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Pension Risk Transfer: A 2017 Survey of U.S. DB Plan Sponsors (PDF)
12 pages. "In 2016, there was nearly $14 billion of annuity buyout-related PRT activity, and nine in 10 plan sponsors (87%) believe the level of 2017 PRT activity will be at least as, or even more, robust than last year.... The top catalysts driving sponsors to consider transferring pension obligations to an insurer are [PBGC] actions (64%) ... 57% say they will use an annuity buyout, including 43% who plan to use a combination of a lump sum and annuity buyout."


Online Learning Course: 401(k) Plan Structure

Sponsored by International Foundation of Employee Benefit Plans [IFEBP]

Review considerations for structuring a 401(k) plan. Topics include salary deferral limits and catch-up contributions, matching and profit-sharing contributions, nondiscrimination testing and safe harbors.

Basics of Small-Employer Retirement Plan Design (PDF)
"What is the single largest advantage of an employer sponsored, self-administered retirement plan that avoids the retail market? ... Can we have a tax qualified retirement plan without the support of an insurance company or investment broker? ... What about annual administration? ... Can we transfer our Simple IRA accounts to the new plan?"
H.C. Foster & Company

State-Sponsored Retirement Savings Plans: New Approaches to Boost Retirement Plan Coverage (PDF)
37 pages; a working paper. "This paper describes and evaluates models and features used in emerging state-sponsored retirement saving plans such as Auto IRAs, open Multiple Employer Plans and Marketplaces.... [P]lans that boost coverage most will feature two characteristics: required provision of retirement saving plans by firms and automatic enrollment of eligible workers.... [U]nder current legal and regulatory conditions, Secure Choice is the only model that enables states to require that employers provide a plan."
Pension Research Council, The Wharton School of The University of Pennsylvania

Investing for Retirement in a Low Returns Environment: Making the Right Decisions to Make the Money Last (PDF)
35 pages; a working paper. "[Y]ounger generations do face substantial challenges, but there are plausible courses of action involving increased contributions and delayed or partial retirement that can provide reasonable income replacement rates in retirement. [The authors] map out the steps that the retirement industry (government, employers, financial services providers) needs to take to support people in following these courses of action, such as providing more flexibility over Social Security."
Pension Research Council, The Wharton School of The University of Pennsylvania

How Persistent Low Expected Returns Alter Optimal Life Cycle Saving, Investment, and Retirement Behavior (PDF)
22 pages; a working paper. "In the context of a zero return environment, ... workers will optimally devote more of their savings to non-retirement accounts and less to 401(k) accounts, since the relative appeal of investing in taxable versus tax-qualified retirement accounts is lower in a low return setting. Finally, ... people claim Social Security benefits later in a low interest rate environment."
Pension Research Council, The Wharton School of The University of Pennsylvania


The Advisor's Guide to the DOL Fiduciary Rule

Sponsored by The National Underwriter Company

Authored by ERISA experts at The Wagner Law Group, this Guide delivers a powerful combination of expert explanations and legal analysis along with vital Q&As that provide reliable, direct answers to vital questions before they arise. BENLINK for 10% discount.

Low Returns and Optimal Retirement Savings (PDF)
32 pages; a working paper. "[The authors] provide a more complex analysis of optimal savings rates that incorporates Social Security, tax rates before and after retirement, actual retirement spending patterns, and differences in expected longevity by income. [L]ower-income workers will need to save about 50 percent more if low rates of return persist in the future, and higher-income workers will need to save nearly twice as much in a low return environment compared to the optimal savings using historical returns."
Pension Research Council, The Wharton School of The University of Pennsylvania

Retirement Saving and Decumulation in a Persistent Low-Return Environment (PDF)
53 pages; a working paper. "This paper addresses two related topics: first, how have households responded to the current low interest rate environment and second, are there alternative responses or investments which households might do well to consider? ... [The authors] consider alternative portfolio and wealth management strategies targeting increases in equities and delayed participation in Social Security in terms of their potential to add value in persistent low return environments."
Pension Research Council, The Wharton School of The University of Pennsylvania

Getting More from Less in Defined Benefit Plans: Three Levers for a Low-Return World (PDF)
26 pages; a working paper. "[This paper uses] portfolio simulations based on a stochastic asset class forecasting model to evaluate each lever according to two criteria -- its magnitude of impact and the certainty that this impact will be realized.... [I]ncreased contributions have the greatest and most certain impact. Reduced costs have a more modest, but equally certain impact. Increased risk can deliver a significant impact, but with the least certainty."
Pension Research Council, The Wharton School of The University of Pennsylvania

Pension Index Declines by 1.6% in August
"August's capital market results adversely impacted the funded status of typical pension plans.... A decrease in long corporate bond yields reversed the index gains experienced in July."
Willis Towers Watson


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S&P 1500 Pension Funded Status Decreased in August
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies decreased by one percent to 82% funded status in August 2017, as a result of a decrease in discount rates partially offset by mixed equity markets. As of August 31, 2017, the estimated aggregate deficit of $432 billion USD represents an increase of $28 billion as compared to the deficit measured at the end of July 2017."

