Retirement Plans Newsletter

February 23, 2017

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Webcasts and Conferences

Liability-Driven Investing and Other Types of Pension Risk Transfer Strategies (Part 3 of 4)
March 9, 2017 WEBCAST
PRMIA

Perfect Plan: Behavioral Economics and Employee Benefits
March 16, 2017 in GA
Worldwide Employee Benefits Network [WEB] - Atlanta Chapter

Voluntary Fiduciary Correction Program and Abandoned Plan Program Workshop
April 26, 2017 in KY
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

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[Official Guidance]

Text of SEC Guidance Update: Robo-Advisers (PDF)
15 pages. "[D]epending on their business models and operations, robo-advisers should keep in mind certain unique considerations as they seek to meet their legal obligations under the Advisers Act. This Staff guidance offers suggestions for how robo-advisers may address some of these issues.... [T]here may be a variety of means for a robo-adviser to meet its obligations to its clients under the Advisers Act ... This Staff guidance focuses on robo-advisers that provide services directly to clients over the internet. This guidance, however, may be helpful for other types of robo- advisers as well as other registered investment advisers."
U.S. Securities and Exchange Commission [SEC]

[Advert.]

ASC's DB System: Developed for Actuaries & Non-Actuaries

Sponsored by ASC

Easily administer traditional, multiple formula, cash balance and DC/DB combo plans with ASC's DB System. Learn more!


Text of SEC Investor Bulletin: Robo-Advisers
"Before making a decision about whether to invest through a robo-adviser, or in deciding which robo-adviser might be best for you, you should do your own research. Make sure the robo-adviser and the investment portfolio it puts together for you are a good match for your investment needs and goals, and that you understand the potential costs, risks, and benefits of using that particular robo-adviser. [This bulletin highlights] some issues you may want to consider in making these important decisions."
U.S. Securities and Exchange Commission

OMB Working to Finalize DOL Rule Delay
"The DOL delay request -- sent to the OMB two weeks ago -- can take two forms, a proposed rule or an interim final rule. The biggest difference is the timing of required public comment. A proposed rule requires public comment before it can be published, while an interim final rule can be published first, with comment taken afterwards[.]"
InsuranceNewsNet.com

Kansas Court Again Upholds Fiduciary Rule as DOL Seeks to Delay Implementation
"Judge Crabtree's decision came as no surprise. Last November, he denied Market Synergy's motion for a preliminary injunction of the new PTE 84-24. Deciding the issue on the merits, the judge twice noted that the parties submitted no new evidence in the most recent briefing and therefore, found 'no reason to depart from the legal conclusions and reasoning' set forth in his earlier order." [Market Synergy Group v. DOL, No. 16-4083 (D. Kans. Feb. 17, 2017)]
Miller & Chevalier

How the DOL Fiduciary Rule Will End Most Mutual Fund Share Classes
"[T]he fiduciary rule doesn't actually require that advisors use the lowest cost fund, period ... However, if the advisor is going to recommend an actively managed fund ... it better be the cheapest version of the fund available, because using anything different would represent a conflict of interest for the advisor enriching themselves at the expense of the client with an unecessarily-more-expensive product. Yet taken to its logical conclusion, this means that most variable annuity and mutual fund share classes will be rendered entirely irrelevant under [the DOL fiduciary rule]!"
Michael Kitces in Nerd's Eye View

[Advert.]

What Comes Next? Implications of the Fiduciary Rule Under Review

Sponsored by Trucker Huss

Join us Wednesday, March 1 at 10 a.m. PT for a complimentary webinar to hear the latest from the DOL on the Fiduciary Rule under review, its potential impact and how your company can be prepared. REGISTER TODAY!


Millennials Could Drive More ESG Investing
"Overall slightly more than half (51%) of Millennials say they view ESG/impact investing ideas favorably, while just 37% of Gen Xers and 32% of Baby Boomers agree. Millennials are also far and away the most likely to say their investments' impact on society and the environment should be among the most important and primary considerations when building portfolios."
PLANSPONSOR

Helping Millennials Save for Retirement
"Employers are offering a wide range of financial resources to their younger employees and using novel incentives to encourage participation and progress toward money management goals. Education is a common approach: Many employers offer in-person and online classes on a variety of financial topics. Some organizations provide multi-week 'boot camp' programs, followed by sessions on specialized topics."
Society for Human Resource Management [SHRM]

Callan 2017 DC Trends Survey
"The use of automatic contribution escalation increased markedly over the past year (63% in 2016 versus 46% in 2015). Caps on automatic contribution escalation have also markedly increased (27% in 2016 from 19% in 2015)....Nearly half (47%) of plan sponsors reported making a fund change due to performance-related reasons. This is the highest in the survey's history."
Callan Associates

Large Cash Flows Change the Dynamics of a Pension Plan
"One feature of the maturation of the pension sector is that benefit payments have become a bigger consideration for many plans. Not only is there the administrative effort of ensuring cash is on hand each month to make the payments, but there's also a change in the dynamics of the plan itself."
Russell Investments

[Advert.]

