Retirement Plan Policy

[Opinion] Expanding Automatic Enrollment and Making Saver's Credit a Match Will Help to Improve Retirement Security
Excerpt:"Two members of the President's Economic Advisory Board, Martin Feldstein and Laura Tyson have joined a number of others on both sides of the ideological divide to endorse the Automatic IRA. Combined with the Board's two recommendations, the Automatic IRA and a refundable savers'credit will enable many more Americans to build retirement security."(Brookings Institution)

[Opinion] The Evolving Standards of Fiduciary Care
Excerpt:"At issue is a regulatory environment that has lagged the changes in the marketplace. The current defining fiduciary standard was developed by [DOL] in 1975 shortly after the passage of [ERISA]. Since then, the retirement plan landscape and the needs of plan sponsors have changed dramatically."(Finance Behavior)

Presidential Advisory Group Discusses Tax Reform Options for Qualified Retirement Plan Tax
Excerpt:"Simplifying regulation of retirement plans, consolidating rules for different types of individual-account plans, and improving savings incentives are among the proposals outlined in a new presidential advisory board report."(Mercer LLC)

Lifetime Accounts Bill Gets Companion
Excerpt:"A Senate bill was introduced recently as a companion to a House measure (HR 4682) that would create so-called Lifetime Savings Accounts for every newborn child in America."(Investment News; free registration required)

President's Advisory Board's Analysis on Tax Reform Options
Excerpt:"The President's Economic Recovery Advisory Board . . . has released its analysis of various options to change the current Federal tax system to achieve the three-part goal defined by the President: simplification of the tax system, compliance improvement, and reformation of the corporate tax system."(Deloitte via BenefitsLink.com)

[Guidance Overview] IRS Guidance for Calculating Excludable Portion of Pension Distributions Where No Exclusions Were Reported in Prior Years
Excerpt:"Two methods that were suggested by the participant for correcting the prior years'returns were rejected because they did not comply with Code Sec. 72 and underlying regulations."(Wolters Kluwer)

Reforming Teacher Pensions for a Changing Work Force
Excerpt:"[T]he problems with teacher pensions are not just financial. And they do not just affect individual teachers and retirees. The way these plans are structured can negatively influence the teaching work force as a whole. At a time when improving the quality of classroom instruction is a national priority, key structural elements in teacher retirement plans impair the ability of schools to recruit, hire, retain, and compensate high-quality teachers and principals."(Education Sector)

One Man's Story of the Origins of ERISA
Excerpt:"Very few of us . . . really know the story behind ERISA, and how and why it came into being. So I [Scott Simon] thought it might be interesting over the next few months to explore the historical antecedents of modern qualified retirement plans in America and in the process record the oral history, so to speak, of one person who played an important role in shaping the world that many of us inhabit in our professional lives today."(Morningstar)

America's Retirement Problem: Should We Ditch 401(k) Plans?
Video and transcript available on target page. Excerpt:"Over the past decades, defined-benefit plans have been replaced, for the most part, by defined-contribution plans like 401(k) plans. But the majority of Americans with access to 401(k) plans are not saving the maximum amount they can, and in may cases are not saving at all. Should the government play a greater - or different - role in getting Americans to save more for their retirement?"(Grace Creek Media and The George W. Bush Institute)

The Report on Tax Reform Options: Simplification, Compliance, and Corporate Taxation (PDF)
130 pages. See Section II.b. Option Group B: Simplifying Savings and Retirement Incentives. (The President?s Economic Recovery Advisory Board)

[Opinion] Testimony: Disparities for Women and Minorities in Retirement Saving before Advisory Council on Employee Welfare and Pension Benefit Plans
Excerpt:"It would be far better policy to eliminate the implicit tax on retirement saving in these programs by mandating that retirement accounts such as 401(k)s and IRAs be disregarded for eligibility and benefit determinations in federal and state means-tested programs. Changing the law to exempt retirement accounts from being considered in means-tested programs would treat retirement savings fairly and consistently and would send an important signal to families that rely or might need to rely on means-tested programs in the future: you will not be penalized for saving for retirement."(The Brookings Institution)

2010 University of Michigan Retirement Research Center Conference Papers
'Retirement, Planning, and Social Security in Interesting Times."(University of Michigan Retirement Research Center)

