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[Guidance Overview]
The New Fiduciary Rule: How Advisers' Plan Sponsor Clients Will Feel the Effect
"Depending on which version of the BIC exemption applies, qualifying for that will require general disclosures regarding an adviser's compensation, transaction disclosures for each recommended investment, and disclosure of related conflicts of interest, as well as a warranty that the adviser's firm has adopted compliance policies to mitigate these conflicts."
(Marcia Wagner, via planadviser)
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Defined Contribution Plan Participants' Activities, 2015 (PDF)
12 pages. "In 2015, 3.4 percent of DC plan participants took withdrawals, compared with 3.6 percent in 2014 and 3.5 percent in 2013. Levels of hardship withdrawal activity also remained low. Only 1.6 percent of DC plan participants took hardship withdrawals during 2015, similar to the past several years.... In 2015, 2.6 percent of DC plan participants stopped contributing, compared with 2.8 percent during 2014 and 2.7 percent in 2013.... At the end of December 2015, 17.4 percent of DC plan participants had loans outstanding, compared with 17.9 percent at year-end 2014."
(Investment Company Institute [ICI])
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401(k) Self-Directed Brokerage Accounts: A Cautionary Tale
"What makes SDBAs different -- and there is no nice way to say it -- are all the problems a participant can cause by making investment decisions [that have one of the following eight adverse consequences to the plan or its trust fund] ... A plan sponsor can build in all these 'shall nots' in their Investment Policy Statement (assuming that they even have one) but sometimes participants do what they do. And that can keep a plan sponsor up at night."
(The Retirement Plan Blog)
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Fiduciary Financial Advice to Retirement Savers: Don't Overlook the Prudent Investor Rule
"This essay calls attention to the regulatory imposition of the prudent investor rule on financial advisers to retirement savers. The essay also canvasses the basic tenets of the prudent investor rule, highlighting its nature as principles-based rather than prescriptive, and the customary role of an investment policy statement in compliance by professional fiduciaries."
(Max M. Schanzenbach, Northwestern University School of Law, and Robert H. Sitkoff, Harvard Law School, Via SSRN)
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Pensions Unaware That Hidden Real Estate Fees Dwarf Those Disclosed
"Given that real estate is regarded as the oldest alternative investment asset class commonly held by pensions, and many pensions invest 5 percent or more in real estate, the dearth of information regarding the all-in fees and expenses related to investing directly or indirectly through funds, in real estate is hard to explain. Pension fiduciaries clearly have a legal duty to understand and monitor the reasonableness of all of the investment fees paid by the plan."
(Forbes)
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Union Retirees Battle for Pension Payouts, Possible Bailout: What's at Stake?
"What you probably heard was the story of retired or soon-to-retire Teamster truck drivers and warehouse workers, ... members of the Central States Pension Fund who faced similar problems this year. [But retired construction worker Walter] Overstreet belongs to a much smaller union, Local 17 of the Iron Workers, with about 2,000 members altogether. Their union has $223 million in pension liabilities but only $90 million in assets. Get used to hearing such stories, because several other union pension plans are pleading similar hardships right now, and about 150 more are lined up behind them."
(cleveland.com)
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ESOPs: More Than a Retirement Plan
" 'It is such a missed opportunity if an ESOP is only a retirement plan,' says Suzanne McDowell, [of King Arthur Flour] ... 'It is so much more significant to invite people to the table to participate in creating an organization we are all really proud of.' ... The company makes it clear that while employee ownership offers benefits, it also comes with responsibilities. All three co-CEOs actively look for feedback -- and get it."
(The ESOP Association)
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The Economic Consequences of Pension Underfunding: Evidence from the Retirement Systems of Alabama
"While many nation-wide empirical studies have evaluated the growth in unfunded pension liabilities, few academic case studies have been done for individual public pension systems to analyze specifically how these unfunded liabilities have accumulated and to formulate concrete avenues for reform.... [The authors] find that Alabama is similarly situated relative to a number of other public pension systems in the U.S. when it comes to issues with accounting standards, transparency and oversight, and the use of economically targeted investments.... [They] offer recommendations for reforming public pensions."
(Daniel J. Smith and John A. Dove, via SSRN)
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[Opinion]
The Importance of a Private Retirement System
"[401(k) plans] are inefficient compared with pensions, which pool longevity and investment risk at no cost to workers or employers. 401(k) participants also face higher fees and earn lower net returns.... First and foremost, we need to reverse Social Security cuts and expand benefits across the board.... Second, we need to defend pensions for those who still have them.... Third, we need new solutions for workers whose employers are not in a position to provide traditional pensions."
(Economic Policy Institute)
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Benefits in General
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The Spokeo Decision: New Hope for Defending Against ERISA Claims?
"It is easy to imagine circumstances under which a participant or beneficiary suffers no actual harm because of a plan administrator's failure to comply with a request for a plan document ... The Spokeo opinion at least raises the question whether, despite the language of ERISA section 502(a)(1)(A) authorizing such a lawsuit, a plaintiff might lack standing to seek the penalty under ERISA section 502(c) if the plaintiff fails to allege and prove a 'concrete' injury-in-fact other than and in addition to nonreceipt of the requested documents."
(Ogletree Deakins)
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Social Security Disability Insurance: Participation and Spending
"Under current law, CBO projects, the number of DI beneficiaries would rise by 0.8 percent per year over the next decade; excluding the effects of inflation, the average benefit would rise by 0.9 percent per year and total spending on benefits would rise by 1.9 percent per year, on average.... [U]nder current law spending would exceed income after 2018, and the trust fund would be exhausted in 2022[.]"
(Congressional Budget Office [CBO])
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Press Releases
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2016 BenefitsLink.com, Inc. All materials
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