ERISA Audits: What We All Knew but Forgot

Sponsored by Lorman and BenefitsLink

Feb. 27 webinar. When the DOL or IRS comes knocking and looking to examine the benefits being offered to employees, it is important for an employer to be knowledgeable and ready.


Investment Return Volatility and the Los Angeles Fire and Police Pension Plan (PDF)
51 pages. "[This report examines] the potential implications of investment return volatility for the Los Angeles Fire and Police Pension Plan (LAFPP) ... one of five plans [selected] to analyze in detail.... [If] LAFPP's investment-return assumption is approximately correct over the long run, the plan has very little risk of becoming severely underfunded in the next thirty years, even if investment returns vary significantly from year to year.... Under plausible alternative investment-return assumptions, the risks of severe underfunding remain small but the city's contribution risks are greater."
Rockefeller Institute of Government

International Pension Plan Survey 2016
"Key findings [include]: [International Pension Plans (IPPs) and International Savings Plans (ISPs)] are offered by companies in excess of 20 business sectors, with high prevalence in Banking and Finance, Oil and Gas, Industrials, and Engineering and Power. 59% have been established with a 'retirement objective' (IPPs), with 41% having more a shorter-term 'savings objective' (ISPs).... IPPs/ISPs are increasingly being used for local employees based in countries where there are serious economic difficulties by paternalistic sponsoring employers."
Willis Towers Watson

[Opinion]

ERIC Comments on Oregon State Retirement Savings Plan
"Defining 'employee' with an age requirement of 18 years old is in direction contradiction of federal laws and regulations ... [E]mployers should be able to limit participation in an employer retirement plan to full-time employees ... and not have to separately enroll other groups of non-eligible employees into the State Retirement Plan.... A mandate to apply for a conditional exemption every three years, and the threat of the requirements changing to receive the exemption at any point in time, will only decrease the likelihood of employers offering a quality retirement plan[.]"
The ERISA Industry Committee [ERIC]

[Opinion]

American Benefits Council Comment Letter to IRS on IRS Notice 2016-67, Rules for Implicit Interest Pension Equity Plans
"We see no basis under the law for treating the assumption for pre-retirement mortality as part of the interest crediting rate subject to the market rate rules.... If implicit interest is not made subject to the market rate rules: [1] We urge the IRS to issue prospective guidance confirming this, so that the uncertainty is resolved. [2] In this guidance, we ask the IRS to approve any reduction based on the contrary interpretation for all purposes (including qualification, funding, and benefit restrictions), provided that the reduction is voided prospectively within a reasonable specified period after the issuance of the guidance (such as six months). [3] There would need to be anti-cutback relief to permit any prior reduction to be voided. Because a market rate can in many instances be lower than a non-market rate, we would need this anti-cutback relief. [4] The guidance should state that the voiding of the prior reduction would not require a 204(h) notice."
American Benefits Council

[Opinion]

American Benefits Council Comment Letter to Oregon State Treasury on Oregon Retirement Savings Plan
22 pages. "[T]he revised proposed rules would cause the [Oregon Retirement Savings Plan (ORSP)] to significantly disrupt existing Qualified Plans and their participants by effectively dictating the design of retirement plans that already meet the numerous and stringent requirements imposed by federal law. Although it has since been communicated that this was not the intent of the new language, this situation only highlights the importance of the Board examining how the ORSP could affect our current retirement system and avoiding any adverse effects on employers who currently sponsor a retirement plan. The only way to ensure that correct result is for the ORSP to permanently exempt all current plan sponsors from the Plan's requirements in accordance with Oregon's authorizing legislation."
American Benefits Council

Benefits in General

[Guidance Overview]

ERISA Disability Claim Regulations Get a Facelift
"Plans must ensure independence and impartiality of persons involved in claims determinations ... [P]ractitioners, employers, and administrators should expect that plaintiffs will use the rule in litigation to engage in broad-reaching 'conflict' discovery.... [W]hile the rule is intended to reduce conflict and claim disputes, it probably does little to change how plans already operate on this front.... [It] threatens to increase discovery and litigation costs, contrary to ERISA's goals."
Lathrop & Gage, LLP

Cybersecurity Considerations for Employee Benefit Plans
"[E]mployee benefit plans typically share sensitive employee data and beneficiary and employer information with these service providers. Based upon historical cybersecurity breaches, third parties can be considered the weakest cybersecurity link."
Schneider Downs

Press Releases

Northeast Professional Planning Group Acquires Riker Associates, LLC
Northeast Professional Planning Group [NPPG)]

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Lois Baker, J.D., President  loisbaker@benefitslink.com
David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017 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 those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.

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