Retirement Plans Newsletter
May 18, 2020
Newport Retirement Services Chicago IL / La Crosse WI / Overland Park KS
Newly PostedWebcasts, Conferences
COVID-19: the "New Normal" and Its Implications for Actuarial Modeling
May 19, 2020 WEBCAST
Club Vita
ERISA 2020: The Evolving World - Part I
August 4, 2020 WEBCAST
Practising Law Institute
Pension Plan Investments 2020: Current Perspectives
October 13, 2020 WEBCAST
Practising Law Institute
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Retirement Preparedness Is Top Concern Among Employers (PDF)
"Eighty-two percent of plan sponsors have made changes to plan design in the past two years.... [A]dding a matching contribution, increasing the matching contribution amount, and changing the matching formula represented three of four top changes made over the past two years. Adding a Roth contribution option rounded out the top four changes.... More than half of plan sponsors said they offer financial wellness programs to employees (57%).... Most sponsors said they offer a High Deductible Health Care Plan (56%), and of those that do, 86% also offer a Health Savings Account (HSA)."
Fidelity
Why Company-Sponsored DB Plans Are Still the Norm in the Midwest
"Private-sector employers in Iowa and Minnesota are still more likely to sponsor retirement plans, and employees there are more likely to take them up on the offer -- as of 2019, the most recent year available. What makes those states different? ... [E]verything seems to come back to culture. The cliches 'Minnesota nice' and 'Iowa nice' arise again and again. And really, what's nicer than helping your employees save for retirement?"
The Washington Post; subscription may be required
Pension Funded Status Deficit Grew to $299 Billion at End of April
"April's robust 3.93% investment gain increased ... asset values by $55 billion, to $1.571 trillion at the end of April.... [The] projected benefit obligation (PBO) increased by $113 billion during April to $1.870 trillion. The change resulted from a sharp decrease of 47 basis points in the monthly discount rate, to 2.92% for April from 3.39% in March."
Milliman
House Relief Act Comes with Multiemployer Changes -- and Controversy
"[The proposal] includes some funding relief for both multiemployer and single employer retirement plans ... [and] gives the PBGC authority and resources to partition more troubled multiemployer pension plans and provide financial assistance to keep them solvent for 30 years, with no benefit cuts. The legislation also doubles the PBGC guarantee for multiemployer plans, which currently is much smaller than the one for single-employer plans."
Pensions & Investments
What Might Multiemployer Pension Reform Look Like?
"As lawmakers shift to the next phase of COVID-19 stimulus, a review of past funding relief and recent proposals can provide insight in to what, if anything, multiemployer pension legislation could look like. Relief measures similar to those in WRERA and PRA may help healthy plans weather the storm while other proposals contain elements that could help address the multiemployer crisis. It is notable that the concepts of expanded partition authority and increased PBGC guarantees are included in proposals by both Senate Republicans and Democrats. However, differences of opinion on how these measures would be funded could be a sticking point in negotiations."
Milliman
ERISA's Social Goals: ESG Considerations Under ERISA
"In the current regulatory environment, there are indications that a fiduciary choosing an investment option on behalf of an ERISA plan should to be able to show that any consideration of ESG factors is not expected to diminish returns, and affirmatively to justify the taking into account of ESG factors.... [T]he extent to which the analysis under ERISA will influence or otherwise affect the analysis under state and local law, and in non-U.S. jurisdictions, is unclear, particularly where those jurisdictions and regimes permit, or even require, the consideration of ESG factors.... While shifts in regulatory tone and emphasis have been and may continue to be significant, it may be expected that ERISA's fundamental emphasis on investment performance will remain."
Dechert, via Lexology; free registration required
How Sticky Is Retirement Behavior in the U.S.? Responses to Changes in the Full Retirement Age
"[W]hile increases in the FRA strongly and immediately shift claiming ages, retirement ages exhibit persistent 'stickiness' at the old FRA of 65. [The authors] use several strategies to explore the likely mechanisms behind the stickiness in retirement, [and] find suggestive evidence of a role for employers in individuals' responses to the FRA."
National Bureau of Economic Research [NBER]; purchase required for full document
[Opinion]
Bad Examples Are Being Used to Justify Condemnation of the Nation's Private Retirement System
"401(k)s are working for far more people and in much more varied circumstances than the fear-mongering headlines acknowledge.... It's well past time to call out these reports -- that 'normalize' these 'bad' examples -- for what they really are: at best a naïve and misinformed parroting of surveys with questionable samplings and methodologies, and at worst serving as the agent of a long-standing and deliberately intentioned 'plot' to kill the 401(k).... If those of us who know better don't start speaking up -- and speaking out -- you can bet that the drumbeat of coverage about the failure of the 401(k) will one day become a self-fulfilling prophecy."
Data 'Points'
[Opinion]
"The special partition relief in the HEROES Act [would] have a powerful stabilizing effect on distressed multiemployer plans and the PBGC, and would allow plans to pay full retirement benefits to more than a million participants who are currently in danger of losing their benefits. This relief should carefully weigh the protection of accrued benefits and the special partition relief eligibility criteria with the cost of the legislation."
American Academy of Actuaries
[Opinion]
How the IRS and DOL Believe CARES Act Takes Care of an Individual's Savings and Retirement Benefits
"Both the IRS and DOL have recently issued guidance with respect coronavirus-related relief for an individual with savings and retirement benefits, including IRAs. The IRS and the Treasury Department 'anticipate' issuing further guidance. However, there is a need not only for more guidance, but for revised guidance to be issued quickly, so that those entitled to coronavirus-related relief will be aware of and be able to take advantage of all such relief[.]" [This article identifies and discusses specific areas of relief for which the author believes further guidance is needed.]
Albert Feuer, via SSRN
Benefits in General
[Guidance Overview]
COVID-19 Resource Guide: Action Items and Implementation Guidelines for Employee Benefit Plans
22-page chart summarizes official guidance, effective dates, employer actions, and additional notes for employer-sponsored plans.
Pepper Hamilton LLP and Troutman Sanders
Selected Discussionson the BenefitsLink Message Boards
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Life Insurance Policy at Normal Retirement Date
"I have a 401(k) plan with life insurance policies (ugh!, it was a takeover). One of the participants with a policy is terminated and is age 64. Is it correct that the plan sponsor needs to either distribute the policy to him at age 65 or convert the policy to cash? From what I read, if he were still working for the sponsor and not retired, the policy could stay in force."
BenefitsLink Message Boards
Davis Bacon Plans Annualization
"Plan accepts Prevailing Wage contributions and provides that they can be used to offset Profit Sharing. PW contributions are 100% vested. Although the plan document allows for offset, it doesn't address if those amounts used for that offset can also be subject to the Profit Sharing vesting schedule. Does the plan document have to specifically allow for the application of a vesting schedule on those amounts that are used to offset PS? Can someone point me to a resource that discusses this in more detail?"
BenefitsLink Message Boards
Missing Participant Due Over $5,000
"Is there any way for the trustee of a 401(k) plan that is not terminating to legally roll over a large balance on behalf of a missing or unresponsive participant to an IRA?"
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Press Releases
Walcheske & Luzi, LLC Adds Prominent ERISA Professor as Partner Walcheske & Luzi, LLC
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