Summary: What is the employer's responsibility for maintaining plan beneficiary information? In reviewing the employer requirements and responsibilities under ERISA as it relates to the employer's duties for maintaining beneficiary information, most of the statutory provisions relate to the employer's fiduciary responsibility to follow the plan's requirements and manage the plans in accordance with those requirements and ERISA rules.
Source: Thinkhr.com, May 2012.
Summary: The Department of Labor has issued an Advisory Opinion dealing with a tax-exempt organization which provides a deferral-only 403(b) plan and makes matching contributions to a qualified money purchase pension plan. The opinion rules that the 403(b) plan is subject to ERISA.
Source: Sungard/Relius, May 2012.
Summary: Is the 401k working as a retirement plan for the American public? Millions of Americans are barreling toward 65-plus with very little in the sugar bowl. A conversation with Teresa Ghilarducci and David Wray.
Source: Onpoint.wbur.org, May 2012.
Summary: If we are to believe the results of recent surveys, 401k investors currently have an overwhelming preference for guaranteed income investment options rather than traditional growth options. But, despite their popularity in polls and the imprimatur of government regulators, do fixed income investments really make sense for young workers investing for their retirement?
Source: Fiduciarynews.com, May 2012.
Summary: The United States isn't the only country that encourages workers to use retirement accounts to save for the future. Some other countries provide retirement accounts similar to 401k's that offer clearer disclosures, simpler investments, and lower costs than most retirement plans in the United States. A recent Government Accountability Office report recommends that the Labor Department examine retirement accounts in these four countries for ideas about how to improve retirement accounts here.
Source: U.S.News & World Report, May 2012.
Summary: The DOL recently issued two advisory opinions relating to "open" multiple employer plan (MEP) arrangements under which an entity purports to act as plan sponsor and plan administrator under ERISA to a single plan in which unrelated employers participate. The DOL concludes that the Open MEPs are not single retirement plans for purposes of ERISA but are several separate retirement plans separately established and maintained by the individual employers.
Source: Practical Law Publishing, May 2012.
Summary: Plans with qualified joint and survivor annuity options ("QJSAs") can be faced with a dilemma when a participant is seeking a distribution in a form other than as a QJSA without spousal consent and the participant also asserts they cannot get that consent because their spouse has "disappeared." If the spouse refuses to consent, then there is no distribution. But what if they really have no idea where their spouse is?
Source: Fox Rothschild LLP, May 2012.
Summary: This report presents the findings of Mohler, Nixon & Williams' 2012 Northern California 401k Plan Survey. The survey offers a regional perspective of 401k plans, and recent trends. The survey was conducted in March 2012, with over 100 Northern California plan sponsors and benefit plan managers participating. The respondents were asked about their current plan offerings and structure, and recent and expected changes.
Source: Mohler, Nixon & Williams (Free Registration May Be Required), May 2012.
Summary: To a large extent, the Department of Labor's 38 Q&As on the pending participant fee disclosures, contained in Field Assistance Bulletin (FAB) 2012-02, provide exactly what the retirement community is seeking -- clarification and explanation of the new rules for participant fee disclosures that must be provided by August 30. However, the now-notorious FAQ-30 appears to require new disclosures not to be found in the final rule.
Source: Plan Sponsor Council of America  , May 2012.
Summary: This is a checklist intended to be used by HR personnel and the plan fiduciaries of a covered individual account plan to help develop an action plan to comply with the participant fee disclosure requirements.
Source: Hawley Troxell Ennis & Hawley LLP, May 2012
Summary: This article is a talk with ERISA attorney Fred Reish about the retirement plan issues on the agenda in Washington, DC, and how they might be affected by the upcoming elections.
Source: PIMCO , May 2012.
Summary: Compliance with the DOL's new disclosure regulations ought to arm a plan's fiduciaries with the information that they need to know about what the plan is paying its service providers - both directly and indirectly. But is that enough? No. This article reviews several additional actions.
Source: Chang, Ruthenberg & Long PC, May 2012
Summary: The average investor using a target-date retirement fund didn't pick the fund because of its "glide path" or the asset allocation it will have when they reach retirement age. They picked the fund -- or allowed their employer to use it as a default choice for them -- because it was in the company's retirement plan and offered the promise of keeping the investment process simple.
Source: Smartmoney.com, May 2012
Summary: This is the third in Drinker Biddle's series of bulletins on the impact of the Department of Labor Final Regulation on service provider disclosures under ERISA Section 408(b)(2). In this bulletin they discuss the impact of those changes on broker-dealers. Authored by Fred Reish, Bruce Ashton and Summer Conley.
Source: Drinker Biddle & Reath LLP , May 2012.
Summary: Multiple employer arrangements offer the potential for economies of scale and efficient, professional fiduciary oversight that might otherwise be unavailable to a small or mid-sized employer. They can be a tremendous source of benefits for American workers, and supporting their formation and operation is sound public policy.
Source: Pentegra Retirement Services , May 2012.
Summary: Facing fierce financial industry resistance, a pending regulation that would expand the definition of "fiduciary" for anyone providing investment advice about retirement plans is confronting another hurdle: the fall election. DOL and SEC likely will delay any moves until after November vote.
Source: Investmentnews.com (Free Registration May Be Required), May 2012
Summary: If you think your employer knows more about your 401k plan's fees than you do, think again. Sponsors of some 401k plans don't understand the fees they're paying toward plan administration, says a new report by the U.S. Government Accountability Office. The GAO reported on one case, in fact, where a relatively large plan underestimated its recordkeeping costs by $58,000.
Source: Consumerreports.org, May 2012
Summary: This is a statement from Brian H. Graff, CEO and Executive Director of The American Society of Pension Professionals & Actuaries in response to Demos report, "The Retirement Savings Drain: Hidden & Excessive Costs of 401ks."
Source: ASPPA, May 2012
Summary: An median-income, two-earner household will pay nearly $155,000 over the course of their lifetime in 401k fees, according to a new analysis by national public policy center Demos. "The Retirement Drain: The Hidden and Excessive Costs of 401ks" details how the nation's shift in retirement policy toward individual retirement accounts has made savers vulnerable to losing almost one-third of their investment returns to a complex, inefficient market.
Source: Demos.org , May 2012.
Summary: The SPARK Institute has created an "Investment Provider Information Form for Multivendor 403(b) Plan Participant Disclosure" that will help facilitate compliance with the Department of Labor's participant disclosure regulations by investment providers and recordkeepers serving 403(b) plans with multiple vendors.
