June 2018 Pension Finance Update

June was another decent month for pension sponsors, rounding out a solid quarter and first half of 2018 for pension finance, as stock markets have eked out modest gains while higher interest rates have decreased pension liabilities. Both model plans we track1 at least held steady again last month – traditional Plan A gained 1%… Read More

Cash Balance Plans: 2018 Survey and Trends

In this report we review the use of cash balance features in defined benefit plans sponsored by U.S. employers with a focus on the evolution of interest crediting bases utilized by those plans. Our emphasis on interest crediting is prompted by current and prospective cash balance plan sponsors seeking interest crediting bases that are more… Read More

Legacy stock after Fifth Third Bancorp v. Dudenhoeffer

The United States District Court for the Southern District of Texas, in Schweitzer v. The Investment Committee Of The Phillips 66 Savings Plan (May 9, 2018), recently considered several ERISA fiduciary issues with respect to “legacy stock” (stock of a former employer) held in a defined contribution plan. In dismissing plaintiffs’ complaint, the court found… Read More

May 2018 Pension Finance Update

Pension sponsors saw modest improvement in funded status during May, due mainly to higher stock prices. Both model pension plans we track1 gained ground last month – both traditional Plan A and the more conservative Plan B improved a fraction of 1% in May. For the year, Plan A is 5% ahead, while Plan B… Read More

Legislative update – June 2018

In March 2018 there was a possibility that all or part of the Senate’s bipartisan Retirement Enhancement and Savings Act of 2018 (RESA), which addressed a number of important retirement policy issues, would be included in omnibus spending legislation that was passed on March 23, 2018. That ultimately did not happen, because of objections raised… Read More

Principal sued over target date fund structure

On April 16, 2018, a group of plaintiffs filed suit in the United States District Court for the Southern District of Iowa against a group of Principal affiliates, alleging that they violated their ERISA fiduciary duties of loyalty and prudence. The complaint is interesting in several respects: It extends the “identical lower cost investment available… Read More

SEC investment adviser proposal

On April 18, 2018, the SEC proposed (1) a “Regulation Best Interest” providing new conduct standards for broker-dealers, (2) an “Interpretation Regarding Standard of Conduct for Investment Advisers” that “reaffirms, and in some cases clarifies, certain aspects of the fiduciary duty that an investment adviser owes to its clients,” and (3) a requirement that investment… Read More

DOL provides temporary enforcement relief for possible prohibited transactions resulting from the Fifth Circuit decision

On May 7, 2018, the Department of Labor published Field Assistance Bulletin 2018-02, Temporary Enforcement Policy On Prohibited Transactions Rules Applicable To Investment Advice Fiduciaries, providing temporary relief for certain prohibited transactions that may result from the Fifth Circuit’s decision vacating the exemptions included in the Fiduciary Rule regulation package. In this article we discuss… Read More

April 2018 Pension Finance Update

Higher interest rates boosted pension finances in April. Both model pension plans we track gained ground last month – traditional Plan A gained more than 1% in April while the more conservative Plan B improved less than 1%. For the year, Plan A is now 4%-5% ahead, while Plan B is up almost 1%.

Field Assistance Bulletin 2018-1 – DOL clarifies guidance on economically targeted investments and proxy voting, again

On April 23, 2018, the Department of Labor published Field Assistance Bulletin (FAB) No. 2018-01 on Interpretive Bulletins (IBs) 2015-01 (economically targeted investments) and 2016-01 (proxy voting). The issue of economically targeted investments (ETIs) (particularly) has become “political,” with the Clinton, Bush, Obama and (now) Trump DOL’s all weighing in with (differing) guidance on it…. Read More

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