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Sr Operations Investment Analyst
T. Rowe Price
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Buck Consultants a Xerox Company
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2015 Health Care Heroes + Forum
June 2, 2015 in OH
(Crain Communications, Inc.)

Very Little Trouble with Tibble -- Supreme Court Unanimously Holds that ERISA's Statute of Limitations Does Not Bar Claims for Inadequate Fund Monitoring
June 5, 2015 WEBCAST
(Practising Law Institute)

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Text of SEC Proposed Rule: Investment Company Reporting Modernization (PDF)
506 pages. "The [SEC] is proposing new rules and forms as well as amendments to its rules and forms to modernize the reporting and disclosure of information by registered investment companies.... We have historically acted to modernize our forms and the manner in which information is filed with the Commission and disclosed to the public in order to keep up with changes in the industry and technology.... Our proposed reforms seek to [1] increase the transparency of fund portfolios and investment practices both to the Commission and to investors, [2] take advantage of technological advances both in terms of the manner in which information is reported to the Commission and how it is provided to investors and other potential users, and [3] where appropriate, reduce duplicative or otherwise unnecessary reporting burdens on the industry." (U.S. Securities and Exchange Commission [SEC])

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SEC Proposes Rules to Modernize and Enhance Information Reported by Investment Companies and Investment Advisers
"The investment company proposals would enhance data reporting for mutual funds, ETFs and other registered investment companies. The proposals would require a new monthly portfolio reporting form (Form N-PORT) and a new annual reporting form (Form N-CEN) that would require census-type information. The information would be reported in a structured data format, which would allow the Commission and the public to better analyze the information. The proposals would also require enhanced and standardized disclosures in financial statements, and would permit mutual funds and other investment companies to provide shareholder reports by making them accessible on a website." (U.S. Securities and Exchange Commission [SEC])

Mandatory E-Filing Under PBGC Proposed Rule Applies Only to Notices to PBGC
"PBGC has received inquiries whether its proposed rule on mandatory e-filing for certain multiemployer notices would affect notices to participants. The proposed rule only affects notices to PBGC.... [T]he proposed rule would require the following notices to be filed electronically with PBGC: notices of termination under part 4041A, notices of insolvency and of insolvency benefit level under parts 4245 and 4281, and applications for financial assistance under part 4281 ... Further, the proposed rule does not involve the Multiemployer Pension Reform Act of 2014 (MPRA). Comments on the proposed rule are due June 2, 2015." [Announcement is dated May 20, 2015.] (Pension Benefit Guaranty Corporation [PBGC])

Reporting Unrelated Business Taxable Income on IRS Form 5500-SUP
"The inclusion of the question regarding UBTI on the draft 2015 Form 5500-SUP suggests that the IRS is concerned that Plan Administrators may be failing to properly report and remit unrelated business income tax. By placing the question on the 5500-SUP, the IRS is placing the onus on Plan Administrators -- under penalty of perjury -- to identify and disclose the existence and amount of UBTI with each plan year. It is reasonable to expect that a 'yes' answer to this question on the 5500-SUP will cause the IRS to look for the related Form 990-T submission and payment of the calculated tax liability." (SunGard Relius)

Proposed Best Interest Contract Exemption Could Require Dramatic Changes for Financial Institutions
"Public disclosure is to be provided through a website, and client disclosure is to be provided as a point-of-sale disclosure, an annual disclosure and a potential limited-range-of-investment-options disclosure.... The website, freely accessible to the public, must provide three items: [1] Direct and indirect material compensation provided in connection with each Asset that is available and has, in fact, been purchased, held or sold within the last 365 days through the Adviser or Financial Institution; [2] The source of the compensation; and [3] How the compensation varies within and among Assets ... The website chart must also be machine readable[.]" (Faegre Baker Daniels LLP)

