Subject:                                     BCG Pension Insider September 2018



The Pension Insider


The Pension Insider is a monthly newsletter developed for individuals who work in the pension arena. The Pension Insider was created to share ideas, success stories, coming events and industry specific articles.



September 2018 - Volume 83, Edition 1



Another Hit to Retirement Plan Investors:

Financial Transaction Tax

PlanSponsor | September 10, 2018 | Rebecca Moore


An analysis shows a new bill introduced in the Senate would result in a significant financial hit to retirement plan investors. Modern Markets Initiative is pushing back on a tax provision in the bill.


The Inclusive Prosperity Act of 2017 has been introduced in the Senate and includes a financial transaction tax (FTT).


According to Modern Markets Initiative (MMI), the FTT would be applied to every stock traded, including a 0.5% rate on equity, a 0.1% rate on debt and a 0.005% rate on derivatives. MMI, an education and advocacy organization, which is strongly opposing this tax, has done an analysis of what its costs would be for pension funds and all investors.


While MMI’s analysis focuses specifically on public pension funds, an op-ed by CEO Kirsten Wegner notes that the tax will affect all defined benefit (DB) plans, individual retirement accounts (IRAs), defined contribution (DC) plans and individual investors.


For example, using asset allocations in 2015 for the California Public Employees’ Retirement System (CalPERS), as well as published data about its trades, MMI calculated the FTT would be $508,374,705. “That’s not a typo - CalPERS and the hardworking public employees it invests for would have paid more than half a billion dollars in tax in 2015 alone,” Wegner writes. Click Here for full article


Mercer Makes Recommendations for Finding Missing Participants

PlanSponsor | Lee Barney

If there are missing participants that plan sponsors have not made a genuine effort to find, “the entire plan could be disqualified under the tax code and the plan fiduciaries may be found to have breached their ERISA duties,” says Norma Sharara, a partner with Mercer.


In a recent Mercer podcast, “Missing Participants - Risks and Remedies,” Norma Sharara, a partner with Mercer, discussed the serious ramifications that sponsors could face if they don’t find missing participants and why the government is more focused on this issue than ever before.


Because of the massive number of Baby Boomers retiring, Congress, the Government Accountability Office (GAO) and the three agencies that regulate retirement plans—the Internal Revenue Service (IRS), the Department of Labor (DOL) and the Pension Benefit Guaranty Corporation (PBGC) - are focused on the problem of missing participants.


“With 10,000 Baby Boomers retiring every day, an increasing number of participants in these plans who are turning 65 or 70-1/2 are going to be required to take out benefits from the defined benefit (DB) or defined contribution (DC) plan,” Sharara said. “That’s why it is such a hot topic right now.”


If there are missing participants that plan sponsors have not made a genuine effort to find, “the entire plan could be disqualified under the tax code and the plan fiduciaries may be found to have breached their ERISA [Employee Retirement Income Security Act duties.”. Click Here for full article



Best Practices for Handling Uncashed Checks

PlanSponsor | Rebecca Moore


A review of ways retirement plan fiduciaries can handle returned, uncashed participant benefit checks


May 16, 2014 - Some plan sponsors are unsure about best practices for handling uncashed retirement plan benefit checks, but a new paper aims to help.


There is no clear guidance from the U.S. Department of Labor (DOL) or the Internal Revenue Service (IRS) on all aspects of the uncashed checks issue (see “Unanswered Questions About Uncashed Checks”). Regulations allowing plan sponsors to roll participant accounts of less than $5,000 were passed in 2001 and put into effect in 2004 (see “DOL Announces New Automatic Rollover Regulations”), but Lowell M. Smith, Jr., president of Inspira, an individual retirement account (IRA) record keeper based in Pittsburgh, Pennsylvania, that offers an automatic IRA solution for plan sponsors, tells PLANSPONSOR at the time there were few providers available for plan sponsors to work with, and especially few that would take amounts less than $1,000.


Although there are more providers in the automatic rollover market now, many plan sponsors never adopted a policy for automatically rolling over participants’ balances due to the lack of providers at the time, and even those plan sponsors that are now automatically rolling over small balances, may not have put cash-out provisions in their plan documents, Smith says. He recommends that as plan sponsors are now amending their plans for Pension Protection Act and other legislation provisions, they should consider adding cash-out provisions. “I would say, even though they can still just issue a check for amounts less than $1,000, they should roll those over too.” Click Here to continue reading






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Patrick McLean


(800) 832-7742



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Michael E. Devlin, Principal

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David Rumas


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Sean O'Flaherty


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ANNUITY RATES Standard Pension Closeout/Terminal Funding Case Rates:

(No lump sums, no disability or unusual provisions)

Retirees - 3.18%

Term Vesteds - 3.23%

Actives - 3.30%

Annuity Purchase Rates as of September 24, 2018



BCG Pension Risk Consultants

We specialize in settling pension liabilities for terminating and ongoing pension plans.

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