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August 18, 2017 logo logo
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[Guidance Overview]

Everything You Wanted to Know About BICE But Were Afraid to Ask (PDF)
"While much of the rule is aimed at financial advisors who provide retirement investment advice and recommendations to retirement investors ... plan sponsors and fiduciaries will have items to cross off their to-do list as well.... BICE is DOL attempting to balance the need to protect retirement plan investors from investment losses caused by conflicted advice while at the same time providing advisors the flexibility and discretion to design compensation structures and practices unique to their business, so long as they adhere to impartial standards of fiduciary conduct and implement procedural safeguards to mitigate conflicts of interest with respect to the provision of such investment advice."
Jackson Lewis via Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS]


Online Learning Course: Fiduciary Responsibilities for ERISA Plans

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Understand the requirements of ERISA, including penalties, vesting requirements, fiduciary responsibilities, plans covered by the PBGC, and the roles of the various enforcement agencies.

Judge Extends Employment Arbitration Requirement to Claims Against Advisor
"A federal court has extended the reach of an employment arbitration agreement to require a participant to first arbitrate, rather than sue a plan's investment advisor.... [The court] drew a distinction between the arbitration clause in an employer handbook and the 401(k)'s summary plan description. The latter, which advised participants that they may file suit in federal court, didn't undermine a finding that in this case the participant's claims were related to employment, and thus subject to arbitration." [Cooper v. Ruane Cunniff & Goldfarb Inc., No. 16-1900 (S.D.N.Y. Aug. 15, 2017)]
National Association of Plan Advisors [NAPA]

District Court Rules in Favor of Plaintiffs on Retail-Priced Investments
"The ruling ... on [August 16] was issued exactly 10 years after plan participants filed their original complaint against Edison International ... The judge [accepted] the parties' agreement that there were damages of $7.52 million from 2001 to January 2011. Damages past January 2011 will be calculated based on the plan's 'overall returns.' ... The complaint focused on 17 mutual funds that participants in the class-action suit argued should have been institutionally priced rather than retail priced. The judge agreed." [Tibble v. Edison Int'l, No. 7-5359 (C.D. Cal. Aug. 16, 2017)]
Pensions & Investments

As the Fiduciary Rule Turns: More Guidance, More Delays (PDF)
"[The DOL's] path to a new ERISA fiduciary advice definition has seemed like a daytime soap opera. In the latest episode, we find the DOL releasing new, favorable guidance that says encouraging participants to save more does not trigger fiduciary status. However, the plot takes an unexpected twist with the DOL's surprise announcement that it will delay the fiduciary rule's effective date, yet again, to July 1, 2019. The plot thickens, and the DOL's attempts to move the rule down the tracks may be derailed by pressure from the Trump administration and Wall Street."

How to Build a Better Target Date Fund
"When adding any alternative asset class, the expected improvements to outcomes must clearly outweigh any potential increase in fees.... Helping retirees draw down assets during the distribution phase represents the next great puzzle facing the DC system.... In an effort to refine the target date approach, some providers are looking to incorporate information beyond a participant's age when building their asset allocation."
Callan Associates


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

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Retirement Savings: Why Hedging Inflation Is Important
"Inflation has been calm for so long that many retirement investors have overlooked its potentially corrosive effects. But for [DC] plan portfolios designed to last decades, ... inflation remains one of the greatest potential risks, making inflation-hedging assets critical. In fact, the vast majority of respondents to [a recent survey] supported offering a variety of inflation-hedging strategies in a DC plan's core investment menu or in a custom target-date strategy."

DC Plan Capital Preservation: Stable Value Remains on Top
"More than eight in 10 consultants said they are likely or very likely to recommend stable value to plan sponsors seeking alternatives to prime money market funds ... By contrast, only 21% said they would recommend that plans keep their prime money market option."

New Players Emerge in 401(k) Services Market
"While Fidelity and Vanguard have historically dominated 401(k) plan record-keeping and administrative services -- in both the number of plans they're managing and the percentage of new plans they're winning -- challenger brands are gaining ground ... Micro-plan sponsors look for value and companies they trust while small to medium plans seek superior choice and flexibility with investment options. Large and mega plans hone in on best-in-class participant service and support."
Society for Human Resource Management [SHRM]

Multiemployer Plans Zone Status, Summer 2017 (PDF)
"[T]he survey finding that about two-thirds of calendar-year plans are in the green zone should not obscure the fact that just about half of all participants in the survey are in red-zone plans. Significantly, about one-quarter of the participants in the survey are in plans that are also in 'critical and declining' status."
Segal Consulting


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How I Passed My Passion for Retirement Saving on to My Children
"Many employers offer retirement savings plans. They even offer a match within the plan, and still, hundreds of thousands of participants refuse to participate in the plan.... We must educate our young people while they are in grade school and high school on the importance of saving and saving as early as possible. This is the only way to solve the retirement savings crisis. As parents and family members, as business owners and leaders, we need to make retirement savings education a priority at our jobs and in our community."
TriStar Pension Consulting

Benefits in General

DOL to Review Disability Claims Procedure Regs
"DOL recently announced that it will review ERISA's disability claims procedures regulations for questions of law and policy to determine if they should be amended, delayed, or withdrawn. The regulations ... were finalized in December 2016 and slated to take effect for claims made on or after January 1, 2018 ... An announcement of this nature is fairly uncommon so it is likely, but not a certainty, that DOL will delay and/or amend the final regulations."
The Wagner Law Group

The DOL's Final Rule on Disability Claims Procedures: What Changes Do You Need to Make?
"[1] [D]enial notices must contain specific reasons for an adverse determination and basis for departing from previous rulings... [2] [C]laimants must be informed of their right to request and obtain the entire file upon denial of a claim, not just upon denial of an appeal.... [3] [B]enefit denial notices must be updated to include the plan's internal rules, guidelines, protocols and criteria used to adjudicate the claim[.]"
Graydon Head & Ritchey LLP

Simply Enclosing SPD with Benefit Denial Notice Was Insufficient Claims Procedure
"[T]he court noted that the initial denial letter did not describe the plan's review procedure or time limits for filing an appeal (or the right to sue following a final adverse benefit determination). The [SPD] enclosed with the letter did set forth this information ... The court explained that merely enclosing the 36-page SPD, with no express mention of the appeal procedures in the letter itself, was insufficient to satisfy ERISA's requirement that the denial notice be calculated to be understandable." [Turner v. Volkswagen Grp. of America, Inc., No. 16-6570 (S.D. W. Va. July 18, 2017)]
Thomson Reuters / EBIA

Discussions on
the BenefitsLink Message Boards

Balance Forward Earning Accounting: How Does It Work?
"Could someone please explain to me what balance forward earning accounting represents? I'm new to the benefit plan world, and I noted that our recordkeeper has an adjustment for 'Balance Forward Earnings to Allocate.' I understand that this balance is allocated to each plan participant but I don't understand the basis behind this adjustment."
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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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