The Department of Labor (DOL) released proposed regulations that if adopted impose new requirements for the disclosure of fee and expense information to participants in self-directed individual account plans (such as 401(k) plans). The proposed rule is expected to be effective for plan years beginning on or after January 1, 2009 and is part of an ongoing effort to ensure that participants receive sufficient information about plan fees and expenses so that they can make informed investment decisions. In the same notice, DOL proposed changes to the regulations under Section 404(c) of the Employee Retirement Income Security Act (ERISA) to integrate the disclosure requirements and to restate DOL’s position with respect to the scope of ERISA Section 404(c)’s protection.

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...in the Pittsburgh Business Times (full article requires a subscription):

Senior executives are taking a much more active role in administering 401(k) plans than in the past, according to a survey of more than 125 employers in the tri-state area around Pittsburgh.

Of the respondents in this year’s survey by Downtown Pittsburgh-based consultant Cowden Associates Inc., 94 percent said senior executives are involved in making decisions about investments, up from 30 percent in 2007.

...in the Pittsburgh Post-Gazette (full article):

The survey of 128 area employers also found that 25 percent of companies were automatically enrolling employees in 401(k) plans, up from 16 percent in 2007.

Cowden said the survey also identified a major deficiency among plan sponsors: One-quarter said they did not have an investment policy statement, which outlines the general investment goals and objectives of a retirement plan.

...in the Pittsburgh Tribune-Review (full article):

Employers in the Pittsburgh region are taking action to retain and attract top employee talent by increasing contributions to their workers' 401(k) and related retirement plans well above the standard 3 percent mark, a consultant's survey found.

Cowden Associates Inc.'s second annual survey of employers who sponsor defined-contribution plans released Thursday found a substantial year-over-year percentage increase in employer matching contributions.

Cowden Associates survey finds significant changes in investment decision-making process

Significantly more senior executives are taking a direct role in decisions regarding their organization’s 401(k) plans than in the past, according to Cowden Associates, Inc.’s Second Annual Tri-State Defined Contribution Plan Sponsor Survey.

Of the respondents to this year’s survey, 94 percent indicated that their senior executives are involved in the investment decision-making process, compared with 30 percent in 2007.

More than 125 employers throughout the tri-state region participated in this year’s survey, which was conducted during March and April, and provided information on their location, size, total plan assets, type of organization, and eligibility for and participation in the plan.

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A recent study by EBRI (Employee Benefit Research Institute) reports that many experienced employees might delay retirement if offered the right incentives. In partnership with the HR Policy Association, EBRI interviewed employees and retirees from 11 aerospace and defense industry companies. Nearly half of those polled said that feeling needed would be enough to get them to stay as much as 2 years longer. Half also said that receiving a full pension while adopting a part-time schedule would delay their retirement. Nearly as many would be enticed by a partial pension while working part-time. An overwhelming majority say that they would look positively on an employer asking them to stay longer. Employers have a narrow window to offer incentives for working longer, though. Many employees start thinking and planning for retirement as much as 2 years before they retire.

The New York Times on Pittsburgh:

PITTSBURGH has undergone a striking renaissance from a down-and-out smokestack to a gleaming cultural oasis. But old stereotypes die hard, and Pittsburgh probably doesn’t make many people’s short list for a cosmopolitan getaway. Too bad, because this city of 89 distinct neighborhoods is a cool and — dare I say, hip—city. There are great restaurants, excellent shopping, breakthrough galleries and prestigious museums. The convergence of three rivers and surrounding green hills also make it a surprisingly pretty urban setting. And if the Pirates are in town, head over to PNC Park. Besides the game, the ballpark offers a great excuse to explore downtown Pittsburgh and the river views.

In June, President Bush signed into law H.R. 6081: Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART Act), providing tax benefits and incentives to employees in qualified military service as defined by the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The provisions have varied impact on many benefits, including 403(b) plans, governmental 457(b) plans, IRAs, and health flexible spending accounts. A full summary can be found at GovTrack.us.

A survey commissioned by the AARP reports that the current downward shift in the economy is having a big effect on people age 45 and older, causing them to delay retirement and take premature withdrawals from their retirement savings. 27% of those over age 45 say they have postponed their retirement plans and over one quarter are struggling to pay mortgage or rent. The complete summary and the full survey can be found at the AARP website.

The U.S. Department of Labor (DOL) has released additional clarification of the "QDIA regulation," the final regulations governing Qualified Default Investment Alternatives (QDIA). These regulations provide plan sponsors relief from certain fiduciary responsibilities under the Employee Retirement Income Security Act (ERISA) for investments made on behalf of participants or beneficiaries who fail to direct the investment of assets in their individual accounts. The guidance has been published in the form of a Q & A that can be found at the DOL website.

An update to a retiree health care case we featured last year: on March 24, 2008 the U.S. Supreme Court declined to review a 2007 federal appeals court ruling, upholding a final rule from the Equal Employment Opportunity Commission (EEOC) that allows an employer to coordinate retiree health benefits with Medicare or a similar state health benefits program without being subject to the Age Discrimination in Employment Act (ADEA). The effect of the ruling is that employers are allowed to provide a two-tier system of retiree heath care coverage, with younger retirees receiving richer benefits than Medicare-eligible retirees. The final ruling ends an eight year court battle, often referred to as the "Erie County" case.

Cowden Associates' 2007/2008 Tri-State Employee Benefits Survey featured in the Pittsburgh Business Times:

A survey by Downtown employee benefits consultant Cowden Associates Inc. found that the number of businesses adopting some form of the so-called consumer-driven health care plan more than tripled since last year, but 107 out of 274 respondents, or 62.9 percent, said they were unlikely to offer the coverage in the future. Another 37 respondents, or 21.8 percent, said they had no interest in the plans, which usually incorporate a health reimbursement or savings account.

"It's a big change, and employees are not necessarily looking for big changes in the way their benefits are structured," said Cowden Executive President Vincent Wolf. "We seem to have hit a threshold, a ceiling, with these types of plans."

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