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April 7, 2017 logo logo
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Webcasts and Conferences

Choosing a Retirement Solution for Your Small Business
April 25, 2017 in IL
Employee Benefits Security Administration [EBSA], U.S. Department of Labor

Pharmacy Market, Trends and Understanding PBM Contracts
April 25, 2017 in TX
Worldwide Employee Benefits Network [WEB] - Dallas Chapter

ERISA Fiduciary Update 2017: Best Practices from Industry Professionals
May 18, 2017 in WI
Francis Investment Counsel

Fundamentals of 401(k) and Other Qualified Plans
June 12, 2017 in PA
FIS Relius Education

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Text of District Court Opinion Rejecting Use of Vanguard's Fees to Determine Reasonableness of Proprietary Investment Fund's Fees (PDF)
"Plaintiffs rely on [an expert's comparison of] Putnam mutual funds' average fees to Vanguard passively-managed index funds' average fees.... Vanguard is a low-cost mutual fund provider operating index funds 'at-cost.' ... Putnam mutual funds operate for profit and include both index and actively managed investment. [The] analysis thus compares apples and oranges. Moreover ... the Plaintiffs cite no relevant case law holding that such ranges or averages are unreasonable as matter of law." [Brotherston v. Putnam Investments, Inc., No. 15-13825 (D. Mass. Mar. 30, 2017)]
U.S. District Court for the District of Massachusetts


SALGBA 2017 National Conference

Sponsored by SALGBA [State and Local Government Benefits Association]

Join SALGBA, the premier organization for public sector benefits professionals in Anaheim, CA for the 2017 National Conference at the Hyatt Regency Orange County. Visit for details.

Judge in Putnam 401(k) Suit Deals Potential Setback to Use of Vanguard as Fee Benchmark
"Similar self-dealing lawsuits against fund managers have proliferated of late, often using Vanguard and other recognized indexers as a barometer of acceptable low-cost funds for a 401(k) plan. This Putnam ruling ... points to a potentially difficult road ahead for plaintiffs[.]" [Brotherston v. Putnam Investments, Inc., No. 15-13825 (D. Mass. Mar. 30, 2017)]

BlackRock Accused of Self-Dealing with 401(k) Plan
"The proposed class action ... alleges that participants in the 401(k) plan were subjected to higher hidden fees through excessive fund layering, where one BlackRock fund invested in a 'rabbit hole' of other BlackRock funds.... [T]he lawsuit ... alleges that the fees plus the poorly performing funds have caused participants to lose $60 million in retirement savings. The plan has more than 9,700 participants."
Bloomberg BNA

Investment's Failure to Satisfy QDIA Safe Harbor Does Not Preclude Its Use as a Default
"The QDIA rules allow plan fiduciaries to shed some potential responsibility for the investment of participant accounts when participants or beneficiaries fail to give investment instructions. While [a recent DOL Information Letter] does not expand that protection to investments with noncompliant transfer restrictions, it serves as a reminder that the QDIA rules are only a safe harbor. Fiduciaries willing to forgo the protection of the QDIA rules may still be able to satisfy their fiduciary duties by carefully selecting default investments."
Thomson Reuters / EBIA

DC Investors Continue Shift to Target Date Funds, Away from Equity
"Mutual fund assets held by defined contribution plans were approximately $3.9 trillion as of the end of 2016. About 46% of those assets were invested in U.S.-equity focused funds and just more than a quarter were invested in hybrid funds, primarily target date and lifestyle. The 10-year trend has seen allocations to hybrid funds increase to 25.6% of DC assets from about 16%, while equity assets have fallen to 9.5% as a proportion of the whole."
Pensions & Investments


Frozen plans are different, and need to be managed differently.

Sponsored by Russell Investments

Thousands of pensions have frozen benefit accruals on the path to plan termination. Many more are considering such a step. The Frozen Plan Handbook is an illustrative guide for sponsors who have frozen -- or are considering freezing -- their pension plan.

