Feb. 2, 2012. 'While economic studies have established the benefits of annuitization for retirees -- including both immediate and longevity annuities -- many workers have only limited access to these products. The administrative guidance issued by the Treasury today, easing and simplifying certain regulatory requirements for retirement plans and IRAs, takes an important first step towards a more complete private market offering more attractive lifetime income options."
"The American Academy of Actuaries' Health Practice Council appreciates the opportunity to provide comments on the recently released [HHS] research brief, 'Actuarial Value and Employer-Sponsored Insurance.' . . . There are additional factors that should be considered when interpreting the results and formulating policies to regulate [actuarial value] calculations for [employer-sponsored insurance]: . . ."
"The American Academy of Actuaries' Health Practice Council appreciates the opportunity to provide comments on the recently released [HHS] research brief, 'Actuarial Value and Employer-Sponsored Insurance.' . . . There are additional factors that should be considered when interpreting the results and formulating policies to regulate [actuarial value] calculations for [employer-sponsored insurance]: . . ."
"[T]here are a few implications of allowing the flexibility to create multiple benefit sets that should be considered. Such flexibility in benefit design could create confusion for consumers; result in situations in which insurers design benefit packages to minimize certain risks; and have a material effect on premium rates, particularly in the individual market. . . . Clarification of the use of the terms 'actuarial equivalence' and 'substantially equal' as used in the context of essential health benefits is needed as well."
"Gretchen R. Haggerty, Executive Vice President and Chief Financial Officer for the United States Steel Corporation testified today on behalf of The ERISA Industry Committee (ERIC) . . . called on Congress to enact permanent reforms to the pension funding rules enacted under the Pension Protection Act of 2006 (PPA), contending that the current rules are severely burdening companies, undermining the future of defined benefit plans and potentially threatening the country's larger national economic recovery."
"New data show that an approach to covering the uninsured that Newt Gingrich's Center for Health Transformation (CHT) largely designed and heavily promoted to Georgia policymakers -- and that Georgia adopted in 2008 -- has failed to produce the promised results."
12 pages. '[The paper explains why] (1) interest rates directly impact plan funding levels/contribution volatility, and (2) a declining-rate/low-rate environment can quickly lead to funding level shortfalls for plans utilizing a traditional total-return investment strategy; and [discusses] how liability-driven investing (LDI) works and why, for many DB plans, it may be a better approach than a total-return strategy."
"As with everything 403(b), there are going to be complications, as it is not a totally carte blanche of pre-2009 'frozen' contracts. There will be odd circumstances, like where vendors who insist on employer approval on loans and distributions from those contracts (but the price of that insistence will be 408(b)(2) disclosure)."
"To an economist it is astonishing that Americans have been content for so long to allow an economic sector that has absorbed an increasing portion of their incomes -- 18 percent of their gross domestic product now and 20 percent before too long -- to operate without any meaningful price transparency."
"A district court did not err when, to calculate a restitution amount, it considered losses stemming from an individual's nine-year pattern of theft from her employees' retirement accounts, instead of focusing solely on losses incurred in the year that encompassed the charged criminal conduct, the U.S. Court of Appeals in San Francisco (CA-9) has ruled."
"The Insurance Rate Public Justification and Accountability Act will reform an unaccountable insurance industry by requiring health insurance companies to open their books, publicly justify rate hikes, and get approval before an increase can take effect. 35 states have the power to reject unjustified health insurance rate increases but California does not."
"Some of those advantages are: 1. Cost reductions through plan aggregation, creating volume discounting. 2. Fiduciary risk transfer to the MEP sponsor and its named fiduciary. 3. Elimination of document maintenance by adopting employers. 4. Elimination of Form 5500 filings by adopting employers. 5. For larger adopting employers, elimination of expensive individual ERISA audits."
"The EEOC issued a final rule extending the existing recordkeeping requirements under Title VII and the ADA to entities covered by Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA). Effective April 3, 2012, employers with 15 or more employees must retain all personnel and employment records for at least one year, and must retain documents relevant to charges filed under GINA until their final disposition."