Source: 401khelpcenter.com, May 2012
Summary: It has long been the case that the Morningstars and Financial Engines of the world made money as fiduciaries -- but now smaller RIA firms may get in on the act by offering a level of flexibility, customization and cachet that their small broker counterparts are comfortable with.
Source: RIAbiz.com, May 2012
Summary: For some, "audit" can be the most feared word in the English language. And this year, the Labor Department is doing its utmost to spread the word. The buzz is that the department is stepping up its efforts to audit 401k plans and other employer-sponsored retirement plans. Advisers should look for these common mistakes made by retirement plan sponsors.
Source: Investmentnews.com (Free Registration May Be Required), May 2012
Summary: The court found it troublesome that ABB took no action with respect to these fees, even after receiving a report from its benefits consultant, noting that the plan recordkeeping fees paid by ABB's 401(k) plans were excessive and appeared to be subsidizing other non-plan-related services that Fidelity provided to ABB.
Source: Reed Smith LLP, May 2012
Summary: The willingness of an experienced plaintiffs' ERISA counsel to settle for "pocket change" in the Braden vs. Wal-Mart Stores Inc. case and the 7th U.S. Circuit Court of Appeals' upholding of a lower court's dismissal of the Loomis vs. Exelon Corp. case must have delighted 401k plan sponsors.
Source: Pensions & Investments (Free Registration May Be Required), May 2012
Summary: This article is intended to serve as a guide for plan sponsors on how to survive 2012 and beyond as this year places added burdens and responsibilities to plan sponsors.
Source: Rosenbaum Law Firm PC, May 2012
Summary: Many contend that savings rates are too low to ensure sufficient retirement income. Education and automation can turn things around.
Source: Society for Human Resource Management, May 2012*
Summary: Selecting the appropriate investment default option for a defined contribution plan is likely to be the most important decision that plan sponsors will make. This is particularly true for the majority of DC plans that automatically enroll participants and invest their contributions into an investment default option - predominantly target-date strategies. So where should a plan sponsor or fiduciary begin in selecting and evaluating appropriate default investment strategies?
Source: PIMCO , May 2012.
Summary: Whether the status of a "safe harbor" 403(b) plan under 29 C.F.R. 2510.3-2(f) would be adversely affected if the employer makes matching contributions into another pension plan based on the employees' salary deferrals to the 403(b) plan.
Source: U.S. Department of Labor, May 2012
Summary: Whether an arrangement to be established by National Retirement Plan, Inc. (NRP) to merge unrelated abandoned individual account plans would constitute an "employee pension benefit plan" within the meaning of ERISA section 3(2).
Source: U.S. Department of Labor, May 2012
Summary: Whether a retirement savings program marketed by 401k Advantage LLC as a multiple employer plan would be a single "employee benefit plan" within the meaning of ERISA section 3(2) where multiple unrelated employers adopt the Plan to provide retirement benefits to their employees.
Source: U.S. Department of Labor, May 2012
Summary: A continuing challenge in the marketplace (and, generally, for policymakers) is how to effectively increase small employer sponsorship of retirement plans in a manner which protects plan participants, while keeping a few "bad actors" from abusing the system.
Source: Businessofbenefits.com, May 2012
Summary: The Employee Benefits Security Administration has issued guidance on the application of the fee disclosure regulations under ERISA §404(a) and §408(b)(2). The guidance, issued in the form of a Field Assistance Bulletin, addresses the calculation of the quarterly disclosure of revenue sharing, the reporting of fees under brokerage windows, the treatment of investment management services as a designated investment alternative, and numerous other issues.
Source: CCH, May 2012
Summary: The Government Accountability Office has recommended that the Department of Labor examine the definition of fiduciary to determine if the definition captures the current relationship between sponsors and providers. The GAO unveiled this recommendation in a study conducted to better understand the fees that 401k plan sponsors and their participants pay.
Source: Benefitspro.com, May 2012
Summary: To optimize the value of a 401k plan, employers need to focus on three important tenets: run the plan in the best interest of employees; use investments that diversify risk and minimize the potential for a large loss; and above all, keep fees as low as reasonably possible.
Source: Forbes, May 2012
Summary: There is a growing trend: lawsuits filed by (or on behalf of) ERISA plans against investment providers for charging excessive fees or otherwise gleaning improper profits from investments used in ERISA plans. What is unusual about the trend is that the while the suits are purportedly filed by the plans, the plans' fiduciaries often have no involvement with bringing suit against their service providers.
Source: Seyfarth Shaw LLP, May 2012
Summary: It is the responsibility of the plan fiduciaries--those ultimately responsible for the administration of the plan and the investment of plan assets--to pay those third parties no more than "reasonable" compensation. If a fiduciary pays a third party an unreasonable amount, the fiduciary could have liability and face excise tax penalties under ERISA.
Source: Ballard Spahr LLP, May 2012
Summary: A Government Accountability Office survey and review of retirement plan documents showed some sponsors face challenges in understanding the fees they and their participants are charged.
Source: Plansponsor.com, May 2012
Summary: GAO recommends that the DOL develop and implement more proactive approaches to sponsor educational outreach, improve public access to annual Form 5500 data, and examine the definition of a fiduciary to determine if it captures the current relationship between sponsors and providers.
Source: U.S. Government Accountability Office, May 2012
Summary: The survey was used to gather information on the fee amounts plan sponsors and participants paid for certain services performed by service providers, the factors they considered in selecting service providers, the investment options offered to plan participants, and the Department of Labor resources sponsors may have used.
Source: U.S. Government Accountability Office, May 2012
Summary: All small businesses operate toward the same goal: staying in business. Once the initial shaky stage is over, the next step is preparing for the future. One aspect is choosing the best retirement plan for your company.
Source: Reuters, May 2012
Summary: Small businesses are increasingly concerned about the inadequacy of retirement savings for many Americans and possible government responses, according to a provider of payroll services.
Source: Planadviser.com, May 2012
Summary: A significant number of U.S. employers that still offer defined benefit pension plans are committed to providing those benefits to new salaried employees, according to a survey Towers Watson. The survey also finds that employers are adding features to their defined contribution plans that mirror DB design to help close possible savings gaps created by the shift from DB to DC plans.
Source: Employee Benefit News, May 2012
Summary: Plan fiduciaries violated their duties under ERISA by failing to monitor recordkeeping costs and to negotiate rebates from a recordkeeper that was paid through revenue sharing, according to a federal trial court in Missouri.
Source: CCH, May 2012
Summary: More than half of Baby Boomers and Generation Xers are projected to have adequate retirement income to cover basic expenses and uninsured health care costs, according to the latest projections by the nonpartisan Employee Benefit Research Institute.