The Top Ten Major Misconceptions Plan Sponsors Have About Retirement Plans
2 pages. Excerpt:"[T]his list of major misconceptions about retirement plans is just a portion of the wrong advice that plan sponsors rely on, [but represents many misconceptions held by employers]."(The Rosenbaum Law Firm P.C. via JD Supra, LLC)

[Opinion] Plan Sponsors Not Focused on Same Issues As Advisers&Regulators
Interview with PlanSponsor's Nevin Adams. Excerpt:"Adams: Like their workers, I find most plan sponsors are more worried about the here-and-now aspects of health care reform than they are retirement plans, per se. People are people, after all, and there is a strong sense that we have more time to deal with retirement than with health care, and there is a great concern about what the new law will require, and how that will impact existing programs, and what that will mean."(Fiduciary News)

Pension Overhaul in California Is Up in The Air
Excerpt:"The governor may have to settle for a few incremental pension reforms pending in the final hours of the legislative session, particularly Assembly Bill 1987, whose tortured history illustrates the political difficulty of the issue."(The Fresno Bee)

[Opinion] The Public Pension Monster
Excerpt:"The graph projecting the growth of pension obligations in California demonstrates that what started as a little harmless back scratching has morphed into a monster that unaddressed will claim all of the resources the state can muster via taxation."(Tom Lindmark via iStockAnalyst)

[Opinion] Public Employee Pension Reforms Recipe for Disaster
Excerpt:"While many of the people, including the Daily News, calling for reform are acknowledging that private-sector workers have lost tremendous value on their retirement plans, incredibly they present that as a model for public-sector employees!"(Paul Weber in the Los Angeles Daily News)

[Opinion] Time is Now for Changes to Municipal Government Pensions and Health Plans in Massachusetts
Excerpt:"[I]n many towns Massachusetts taxpayers subsidize medical services that are available to all retirees under Medicare. Yet feckless local boards, under the thumbs of unions, refuse to enact even basic economies."(Boston Globe)

[Opinion] Only Thing Worse Than Not Telling 401(k) Participants How Much to Save Is Offering Reckless Target Date Funds
Excerpt:"[T]he biggest problem with target date funds is that they mislead 401(k) participants into thinking that the most important component of retirement adequacy is the investments you choose when it's the actually the size of the contribution to retirement savings relative to income along with the investment time horizon."(Jane White of Retirement Solutions)

Text of Agenda for September 14-15 Joint Hearing on Lifetime Income Options for Retirement Plans (PDF)
2 pages. Excerpt:"A live webcast of the hearing is available on EBSA's Web site at www.dol.gov/ebsa[.]"(U.S. Employee Benefits Security Administration)

Retirement Industry Acronyms and Abbreviations
Excerpt:"Like many industries, the retirement profession is acronym and abbreviation crazy. [401khelpcenter.com] compiled this list of the more common acronyms and abbreviations to help those who are not familiar with their meaning."(401khelpcenter.com, LLC)

Lifetime Income Options for Retirement Plans Hearing Agenda Unveiled
Excerpt:"The hearing was designed to hear testimony regarding: certain participant concerns affecting the choice of lifetime income relative to other options; information to help participants make choices on the management and spend down of retirement benefits; disclosure of account balances as monthly income streams; the fiduciary safe harbor for selection of lifetime income issuers or products; and alternative designs of in-plan and distribution lifetime income options."(PLANSPONSOR.com)

Experts from Biggest Financial Companies Discuss Current Retirement Hurdles
Excerpt:"[The Roundtable experts] discussed issues including the harsh realities facing baby boomers, the financial needs of Gen X and Gen Y with their longer lead-in time to retirement, and the reason that distribution is still so hard after all these years. What matters most-lifestyle in retirement or meaningful community involvement? What's the measurement of a need versus a want? And is it really cool to be boring these days? (At least one panelist hopes so.)"(On Wall Street)

[Opinion] The Real Costs of Social Security
Excerpt:"The real costs of Social Security far exceed the taxes collected: The compulsory pay-as-you-go retirement system has denied people the choice of using those funds for private investment, diminished the culture of responsibility and strengthened the redistributive state. [This article appeared in Investor's Business Daily on August 20, 2010.]"(Investor's Business Daily via Cato Institute)

