Employee Benefits Headlines

Gathered from the web by the editors at BenefitsLink.com.

Report of Council of Economic Advisers: 'Supporting Retirement for American Families' (PDF)
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." (Council of Economic Advisers, Executive Office of the President)

[Opinion] Comments of American Academy of Actuaries on HHS' Research Brief Entitled 'Actuarial Value and Employer-Sponsored Insurance' (PDF)
"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]: . . ." (American Academy of Actuaries)

[Opinion] Comments of American Academy of Actuaries on HHS' Essential Health Benefits Bulletin (PDF)
"[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." (American Academy of Actuaries)

[Opinion] ERIC to Congress: Fix Pension Funding Rules to Strengthen Pensions and Improve Economic Growth
"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." (The ERISA Industry Committee)

[Opinion] Georgia's Tax Breaks to Increase Use of Health Savings Accounts Did Not Expand Health Coverage
"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." (Center on Budget and Policy Priorities)

Managing Volatility in Defined Benefit Plans
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." (Principal Financial Group)

[Guidance Overview] Final Fee Disclosure Regs Contain Important Relief for 403(b) Plans
"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)." (Business of Benefits, Robert J. Toth Jr.)

For 11 States and Puerto Rico, Cost of Employee Benefits Is One of Three Top Fiscal Issues for 2012 (PDF)
"Dealing with unfunded liabilities, increasing employee contributions and making significant reforms lie in the year ahead for state lawmakers." (National Conference of State Legislatures)

[Opinion] Health Care Consumers Have Uphill Battle in Pushback Against High Prices
"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." (New York Times; free registration required)

[Guidance Overview] District Court Permitted to Look Beyond Charged Conduct to Calculate Restitution Amount for Theft from Plan
"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." (Wolters Kluwer Law & Business / CCH)

[Opinion] Patients Facing Unaffordable Premiums And Consumer Advocates Launch Historic All-Volunteer Signature-Gathering Effort for Health Insurance Rate Regulation Initiative
"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." (Consumer Watchdog)

Multiple Employer Plans Offer Retirement Security Advantages
"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." (Employee Benefit News)

[Guidance Overview] EEOC Issues Final Rule Extending Title VII And ADA Recordkeeping Requirements to GINA
"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." (Practical Law Company)

Providence Is Now on 'the Brink of Bankruptcy,' Mayor Taveras Warns
"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." (WPRI.com)

Annual Statistical Supplement, 2011, Published by the U.S. Social Security Administration
"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." (U.S. Social Security Administration)

Social Security Bulletin (February 2012)
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. (U.S. Social Security Administration)

PBGC Director Explains Retirement Security Challenges, Pension Agency Finances Before House Panel
"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." (Pension Benefit Guaranty Corporation)

Webcast and Written Testimony: Hearing Entitled 'Examining the Challenges Facing PBGC and Defined Benefit Pension Plans'
February 2, 2012. (Subcommittee on Health, Employment, Labor, and Pensions; Education and the Workforce Committee; U.S. House of Representatives)

401(k) Plan Sponsors Less Confident That Employees Will Be Financially Prepared for Retirement (PDF)
"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." (Deloitte; International Foundation of Employee Benefit Plans; International Society of Certified Employee Benefit Specialists)

Deloitte's 2011 401(k) Benchmarking Survey (PDF)
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." (Deloitte)

Association of Public Pension Plans Launches Web Site Promoting Extension of Coverage to Private-Sector Employees
"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." (National Conference on Public Employee Retirement Systems (NCPERS))

Providence, R.I., Mayor Proposes Benefit Cuts to Avert Bankruptcy
"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." (New York Times; free registration required)

[Opinion] A Closer Look at the Braden v. Wal-Mart Case: How Not to Run a 401(k) Plan
"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." (Morningstar Advisor)

[Guidance Overview] Common Questions About the Next Restatement Cycle for Defined Contribution Plans
"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. . . . (Wolters Kluwer Law & Business / ftwilliam.com)

[Guidance Overview] Estoppel in ERISA: Simple Mistakes Can Lead to Costly Litigation
"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: . . . ." (Employee Benefits Law Report)

[Guidance Overview] DOL Finalizes, Delays 401(k) Fee Disclosure Rules
"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." (Benefits in Brief)

SEC Reporting Trap and Setting Performance Goals
"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." (Winston & Strawn LLP)

Baltimore Mayor Takes Stand in Pension Trial
"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." (Baltimoresun.com)

Administration and Catholics Tangle Over Mandatory Contraception Coverage
The administration will not reconsider the decision, White House spokesman Jay Carney said yesterday, according to the Associated Press. (AP via Washington Post)