Source: Employee Benefit Research Institute , May 2012.
Summary: Revenue sharing can be widely abused by both plan providers and investment advisors. The proper use of revenue sharing and the corresponding decisions about which mutual fund share classes to use in a 401k plan are a fiduciary concern of significant importance.
Source: MJM401k.com , May 2012.
Summary: While both securities fraud cases and ERISA stock drop lawsuits center on the facts leading up to a decline in the company's stock price, the two types of litigation have critical differences and ERISA plaintiffs have a number of advantages over securities plaintiffs.
Source: Schiff Hardin LLP , May 2012.
Summary: The Department of Labor is submitting an Employee Benefit Security Administration information collection request to the Office of Management and Budget for review and approval on ERISA Procedure 76-1 and notice of blackout period under ERISA.
Source: CCH, May 2012
Summary: Would you have guessed that McDonald's would have such a generous retirement benefit? Is its retirement generosity only possible because it offers mini-med health benefits?
Source: Employee Benefit News, May 2012
Summary: Little did Jamila Minnicks know the firestorm she would start when she wrote a memorandum asking the U.S. District Court for the District of Idaho to remove Matthew Hutcheson from exercising authority or control over one of the plans he served as fiduciary or trustee for, and asking the court to appoint an independent fiduciary to wrap up the plan.
Source: Pension Protection Act Blog, May 2012
Summary: On July 1, 2012 all covered service providers are required to deliver a written description of their services rendered for fees charged. But, what happens if the covered service provider fails to deliver the disclosures to the responsible plan fiduciary on July 1st? This is the focus of this article.
Source: FRAplantools.com , May 2012.
Summary: The combination of increased retiree longevity and increased prices has resulted in many older Americans outliving their retirement savings. There are lifetime income payment options that would ameliorate this problem, but which are not offered by most defined benefit or defined contribution plans. New guidance would begin to make it easier for plan sponsors to incorporate these options.
Source: Morgan, Lewis & Bockius LLP, May 2012
Summary: A former J.P. Morgan Chase & Co. employee is suing the firm on behalf of retirement plan participants who lost money investing in the company's stock after the bank reported a $2 billion trading loss.
Source: Plansponsor.com, May 2012
Summary: If an employee benefit plan suffers an investment loss, a plan fiduciary may be held liable under ERISA only if ERISA's loss causation requirement is satisfied -- that is, only if the loss was caused by the fiduciary's breach of fiduciary duty. The U.S. courts of appeal are divided on the question of whether the burden of proof regarding loss causation falls on the plaintiff or the defendant.
Source: Covington & Burling LLP , May 2012.
Summary: Principal created this comprehensive interactive online tool called Assessing Retirement Plan Value. It offers tips and tools for understanding and evaluating retirement plan fees, services and overall value.
Source: Principal, May 2012
Summary: BrightScope and The Spaulding Group jointly announced the release of a new white paper, "Universal Advisory Performance Standards," highlighting the need for an industry consensus performance standard for financial advisors.
Source: 401khelpcenter.com, May 2012
Summary: The purpose of this white paper is to propose a set of standards, the Universal Advisor Performance Standards (UAPS), for the retail / high net worth space, to address two areas: Reporting to prospective clients and reporting to existing clients.
Source: BrightScope , May 2012.
Summary: This 40 page checklist is a "quick glance" resource to help you meet plan reporting and disclosure requirements for plans subject to the reporting and disclosure requirements of ERISA. This easy-to-follow checklist should help you provide timely and complete information to individuals and appropriate government agencies.
Source: Prudential , May 2012.
Summary: An annual benchmarking survey of nonprofit sector retirement plans shows broad improvement, but the survey's sponsor says financial advisors are needed to close the still yawning gap between 403(b) plans and their corporate cousins, 401k's.
Source: Advisorone.com, May 2012
Summary: Sponsors of 403(b) retirement plans continue to adapt to new regulations from the DOL. The not-for-profits continue to make improvements, especially to investment line-ups. These insights and more are revealed in the latest 403(b) plan sponsor survey from the Plan Sponsor Council of America.
Source: 401khelpcenter.com, May 2012
Summary: PSCA conducted a survey of 403(b) plan sponsors in March 2012 to help fill the gap in available benchmarking data for 403(b) plan sponsors. Here are the highlights of the survey.
Source: Plan Sponsor Council of America, May 2012
Summary: Sponsors of 403(b) retirement plans continue to adapt to regulations from the Department of Labor (DOL) and continue to make improvements.
Source: Plansponsor.com, May 2012
Summary: Author writes, "I have been asked by a number of folks of my thoughts related to the statements by the DOL in their brief for removal of the fiduciaries in the Hutcheson matter. Besides the observation that this sort of mischief could have (and does happen) regardless of the existence of a MEP, to my mind, its all about accountability. Lets explore this."
Source: Businessofbenefits.com, May 2012
Summary: Upcoming Department of Labor fee disclosure rules will compel plan fiduciaries to look more closely at fees associated with their retirement plans and that may prompt many to consider lower cost lower-cost index funds.
Source: Investmentnews.com (Free Registration May Be Required), May 2012
Summary: Several independent divisions of Morningstar filed a comment letter with the Securities and Exchange Commission urging the regulator to require target-date series to provide more details on how the investments are managed and structured.
Source: Morningstar.com, May 2012
Summary: Today, participation in Leviton's 401k plan is 84%. Fran Ruderman, vice president of HR for Leviton, attributes the participation success to a three-pronged approach: auto-enrollment, auto-escalation and access to personalized saving and investing advice.
Source: Employee Benefit News, May 2012
Summary: Most companies can do a better job in supervising the company 401k and the motivation to do so needs to start at the top with the owner of the company or the Board of Directors.
Source: Figuide.com, May 2012
Summary: 401k's remain a focal point of criticism when thinking about retirement security in America. Perhaps the most commonly cited concern about 401k's is the size of current account balances. This argument, however, overlooks the rapid expansion of 401k plans over the past three decades.
Source: Vanguard, May 2012
Summary: Sponsors of 401k plans often fail to make the proper employer matching contribution called for under the terms of the plan document. Although there are any number of causes for this failure, a common one involves the timing of matching contributions.
Source: Spencer Fane Britt & Browne LLP, May 2012
Summary: Two companies have settled lawsuits with the Department of Labor, agreeing to restore retirement assets to participants.
Source: Plansponsor.com, May 2012
Summary: In outlining the traditional structure for an IPS, the CFA Institute retains language from the era preceding the dominance of 401k plans in the institutional realm. While this structure certainly continues to work well for private individuals and single portfolio institutions, it represents an awkward construct for 401k plans.
