Retirement Plans Newsletter

May 26, 2016

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Employee Benefits Jobs

Senior Pension Benefits Analyst
Willis Towers Watson
in CO, MA, MI, PA, TX

Pension Consultant
Willis Towers Watson
in CO, MA, MI, PA, TX

Retirement Plan Consultant
SuperiorUSA Benefits
in IA, MN

Retirement Plan Manager
Aspire Public Schools
in CA

Retirement Services Product Manager
Insperity
in TX

Administrator Assistant
Actuarial Consultants, Inc.
in CA

Director for Retirement Programs and Services
Board of Regents of the University System of Georgia
in GA

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Webcasts and Conferences

ACA: A Never-Ending Story
June 14, 2016 WEBCAST
(Cowden Associates, Inc.)

PBM Trends
June 21, 2016 in MA
(Employers Health)

2016 Annual Employer Symposia: Building a Thriving Workforce through Benefits
June 23, 2016 in OH
(Employers Health)

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[Guidance Overview]

Best Interest Contract Exemption Permits Proprietary Products and Commissioned Sales
"The BIC exemption broadly (though not universally) acts to preserve access to commissions provided that the advice is not conflicted and is in the 'best interest' of the investor.... The exemption permits advisors and financial institutions to continue to receive commissions for providing fiduciary advice, provided that the financial institution/advisor acts in the retirement investor's best interest, does not receive unreasonable compensation, observes anti-conflict policies, and makes certain required disclosures." (Mintz Levin)  


[Advert.]

Now is a great time to join Worldwide Employee Benefits Network (WEB)

Sponsored by WEB - Worldwide Employee Benefits Network

WEB members represent more than 25 professions and 30 areas of expertise within the pension and benefits industry-including administrators, consultants, attorneys, accountants, investment managers, communications experts and benefits managers. Join today.



DOL Backs Foot Locker Workers in Pension Case
"The DOL has asked the U.S. Court of Appeals for the Second Circuit to rule that a group of Foot Locker Inc. workers can bring a class action against the company without having to prove that each individual worker relied on Foot Locker's misrepresentations about the effects of a 1996 pension plan change. If the Second Circuit agrees with the DOL, the ruling would make it easier for workers to file class actions under [ERISA], whereas a decision to the contrary would limit the ability to obtain class-wide relief in cases claiming that an employer misled its workers about retirement benefits." (Bloomberg BNA)  

100-Participant 401(k) Plan Subject of New ERISA Fiduciary Breach Class Action
"Proving that even modest size 401(k) plans are fair game, a fiduciary breach class action suit has been filed against the plan sponsor and fiduciaries of ... [a plan with] approximately 130 participants and $9.8 million in assets. The suit claims that ... the plan's investment options ... include mutual funds, pooled separate accounts and a guaranteed investment contract offered by Voya. Voya is also the plan's recordkeeper.... The ERISA fiduciary breach allegations are the same as those made in the cases against the giant employers and their plans[.]" (Nixon Peabody LLP)  

Designing the DC Plan of the Future
16 pages. "Sponsors have sought to address the limitations of DC plans by borrowing best practices from the DB arena. While stopping short of a full-scale return to the pension model, the so-called 'institutionalization' of DC plans relies on the following approaches:[1] Increased use of low-fee, institutional vehicles; [2] Greater use of alternative strategies; [3] Generating an income stream during retirement. The benefits of each of these approaches are explained in greater detail [in this article]." (BNY Mellon)  

Aegon Retirement Readiness Survey 2016: A Retirement Wake-Up Call
"Improvements in planning and saving have been offset by decreases in feelings of personal responsibility related to providing sufficient income in retirement. Moreover, around the world, many workers are heavily reliant on government benefits and are not saving enough to adequately fund their retirement income needs. Inadequate attention is being given to address the costs and implications of increased life expectancy. Fundamental changes are needed for people to achieve their retirement aspirations and to support retirement systems that are affordable, inclusive, and equitable. Governments, employers, and individuals must continue to expand upon actions that are proven effective while innovating new solutions for the future." (Aegon)  


[Advert.]

2016 SPARK National Conference -- June 19-21, Washington DC

Sponsored by SPARK

The retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda is designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.



Implementing a Single-Employer DB Plan Spin-Off
"A plan sponsor in an ongoing pension plan is generally not allowed to transfer the responsibilities for the liabilities of active participants unless the plan is being terminated. If the assets and liabilities related to active participants are spun off into a new separate plan, that plan can then be terminated with the liability responsibility transferred... If 3% or more of plan assets are spun-off into a new plan, a complicated actuarial calculation must be done to determine the assets allocated to each plan, based on PBGC liability categorization rules for underfunded plan terminations." (Milliman Retirement Town Hall)  

