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Hot Topics in Employee Benefits: What We're Seeing - December 2015
December 16, 2015 WEBCAST
(Morgan Lewis & Bockius LLP)

14th Annual Future Care Summit
January 21, 2016 WEBCAST
(Healthcare Web Summit)

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Today's Discussions on the BenefitsLink Message Boards

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End of Year Disclosure Reports for DB Plans (PDF)
"A critical element used to determine the liability is the discount rate. The process of determining the discount rate has become more sophisticated in recent years. Each Plan has its own unique discount rate based on the expected future benefit payment flow from the Plan. The discount rate is intended to reflect the rate for high quality corporate bonds of similar benefit payment flow as the Defined Benefit Plan." (Markley Actuarial)

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Hybrid Plan Rules Leave Those Using Whipsaw in Tight Spot
"While the IRS and Treasury had given plans time to eliminate whipsaw calculations in the past, it was never made explicitly clear that they were required to do so, [said] Richard Shea [of Covington & Burling LLP] ... 'Sponsors in this situation are really, really angry. Their view is for a period of almost 20 years they were told, if your interest crediting rate isn't one of the rates in Notice 96-8 , you must do whipsaw and if you don't, your plan is bad,' Shea said. But now, they're being told that if they use whipsaw, they have a problem. To say that and 'then not to provide transition relief when it's actually needed adds insult to injury.' " (Bloomberg BNA)

Mobile Offerings for Retirement Plan Participants Increasing
"Additional features, such as message centers and document sending capabilities, are slowly appearing on mobile platforms. Sending documents, a feature added by one firm, allows participants to use a phone's or a tablet's camera to upload documents, similar to depositing a check on a mobile banking app." (PLANSPONSOR)

Anger Turns to Resignation in Face of DOL Rule
"When the U.S. Department of Labor came out with its long-awaited conflict-of-interest rule in April, some advisors, agents and broker-dealers feared the worst. Why us, they asked? What is it about what we do that regulators want to change the way we go about our professional lives? Months and many public hearings later, during which industry representatives have had the opportunity to vent their spleen, anger has mellowed into grudging resignation. That appears to be giving way to the new reality: those non-fiduciaries who sell financial products into retirement plans are simply going to have to adapt." (InsuranceNewsNet.com)

DOL's Retirement Advice Rule: Helping or Harming Sound Retirement Planning? (PDF)
15 pages. "According to research, including prior analysis issued by the DOL, the value of financial advisers could be more than the cost of conflicted advice envisioned by both the [Council on Economic Advisors] and DOL. Other widely cited potential consequences of the re-proposed rule include: [1] Cost increases and decreased access to financial advice especially for low and moderate income individuals; [2] Increased leakage of assets during job changes; [3] Decreased access to workplace retirement for small businesses; [4] Limits to investment education. When these potential consequences are quantified, one analysis shows that the re-proposed rule could decrease retirement savings between $68 and $80 billion each year." (American Council for Capital Formation)

City of Chattanooga Wins COLA Lawsuit Brought by Retired Police Officers, Firefighters
"In 2014, the City Council voted to reduce the cost-of-living adjustment, or COLA, for retired police officers and firefighters from a guaranteed annual 3 percent rate to an average of 1.5 percent, depending on the level of benefits a retiree was receiving. Reducing the cost-of-living adjustment level was part of a package of reforms ... to reduce the city's $150 million unfunded pension liability ... The reform also increased employees' pension contributions by nearly 40 percent, while saving the city more than $227 million over the next 24 years, the mayor's office said." (Chattanooga Times Free Press)

New Jersey to Disclose 5-Year History of Fees, Performance Data
"New Jersey State Investment Council, which oversees the policies governing the $79 billion New Jersey Pension Fund, has voted to report a five-year history of fees and performance data for the pension fund's investments.... The new fee information will apply to both externally managed investments and internally managed ones ... For fiscal year 2014, 74% of pension fund assets were managed internally ... The division uses external managers only for alternative investments and for global diversified credit funds[.]" (Pensions & Investments)

