July 2017 Pension Finance Update

Strong stock markets have buoyed pension sponsors this year, overcoming lower interest rates to produce improvements in pension funded status, and July saw a continuation of this trend. Both model plans we track1 enjoyed modest (less than 1%) improvement last month and remain in the black for the year so far. Traditional Plan A is… Read More

Missing participants – part 2

“Missing participants” is becoming a target issue for regulators and policymakers. In our first article in this series we discussed DOL’s missing participant audit project and Field Assistance Bulletin 2014-01 – fiduciary obligations with respect to missing participants in terminated defined contribution plans. In this article we discuss the Pension Benefit Guaranty Corporation’s 2016 proposal… Read More

Missing participants – part 1

There are widespread reports of Department of Labor audits focusing on plan procedures with respect to “missing participants.” As we understand it, this audit/enforcement effort began in early 2016 and initially focused on large defined benefit plan procedures for missing participants in connection with the minimum distribution requirements. DOL is treating the failure to adopt… Read More

Fidelity wins stable value lawsuit

On June 19, 2017, the US District Court for Massachusetts handed down a decision for the defendant in Ellis v. Fidelity. Plaintiffs were two participants in the Barnes & Noble 401(k) plan, representing a class including all participants in defined contribution employee pension benefit plans investing in the Fidelity Group Employee Benefit Plan Managed Income… Read More

State retirement plan initiatives – update July 2017

We have been following initiatives by several states, including California, Connecticut, Illinois, Maryland and Oregon, to implement mandatory, private employer payroll deduction auto-IRA programs. In this article we review developments since May, 2017, Congressional action repealing the Obama Administration’s regulatory “path forward” for these programs. Background It is DOL’s view that an auto-IRA creates an… Read More

June 2017 Pension Finance Update

Pension sponsors suffered modest declines in funded status last month, due to mixed stock markets and lower long-term interest rates, but both model plans we track1 have enjoyed modest improvement overall in the first half of 2017. Plan A lost close to 1% last month but is still ahead almost 2% for the year, while… Read More

DOL fiduciary rule update – July 2017

In this article we review recent developments with respect to the Department of Labor’s fiduciary rule, including DOL’s RFI, recent testimony by DOL Secretary Acosta, and comments by Securities and Exchange Commission Chairman Clayton regarding the rule. DOL releases RFI In February, 2017, President Trump ordered a DOL review of the fiduciary rule. On April… Read More

Sponsor financial condition not an Early Warning Program trigger for PBGC

At the end of 2016, the (Obama Administration) Pension Benefit Guaranty Corporation amended the web page describing its Early Warning Program to include elements of a sponsor’s financial condition as “triggers,” initiating PBGC action. The change was controversial and was criticized by both industry representatives and PBGC’s Participant and Plan Sponsor Advocate. In May, 2017,… Read More

Current outlook June 2017

With the Department of Labor’s fiduciary rule becoming “applicable” on June 9, 2017, in this current outlook we review the way in which it will apply during 2017, consider its significance for plan sponsors, and briefly review Congressional repeal proposals. Fiduciary rule now applicable On April 7, 2017, DOL issued a regulation delaying the applicability… Read More

Court dismisses fee complaint in White v. Chevron a second time

On May 31, 2017, the United States District Court for the Northern District of California dismissed, for the second time, plaintiffs’ complaint in White v. Chevron. We discussed the court’s 2016 decision in our article District Court dismisses Chevron fee complaint, rejects plaintiffs’ attack on use of retail share classes. In the 2016 decision, the… Read More

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