Source: Fiduciarynews.com, May 2012
Summary: DOL revised its response to Q-19 regarding website performance information, making clear that a website in connection with a variable return DIA should be updated to show 1-, 5-, and 10-year performance information for the period ending on the most recently completed calendar quarter.
Source: Groom Law Group, May 2012
Summary: Article covers these questions and others: What should a plan fiduciary do to confirm that disclosure received from service providers satisfies the new regulations? Who are the covered service providers required to provide disclosure? What must the content of the disclosures include?
Source: Metropolitan Corporate Counsel, May 2012
Summary: A federal district court has found the plan sponsor, employee fiduciaries and a recordkeeper of 401(k) plans liable for more than $35 million in damages under ERISA for failing to control costs, permitting the plans to pay excessive revenue-sharing compensation to service providers and imprudently selecting investment options.
Source: McGuireWoods LLP, May 2012
Summary: Many fiduciaries taking on the role are not high enough up the corporate food chain to clearly have enough power to control for and avoid potential problems in the plans they have been charged with administering. This leaves those administrators in the situation of being exposed as fiduciaries to personal liability for problems in the plan, while not having enough power to avoid or cure the problems.
Source: Bostonerisalaw.com, May 2012
Summary: Many plan sponsors have never had to deal with fee disclosure regulations issues in the past because their providers gave them everything they needed, but that is no longer enough. As the fiduciary of their plans, they now have to justify plan expenses to their plan participants. There are many risks to plan sponsors because of the new fee disclosure regulations.
Source: Benefitspro.com, May 2012
Summary: At age 56, a partner left his law firm and elected to roll his balance in the firm 401k over into an IRA. Subsequently, he took a pre-age 59½ distribution from the 401k and was assessed with the additional 10% tax. The U.S. Tax Court upheld the additional 10% tax.
Source: Haynes and Boone LLP, May 2012
Summary: Protecting against risk is the most important concern for Americans of every age when it comes to managing their retirement assets, according to Charles Schwab's latest quarterly Retirement Pulse Survey.
Source: 401khelpcenter.com, May 2012
Summary: Today, more and more participants are requesting hardship distributions from their 401k plans in an effort to make ends meet. While you no doubt want to comply with their requests, you don't want to do so to the detriment of your plan. It's critical to understand what the law allows and to review your plan's hardship distribution procedures in order to avoid the headaches that will result from impermissible hardship distributions.
Source: Employee Benefit News, May 2012
Summary: The sad tale of Chesapeake Energy employees is a reminder of a series of oft taught but seldom learned lessons, namely that when you hold too much of your employer's stock you imperil your retirement, impair your ability to manage risk and set yourself up for expensive, emotionally driven investment decisions.
Source: Reuters, May 2012
Summary: The Department of Labor has issued Field Assistance Bulletin No. 2012-02 to supplement the regulations on fee disclosures to 401k plan participants. The bulletin is in the form of 38 questions and answers and also provides guidance on the related requirement on service providers to furnish specified information to plan administrators so that administrators may comply with their disclosure obligations to 401k plan participants.
Source: Compensation.BLR.com, May 2012
Summary: Plan sponsors are required to report on Schedule C each service provider that received $5,000 or more in direct or indirect compensation from a plan. DOL is concerned that plan administrators and fiduciaries are unaware of the fees and expenses that they are supposed to report on Schedule C.
Source: Bloomberg/BNA, May 2012
Summary: How many of your retirement-age employees are just hanging around so they can receive benefits and collect paychecks, simply because they can't afford to stop working? It's in employers' best interests to improve the retirement outcomes for their employees by creating a culture of retirement readiness. Here is a six-step plan.
Source: Business Management Daily, May 2012
Summary: If a fiduciary sets aside their duty, they may be held personally responsible for the results. Your obligations can follow you into bankruptcy.
Source: Lockton Retirement Services , May 2012
Summary: According to a survey by The Hartford, the younger the worker, the greater the attraction to having the ability to take at least a portion of a retirement account as guaranteed income. A high percentage of workers in all age ranges found this appealing, but the greatest appeal was among workers under the age of 30, with 95 percent of these workers responding affirmatively to the survey. The author has two reactions to this.
Source: Yahoo Finance, May 2012
Summary: One of the biggest flaws in most people's retirement plan is something that previous generations rarely worried about: monthly income guaranteed for life. But the fix is in, and before long your 401k may look a lot more like your dad's pension.
Source: Time, May 2012
Summary: In a survey released at last month's fi360 Annual Conference, the desires of rank and file advisers may contradict the stated position of major industry lobbying groups.
Source: Fiduciarynews.com, May 2012
Summary: The 408(b)(2) regs have an important prohibited transaction exemption for the responsible plan fiduciary under certain conditions, should there be a failure of disclosure, but this exemption does not run to the service provider who fails to make a timely disclosure. And even then the exemption only runs to the disclosure itself, not the actual prohibited transaction which may be disclosed under 408(b)(2).
Source: Business of Benefits, May 2012
Summary: The Charles Schwab Corp. is partnering with fiduciary company fi360 in an effort to give its RIA clients fiduciary training and integrated technology so that they'll be better equipped to meet increasing demands from 401k plan sponsors.
Source: RIAbiz.com, May 2012
Summary: The Labor Department is charging the fiduciary with prohibited transactions, including self-dealing and conflict of interest, as well as breaches of impartiality, loyalty and prudence. The agency also has filed an application for a temporary restraining order, and it seeks to remove and replace Mr. Hutcheson and other defendants as fiduciaries over the affected plans.
Source: Investmentnews.com (Free Registration May Be Required), May 2012
Summary: A little-recognized aspect of target-date funds is their glide paths -- the way an investor's asset allocation changes over time -- may change. This is not the expected change in allocations from year to year as stocks decline and bonds increase; rather it's when the entire glide path itself shifts up or down.
Source: Morningstar.com, May 2012
Summary: Importantly, although the responsibility to provide the disclosures rests solely on the service provider, the law also places responsibility - and potential liability - for ensuring that the plan receives the required disclosures on the plan fiduciary. Therefore, plan fiduciaries must act now to fulfill this responsibility in order to prevent a possible prohibited transaction and/or fiduciary breach.
Source: Winston & Strawn LLP , May 2012
Summary: The survey is conducted through an independent research firm and the data represents employees of different age groups and employers of various sizes. In addition to the findings on various retirement issues, the survey provides an in-depth segmentation and comparison analysis based on company size, gender and age groups.