"Taveras said the city's retirees must accept reduced pension and health care benefits to save the city from financial ruin. A decree signed in 1991 by Mayor Buddy Cianci pushed the city's pension liability 'into the stratosphere' by giving annual cost-of-living increases of 5% and 6% to more than 600 retirees, he said."
"The Supplement is a major resource for data on our nation's social insurance and welfare programs. The majority of the statistical tables present information about programs administered by the Social Security Administration -- the Old-Age, Survivors, and Disability Insurance program, known collectively as Social Security, and the Supplemental Security Income program. In addition, data are presented on the major health care programs -- Medicare and Medicaid -- and social insurance programs, including workers' compensation, unemployment insurance, temporary disability insurance, Black Lung benefits, and veterans' benefits. The Supplement also includes program summaries and legislative histories that help users of the data understand these programs."
Vol. 72, No. 1. Articles include The Impact of Changes in Couples' Earnings on Married Women's Social Security Benefits, The Retirement Prospects of Divorced Women, This Is Not Your Parents' Retirement: Comparing Retirement Income Across Generations; and The Increasing Labor Force Participation of Older Workers and its Effect on the Income of the Aged.
"Josh Gotbaum, director of the Pension Benefit Guaranty Corporation (PBGC), told a House subcommittee today that the combination of living longer, the economy, and changes in pension plans was threatening many people's retirement security. He also detailed the agency's financial challenges, and outlined an administration proposal to redress them by reforming how PBGC sets premiums."
"84 percent of polled executives responsible for [401(k)] plans say only some or very few employees will be financially prepared for retirement, a new Deloitte survey reveals. . . . To encourage plan participants to make better use of their 401(k), nearly half of plan sponsors (49 percent) are offering features that automatically increase participants' contribution levels. However, nearly two-thirds (64 percent) of plan sponsors report that fewer than 10 percent of participants take advantage of this opportunity."
68 pages. 'While plan sponsors and fiduciaries are generally aware of the fees charged for the administration of their plans, the possibility exists that many will be surprised by the sum total of costs."
"Retirement security for all Americans -- whether they work in the public or private sector -- must become a national priority. The Secure Choice Pension (SCP) plan would allow private companies and individuals to participate in a state-sponsored pension plan for the private sector. . . . The SCP benefits include having more taxpaying, productive retirees rather than senior citizens becoming wards of the state who rely upon public assistance."
"Mayor Angel Taveras, a Democrat, outlined plans to reduce pensions for retired municipal workers and vowed to appeal a recent state court ruling preventing the city from forcing its retirees to switch to the federal Medicare health insurance program when they turned 65."
"The Wal-Mart case is the poster child for the way in which a 401(k) plan should not be run: plan investment options bearing excessive and entirely unnecessary costs, undisclosed conflicts of interest, lack of meaningful disclosure of costs to plan participants (which was actually part of the agreement between plan fiduciaries), and, I'd argue, an apparent absence of any serious fiduciary mindset on the part of the plan sponsor fiduciary and the trustee fiduciary."
"Pre-approved defined contribution plans will need to be restated in a two year window. This window will likely open in early 2014 and close in early 2016. If a plan is currently on an EGTRRA pre-approved document, there is generally no need to restate the plan until this two year window opens. Q: So I don't need to do anything with my plans until 2014? A: That's probably not correct. . . .
"Even if the participant ultimately fails in proving the elements of estoppel, defending against such claims is costly and time-consuming. Accordingly, employers and plan administrators should take the following steps to protect themselves from these types of claims: . . . ."
"The final regulations 'strongly encourage' service providers to offer plan fiduciaries a 'guide' or summary of their disclosures. The DOL included a sample guide as an appendix to the final rule. Debate about whether to require such a summary disclosure is rumored to have delayed the release of the final rules. For now, the summary is voluntary, but the DOL strongly hinted that it may make the summary mandatory in future regulations."
