief postpones various tax filing and payment deadlines that occurred starting on April 17, 201 [6] As a result, affected individuals and businesses will have until Sept. 1, 2016 to file their returns and pay any taxes due. This includes 2015 income tax returns normally due on April 18.... A variety of business tax deadlines are also affected including the May 2 and Aug. 1 deadlines for quarterly payroll and excise tax returns." (Internal Revenue Service [IRS])  

Cybersecurity and Employee Benefit Plan Fiduciary Duties: Going Beyond HIPAA
"Health plan sponsors also should consider including references to state data breach notification laws and cyber liability insurance in business associate agreements (or related services agreements) in addition to the HIPAA minimums. Although HIPAA does not extend to retirement plans, ... ERISA's fiduciary duties nonetheless likely apply.... [R]etirement plan sponsors should consider including both 'HIPAA-like' and expanded cybersecurity provisions in contracts with TPAs that govern the privacy and security of participants' PII and plan assets." (Bond Schoeneck & King)  

Executive Compensation and Nonqualified Plans

[Guidance Overview]

You Can Bank On Your Incentive Pay Eventually: Proposed Regulations Would Require Sweeping Changes
"The preambles recognize that post-crisis, the largest banking institutions have refined their incentive-based compensation arrangements to reflect risk adjustments, to penalize adverse outcomes, to require more pay to be deferred, and to subject a larger percentage of deferred pay to reduction based on failure to meet performance targets or on account of adverse outcomes triggering forfeiture and clawback reviews. Despite these recognized improvements, the Regulators assert more oversight is necessary.... The 2016 Proposed Regulations impose different and increasingly onerous standards on financial institutions, depending on their size[.]" (Paul Hastings LLP)  

[Guidance Overview]

Regulators Release Revised Proposed Executive Compensation Rule
"So far, four of the Agencies (OCC, FDIC, SEC, and NCUA) have approved the proposed rule, and the Board and the FHFA are expected to approve the Proposed Rule shortly. The Proposed Rule is actually a reproposal of an April 2011 proposed rule that was never issued in final form, and according to the draft release, reflects the numerous comments on the 2011 proposal as well as experience that the Agencies have gained in applying prior guidance on incentive-based compensation. The Proposed Rule has an effective date of at least 18 months after the final rule is published, and as proposed, would not apply to any incentive-based compensation plan with a performance period that begins before the effective date." (Morgan Lewis)  

[Guidance Overview]

Are You a 'Significant Risk-Taker' Under Dodd-Frank?
"[B]eing labeled a 'significant risk-taker' in the new proposed rules under Dodd-Frank Act Section 956 just means you are subject to a mandatory compensation 'deferral' period during which up to 50% of your incentive-based compensation is subject to forfeiture or 'downward adjustment' (and after that, the compensation is subject to a clawback!). The definition of 'significant risk-taker' in the proposed rule is 20 pages long. It is intended to include 'covered persons' ... who are not 'senior executive officers' ... but are in the position to put a Level 1 or Level 2 covered institution at risk of material financial loss." (Winston & Strawn LLP)  

[Guidance Overview]

Compensation Practices at Financial Institutions Targeted: Proposed Incentive Compensation Rules Aim to Curb Excessive Risk-Taking (PDF)
10 pages. "[T]he proposed rules include ... [1] a new tiered framework that tailors prohibitions to the size of a CFI ... with more stringent requirements applying to the largest CFIs; ... [2] a new requirement to take into account both financial and nonfinancial risk-based measures in determining incentive-based compensation for all employees; [3] new recordkeeping and disclosure requirements, as well as corporate governance procedures; and [4] reduced reporting obligations as compared to the 2011 proposal." (Debevoise & Plimpton LLP)  

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of that content. You may not alter or remove any trademark, copyright or other notice from copies of the content.

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