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[Official Guidance]

Text of IRS Final Regs: Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options under Defined Benefit Pension Plans
24 pages. "These regulations change the regulations regarding the minimum present value requirements for defined benefit plan distributions to permit plans to simplify the treatment of certain optional forms of benefit that are paid partly in the form of an annuity and partly in a single sum or other more accelerated form."
Internal Revenue Service [IRS]


P&I DC West Conference | San Diego | Oct 23-25

Sponsored by Pensions & Investments

Join leading executives who manage 401(k), 403(b), 457 and TSP plans at DC West. You'll learn how other plan sponsors analyze, develop, implement and measure programs for their participants, so you can improve your own plan.

[Guidance Overview]

Final DOL Rule Opens Door for State Retirement Initiatives (PDF)
"Now that DOL has given its blessing to payroll deduction auto-IRAs, states like California, Connecticut, Illinois, Oregon, and Maryland will continue to pursue this method, but the approach has limitations.... For those states that opt to stay within the confines of ERISA, the state-sponsored open MEP is one especially intriguing option. Though no states have started implementing an open MEP, some have expressed interest in pursuing it, including Massachusetts."
The Aspen Institute

[Guidance Overview]

IRS Issues Proposed Regs for Executive Deferred Comp Plans of Tax-Exempt Organizations
"The proposed regulations provide important guidance and clarification in areas that have been unclear for practitioners and the organizations maintaining plans for executives. The regulations address substantial risk of forfeiture and severance as well as providing clarification regarding short-term deferrals and the interaction between sections 457(f) and section 409A."

Top IRS and DOL Audit Issues for Retirement Plans (PDF)
"[A] review of [IRS and DOL] audits over the last five years reveals that auditors at both agencies are increasingly focused on the internal controls employers maintain for their employee benefit plans.... [The authors assembled] IRS and DOL data requests in audit letters sent during the past five years ... catalogued each request by topic and frequency of recurrence ... [and] compiled the results to create [a] checklist of retirement plan compliance issues[.]"
McDermott Will & Emery, via Bloomberg BNA Pension & Benefits Daily

Interesting Angles on the DOL's Fiduciary Rule, Part 18
"[H]ow will an adviser determine whether its compensation is reasonable? Most likely, ... the value of services will be determined by the competitive marketplace. Since competitive market data is not generally available for IRAs, RIA firms and broker-dealers will need to work with service providers who have that information. In the 401(k) world, those are called benchmarking services."


SPARK Forum - November 6-8, 2016 -- The Breakers, Palm Beach, FL

Sponsored by SPARK

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

U.S. District Court Dismisses Two Stock-Drop Cases Against IBM
"A federal district court judge in New York dismissed two lawsuits Wednesday against International Business Machines Corp. that alleged the company failed to adequately disclose information and/or take appropriate action to protect shareholders regarding the disposal of a troubled business unit.... [One] case was dismissed, the judge wrote, because plaintiffs only offered 'a rote recitation of proposed remedies' without providing necessary facts to support their complaints. The [second] case was dismissed because plaintiffs failed to prove IBM's intent to keep information hidden. 'It is far more plausible the defendants were not deceitful but mistaken,' he wrote."
Pensions & Investments

Haven't Been Out to RFP Since 2011? It's Time.
"RFP solicitations are not a yearly event. While market changes are unavoidable and you always want to be certain you are getting the best services and lowest fees available, you should time your RFP for when it will be most effective. The current industry standard and best practice is to have an RFP done every three to five years. This allows time for changes in service and fee structures to occur and for market trends to be more apparent."
Fiduciary Plan Governance, LLC

What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2010-2014 (PDF)
28 pages. "The average 401(k) plan account balance for consistent participants rose each year from 2010 through year-end 2014. Overall, the average account balance increased at a compound annual average growth rate of 17.3 percent from 2010 to 2014, to $138,553 at year-end 2014. The median (mid-point) 401(k) plan account balance for consistent participants in creased at a compound annual average growth rate of 19.7 percent over the period, to $56,653 at year-end 2014."
Employee Benefit Research Institute [EBRI] and Investment Company Institute [ICI]

Improving the Defined Contribution System: U.S. Can Learn from Other Countries' Approaches
16 pages. "Although U.S. public policy nudges people to save for retirement by offering tax breaks for saving and tax penalties for early withdrawals, the United States lags other countries in encouraging retirees to make decisions that will help their savings last as long as they live.... The U.S. has comparatively few mechanisms to protect retirees from themselves.... The U.S. could learn from countries that promote annuities.... The U.S. Social Security system is generous compared to other developed countries' universal pension plans.... The retirement system is more fragmented in the U.S. than in other countries."


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

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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.