Pension Strategy in Today's Market Environment (PDF)
"Given the market volatility in Q1 and industry reports highlighting an overall decrease in funded status of corporate pensions, should plan sponsors be reacting by de-risking their pension plans? ... Are there other contributing factors that make initiating a de-risking strategy not necessarily conducive to the current market environment? ... Are there certain scenarios where plans should be de-risking? ... If a plan sponsor doesn't necessarily meet the profiles mentioned above, what strategies should they be considering in the current environment?" (SEI)  

Addressing Cybersecurity in Your Retirement Plan TPA Contract
"Plan fiduciaries clearly have an obligation to protect retirement plan assets. Given that cyber-attacks may jeopardize the safety of those assets, employers should consider cybersecurity as it relates to the safety of plan assets when making decisions to select or retain a TPA and/or trustee for its plan(s). It is less clear what the employer's exposure would be in the event an employee's identity would be stolen as a result of a cyber-attack on the retirement plan TPA if no theft of retirement plan assets occurs." (von Briesen & Roper, s.c.)  

Fiduciary Responsibilities: An Overview for Retirement Plan Sponsors
"As a plan sponsor, you should regularly receive fee disclosures that include the following information: [1] A description of the services provided; [2] The status of the service provider as an ERISA fiduciary; [3] A clear statement of compensation and fees; [4] Termination charges, if any. They should become part of your permanent due diligence file after you've reviewed them to make sure they're complete and accurate. If you aren't getting them, ask. It's up to you to make sure you have the information you need." (Fiduciary Plan Governance, LLC)  

DOL Warns Broker Dealers to Prep for Fiduciary Deadline; AARP to Deploy 'Mystery Shoppers'
"Broker-dealers should be 'nervous' if they don't have policies and procedures in place before the [DOL] fiduciary rule's first deadline hits next April, Timothy Hauser, one of the chief architects of the rule, said ... Nancy Smith, executive vice president and corporate secretary at AARP, said ... that AARP will not only continue to advocate for the fiduciary rule but plans to assemble some members to act as 'mystery shoppers' to see if advisors are complying. The retirement advice 'problem is not just a few bad actors,' Smith said. 'All financial professionals can face enormous institutional and peer pressure to act in a way that's not in the client's best interest.' " (ThinkAdvisor)  

Fiduciary Rule Had Support from a Surprising Contingent
"Over the years the [DOL] spent developing and then reworking the fiduciary rule, Assistant Secretary Phyllis Borzi and her colleagues regularly received support from a surprising quarter -- people who work for some of the companies that most vehemently fought it. 'Wherever I would go, people would come up to me, wearing name tags of companies that were wildly opposed to what we were doing, and they would say, "You go, girl" ', Borzi told an audience at an Institute for the Fiduciary Standard event this week. 'And that kept us going.' " (Financial Planning)  

How Much of That Part-Time Income Can You Afford to Spend in Retirement?
"Many individuals who are retired take a part-time job to supplement their income in retirement. Frequently, these retirees believe that this income can increase their annual retirement spending budget by the net amount received during the year from such employment ... [This article] will encourage retirees who work to possibly consider taking a longer-term 'actuarial' perspective by spreading the present value of this extra income over their remaining period of retirement." (Ken Steiner, FSA Retired)  

Pension Debt for Chicago Worker Pensions Doubles; Now More Than $21 Billion
"Thanks to new government reporting standards, Chicago's municipal-workers and laborers pension funds' debt doubled in 2015 to more than $21 billion. That's $20,500 of pension debt per Chicago household.... The doubling of the funds' pension debt did not occur because of some unforeseen financial calamity or economic collapse. Instead, it occurred because [GASB] ... demanded that public pensions be more honest in their calculations." (Illinois Policy Institute)  

[Opinion]

Chicago's Pension Patch Job?
"In Chicago, powerful public unions are going head to head with a powerful and unpopular mayor who got rebuffed by Illinois's Supreme Court when he tried cutting pension benefits. Now, they are tinkering around the edges, increasing the contribution rate for new employees of the city's smallest pension, which is not going to make a significant impact on what is truly ailing Chicago and Illinois's public pensions. All these measures are like putting a band-aid over a metastasized tumor." (Pension Pulse)  

Executive Compensation and Nonqualified Plans

Court Boots Executive's $21 Million ERISA Claim Under Stock Rights Plan
"In affirming a federal district court's decision, the U.S. Court of Appeals for the Ninth Circuit held ... that the Booz Allen stock rights plan wasn't covered by [ERISA] because it wasn't designed or intended to provide retirement or deferred income. With this ruling, the Ninth Circuit joins the Third, Fifth and Eighth circuits in holding that to qualify as an employee pension benefit plan subject to ERISA, 'the paramount consideration is whether the primary purpose of the plan is to provide deferred compensation or other retirement benefits.' " [Rich v. Shrader, et al., No. 14-55484 (9th Cir. May 24, 2016)] (Bloomberg BNA)  

Press Releases

TRA Expands Western Sales Staff
The Retirement Advantage [TRA]

DOLís Actions Recover $7.1M for Workers in AIT Laboratories Employee Stock Ownership Plan
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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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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