[Opinion] Retiree Ponzi Scheme, the U.S. Social Security System, Is $16 Trillion Short
Excerpt:"If we re-label Social Security'payroll'taxes as'general revenue wage taxes,'Social Security's fiscal gap increases by $60 trillion, and the fiscal gap of all other government activities falls by $60 trillion, leaving the overall $202 trillion gap unchanged. Even by the Trustees'measure, there's a massive problem. Coming up with $16 trillion requires permanently raising revenue or cutting benefits by 26 percent, starting now. In other words, the program is 26 percent underfunded."(Laurence Kotlikoff via Bloomberg L.P.)

Who Will Pay? Inter-Generational Transfers and Public Sector Pensions
Excerpt:"This paper analyses the different channels through which particular generations within one society can end up subsidising other generations through the functioning of the welfare state. The welfare state, which is organised and funded by'society'through taxation, plays an important part in almost all countries, often providing services such as education and health care or transfers such as state pensions."(Social Science Research Network)

Pension Cuts Won't Cover U.S. Taxpayers'$3 Trillion Bill, Professor Says
Excerpt:"Taxpayers must cover at least a third of a $3 trillion bill for public employee pensions even if lawmakers eliminate cost-of-living increases and raise the retirement age, according to an academic study."(Bloomberg L.P.)

Behind Fraud Charges, New Jersey's Deep Public Pension Crisis
Excerpt:"Experts say that governors and legislators, Republicans and Democrats, have all contributed to the problem by refusing to put state money into the funds as they should have. And even if benefits are cut and taxes raised, they said, there is no obvious fix in sight."(The New York Times; free registration required)

CalPERS Committee Approves Policy Change to Lower Pension Costs
Excerpt:"A key committee of the California Public Employees'Retirement System [has approved a] recommendation that would change the pension fund's policies to immediately recognize benefit changes. A CalPERS news release said the shift in policy, requested by the employer and some unions, could save the State's General Fund budget up to $500 million this fiscal year if the Governor and Legislature enact higher contributions for existing members and new hires."(PLANSPONSOR.com)

Social Security Cuts Weighed by Entitlement Commission
Excerpt:"In addition to raising the retirement age, which is now set to reach age 67 in 2027, specific cuts under consideration include lowering benefits for wealthier retires and trimming annual cost-of-living increases, perhaps only for wealthier retirees, people familiar with the talks said."(The Wall Street Journal)

[Opinion] New Study Identifies Revenues for Doubling of Social Security Payout
Excerpt:"Despite Social Security's new role as a de facto national retirement plan, many budget deficit hawks are calling for cuts to it to decrease America's indebtedness. But that would only make things worse for retiring Americans. The real problem with Social Security is that it is not robust enough to play this role as retirement security of last resort . . . . The bigger problem is that its payout is so meager."(CommonDreams.org)

Labor and Treasury Departments to Hold Joint Hearing on Lifetime Income Options
Excerpt:"After reviewing [requested] comments, the Departments distilled five specific areas in which they would like to receive further input. In a notice issued on August 10, they announced that a joint hearing will be held on September 14, and, if necessary, September 15 . . . ."(Deloitte via BenefitsLink.com)

Bills to Require Automatic Employer-Provided IRAs Proposed in House and Senate
Excerpt:"Both bills would provide incentives for the establishment of qualified retirement plans. These would include increasing the maximum start up credit for qualified plans from $500 to $1,000 (which would be available for the first three years, instead of only the $250 credit available for first two years for providing the Automatic IRAs)."(Deloitte via BenefitsLink.com)

The Gospel According to 401(k) Reformer Matthew Hutcheson
Excerpt:"An advocate . . . for higher fiduciary standards and greater fee transparency throughout the financial services industry, [Matthew Hutcheson] has testified before Congress, written articles and books, helped start the 401(k) rating service, Brightscope.com, and been active in the year-old Committee for the Fiduciary Standard."(Retirement Income Journal)

[Opinion] Opinion: Union Plans Want to Be Next Pension Bailout
Excerpt:"Big Labor is going Code Red on the issue, in the face of a looming accounting change that would force companies to confront the Ponzi-style nature of multi-employer pension plans."(Wall Street Journal)