"In a series of correspondence with Verizon, the SEC took a surprising position on the Summary Compensation Table disclosure of performance-based equity awards in situations where the Compensation Committee retained authority to adjust performance-based equity awards based on non-objective criteria."
"The Fraternal Order of Police and the firefighters union contend that the administration's plan, which delayed retirement for some and abolished a fluctuating cost-of-living increase, among other changes, violates their contracts with the city."
"Over half of Americans already live in the 28 States that require insurance companies cover contraception: Several of these States like North Carolina, New York, and California have identical religious employer exemptions. Some States like Colorado, Georgia and Wisconsin have no exemption at all."
"These regulations make several significant changes . . . including: [1] Excluding certain frozen IRC Section 403(b) plans issued before January 1, 2009 from coverage under the regulations; [2] Enhancing the information relating to 'indirect compensation' required to be disclosed; [3] Adding certain investment-related disclosures to facilitate compliance with DOL regulations under ERISA Section 404(a); [4] Extending the effective date to July 1, 2012. This has the effect of delaying the effective date of most participant-level disclosures under ERISA Section 404(a) to August 30, 2012."
"Who gets the haircut? The PBGC has a sliding scale of maximum benefits, depending on age. The most it will pay people who retire at age 65 is $55,841. If your benefit is less than that you have only the long-term health of the PBGC to worry about."
"Due to preemption of the state law, the state law claim was defeated on its merits. The court, however, noted that it was not expressing an opinion as to whether its holding would apply to a state HIPAA-type statute that provided additional protection beyond the federal HIPAA statute."
"The details delivered to the Legislature on Thursday generally tracked with an outline he unveiled in October. Representatives of a union coalition hoped to negotiate what they consider a less severe package. On Thursday, they said they felt blindsided."
"The governor's plan won't go forward without two-thirds of the Legislature voting to put the constitutional changes on the Nov. 6 ballot, which would then need voter approval from a majority."
"J. Mark Iwry, an official at the Treasury department, said the department hoped in particular to foster a workplace market for 'longevity insurance,' something much discussed in policy circles but that employers rarely make available to workers when they retire."
"[The federal] employees that the report claims may be overcompensated are hardly those whom people would think of as 'government bureaucrats in Washington.' No, these 'bureaucrats' are among the lowest-paid federal employees, doing unglamorous but critical work around the country."
"Employers have been reluctant to adopt annuities in retirement plans they sponsor because of concern that fees are too high and that they would be held liable for their choice of insurers. Americans have resisted buying the insurance because they don't want to lock up their assets."
"Pensions and fringe benefits for uniformed workers are going to cost the city more next year than their actual salaries, Mayor Bloomberg revealed [on Thursday, Feb. 2] as he made another strong pitch for Albany to enact pension reforms."
"The change means the plan will need larger contributions from taxpayers, teachers, school districts, or a combination of all three, to cover pension costs."
"Previously, the maximum annual pension was based on an officer's pay at 26 years of service. Now, a four-star officer retiring in 2011 with 38 years' experience would get a yearly pension of about $219,600, a jump of $84,000, or 63% beyond what was once allowed."
"If you are a business owner, on the Board of Directors or serve on the Plan Investment Committee, follow the line of questions from a 'hypothetical deposition' directed to you and picture how you would answer the questions."
"Most workers won't see their companies offering annuities anytime soon, concedes David Wray of the Plan Sponsor Council of America, an employer group. He said employers would be concerned about choosing solid insurance companies and reasonably priced annuities for their workers."
"Home-improvement retailer Lowes established a partnership with the Cleveland Clinic in Ohio to offer heart surgery procedures at no cost to full-time employees and dependents enrolled in its self-insured medical plan. Lowe's covers all medical deductibles and coinsurance amounts, as well as travel and lodging expenses for the patient and a companion."
"A major component of the reform law was hiking the amount that all public employees contribute from their salary to support the state's retirement pension account. [The plaintiff] argued that it was against the law to increase the contributions for all employees who had worked for at least a year. Judge McNamara agreed."