How Much Would 401(k) Participants Save with Auto-Portability?
"If all participants with less than $5,000 ... in their 401k savings accounts would be subject to auto portability when they change jobs, they would have an additional $1.5 trillion in retirement savings ... when they reach age 65. The retirement deficit for Americans between ages 35 and 39 would be reduced by 20% ... The biggest increase in savings would be experienced by workers aged 25 to 34 in the lowest income bracket."
401K Specialist

Proposal Would Amend Nondiscrimination Rules for Closed DB Plans
"The Retirement Security Preservation Act of 2017 [would amend] the nondiscrimination rules that apply to defined benefit plans that have been closed or frozen. The bill builds on previous legislation and [IRS] regulations to address this issue, and was approved unanimously by the Senate Finance Committee as part of a retirement-related legislative package in September 2016."

The Long (Long) View of Interest Rates
"Current global interest rates are at a 5,000 year low. But the high rates of the 1970s and 1980s were even more aberrant on the high side. Rates have trended down since.... It was during those years when interest rates were at a 5,000 year high that ERISA came in and retirement policy was legislated in the United States."

2017 Corporate Pension Funding Study (PDF)
"The 0.7% decline in the pension funded ratio and the resulting $22 billion fiscal year (FY) 2016 funded status deterioration, masks: [1] Volatility in the interest rate environment, which caused the discount rate to decline steeply by 30 basis points in FY2016 to 3.99%; [2] FY2016 pension trusts' investment return of 8.4% compared to the average return expectation for the Milliman 100 companies of 7.0% in 2016; [3] Employers' 2016 plan contributions of $42.8 billion, a 38.0% increase from $31.1 billion in 2015."

De-Risking Strategies for Governmental Pension Plans
"Governmental as well as private-sector sponsors have taken de-risking actions related to plan design (i.e. reducing future benefits in some manner).... Some governmental sponsors have implemented two-tiered benefit provisions, with less-generous benefits provided to employees hired after a certain date.... Other governmental organizations have frozen plan participation and cover newly-hired employees under a defined contribution plan."
Cowden Associates, Inc.

Fifth Circuit Denies Emergency Injunction to Stop DOL Fiduciary Rule
"The Fifth Circuit Court of Appeals in New Orleans denied a request for a preliminary injunction against the regulation that was filed by several industry interest groups. The three-judge panel also denied the plaintiffs' motion for an expedited appeal of the case.... The plaintiffs include the Securities Industry and Financial Markets Association, the Financial Services Institute, the Financial Services Roundtable and the U.S. Chamber of Commerce."

Another Question is Answered in the Who's the Employer Q&A Column
"A private equity firm says it's not a trade or business, and that the controlled group rules and affiliated service group rules don't apply to them. If a private equity firm buys 80% of company A and buys 80% of company B using its investors' money, aren't A and B part of a controlled group?"
S. Derrin Watson, on BenefitsLink


Why Arguments of a Broken Retirement System Are Misguided
"81 percent of working households aged 55 to 64 have accrued benefits in a DB plan, have accumulated assets in a DC plan or [IRA], or both.... [F]or households in the middle wealth quintile of households with at least one member aged 57 to 62 in 2010, the combined value of future DB benefits and assets in DC plans and IRAs is about 70 percent of the value of future Social Security benefits."
Investment Company Institute [ICI]

Benefits in General

First Circuit Says ERISA Preemption of Claim Is Arbitrable Issue
"The Court held that the pending dispute did not raise a question of substantive arbitrability, because there clearly was an arbitration clause and it applied to the dispute.... The Court also rejected plaintiff's argument that an arbitrator might damage the purposes of ERISA by reaching the wrong conclusion, calling it 'exactly the kind of "outmoded" view of arbitration' rejected by the Supreme Court." [Prime Healthcare Services -- Landmark LLC v. United Nurses & Allied Professionals, Local 5067, No. 16-1161 (1st Cir. Feb. 3, 2017)]
Robinson & Cole LLP

Press Releases

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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017, 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, 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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