Source: Transamerica Center for Retirement Studies, May 2012
Summary: On May 7, 2012, the DOL issued Field Assistance Bulletin 2012-02 (the "FAB"), which provides additional guidance about these disclosures in a question and answer format. The FAB also contains several very helpful illustrative examples. The key issues discussed in the FAB are summarized here.
Source: Seyfarth Shaw LLP, May 2012
Summary: The decision making process of a retirement plan fiduciary has always been important. However, the recent district court decision in Tussey v. ABB, Inc., which levied a $35.2 million judgment against the employer-fiduciary (ABB), emphasizes the importance of a prudent decision-making process. Here are some of the major missteps made by ABB and the key takeaways for other plan fiduciaries.
Source: Poyner Spruill LLP, May 2012
Summary: DOL's Fee Disclosure FAQs say those making a good-faith effort to comply with participant fee disclosures will not be penalized initially. But, those not fully in compliance with participant-level fee disclosures by August 30 will need to be in full compliance by the next disclosure, Borzi says.
Source: Bloomberg/BNA, May 2012
Summary: Plan sponsors should be working with their attorneys to help ensure that they receive required fee and service information from covered providers before July 1, 2012 for current contracts and that they have reasonable procedures in place for follow up as necessary. These steps will help plan sponsors avoid inadvertent prohibited transactions where possible, and position them to take advantage of the regulatory relief if necessary.
Source: Sibson Consulting , May 2012
Summary: The July 1st deadline for compliance with the Department of Labor's 401k and 403(b) fee disclosure regulations is fast approaching. Reviewing related information is part of an employer's fiduciary responsibility to prudently administer plan funds and service providers and make sure fees paid by the plan are "reasonable."
Source: CFO.com, May 2012
Summary: Now that year two of the new 403(b) requirements are behind us, this article focuses on common audit issues uncovered by CapinCrouse, an independent accounting and auditing firm specializing in not-for-profit organizations, during audits performed for its clients.
Source: Lockton Retirement Services , May 2012
Summary: Lifetime income is not a cure-all, but plan sponsors should understand that participants have significant risk in outliving their plan accounts, and lifetime income options are worth considering as a viable component to plan design.
Source: Lockton Retirement Services , May 2012
Summary: Half of Americans say they aren't contributing to a retirement plan, but more specifically 56% of Americans ages 18-34 are more likely to be among those not saving, according to a recent LIMRA survey. "The findings from this survey were disturbing," says Matthew Drinkwater, associate managing director, LIMRA Retirement Research.
Source: Employee Benefit News, May 2012
Summary: The DOL has issued Field Assistance Bulletin No. 2012-02 to supplement the regulations on fee disclosures to 401k plan participants. The Bulletin is in the form of 38 questions and answers and also provides guidance on the related requirement on service providers to furnish specified information to plan administrators so that administrators may comply with their disclosure obligations to 401k plan participants.
Source: HR.BLR.com, May 2012
Summary: Evan Inglis, Vanguard chief actuary and a principal in Vanguard Investment Strategy Group, and Steve Utkus, head of the Vanguard Center for Retirement Research, discussed the shifting role plans play in the retirement decision--and the workforce-management implications for plan sponsors.
Source: Vanguard, May 2012
Summary: Research from Vanguard bolsters the argument for limiting the number of loans that employees can take from their 401k retirement accounts. The research analyzed 2010 data for roughly a quarter million participants in seven large, defined-contribution retirement plans that are administered by Vanguard.
Source: New York Times, May 2012
Summary: HR.BLR.com editor Chris Ceplenski details the notifications that service providers must make to plan sponsors, what plan sponsors must do when they receive the information, and what plan sponsors should do if they have not received the proper disclosure from a service provider.
Source: HR.BLR.com, May 2012
Summary: Fielded in March and April of 2012, the survey was completed by 380 advisors from across the spectrum of advisor business models and affiliations. The survey not only sought advisors' opinions on the fiduciary standard but also gauged their understanding of what such a standard means now, or would mean, to their businesses.
Source: Advisorone.com, May 2012
Summary: The exclusion of these products as a qualified default investment alternative in the Pension Protection Act of 2006 was the supposed death knell for principal preservation. But principal preservation products such as stable value are alive and well, and advisers and sponsors should take notice.
Source: Investmentnews.com (Free Registration May Be Required), May 2012
Summary: The Eleventh Circuit adopted the Moench presumption of prudence in affirming the dismissal of employer-stock drop case Lanfear, et al., v. Home Depot, Inc., et al. The court likewise rejected the notion that allegedly inaccurate and incomplete public securities filings lead to plausible claims under ERISA.
Source: Alston & Bird LLP , May 2012
Summary: Some Americans are not optimistic about the possibility of a financially comfortable retirement - or the possibility of retirement in general. According to a survey released today by financial services firm Edward Jones, one in 10 Americans say retirement simply isn't an attainable goal when asked to identify the reason they're not saving enough.
Source: 401khelpcenter.com, May 2012
Summary: The Position Paper concludes that for many, target income replacement ratios should be higher than the 70-75% conventionally accepted as a rule of thumb. Regardless of target income ratio, the six panelists call for consistent contribution levels in the range of 10% to 16% of pay over a 30-year or 40-year career.
Source: Retirement Advisor Council , May 2012
Summary: In Lanfear v. Home Depot, Inc., No. 10-13002, 2012 WL 1580614 (11th Cir. May 8, 2012), the United States Court of Appeals for the Eleventh Circuit became the sixth circuit court to expressly adopt the view that ERISA plan fiduciaries do not abuse their discretion by investing in employer stock according to plan terms, as long as it was reasonable to do so under the circumstances.
Source: Jenner & Block , May 2012
Summary: Plan sponsors and providers are increasingly scrutinizing defined contribution plans to ensure they accommodate participants' long-term needs. As a result, plans are being transformed by the widespread adoption of target-date funds (TDFs), often as the default fund, and the use of managed accounts as a complementary strategy.
Source: Vanguard , May 2012
Summary: This article describes lessons learned and focuses on areas related to employee matters that the buyer's deal team should incorporate in its due diligence and planning, including pension and other benefit issues.
Source: Employee Benefit Solutions , May 2012
Summary: Consider the case of a man who named his wife as the beneficiary of his union pension but never told anyone that he had a first wife whom he never divorced. Here's the question: Which wife gets the money?
Source: Investmentnews.com (Free Registration May Be Required), May 2012
Summary: Target income replacement ratios should be higher than the 70% to 75% conventionally accepted as a rule of thumb, the Retirement Advisor Council contends. Regardless of target income ratio, the paper calls for consistent contribution levels to 401k and 403(b) plans in the range of 10% to 16% of pay over a 30- or 40-year career.