This Missouri City Just Switched Employees from a 401(k) to a Defined Benefit Plan
"The city of Webster Groves switched from a defined contribution 401(k) plan to a defined benefit pension through the Local Government Employees Retirement System (LAGERS) ... [which is] a statewide public pension system for local government employees in Missouri.... The system is also 95% funded, a clear sign of the strength of the system."
National Public Pension Coalition

Replace the Stretch IRA?
"[M]ost IRA owners and beneficiaries do not benefit from the 'stretch,' because: [1] The life expectancy payout is available only if the deceased IRA owner named the individual as his 'designated beneficiary.' Many participants flub this step, causing their retirement benefits to pass to their estate rather than directly to family members.... [2] A trust named as beneficiary can qualify for the life expectancy payout under IRS rules -- but only if it meets stringent IRS requirements.... [3] [It] is actually rare for an IRA to be left to a young individual who would qualify for a multidecade payout. [4] Even when the stretch payout is an option, many beneficiaries prefer an immediate cashout over a deferred payout."
Morningstar Advisor


Did the 401(k) Really Kill DB Plans?
"Retiree longevity provided the actuarial math that ultimately doomed the existence of pension plans ... Within the last generation we've seen a new economy emerge -- the Content Economy. This new economy allows workers to quickly more from one project to the next and, likewise, from one company to the next.... Simultaneous to [these] two trends has been the streamlining of American equity markets.... [T]he idea of 'owning your own personal account' seems more approachable to the average employee than the concepts of 'workforce demographics' and 'actuarial assumptions' that underlie the foundation of pension plans."
Fiduciary News

Benefits in General

Proving Loss Causation in Breach of Fiduciary Claims: The Split Widens (PDF)
"[M]ost circuit courts of appeals agree that ERISA requires that causation between the alleged breach and the claimed loss must be established before any liability may be imposed upon a breaching fiduciary. The courts are split, however, as to whether an ERISA plaintiff or the defendant-fiduciary bears the burden of proving the causal link between breach and loss. In other words, does the burden compose an element of the claim and thus fall upon the plaintiff, or does the burden constitute an affirmative defense and thus fall upon the defendant-fiduciary?"
Jackson Lewis P.C.

Hurricanes Harvey and Irma: What Kind of Relief May Employers Offer to Affected Employees? (PDF)
"Qualified Disaster Relief Payments ... Paid leave and working condition fringes ... Charitable contributions ... Leave sharing programs ... Traps for employers ... Retirement plan relief."
Epstein Becker Green

Addressing Disasters and Emergencies, Widespread to Individual (PDF)
"While many plan sponsors will focus on the immediate impact of Hurricane Harvey, plan sponsors might also take this time to plan for the future or to refine existing policies designed to assist employees year-round.... [C]onsider changes that will position your plans and human resources policies to meet workers' everyday needs.... [C]onsider the precedent-setting nature of any extraordinary actions you take today to respond to Harvey -- will you be in position to take similar action in the future?"
Plan Sponsor Council fo America [PSCA]

Helping Employers Become Age-Ready (PDF)
15 pages; a working paper. "This paper will ... examine how living longer is likely to influence working longer, how the nature of changes to work itself will influence future generations of work, workers and workplace, and ultimately, the paper will dive deeply into what employers can do to achieve a competitive advantage from the changing demographics. In short -- how do employers become age-ready?"
Pension Research Council, The Wharton School of The University of Pennsylvania

Executive Compensation
and Nonqualified Plans

[Guidance Overview]

Nonqualified Plans May Need to Be Updated for New Disability Claims Procedure Regs
"While nonqualified deferred compensation plans are generally exempt from most of the substantive provisions of [ERISA], Nonqualified Plans are still subject to ERISA's enforcement provisions, including claims regulations implementing section 503 of ERISA. For that reason, a Nonqualified Plan must contain claims procedures that comply with the ERISA claims regulations for resolving participant claims under Nonqualified Plans."
Trucker Huss

on the BenefitsLink Message Boards

Correction of Excess Contributions by Payroll Adjustment?
"Several plan participants made excess contributions to the plan during the 2015 and 2016 plan years, to the extent their deferrals were based on commissions -- which are not a form of eligible compensation under the plan document. Distributions would be one way to correct the excess contributions. But could the plan sponsor refund the excess contributions (adjusted for earnings) to these participants through payroll, particularly if the correction would be made within the same plan year as the error?"
BenefitsLink Message Boards

Can Mortality Table Be Protected?
"A plan is amended to adopt standard PPA lump sum rates and remove an enhanced lump sum basis equal to the 30-Year Treasury Rate minus x% on benefits earned through 12/31/2008. The enhanced lump sum basis is being protected on the 12/31/2008 benefit, including the Mortality Basis which is the Applicable Table incorporated by reference, including any subsequent pronouncements. Can this plan now amend the enhanced lump sum basis in 2017 to state that the mortality table for the enhanced lump sum protection is and will be going forward the 2017 Unisex table? Would an ERISA Section 204(h) Notice be required?"
BenefitsLink Message Boards

Designated Beneficiary Already Dead at Participant's Death; Who Gets the Account?
"Participant designated an individual as Beneficiary. Participant dies. Plan administrator determines that Beneficiary had died before the Participant. Did the Beneficiary designation become void when the Beneficiary died, such that the account balance should go to the Participant's estate? Assume no contingent beneficiary was named, and that the document specifies the participant's estate is the default beneficiary when there has been no designated beneficiary. Some colleagues say the account must go to the estate of the Beneficiary. What's the right thing to do?"
BenefitsLink Message Boards

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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