Auto-IRA Legislation Introduced in Both Houses of Congress
Excerpt:"The bills set the stage for serious work on the proposals in the next Congress. Auto-IRAs are a key plank in the Obama administration's retirement policy agenda, and the bills may draw support from Republicans who have backed prior auto-IRA bills."(Mercer)

August Recess Has Democrats Pummeling Republicans for Wanting to Trim Social Security, and Republicans Hammering Democrats for Favoring Tax Increases
Excerpt:"A bipartisan deficit commission is set to issue recommendations Dec. 1, and the Bush tax cuts are scheduled to expire at year's end. Many economists say any strategy for lowering the deficit would likely require some form of tax increases and a cut in benefits under entitlement programs such as Social Security, among other things."(The Wall Street Journal)

[Opinion] The Social Security Program Is Under Attack
Excerpt:"Rumor has it that President Obama's deficit commission may call for deep benefit cuts, in particular a sharp rise in the retirement age."(The New York Times; free registration required)

[Opinion] California Governor Calls for a State Budget That Cuts Spending and Does Not Raise Taxes
Arnold Schwarzenegger, governor of California. Excerpt:"We must also reform California's pension system for government employees, whose costs to taxpayers for just one of our major pension funds have skyrocketed from $150 million a year a decade ago to almost $4 billion this year. Private-sector workers already struggle to pay for their own retirement. Now they are being forced to pay more and more for the government workers'retirement, at the very time their own retirement accounts have declined. What is worse, in five years those pension costs will grow to well over $10 billion per year, and keep growing from there."(Los Angeles Times)

[Opinion] DC Limits and Profit Sharing
Excerpt:"Since most DC plans now include a 401(k) feature and over 80% of these include matching contributions, we need to preserve the current Section 415 annual additions limit of $49,000 if profit sharing and other non-elective contributions of any significance are to continue."(Profit Sharing / 401k Council of America)

'Automatic'IRAs to Fill Retirement Plan Coverage Gap
Excerpt:"Half of American workers have no work-based retirement plan, and as many as 42 million Americans would benefit from the bill . . . ."(TheStreet.com, Inc.)

Seven Ways the Automatic IRA Would Impact Retirement Savers
Excerpt:"The default retirement account would be a Roth IRA, but employees would be given the option to contribute to a traditional IRA."(U.S. News&World Report)

[Opinion] Illinois Public Employees Who Think State Constitution Guarantees They'll Get All Their Pension Benefits May Have Another Think Coming
Excerpt:"[A legal opinion from a Chicago law firm] acknowledges that the constitution creates a contractual agreement between the workers and the state's employee pension funds. But it concludes that neither the constitution nor the law say the state is a guarantor of that obligation."(Chicago Tribune)

[Opinion] 401k Follies and the Need to Reinvigorate the U.S. Annuity Market
Excerpt:"The proposal described herein seeks to diminish the retirement security deficit through three interlocking regulatory parts: (1) a requirement to offer an annuity as part of 401K distribution options; (2) mandatory education pre-distribution on annuities; and (3) mandatory fee disclosure by annuity providers. These steps will likely reinvigorate the annuities market in the United States and help to bring an end to the 401K Follies."(Social Science Research Network)

Quick Answers to Common Questions about Social Security
This Q&A was developed to accompany the Academy brief,'Social Security Finances: Findings of the 2010 Trustees Report."(National Academy of Social Insurance)

[Official Guidance] Text of Notice of Hearing on Certain Issues Relating to Lifetime Income Options for Participants and Beneficiaries in Retirement Plans (PDF)
11 pages. Joint IRS/EBSA hearing to be held Sept. 14, 2010. (U.S. Employee Benefits Security Administration)

[Official Guidance] Text of Official Summary of the Automatic IRA Act, H.R. 3760 (PDF)
6 pages. (American Benefits Council)

[Opinion] The Latest on Medicare and Social Security
Excerpt:"According to the reports, the date of insolvency for Medicare's hospital fund was pushed back, from 2017 to 2029, because of cost-saving measures in health reform. As for Social Security, without any changes, it will be able to pay full benefits until 2037 and partial benefits after that, the same estimate as in last year's report, despite temporary setbacks from the recession."(The New York Times; free registration required)

