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U.K. Government Discouraging Employers From Offering Cash Bonuses to Employees Who Switch from DB to DC Plans

"In recent years companies across the UK have closed their final salary schemes to new members as the cost of funding them has rocketed on the back of increasing life expectancy and lower expected long-term investment growth. Many employers have also tried to further reduce their liabilities by tempting the existing members out of these final salary schemes and into alternative personal pension schemes. To get existing final salary members to transfer out of the scheme, companies have offered them enhanced transfer value packages. Although these packages may look attractive upfront, they do not always properly compensate members for the pension benefits they are giving up. One particularly controversial aspect of these incentive packages has been the cash payments made to those willing to transfer. However a government-backed voluntary code of practice, launched in June, now prohibits the payment of such cash incentives."

SEC Examines Mutual Funds, Money Market Funds and Target Date Funds

"On November 7, 2019, the SEC's Office of Compliance Inspections and Examinations (OCIE) published a Risk Alert highlighting the most often cited deficiencies and weaknesses observed in recent examinations of registered investment companies, including as related to national examination initiatives focusing on money market funds and target date funds."

SEC Money Market Plan Falls Short, Critics Charge

"[S]ome observers cast doubt on the effectiveness of the new proposal, arguing it did little to address the underlying fears that money market mutual funds are subject to runs and potential systemic panic.... The SEC's proposal, which will allow a 90-day public comment period, noticeably omitted mention of requiring funds to raise more capital to absorb potential losses -- an option that had been included in the earlier draft plan promoted by Schapiro last year as well as recommendations laid out by the Financial Stability Oversight Council."

Drugs Could Soon Come with a Money-Back Guarantee

"The government and private insurers have been trying for years to move away from the fee-for-service system that pays doctors and hospitals based on the volume of tests they perform and treatments they prescribe. They want to replace it with contracts that reward quality and better outcomes.... The changes in the reimbursement model are rippling out to manufacturers of drugs and devices. The shift could help address a long-standing problem with medical advances: The benefits observed in carefully designed clinical trials don't always materialize when a treatment is deployed in the real world."

Alight Solutions 401(k) Index: August 2021 Observations

"With stock market indices posting their seventh straight month of gains in August, some 401(k) traders were in profit-taking mode ... Net trading activity in August was 0.13% of balances, up from 0.07% in July. Nearly all trading days in the month saw money moving from equities to fixed income."

Observations on the New COBRA Provisions; Certain Clarifications Needed, and Effects on Plan Design

Excerpt: The law specifically requires that the individual (or a person other than the employer of the severed employee) pay 35% to get the 65% credit. What if a severance arrangement includes an employer subsidy for COBRA? It would be pretty stupid for an employer to pay money that could have been paid by the government. Renegotiation of subsidized severance arrangements, possibly with a taxable cash-out or a deferral of the subsidy to 2010, may make sense for arrangements in effect now.

Bank of America Pension Plan Unusual: Workers Directing Their Virtual Accounts Considered Uncommon

Excerpt: The Bank of America Corp. pension plan targeted in a class-action lawsuit and a federal audit is unlike plans at most other companies, benefits experts say. The Charlotte company's cash-balance pension plan has an unusual feature that allows participants to put part of their money in hypothetical investments that rise and fall with the market. In most cash-balance plans, participants receive an interest credit tied to inflation or another benchmark.

Tax Law's Pass-Through Provision Could Harm 401(k) Plans

"The alarm stems from a new tax mismatch created by the rules on pass-through entities ... This lower rate provides a disincentive for small-business owners to stash pre-tax money in a 401(k) plan, observers argue. Their logic: Why save money in a 401(k) now and likely pay a higher rate later upon withdrawal, when the owner can pay a lower tax rate now?"

Public Pension Reforms Often Fall Short of What Is Needed

"Policymakers have failed if a traditional pension is brought up to a satisfactory funding level but still does not benefit most participants. This failure may not be immediately observable, but over time, it will become clear that a great deal of money and effort was spent to have a solvent pension plan that still does not meet the retirement security needs of many public workers, the plan's most important objective."

The Ineffectiveness of Employer Wellness Programs, and the Importance of Randomized Trials

"Wellness programs sometimes claim to save money by reducing health care spending. The observational analysis supports this belief.... The randomized controlled trial showed that the wellness program had little effect on spending compared with the control group [.]"