Domestic Policy Council Director's Statements on White House Blog About Contraceptive Mandate
"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." (The White House Blog, written by Cecilia Mu?oz, Director of the White House Domestic Policy Council)

[Guidance Overview] Final ERISA Section 408(b)(2) Regulations Include Significant Differences from Interim Rules
"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." (Practical Law Company)

Is My American Airlines Pension Guaranteed? Yes, But...
"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." (TIME.com)

[Guidance Overview] Ninth Circuit Holds That Federal HIPAA Preempts Montana's 'Little HIPAA' Law
"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." (Haynes And Boone)

Unions Howl at Details of Jerry Brown's Pension Overhaul Proposal
"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." (Sacramento Bee)

California Governor Jerry Brown Delivers Pension Reform Language to Legislators
"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." (Sacramento Bee)

New Treasury Rules Ease Purchase of Annuity With 401(k)
"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." (New York Times; free registration required)

[Opinion] Where the CBO Report on Federal Pay Went Wrong
"[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." (Washington Post)

Treasury Eases Rules on Annuities in Retirement Plans
"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." (Bloomberg)

Mayor Says Pensions and Benefits for Uniformed Workers Will Cost New York City More Than Their Actual Salaries
"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." (NYPOST.com)

California Teachers' Pension Trims Investment Forecast to 7.5%
"The change means the plan will need larger contributions from taxpayers, teachers, school districts, or a combination of all three, to cover pension costs." (Businessweek)

Some Top Military Brass Making More in Pension Than Pay
"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." (USATODAY.com)

Who's on The Hook for Decisions Made in Your 401(k)?
"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." (Forbes)

New 401(k) Policies Are a Mixed Bag
"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." (Reuters)

Seven Companies With Unique Employee Health Benefits
"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." (Mother Nature Network)

Judge Rejects Law Seeking to Reform New Hampshire State Pensions
"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." (New Hampshire Union Leader)

Underfunded Pensions: The Looming Crisis Facing Investors
"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." (CNBC)

[Opinion] Protestants and Jews Declare to White House: We Stand With Catholics
"[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." (Becket Fund)

[Official Guidance] Rev. Rul. 2012-3: Application of Survivor Annuity Requirements to Deferred Annuity Contracts Under a Defined Contribution Plan (PDF)
"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?" (U.S. Internal Revenue Service)

[Official Guidance] Rev. Rul. 2012-2: Rollover from Qualified Defined Contribution Plan to Qualified Defined Benefit Plan to Obtain Additional Annuity (PDF)
"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?" (U.S. Internal Revenue Service)

Washington Could Be Seventh State to Allow Same-sex Marriage
"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." (Thompson Media)

Anger Brewing on the Left About Mandatory Contraceptive Coverage for Employees of Religious Employers
"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) . . . ." (Washington Post)

[Official Guidance] Text of IRS Notice of Hearing on Discussion Draft of IRS Regs on 'Indian Tribal Government Plan' Status
Reschedules a public hearing from June 5 to be July 10, and extends the period for the submission of public comments. (U.S. Internal Revenue Service)

[Official Guidance] Text of IRS Notice of Hearing on Discussion Draft of IRS Regs on 'Governmental Plan' Status
Reschedules a public hearing from June 5 to be July 9, and extends the period for the submission of public comments. (U.S. Internal Revenue Service)

[Official Guidance] Proposed IRS Regs on Longevity Annuity Contracts
"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." (U.S. Internal Revenue Service)

[Official Guidance] Treasury Fact Sheet: Helping American Families Achieve Retirement Security by Expanding Lifetime Income Choices (PDF)
"[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." (U.S. Internal Revenue Service)

[Official Guidance] Proposed IRS Regs on Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options under Defined Benefit Pension 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." (U.S. Internal Revenue Service)

[Official Guidance] Text of Final 408(b)(2) Regs on Fee Disclosures to Plan Fiduciaries by Covered Service Providers (PDF)
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." (U.S. Employee Benefits Security Administration)

[Guidance Overview] Second DOL 'Fact Sheet'; Description of Major Changes to Final Fee Disclosure Rule
"The final rule's effective date has been extended to July 1, 2012, to allow additional time for compliance." (U.S. Employee Benefits Security Administration)

[Official Guidance] DOL 'Fact Sheet' on Final Regs on Service Provider Disclosures Under ERISA Section 408(b)(2)
"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." (U.S. Employee Benefits Security Administration)

[Guidance Overview] DOL Publishes Final 408(b)(2) Fee Disclosure Regs; Treasury Publishes Regs on 'Lifetime Income' Options
"[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." (U.S. Employee Benefits Security Administration)

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