September 2013 Archive

Pension regulatory update

September 25, 2013

In this article we briefly cover three items: (1) the effect of the Supreme Court's DOMA ruling on retirement plans; (2) DOL's field assistance bulletin allowing a delay in delivery of the 2013 fee/performance ‘comparative chart;’ and (3) IRS's release of new mortality tables for 2014 and 2015 and possible changes to future tables that may affect DB plan cost. Read More

Implications of MAP-21 for DB plan finance – 2013

September 24, 2013

Last year we reviewed the effect of newly adopted rules under the "Moving Ahead for Progress in the 21st Century Act" (MAP-21). At that time, we concluded that if interest rates stayed flat (as of the summer of 2012), typical DB plan sponsors would have ‘downside’ funding protection under MAP-21 through 2020. Since last year's article interest rates have increased, and there is some talk that the long term downward trend in rates, which began back in October of 1981, may have ended. In this article we update our analysis of the effect of MAP-21 on funding to reflect current interest rates. Read More

Proposed SEC rule changes for money market funds

September 10, 2013

On June 5, 2013 the Securities and Exchange Commission released a proposal (the ‘Proposal’) that, if adopted, would fundamentally change how most money market funds operate. In this article we focus on the impact that the adoption of one (or both) of the alternatives discussed in the Proposal would have on defined contribution plans that provide participants a choice of investments, where one of the choices is a money market mutual fund. Read More

Fiduciary issues for target date funds

September 09, 2013

One striking thing about the Department of Labor's Target Date Fund (TDF) tip sheet was how much the ‘tips’ were simply a re-statement of general fiduciary rules applicable to choosing and monitoring any fund in a 401(k) plan fund menu. In this article we briefly review some of the fiduciary challenges that TDFs present. We begin with a brief review of how TDFs work and the features of TDFs that increase the complexity of the fiduciary's job. We then review the issues presented by TDFs in key areas of fiduciary exposure – fund selection, monitoring and benchmarking, and fees. Read More

Treasury/IRS highlight ‘closed plan’ DB issues in Priority Guidance Plan

September 03, 2013

On August 9, 2013, the Department of the Treasury and the Internal Revenue Service released the 2013-2014 Priority Guidance Plan – generally setting priorities for the allocation of the resources for the period July 2013-June 2014. The first item under the subheading Employee Benefits/Retirement Benefits was “Guidance on frozen defined benefit plans and related matters.” In this article we review the ‘frozen DB plan’ issues and proposed solutions. Read More

August 2013 Pension Finance Update

September 03, 2013

Pension plans saw a modest pullback in August, with asset declines outpacing liability declines. The two ‘model’ plans we track each saw drops in funded status of less than 1% last month, although year-to-date, ‘Plan A’ remains ahead 15% while the more conservative ‘Plan B’ is up almost 4%. Despite the drop in August, pension sponsors continue to enjoy favorable conditions – higher stock markets and higher interest rates – during 2013. Download

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