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The #1 Reason Multiemployer Plans Fail a DOL Audit
"Multiemployer plan trustees have a fiduciary duty under ERISA to make sure the fund is receiving all employer contributions that are due, based on participants' hours worked. This means they must follow up when employers neglect to send their contributions on time (in other words, when they're delinquent). This also means trustees need to make sure that the correct amounts are received. If trustees neglect this fiduciary responsibility, they can be personally liable. They help fulfill this duty by having a payroll audit performed by a knowledgeable and experienced auditor." (International Foundation of Employee Benefit Plans [IFEBP])

Missouri Rep. Ann Wagner Wages 'War' Against DOL Fiduciary
"A leading opponent of a Department of Labor proposal to raise investment-advice standards for brokers working with retirement accounts is pursuing an aggressive strategy -- that includes denying the agency funds to implement it -- to stop the rule.... Ms. Wagner argues that the rule would significantly raise regulatory and liability costs for brokers and price them out of serving the middle-income market of retirement savers." (Investment News)

Supreme Court Recognizes ERISA Fiduciary Duty to Monitor Plan Investments
"[T]he Supreme Court implicitly rejected 'continuing breach' theories of recovery that would treat the decision to acquire an investment and the decision to retain the investment as a single, continuous act and allow recovery of all investment losses incurred from the date of selection ... Instead, under the rationale of [ Tibble v. Edison ], as to investment options first made available to Plan participants outside the limitations period, any recovery would be limited to losses incurred as a result of a fiduciary's failure to properly monitor and remove imprudent investments within the six-year period preceding the filing of the claim." (Skadden, Arps, Slate, Meagher & Flom LLP)

How 12(b)-1 Fees and Revenue Sharing May Be the Real Victims of 'Narrow' Supreme Court Ruling
"Amid all the talk of creating a more transparent, client-first financial world, there are two sacred cows: 401(k) kickbacks, known as revenue sharing, and 12(b)-1 fees, known as a way to avoid upfront commissions by stowing the fees out of sight. Even the [DOL] and SEC walk on eggshells around these institutions that pay so much industry freight. The Supreme Court may not have gotten the memo to tread lightly.... [It] seems clear that fiduciary advisors will have a harder time stuffing client portfolios with mutual funds that are overstuffed with fees so that the 'sharing' can begin in a back room." [ Tibble v. Edison Int'l , No. 13-550 (U.S. May 18, 2015)] (RIABiz)

The 403(b) QLAC
"[A]s with all things 403(b) ... there are a few unusual twists when trying to put a [Qualified Longevity Annuity Contract (QLAC)] in a 403(b) arrangement.... Where the vendor will require a rollover to another contract, there can be issues for those 403(b) contracts which have been distributed from a plan: a vendor may be reluctant to do so for these contracts, given the 403(b) tax regulation requirements of employer control. If there is no employer, the vendor may not be willing to arrange for a QLAC. An employer's approval of a 403(b) QLAC may trigger ERISA status for a non-governmental, non-ERISA plan. The 403(b) plan document will need to provide for a QLAC, to the extent that the 403(b) contract still is in the plan." (Business of Benefits)

Latest Twist on the Annuity Hits the Market: The Retirement Spending Account
"An investment account is more flexible than an annuity: If there's an emergency, you can sell it. If you die young, your heirs get the proceeds. But there's no guarantee it will last if you live longer than you expect.... Another downside to the Natixis product is its annual fee of about 1% of assets per year. Because it is sold only through financial advisers, that's on top of any fees they charge for advice." (Investment News)

Annuities With Guaranteed Living Benefits May Pose Risks to Financial System
"Annuities sold with guaranteed living benefits (GLBs) pose 'meaningful financial risks' to the U.S. financial system, the Financial Stability Oversight Council (FSOC) said in its annual report.... [T]he FSOC appeared to voice particular concern with fixed index annuities ... As to the emerging issue of pension risk transfers, the FSOC report said that consequences include the growth in the number of counterparties as well as changes in the type and amount of financial counterparty risk arising from the risk shifting transactions.... 'Accordingly, the backstop for pension plans switches from the [PBGC] to the state insurance guaranty funds,' the report said." (InsuranceNewsNet.com)