"It's no secret that the financial crisis and resulting malaise has taken its toll on bank stocks, commodities and Treasury yields. But it may be have triggered another ripple -- one that has gone somewhat unnoticed. Pension funds have become seriously underfunded."
"[M]ore than 40 non-Catholic religious organizations including Protestant-affiliated colleges, National Association of Evangelicals, Focus on the Family, Assemblies of God, Northwest Nazarene University, and Eastern Mennonite University, sent a letter to the White House demanding religious protection against the newly issued HHS contraceptive mandate."
"Issue: How do the qualified joint and survivor annuity ('QJSA') and the qualified preretirement survivor annuity ('QPSA') rules, described in ?? 401(a)(11) and 417 of the Internal Revenue Code, apply when a deferred annuity contract is purchased under a profit-sharing plan in the situations described below?"
"Issues: [1] Does a qualified defined benefit pension plan that accepts a direct rollover of an eligible rollover distribution from a qualified defined contribution plan maintained by the same employer satisfy ?? 411 and 415 of the Internal Revenue Code in a case in which the defined benefit plan provides an annuity resulting from the direct rollover that is determined by converting the amount directly rolled over into an actuarially equivalent immediate annuity using the applicable interest rate and the applicable mortality table under ? 417(e)? [2] How does the result vary if the defined benefit plan applies different conversion factors for purposes of calculating the annuity resulting from the amount directly rolled over?"
"A sufficient number of Senators for passage in that chamber have said they would vote for it if it reaches the Senate floor, and Gov. Chris Gregoire (D) said earlier in January that she would sign such a measure if it reaches her desk."
"Megan McArdle, senior editor of the Atlantic, wrote yesterday that it might be in Americans' interest to be more flexible with faith-based organizations because they provide such a depth of social services (publicly funded in many cases, of course) . . . ."
"This document contains proposed regulations relating to the purchase of longevity annuity contracts under tax-qualified defined contribution plans under section 401(a) of the Internal Revenue Code (Code), section 403(b) plans, individual retirement annuities and accounts (IRAs) under section 408, and eligible governmental section 457 plans. These regulations will provide the public with guidance necessary to comply with the required minimum distribution rules under section 401(a)(9). The regulations will affect individuals for whom a longevity annuity contract is purchased under these plans and IRAs (and their beneficiaries), sponsors and administrators of these plans, trustees and custodians of these IRAs, and insurance companies that issue longevity annuity contracts under these plans and IRAs."
"[T]he new package of proposed regulations and rulings makes it easier for pension plans to offer workers a wider range of choices as to how to receive their retirement benefits by [1] Making it easier to offer combination options that avoid an 'all-or-nothing' choice, such as the option to take a portion of an individual's plan benefit as a stream of regular monthly income payable for life, while perhaps taking the remainder in a single lump-sum cash payment; [2] Enabling employer plans and IRAs to offer an additional option in the form of 'longevity annuities' -- which permit employees to use a limited portion of their account balance to provide lifelong retirement income beginning at age 80 or 85, protecting those who live beyond average life expectancy from running out of savings; [3] Making clear that employees receiving lump-sum cash payouts from their employer's 401(k) plan can transfer some or all of those amounts to the employer's defined benefit pension plan (if the employer has one and is willing to allow this) in order to receive an annuity from that plan (giving employees access to the defined benefit plans' relatively low-cost annuity purchase rates); and [4] Resolving uncertainty as to how the 401(k) plan spousal protection rules apply when employees choose deferred annuities (including longevity annuities) from their plans."
"These proposed regulations would change the regulations regarding the minimum present value requirements for defined benefit plan distributions to permit plans to simplify the treatment of certain optional forms of benefit that are paid partly in the form of an annuity and partly in a more accelerated form. These regulations would affect sponsors, administrators, participants, and beneficiaries of defined benefit pension plans."
109 pages. 'This document contains a final regulation under the Employee Retirement Income Security Act of 1974 (ERISA or the Act) requiring that certain service providers to pension plans disclose information about the service providers' compensation and potential conflicts of interest. These disclosure requirements are established as part of a statutory exemption from ERISA's prohibited transaction provisions. This regulation will affect pension plan sponsors and fiduciaries and certain service providers to such plans."