Source: Planadviser.com, May 2012
Summary: A workplace investor education program field tested in three states increased employee participation in workplace savings and investing programs, its creators claim.
Source: Plansponsor.com, May 2012
Summary: Some Americans are not optimistic about the possibility of a financially comfortable retirement - or the possibility of retirement in general. According to a survey released today by financial services firm Edward Jones, one in 10 Americans say retirement simply isn't an attainable goal when asked to identify the reason they're not saving enough.
Source: 401khelpcenter.com, May 2012
Summary: Annuity options are more prevalent in 403(b)s and many plans offer multiple service providers. With more service provider choices, it may require greater need for employee education because employees will not only need to decide an asset allocation, but must also make a service provider decision. However, as it relates to participant disclosures, having an annuity option is not necessarily a challenge.
Source: Plansponsor.com, May 2012
Summary: When fiduciary flag-bearer Matthew Hutcheson was indicted last month for 17 counts of wire fraud and 14 counts of theft, critics suggested this might just prove the fiduciary movement was dead. But, fiduciary advocates say, this one arrest doesn't negate the need for fiduciary standards.
Source: RIAbiz.com, May 2012
Summary: This updated analysis discusses why an investor may consider expanding a traditional portfolio. We show that including nontraditional asset classes and strategies can work, we discuss the implementation risks for nontraditional asset classes and strategies, and we offer some best practices for investors interested in moving beyond the three traditional asset classes.
Source: Vanguard , May 2012
Summary: Among other guidance, the DOL Bulletin addresses the compliance difficulties that covered service providers and plan administrators may encounter if they have already furnished or are preparing to furnish their initial disclosures pursuant to the fee disclosure regulations.
Source: Sutherland Asbill & Brennan LLP , May 2012
Summary: Employers and their employees in the U.S. hold different perspectives on how to achieve retirement preparedness through 401k plans, according to the results of two newly released studies from Schwab Retirement Plan Services. The studies indicate that, despite efforts by employers to educate workers on the 401k offering, most workers remain disengaged and unprepared financially for retirement.
Source: Society for Human Resource Management, May 2012
Summary: Fees and expenses are part of every retirement plan but some people have no idea how those fees work, who is paying them, and how much they actually cost. Pentegra Retirement Services answers key questions on new rules in this article.
Source: Pentegra Retirement Services , May 2012
Summary: There are plenty of routes to address retirement planning needs, ranging from simple online calculators to employer-provided preretirement services. Financial advisers also offer their services to create customized comprehensive plans and portfolio management. Whatever avenue you choose, it's going to get complicated. The complexity can be daunting.
Source: New York Times, May 2012
Summary: Most of the 38 FAQs provide helpful clarifications on the scope of the participant disclosure rules and the specific disclosure requirements. However, some of the answers provided raise new compliance questions or additional issues that will need to be considered. Still other questions being raised by the industry remain unanswered.
Source: Morgan, Lewis & Bockius LLP, May 2012
Summary: According to a new LIMRA survey, 49 percent of Americans said they weren't contributing to any retirement plan; Americans ages 18-34 were more likely (56%) to be among those not saving.
Source: LIMRA, May 2012
Summary: Relying on Morningstar's extensive database of information on target-date funds, this report seeks to define the state of the industry as of year-end 2011. The report examines target-date fund flows, risk and return traits, portfolio attributes, and fee rankings, as well as data related to the quality of the people running target-date funds and the parent companies that sponsor them.
Source: Morningstar.com , May 2012
Summary: The law firm of Perkins Coie may have marked the beginning of the fee disclosure wars by filing a class action lawsuit against his employer challenging deductions from his paycheck for various items, including deductions made for "mandatory retirement," contributions made on his behalf to the firm's cash balance plan and 401k matching contributions made on his behalf to the firm's 401k plan.
Source: Pension Protection Act Blog, May 2012
Summary: Fee disclosure is the legal obligation and reasonableness is the issue. But how do you determine reasonableness? RFPs have been relied on in the past as has surveys, but benchmarking is the new normal. If you don't benchmark your plan, someone else will and the conclusions may not work to your benefit.
Source: PlanTools , May 2012
Summary: The percentage of America's younger workers who say an employer-sponsored retirement program is important for either joining or staying with an employer has increased dramatically in the past two years, according to the Towers Watson Retirement Attitudes Survey. The survey also found that traditional defined benefit plans gained favor among newly hired employees.
Source: CCH, May 2012
Summary: Target date funds favoring indexed strategies may hold fewer assets than their actively managed counterparts, but plan sponsors are becoming more intrigued by the offerings. The numbers still favor active managers, however, assets are pouring into passive series at nearly twice the rate of their actively managed cousins.
Source: Investmentnews.com (Free Registration May Be Required), May 2012
Summary: With pension plans falling out of favor, the burden to provide for a secure retirement is increasingly falling on our own shoulders. This means trying to figure out a way to maximize the benefit of retirement accounts such as 401k's. Here are a few ways to take personal responsibility for funding your retirement years.
Source: U.S.News & World Report, May 2012
Summary: Fred Teufel is a principal in Vanguard Institutional Investor Group who oversees annual plan and Form 5500 reporting. To help guide sponsors through the Form 5500 filing process, he provided detailed answers to frequently asked questions.
Source: Vanguard, May 2012
Summary: The DOL, in its final 408(b)(2) regulation, issued relief for 403(b) plans, under which information related to certain contracts would not be subject to the new fee disclosure rules. Though this was helpful, it did not specifically address the 404a-5 participant disclosure regulations for the same type of contracts.
Source: Businessofbenefits.com, May 2012
Summary: Consultants in the employ of some major players in the industry have told state legislators and school districts that teachers are paying too much for their 403(b) accounts. Their advice is to eliminate what they have now and replace it with low-cost, no-frills, do-it-yourself providers. But school districts need to know that teachers want and need choices.
Source: ASPPA, May 2012
Summary: This bulletin discusses the impact of the U.S. Department of Labor's final 408(b)(2) disclosure regulation on discretionary investment managers -- that is, investment advisers with the authority to manage the assets of ERISA-governed retirement plans.
Source: Drinker Biddle & Reath LLP , May 2012
Summary: MassMutual's Retirement Services Division data for the first quarter 2012 indicates that two segments of its defined contribution plan participants are increasing their savings levels at a higher rate than participants overall. For the quarter ended March 31, 2012, women increased their deferral rates at twice the level of men (4 basis point average increase for women vs. 2 basis point average increase for men).