Who Should Pay for the Trillion-Dollar Pension Gap?
Excerpt:"[G]iven that we've promised at least $1 trillion more in retirement benefits to public employees than we have put aside to pay for them, who should pay to make up the difference? Should it be the employees themselves who pay, through cutbacks to annual cost-of-living adjustments for current retirees or tweaks to benefits that those still working will receive?"(New York Times; free registration required)

Auto-IRA Bill Introduced With Employer Mandates
Excerpt:"[The] Automatic IRA Act of 2010 (S. 3760) enables nearly all employees who work for a private business with more than 10 workers and whose employer does not already offer a retirement plan to contribute to retirement savings through payroll deductions."(PLANSPONSOR.com)

Q&A with EBRI Research Director Jack VanDerhei: American Workers'Retirement Income Adequacy and Confidence (PDF)
12 pages. (PIMCO)

Huge Battle Looms Over Public Pensions; Who Will (Who Should) Foot the Bill?
Excerpt:"There's a class war coming to the world of government pensions. The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide. The have-nots are taxpayers who don't have generous pensions."(Mike"Mish"Shedlock)

Assessing Asset Allocation
Excerpt:"This review article describes recent literature on asset allocation, covering both static and dynamic models. The article focuses on the bond/stock decision and on the implications of return predictability."(National Bureau of Economic Research)

Extending Life Cycle Models of Optimal Portfolio Choice: Integrating Flexible Work, Endogenous Retirement, and Investment Decisions with Lifetime Payouts
Excerpt:"This paper derives optimal life cycle portfolio asset allocations as well as annuity purchases trajectories for a consumer who can select her hours of work and also her retirement age. . . . [I]ntroducing annuities leads to earlier retirement and higher participation by the elderly in financial markets."(University of Michigan Retirement Research Center)

Social Security Jitters? Better Prepare Now
Excerpt:"[E]ven if it's not clear yet what, if anything, will be done to Social Security and when, we thought it would be useful to look at a worst-case possibility -- to assume that benefits will not continue to be as generous. This is especially important as pensions continue to fade away."(New York Times; free registration required)

[Opinion] Pension Rights Center Urges Change to'Active Participant'Reporting by DC Plans on Form 5500 (PDF)
2 pages. Excerpt:"Simply having an account balance does not implyactively contributing. . . . An improved definition of'active'participants will be of great benefit to policymakers, as well as to researchers, analysts, the media and consumer organizations such as ours."(Pension Rights Center)

Investment Company Institute's Retirement Snapshot, First Quarter 2010
Excerpt:"[I]n the first quarter of 2010, investors'commitment to 401(k) and similar plans continued, as evidenced by stronger contribution activity and declining levels of participant-initiated withdrawals and changes in asset allocations. . . . Americans held $16.5 trillion in retirement assets at the end of the first quarter of 2010, accounting for 36 percent of all household financial assets in the United States."(Investment Company Institute)

The New Class Warfare: Private Vs. Public Worker
Excerpt:"Over the last decade, politicians . . . who sought to reform public-sector benefits, particularly pensions, argued that promises made to government workers in economic boom times no longer were affordable. But the urgency was lacking. That has changed . . . ."(Los Angeles Times)

The EBRI Retirement Readiness Rating:? Retirement Income Preparation and Future Prospects
Excerpt:"The baseline 2010 Retirement Readiness Rating? finds that nearly one-half (47.2 percent) of the oldest cohort (Early Baby Boomers) are simulated to be'at risk'of not having sufficient retirement resources to pay for'basic'retirement expenditures and uninsured health care costs. The percentage'at risk'drops for the Late Boomers (to 43.7 percent) . . . ."(Employee Benefit Research Institute (EBRI))

[Opinion] Opinion: Marriage Is A Constitutional Right
Excerpt:"The judge easily dismissed the idea that discrimination is permissible if a majority of voters approve it; the [California] referendum's outcome was'irrelevant,'he said, quoting a 1943 case, because'fundamental rights may not be submitted to a vote.'"(New York Times; free registration required)