"The final rule reflects a number of technical and other changes . . . including the following: . . . Expansion of the information that must be disclosed concerning a [Covered Service Provider's] receipt of indirect compensation to include a description of the arrangement between the payer and the CSP pursuant to which indirect compensation will be paid; Conformance of investment-related disclosures for covered plans' designated investment alternatives to the requirements of the Department's participant-level disclosure regulation; and A separate provision for the disclosure of changes to investment-related information, which must be updated at least annually."
"[T]he U.S. Departments of Labor and the Treasury today announced two executive actions designed to help enhance security for millions of Americans saving for retirement. The measures will expand transparency in the 401(k) plan marketplace and broaden the availability of retirement plan options so that Americans can maximize their ability to save responsibly and securely."
"To attract and retain the right talent willing to move across borders, whether on a temporary or permanent basis, employers need to provide competitive compensation packages that include a retirement savings component. This paper details how to address retirement security for a mobile workforce."
"USCP generally has enhanced retirement benefits, a higher minimum starting salary, and a wider variety of protective duties than other federal police forces in the DC metro area that GAO reviewed . . . . In 2010, the USCP Labor Committee presented six proposals that would enhance the current USCP benefit structure. GAO's analysis shows that five of the six would increase existing costs . . . ."
"[An] imminent final rule will establish the requirements of the Summary of Benefits and Coverage (SBC) disclosure that health insurers and group health plans must provide to consumers to enable them to better compare benefits and coverage. The CMS issued a proposed rule on this topic in August 2011. A final rule, which will also 'set standards for the definitions of terms used in health insurance coverage, including specific terms' provided in the Affordable Care Act, is expected to be issued shortly."
"The most recent update on January 24, 2012 added the following . . . FAQs which relate to missing the Form 8955-SSA filing deadline: [1] What should I do if I missed the filing deadline for Form 8955-SSA? You should submit your form as soon as possible after the missed deadline."
"Based on 30-plus years of plan sponsor experience, I believe negative press about 401(k) loans are aimed at the wrong target. Rather, hardship withdrawals should be in the crosshairs, not loans."
"[J]ust like depression, having gender identity disorder is diagnosed by doctors, and the American Medical Association asserts that when discriminatory financial barriers are placed between the transgender community and proper health care by dismissing treatments as 'cosmetic' or 'experimental' -- even when covered for other patients with other recognized medical conditions -- more expensive problems can develop as a result, such as depression, substance abuse problems and stress-related illness."
"CLASS was a fiscal time bomb. It's clear the program's main initial function was to pump up Obamacare's financing, since it would have collected premiums for five years before paying out a penny in benefits. As a result, the Congressional Budget Office estimated that it would reduce budget deficits by $81 billion over the next decade."
"New York owes its five pensions about $2 billion more than previously budgeted because officials have been too optimistic in assuming an 8 percent return on fund investments, Chief Actuary Robert North has determined."
"These [403(b)] plan participants are not fiduciaries, and often do not have anyone to be able to collect and compare data on their behalf. They are sold investment products directly. So it really becomes a very simple issue for that school teacher or administrator: how much sales commissions is my investment generating; what services am I getting in return; is there a way for me to compare it all; and how can I reasonably access comparative data on the investments themselves?"
"CBO's economic outlook predicts that federal spending on Medicare, Medicaid and other healthcare programs will climb to $1.8 trillion -- or about 7 percent of the entire economy -- by 2022."
"This new approach is already affecting how other health plans pay providers and resulting in a number of ACO contracts between providers and private health plans. . . . This Health Policy Brief provides an overview of ACOs, their origins, and the current status of adoption by Medicare and private health insurance plans."
"The U.S. House of Representatives voted 267 to 159 [on Wednesday Feb. 1] to repeal the CLASS Program, a stagnating program that was a crucial component of the Affordable Care Act. . . . The bill's chances in the Senate, controlled by Democrats, [are] far less certain."