Source: 401khelpcenter.com, May 2012
Summary: Employers and their employees hold different perspectives on how to best achieve retirement preparedness through 401k plans, according to the results of two newly released studies from Schwab Retirement Plan Services. Taken together, the studies indicate that, despite efforts by employers to educate workers on the 401k offering, most workers are unengaged and financially unprepared for retirement.
Source: 401khelpcenter.com, May 2012
Summary: The DOL's 408(b)(2) fee disclosure regulation requires certain covered service providers to furnish specified information to plan administrators so that they may comply with their disclosure obligations in the participant-level disclosure regulation. This Bulletin supplements the participant-level disclosure regulation by providing guidance on some of the most frequently asked questions concerning the participant-level disclosure regulation and how it may be implemented.
Source: U.S. Department of Labor, May 2012
Summary: When it comes to the retirement plan industry, many financial advisors and third party administration firms are too concentrated on running their business to concern themselves with marketing. That's a shame because a little marketing can go a long way in growing a larger client base. This article is intended to offer a few marketing tips.
Source: Rosenbaum Law Firm PC, May 2012
Summary: The expanding role of DC plans in providing retirement income to working Americans is adding urgency to the question: Are DC plans capable of filling this role effectively? If the answer is less than a resounding "yes," the follow-on question might be, how do we strengthen today's DC plans to deliver more robust income adequacy? One answer that many in the retirement field are at least considering is "institutionalization." This paper is the first in a series that will explore institutionalization in the defined contribution world.
Source: Defined Contribution Institutional Investment Association , May 2012
Summary: Over the past four years or so, the DOL has issued three sets of fee disclosure regulations directed at retirement plan service providers, all under ERISA § 408(b)(2). Even with all of the guidance from the DOL, questions and uncertainty abound. This is a FAQ to assist service providers in navigating the new world of fee disclosure.
Source: Faegre Baker Daniels, May 2012
Summary: To date, service providers have carried most of the load, studying the new fee-disclosure rules and preparing their own disclosure forms, but that is beginning to change. Retirement plan fiduciaries are starting to receive fee disclosures from their service providers, and in their capacity as plan fiduciaries, they have their own legal duties to review and understand the disclosures, object to those that don't comply, take the disclosures into account as they evaluate providers, and possibly replace providers. This is a FAQ to assist plan fiduciaries in carrying out their fee disclosure duties.
Source: Faegre Baker Daniels, May 2012
Summary: While the new participant disclosure rules of ERISA § 404(a) apply only with respect to defined contribution plans, the service-provider disclosure rules of ERISA § 408(b)(2) apply equally to defined benefit plans. This is a FAQ intended to help investment and service providers, and plan sponsors, understand the new disclosure rules and understand what is required to comply with them.
Source: Faegre Baker Daniels, May 2012
Summary: A former executive and part owner of an Illinois pension plan administrator was indicted for allegedly defrauding agencies and their employees of more than $8.6 million.
Source: Plansponsor.com, May 2012
Summary: Employees continue to report dangerously low levels of retirement preparedness, but are becoming more proactive about their finances in general, and retirement planning in particular.
Source: 401khelpcenter.com, May 2012
Summary: Although a good IPS can be a defense in a lawsuit asserting breaches of fiduciary responsibility, it is a double-edged sword -- it can be very expensive to depart from it. Investment fiduciaries need to make sure that they have read and understand the IPS.
Source: Osler, Hoskin & Harcourt LLP, May 2012
Summary: The ERISA Industry Committee, the Washington, D.C.-based trade association representing America's major employers, submitted to the Department of Treasury and Internal Revenue Service a series of three comment letters in response to their February 2012 package of proposed regulations and revenue rulings regarding lifetime-income options for participants and beneficiaries in retirement plans.
Source: ERISA Industry Committee, May 2012
Summary: Within DC plans, each of the following areas must work in tandem at top efficiency: savings behavior, investment behavior, investment performance, investment structure and diversification, asset preservation, fees and expenses, tax efficiency and spend down. Co-sourcing provides an effective means to meet the higher standards while addressing the organizational risks that DC plans present.
Source: Mercer, May 2012
Summary: When it comes to enjoying life in retirement, the reality for current retirees is beating the expectations of current workers, according to a new survey released today by BlackRock. At the same time, the poll shows, long-term participation in a workplace retirement savings plan like a 401k is also emerging as a key boost to well-being in retired life as well as effective retirement planning among current workers.
Source: 401khelpcenter.com, May 2012
Summary: In this video webcast, three Vanguard experts explain the new fee disclosure regulations for retirement plans and participants. Scott Conking, head of Vanguard Client Services; John Schadl, head of Vanguard Strategic Retirement Consulting; and Amy Cribbs, head of Vanguard Participant ExperienceŽ, provide an overview of the regulations, discuss details of the reporting requirements, and answer frequently asked questions from clients.
Source: Vanguard, May 2012
Summary: The answer to the complexity, inefficiency, and unnecessarily expensive practice of revenue-sharing so well exposed in Tussey v. ABB is to simply do away with revenue-sharing, writes W. Scott Simon of Prudent Investor Advisors.
Source: Morningstar.com, May 2012
Summary: "In a worst-case scenario, which is far more likely under H.R. 4624, a FINRA clone is created, one that is rules-intensive and, along with incumbent costs and other inefficiencies that reduce attention to client needs, may ultimately create winners and losers under the advisor business model. Yet, even before reaching this stark conclusion, in just scanning the 38 pages of H.R. 4624 it becomes painfully obvious that the proposal is designed for an intensive rules-based regimen. The term "fiduciary standard" is mentioned only once in the bill, while the words "rule," "rules" and "rule makings" associated with the SRO are inscribed throughout no less than 73 times."
Source: FI360.com, May 2012
Summary: In Chaaban v. Criscito, the plaintiffs, the current Trustees of the Diagnostics & Clinical Cardiology, P.A. Profit Sharing Plan, filed suit alleging that the defendant, Dr. Mario Criscito, the trustee of the Plan until 2007, violated the fiduciary duties he owed to the Plan participants under ERISA. The district court granted the Trustees' motion for summary judgment and awarded them $4,117,464.65. Criscito appealed.
Source: ERISA Lawyer Blog, May 2012
Summary: A first step to managing against unexpected volatility is understanding the unique circumstances of the plan by identifying several key characteristics: current asset allocation, liability profile, funded ratio, contribution policy, status of the plan, the plan's "end game," and, most importantly, the plan sponsor's risk tolerance.