Pension Finance Watch, August 2016
"The Willis Towers Watson Pension Index remained unchanged for the second straight month; at 66.9, the index remains down 8.4% for the year.... The equity portfolio returned a scant 0.2% for August. Fixed income returns were also generally near zero for the month ... Long corporate yields inched up slightly in August, but remain down about 90 basis points for the year."
Willis Towers Watson

Hedge Fund Capacity May Be Factor in Pension Plan Pullback
"Large public plans -- those with $100 billion or more to invest -- typically have strategies to put 10 percent or more of their portfolio into hedge funds.... Investment managers for these plans, however, may be having difficulty finding a sufficient array of top-flight hedge fund managers in which to invest this money ... Sometimes ... these funds decide that taking in additional dollars will harm their investment returns. Consequently, they stop taking new money once the fund determines that it has reached its investment capacity[.]"
Bloomberg BNA

State Pension Funds Showed Annualized 6.8% Median Return over 10-Year Period
"The 6.8% median return fell within a wide range of individual pension fund returns -- between 4.8% and 8.4%.... [T]he best-performing state plan outperformed the lowest-returning fund by a cumulative 63.8 percentage points over the 10-year period. The best performing fund was the $13.8 billion Oklahoma Teachers' Retirement System, Oklahoma City, which returned 8.3% for the 10 years ended June 30, 2015."
Pensions & Investments

Illinois Pension Crisis Builds as Market Turmoil Deals a Setback
"The state with the least-funded retirement system in the U.S. may see next year's contributions jump by nearly half a billion dollars after its largest pension, the Teachers' Retirement System, reduced the assumed rate of return on its portfolio.... Moody's Investors Service said the change added $7.4 billion to Illinois's debt to the fund[.]"

Chicago Mayor Tries to Prove Tax Plan Sufficient to Save Pension Fund
"Mayor Rahm Emanuel released an actuarial analysis in hopes of proving to aldermen that his 29.5 percent tax on water and sewer bills will be enough to save the largest of Chicago's four city employee pension funds.... Civic Federation President Laurence Msall said ... the infusion of $1 billion in new revenue from the new utility tax by 2023 will put the city's largest pension fund in a 'significantly better place.' But Msall noted that even with that windfall ... the condition of the pension fund will continue to drop over the next five years with 'more benefits going out than coming in.' "
Chicago Sun-Times

Ten Important Facts About IRAs (PDF)
14 pages. "[1] IRAs are the largest pool of assets in the U.S. retirement market.... [2] The incidence of IRA ownership increases with age.... [3] IRAs are predominantly held by moderate-income households.... [4] IRA balances tend to rise with length of ownership.... [5] Equity holdings figure prominently in traditional IRA investments.... [6] Although few traditional IRA investors make contributions, those who do display persistence.... [7] Rollovers from employer-sponsored retirement plans have fueled growth in IRAs.... [8] A large majority of individuals consult a financial professional when rolling over assets to a traditional IRA from a former employer's retirement plan.... [9] Most IRA owners consult a financial professional when creating a retirement strategy.... [10] IRA withdrawals are infrequent and mostly retirement related[.]"
Investment Company Institute [ICI]

Employer Costs for Employee Compensation, June 2016
"In June 2016, average costs in private industry for retirement and savings benefits were $1.27 per hour worked, or 3.9 percent of total compensation. The average cost per hour worked for [DB plans] was 55 cents or 1.7 percent of total compensation. The average cost for [DC plans] was 71 cents or 2.2 percent of total compensation."
U.S. Bureau of Labor Statistics [BLS]


Financial Economics Principles Applied to Public Pension Plans
17 pages. "Producing a final paper could not be achieved to the satisfaction of the Academy and the SOA. Accordingly, this paper is not being issued in the name of the Pension Finance Task Force, which has now been disbanded. It does not reflect the position of either the SOA or the Academy, or of any group that speaks for the profession.... [D]efined benefit public pension plans can be efficiently managed according to economic, financial economics, and public finance principles, as outlined in this paper, by fully funding them (on a solvency basis), and investing assets to hedge the liability. But an underfunded and/or unhedged plan at a minimum violates intergenerational equity (pushing costs to future generations), and potentially is also Pareto inefficient (by not securing the pension promise itself)."
Society of Actuaries


Public Pensions Work -- and These Three Systems Prove It
"This report will examine three of the most successful public pension systems in the country. These three pension plans offer a roadmap to success for other pension systems looking to provide a secure retirement for their public employees. While each is unique, their common commitment to sound funding practices and responsible management ensures that the retirees of these systems can enjoy the dignified retirement they deserve."
National Public Pension Coalition

Benefits in General

Federal District Court Enforces Forum Selection Clause Contained in ERISA Plan
"[The court] observed that forum selection clauses further ERISA's goal of promoting a uniform administrative scheme by having the same court decide all cases relating to a single plan, and also found [the participant's] claim of physical and financial limitations irrelevant to its analysis.... In rejecting [contrary rulings by other courts], the court concluded that ERISA's policy that litigants have 'ready access to the Federal courts' was not intended to supersede the general enforceability of forum selection clauses. Thus, a plan may contractually limit the number of locations where an action 'may be brought.' " [Mathias v. Caterpillar, Inc., No. 16-1846 (E.D. Pa. Aug. 29, 2016)]
Proskauer's ERISA Practice Center

Press Releases

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