Fiduciaries of Large Pension Funds Fire Back at Share-Buyback Policies
"The chief financial officers of two large states and two large cities on Wednesday issued an open letter in their role as pension fiduciaries criticizing the practice of share-buybacks by corporations and questioning whether companies 'are adequately reinvesting for sustainable returns over the long term.' The four financial officers -- from New York state, New York City, Chicago and California -- are fiduciaries to pension funds with $860 billion in assets, covering 4.3 million participants[.]" (Pensions & Investments)

Financial Literacy and Decisionmaking Among College-Educated Hispanics (PDF)
"This report examines the financial practices, experience, literacy and condition of college-educated Hispanics, i.e., those with high school degrees who report at least 'some college' as their highest level of educational attainment, to shed light on their overall financial capability. This group is seldom the singular focus of analysis. To our knowledge there are no other reports that comprehensively examine the personal finances of Hispanics with this level of education. This report can thus serve as a baseline for future research on the personal finances of college-educated Hispanics." (TIAA-CREF Institute)

New Fiduciary Regs Proposal, Part 3: People Are Talking (PDF)
"When all is said and done, the average person must judge his or her personal and retirement plan investments using tools that they can handle. The rules and disclosures of the Proposal are just too complex to do participants or plan fiduciaries any good. Of course, we all know that there are bad actors out there, and yes, we need to get them out of the business, but there has to be an easier, more effective way." (Ferenczy Benefits Law Center LLP)

U.S. Chamber of Commerce Comment Letter to EBSA on Proposed Information Collection Requests and Burden Estimates Associated with the DOL Conflict of Interest Proposed Rule and PTE Notices (PDF)
10 pages. "The potential magnitude of these burdens raises serious concern that the costs of the proposed regulation's information collection strategy may outweigh the benefits that the proposed regulation is likely to achieve. Rather than proceeding down a too-costly regulatory path, the government should consider more carefully whether there may exist prudent alternatives to achieve the desired protections and benefits." (U.S. Chamber of Commerce)

Pay for Performance Table and Best Practices for Proxy Disclosure
"[This article] focuses on the new 'pay for performance' table ... and best practices to address the additional requirement of a description of [1] the relationship between executive compensation actually paid versus the company's TSR and [2] the relationship between the company's TSR versus the TSR of its peer group. The proposed rules give flexibility to describe these relationships in either narrative or graph form (or both).... [T]he use of charts will tell a better story and be easier for shareholders to visualize and understand and thus, should be used to help illustrate the narrative description. [The authors] have provided sample charts[.]" (Orrick)

Incentive Plan Practices: Aligning Executive Pay with Performance
"CEO compensation is overwhelmingly incentive-based. Target compensation is 85% variable and only 15% fixed.... Median annual incentive targets for CEOs equaled approximately 100% of base salary. Typical leverage provides the ability to earn half of the bonus at threshold performance levels and 200% for maximum achievement. 87% of the companies studied used at least one metric related to earnings." (Steven Hall & Partners)

Research Council Forms to Provide Insights on Consumer Behavior in Shopping for Benefits Online Liazon Corporation

NFP Acquires Hackett Valine & MacDonald, Inc. NFP Corp.

ICMA-RC Expands Guided Pathways Investment Advisory Services to Retirees ICMA-RC

ALM?s Judy Diamond Associates Analysis Reveals More Than 54,000 401(k) Plans Failed Nondiscrimination Testing ALM

Schwab Teams Up With University of Colorado Boulder on New Certified Financial Planner Track Charles Schwab & Co., Inc.

Securities and Exchange Commission Announces Charges Against Investment Firm and Two Executives Accused of Defrauding Police and Firefighter Pension Funds U.S. Securities and Exchange Commission

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