CalPERS Reports It Paid $3.4 Billion to Private-Equity Firms
"Private-equity firms reaped $3.4 billion in profit sharing for investing on behalf of [CalPERS] since 1990, the sort of gains that have led to debate over why Wall Street pays lower taxes than most American workers. The $295 billion pension fund Tuesday disclosed for the first time data on carried interest earned from buying and selling companies." (Bloomberg)

Chicago Pension Ruling Seen as a Loss for Investors
"As Chicago awaits the ruling on whether Mayor Rahm Emanuel's plan to save its retirement funds from insolvency is dead or alive, investors are already marking the fight down as a loss that will strain city coffers and boost pension costs by billions.... Moody's Investors Service said Nov. 10 that rejecting the pension fix could pressure Chicago's credit quality, but has factored such a decision into its speculative-grade rating on the city that has a $20 billion pension shortfall." (Bloomberg)

On the Human Element in Plan Governance, Officiating and other Human Endeavors
"[At] the end of the day, the central element of all of these (and many other) issues with regard to ERISA plans is that we are dealing with humans here, not robo-advisors or whatever else (like target date funds, for instance) that people want to think can take the messiness out of plan governance, pension investing, 401(k) decisions and the like.... [P]lan governance cannot help but have human error baked in, which is why, if you get to the heart of it, ERISA litigation doesn't focus on the outcome of plan governance but instead on the process of how the outcome came about: was there too much human error, or was enough effort and thought put into the process that brought about the outcome?" (Stephen Rosenberg, The Wagner Law Group)

Don't Blame Yourself -- Retirement Crisis Stems from Bad Policies, Not Bad Habits
"Americans have to increasingly save more on their own and protect their own savings from rising risks, all while labor-market turmoil has made saving more difficult and financial-market volatility has made protecting savings more onerous. The combination of growing risks and rising risk exposure has made a bad situation much worse because of policy's inattention to what people really need to achieve a secure retirement." (MarketWatch)

Labor Department Rule May Not Be in Consumers' Best Interest
"[T]he DOL rule could inhibit communication between licensed representatives like broker-dealers and employees ... [which] will increase the likelihood that terminating employees will cash out their crucial retirement savings.... [A] lack of educational communications to transitioning employees could result in an additional $20 to $32 billion of cash outs annually, decreasing the retirement savings of affected individuals by 20 to 40 percent.... Many experts think that the lack of a clear seller's exception will limit or discourage many small businesses from starting their own plans, negatively impacting the public policy goal of increasing access to retirement plans." (Pinar Cebi Wilber, via The Hill)

Happy Thanksgiving!
We at BenefitsLink would like to express to you our gratitude, and warmest wishes for the Thanksgiving holiday. The opportunity to be a part of your employee benefits career is truly an honor and a privilege. Thank you. (BenefitsLink)

Will the SEC Finally Provide Some Relief from the Nearly Incomprehensible Proxy Statement Requirement for a New Plan Benefits Table?
"Keith Higgins, Director of Corp Fin, hinted that he might be giving us a welcome gift in the future: a revision of Item 10 of Schedule 14A, the proxy statement ... [which is] a component of the disclosure rules that has too long been ignored and requires serious rethinking and rationalizing.... Corp Fin is currently working on the Disclosure Effectiveness Project, which focuses initially on Regs S-K and S-X, but after that, Higgins advises, the staff will then turn to the executive compensation and corporate governance information in the proxy statement.... Among the areas in the proxy statement that the staff will consider are these: [1] Item 10 of Schedule 14A ... [2] Regulation S-K Disclosure Requirements ... [3] CD&A ... [4] Compensation Tables ... [5] Compensation Committee Report ... [6] Form S-8." (Cooley LLP via Lexology)