Source: CFO.com, May 2012
Summary: ING U.S. released key findings from a study commissioned by the ING Retirement Research Institute that sheds light on the distinct realities women encounter when saving and preparing for retirement. The study, Retirement Revealed, underscores that women on average are significantly less prepared for retirement than men.
Source: 401khelpcenter.com, May 2012
Summary: Judge Laughrey handed down her decision in Tussey v. ABB, Inc. The Tussey v. ABB decision will by no means radically alter the litigation landscape or benefit plan governance. Nevertheless, the decision offers a good reminder of certain "best practices" for plan fiduciaries, a few of which are covered here.
Source: Bryan Cave LLP, May 2012
Summary: William Gale, the director of the Retirement Security Project at the Brookings Institute, proposed a plan to replace pre-tax and tax deductible retirement plan contributions by both employers and employees with a flat 18% tax credit that would be deposited directly into the person's retirement account. Proposals like this aren't necessarily good or bad. Some people will benefit while others will be worse off. The important thing is to adapt to changes as they happen.
Source: Forbes, May 2012
Summary: U.S.-registered investment companies managed $13 trillion in assets at the end of 2011 for more than 92 million investors. This is ICI's annual review of trends and activity in the U. S. investment company industry.
Source: Investment Company Institute , May 2012
Summary: With the need to reduce the federal budget deficit, it is understandable that Congress would consider making changes to the special tax-deferred status of employer-sponsored retirement plans and IRAs. But, the removal of the tax deductibility of employee contributions to 401k or similar defined contribution savings plans could have a potentially detrimental effect on the overall retirement savings rate in America.
Source: Employee Benefit Solutions , May 2012
Summary: Company plan administrators, who are fiduciaries, have always been personally liable if they do not fulfill their responsibilities. But a new DOL rule has the potential to bring financial calamity to plan administrators who are unaware that they, not the service provider, carry all of the liability for missteps. This is a review of the new rule and how to protect your company's 401k plan fiduciary.
Source: Smart Business, May 2012
Summary: On April 24, 2012, the DOL filed a complaint in federal court seeking to recover a total of $63,582.14 in health care premiums and 401k contributions which were withheld from employee paychecks but not remitted to the health care provider or the 401k plan. What makes this prosecution interesting are the amounts involved and how they are spread out over several companies and plans.
Source: The Pension Protection Act Blog, May 2012
Summary: New Vanguard research, a second report in a series on diversity and retirement savings, indicates that blacks and Hispanics are more likely to take loans and hardship withdrawals from their 401k plan accounts than whites and Asians. At the same time, blacks and Hispanics borrow only slightly more of their retirement account balance, so members of all four groups put roughly the same amount of their assets at risk by borrowing from their retirement plan.
Source: 401khelpcenter.com, May 2012
Summary: Alliance Benefit Group (ABG) is calling on the Department of Labor to clarify certain aspects of the new fee and expense disclosure regulations slated to go into effect this summer.
Source: 401khelpcenter.com, May 2012
Summary: Human Resource leaders should rethink their traditional roles if they want to become -- or remain -- effective leaders of their organizations. It requires understanding some key issues affecting HR as well as adapting the tools of other functions for its own uses.
Source: HREonline.com, May 2012
Summary: The retirement planning industry is asking once again for leniency from federal fee disclosure regulations that take effect July 1. ASPPA and the Securities Industry and Financial Markets Association have sent letters to the DOL requesting a time period by which the agency would allow for "good faith efforts" by the service providers to comply with the regulations.
Source: Employee Benefit News, May 2012
Summary: Assistant Secretary of Labor Phyllis C. Borzi issued a harsh rebuke of limited-scope audits on the opening day of an April 30-May 2 conference of certified public accountants. "The limited-scope audit is practically useless."
Source: Bloomberg BNA, May 2012
Summary: In recent court case, Tussey v. ABB, Inc., the judge found that the plan fiduciaries breached their fiduciary duties and were jointly and severally liable for damages. Lessons learned from this case are at least 10 things Plan fiduciaries should avoid.
Source: ERISAdiagnostics.com , May 2012
Summary: Fidelity Investments today reported its average 401k balance rose to $74,600 at the end of the first quarter, up eight percent from the end of the fourth quarter 2011. The first quarter balance also represents a 62 percent increase since the end of the first quarter 2009, often considered the low of the 2008-2009 market downturn, when the average balance was $46,200.
Source: 401khelpcenter.com, May 2012
Summary: In his new book, The Predictable Surprise: The Unraveling of the U.S. Retirement System, Sylvester J. Schieber tells the story of retirement in America. While early Social Security participants received benefits worth considerably more than the actuarial value of the lifetime contributions on their earnings, most American workers today cannot look forward with any measure of certainty to a fair return on their investment. Moreover, the programs they have come to depend on are looking wobbly. Various presidents and others have tried to reform the system, but all efforts, so far, have fizzled.
Source: Towers Watson , May 2012
Summary: The Consumer Financial Protection Bureau recently released CFPB Bulletin 2012-02 clarifying the compensation rules applicable to loan originators under Regulation Z, 12 C.F.R. § 1026.36.
Source: Sungard/Relius, May 2012
Summary: Almost two years after passing its initial amendments to the Ontario Pension Benefits Act, the Ontario government has released the first round of regulations required to implement its pension reform agenda. The regulations, which are in draft form and subject to public consultation, address a number of issues.
Source: Pensionsbenefitslaw.com, May 2012
Summary: Fiduciaries must document what they did, why they did it, and that their actions were in the best interests of the plan and the participants. Unfortunately, Towers Watson and Deloitte have found that relatively few large plan sponsors can do this in spite of the fact that they receive voluminous amounts of data. Apparently, then, there is a significant disconnect between the sponsors' and fiduciaries' needs for actionable information and what their recordkeepers and advisors provide.
Source: Investment Horizons , May 2012
Summary: Over the past several years, more than two dozen lawsuits have been filed relating to 401k plan fees and, more specifically, "revenue sharing" arrangements with plan service providers. Initially, the lawsuits were brought by plan participants against plan sponsors, but lawsuits have also been brought against 401k plan service providers. These cases typically are based on allegations that the service providers are "functional fiduciaries" under ERISA. To learn more about these cases, see this chart.
Source: Groom Law Group , May 2012
Summary: Excellent advisors use independent fiduciary assessments as a governance tool. Assessments help keep the advisor accountable to the assessor and the investor, thereby creating a firm reminder of the professional values of the firm. Regular assessments force the firm to maintain processes that are sustainable, regardless of market conditions, thereby avoiding ad hoc management decisions. The result is a systematic and effective investment management system resulting in higher investment returns over the long term.
Source: Center for Fiduciary Excellence , May 2012
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