"The 28-21 vote in favor of the measure -- three more votes than needed for passage -- sent it on to [Washington] state's House of Representatives, where the bill is expected to win swift approval by a comfortable margin as early as next week."
"There's a battle going on between U.S. Catholic bishops and the Obama administration over its recent directive requiring religious institutions to offer coverage for contraception in their health care plans. Some have announced they will not comply with the mandate. Others are calling on parishioners to . . . speak out against what they call an intrusion against religious liberty."
"This mandate treats a healthy pregnancy as a disease in need of 'prevention,' like breast cancer or AIDS or other conditions that require safe, effective prevention and treatment. But pregnancy is not a disease; it is a gift from God. . . . Never in the history of this country has the government forced citizens to purchase a product that violates core moral and religious beliefs."
"[A] growing number of employers recognize that transparency is needed to change the unsustainable dynamics of the health care industry. Unfortunately, many of these employers are being blocked by health insurance companies that benefit from keeping things the same."
"Exemption of religious institutions from the Obamacare contraception mandate does not involve a clash of the constitutional rights of a religious employer with the constitutional rights of its employees regarding contraception (as enunciated by the U.S. Supreme Court in Griswold v. Connecticut, 1965) or abortion (Roe v. Wade, 1973). Such an exemption in no way limits the freedom of employees of those religious institutions to obtain contraceptive services, to obtain insurance covering contraceptive services from a source other than their employer, or to seek employment with other than a religious employer."
"Overview: Informational nature of reporting requirement; Effective date; Special transition relief for small employers; Employers subject to the new rules; Plans that must be reported; Determination of the aggregate cost; [and] Open issues"
"[G]radually raising retirement ages could help countries contain increases in pension spending and boost economic growth. Further cuts in pension benefits, or raising payroll contributions, are also options countries could consider, although many countries will find many advantages in raising retirement ages. The challenge is to reform pension systems without hurting their ability to provide income security for the elderly and prevent old-age poverty."
"If it does take over the plans, the PBGC will assume the responsibility for paying retirees' benefits -- but not necessarily all of them. The agency caps the monthly benefit it pays at $4,500 a month for plans ended in 2010. It has said about $1 billion in promised benefits to the highest-paid AMR retirees would not be paid."
"This memorandum addresses [three terms that] are or will be very important to employers in understanding their obligations under the ACA. Attached to this memorandum is a chart addressing the application of each of these terms to different types of employer-sponsored coverage."
"Sponsors will be required to present information about the investment options in the retirement plan in a chart that allows plan participants to compare fees and expenses . . . . Plan sponsors can use a model chart developed by the Labor Department or they can develop their own."
"[T]his Kaiser Family Foundation brief serves as a primer on the pending case, which challenges the constitutionality both of the law's individual mandate that requires most Americans to obtain health insurance and of provisions requiring states to expand eligibility for their Medicaid programs. The brief provides an overview of . . . the key constitutional questions, and the legal arguments made by the parties involved . . . and the potential implications of the Court's decisions.'
"I would advise plan sponsors to avoid any revenue-sharing arrangements, of any type, between the advisors and other vendors of the plan. This includes not only payment for shelf space, but also soft dollar compensation and other 'back-channel' payments. Establish the compensation of the investment adviser in advance -- before any investment recommendations are made -- either as a flat fee, hourly fee, or percentage of assets (or some combination thereof)."
"for the retirees who wait many months to get a full annuity, 'unacceptable' might be too mild. And Congress is increasingly anxious to see real improvement, not just plans to make things better, in a retirement program that does not treat federal employees with the respect they deserve."
"[The favorable treatment provided by the Internal Revenue Code for 401(k) plans] costs the Treasury money. The question is how much? The calculation involves comparing the present discounted value of taxes collected from saving within a 401(k) plan to how much would have been collected if the saving were done outside."
"[R]esearchers warned that the longer term prospects for rising healthcare spending could have dire consequences for the U.S. deficit when combined with the cost of Social Security, if current revenue levels remain unchanged."
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