1. TOP 10 INVESTMENT PRIORITIES FOR PENSION PLAN SPONSORS THIS YEAR: For the third consecutive year, an SEI Quick Poll found that pension plan sponsors view controlling funded status volatility as the top priority for their organizations. Of the poll participants identifying this goal as a top focus for 2012, 70 percent said it is at least a high priority, with 43 percent of saying it is an extremely high priority. Reported by lexisnexis.com, the top 10 priorities for 2012 are as follows:
- Controlling funded status volatility
- Improving plan’s funded status
- Managing duration moving forward
- Implementing a Liability-Driven Investing approach using long-duration bonds
- Providing senior management with long-term pension strategies
- Stress-testing the portfolio to gauge its ability to withstand extreme macroeconomic environments
- Conducting an asset-liability study
- Implementing an asset allocation process aimed at exploiting shorter-term market inefficiencies to add return or mitigate risk
- Changing funding policies and timelines
- Defining fiduciary responsibilities for trustees and investment consultants
Making a first appearance in the top 10 list this year is the need to implement an asset allocation process aimed at exploiting shorter-term market inefficiencies. Many organizations are viewing outsourcing as a way effectively to react to short-term markets in order to increase return and mitigate loss. This priority replaces last year’s priority to “make a plan design change.”
2. IRS AND TREASURY TO HOLD TOWN HALL AND CONSULTATION LISTENING MEETINGS ON POSSIBLE APPROACHES TO GOVERNMENTAL PLAN GUIDANCE: Internal Revenue Service and Department of Treasury have announced they will hold town hall and consultation listening meetings across the country to discuss proposed guidance on possible standards for determining if a retirement plan is a governmental plan under section 414(d) of the Internal Revenue Code (see C&C Newsletter for November 24, 2011, Item 4). The issue is important to Federal, State and Local Governments, as well as their employees, because the statutory rules that apply to governmental plans are different from those that apply to nongovernmental plans. IRS and Treasury are soliciting comments on proposed drafts issued in November 2011 of possible approaches to guidance in this area. Comments must be received by June 18, 2012. Input from the general public is also sought from discussions at town hall and consultation listening meetings. Besides town hall meetings in Oakland, California and Cleveland, a free phone forum on the proposed guidance will be held on May 15, 2012 at 2 p.m. Details will be available on the IRS website at www.irs.gov/retirement. A public hearing on the proposed guidance relating to general determination of governmental plans will be held on July 9, 2012 in Washington, D.C. IR-2012-20 (February 13, 2012)
3. FACEBOOK PHOTOS DOOM WORKERS’ COMP CLAIM: If you want to convince a judge that you suffer from chronic, debilitating pain, it is probably not a good idea to have pictures of yourself carousing with your pals plastered all over the Internet. That is a lesson, according to advisen.com, that Zackery Clement should have learned before he requested an extension of temporary and total disability benefits by the Arkansas Workers’ Compensation Commission. There is no doubt that Clement did indeed suffer a legitimate injury while working at a warehouse. In fact, Clement suffered a hernia when a refrigerator he was attempting to move fell on him. The employer’s workers’ comp insurance carrier paid Clement’s medical expenses and temporary total disability benefits for over a year, when he suffered a setback. But when Clement wanted those benefits continued indefinitely because of his continued pain, the employer balked. Clement’s claim for continued benefits may have had a fair chance of succeeding because he had medical evidence supporting his contention that he still suffered from severe pain due to a recurrent hernia and nerve damage. However, there was the problem of certain pictures of Clement on the Internet showing him having way too much fun for a man who was supposed to be suffering from debilitating pain. The employer had done some poking around, and discovered pictures of Clement on Facebook. The employer introduced those photographs at the administrative hearing on Clement’s claim for extended benefits. The pictures may well have tipped the scales, because the administrative law judge rejected Clement’s claim, and the state workers’ compensation commission upheld denial of continued benefits. The Arkansas Court of Appeals affirmed, finding no abuse of discretion in allowing the photographs. The case illustrates that workers’ compensation attorneys and their clients have more to fear than just the sneaky claims investigator with a video recorder. Social media provide potential for self-inflicted wounds with inadvertent disclosure of photographic evidence undermining a claim of disability. Cut.
4. EMPLOYEE’S CLAIMS PREEMPTED BY ERISA: A U.S. district court judge found that Arditi’s claims against Lighthouse International were preempted by the Employee Retirement Income Security Act because they arose under Lighthouse’s Pension Plan and not separately and independently out of Arditi’s written employment agreement. The court denied Arditi’s motion to remand the case to state court, holding that Arditi’s claims were preempted by ERISA and that his suit was therefore properly removed to federal court. The district court then dismissed the action for failure to state a claim because Arditi had not stated any basis for challenging Lighthouse’s authority to amend the Plan. On appeal, Arditi argued that the additional benefits he sought were based on a promise separate and independent from the Plan. The court of appeals disagreed, affirming the district court’s denial of Arditi’s motion to remand the case to state court and dismissal of the action for failure to state a claim upon which relief may be granted. Arditi did not challenge Lighthouse’s authority to amend the Plan; indeed, Arditi conceded that Lighthouse had authority to freeze the Plan. The dissent believed the proper forum for resolving the underlying contract claim was the state court and that the majority’s holding eviscerated any distinction between the federal preemption and the state law merits questions. Arditi v. Lighthouse International, Case No. 11-423 (U.S. 2d Cir., February 9, 2012).
5. KANSAS SENATE COMMITTEE KILLS REQUIREMENT FOR DC PLAN: A Kansas state senate committee voted down reform of Kansas Public Employees Retirement System endorsed by the Governor, which would require new government employees to enroll in a 401(k)-style retirement program. In testimony to the Senate committee, former Topeka police officer Ron Brown, representing the Fraternal Order of Police, said West Virginia had attempted public retirement system reform in 1991 similar to this one. However, after about 17 years in arguably a much more robust economy, the average total account balance was less than $34,000, which led West Virginia to abandon its defined contribution plan.
6. VETERANS COURT HEADS FOR FLORIDA COUNTY: Led by Chief Circuit Judge Peter Weinstein (himself a veteran), the 17th Judicial Circuit Court of Florida is forming a Veteran’s Court division in Broward County, designed to provide rehabilitative services to veterans facing criminal charges. The hope, much like drug courts, is that vets can avoid prison through comprehensive, court-monitored programs that address underlying issues, which are often related to post traumatic stress disorders. The opening is part of a larger movement to help vets across Florida. Legislation that would allow establishment of separate courts for veterans was unanimously passed in House Appropriations Committee. The chief judge in each judicial circuit would be allowed, but not required, to create a vet court. Two similar bills are making their way through the Florida Senate. With the planned Broward opening this year, South Florida will have three courts available to the region’s nearly 287,000 veterans, along with thousands expected to return from Iraq and Afghanistan as the United States continues its military pullouts. Palm Beach County Veteran’s Court opened about 15 months ago, and, in March, the Miami-Dade Drug Court launched a similar specialized track for veterans, according to the Miami Herald.
7. LAUDERDALE COPS UNLEASH “THE PEACEMAKER”: Fort Lauderdale, Florida, sometimes known as the Venice of America because of its expansive and intricate canal system, had a problem --with 165,000 residents, the city could not command a large police force. Yet, according to govtech.com, the city is also a major tourist destination with an estimated 10 million visitors passing through every year. Recently, city officials hit upon an idea of mounting a few cameras on an armored vehicle, and deploying it in crime-prone areas throughout the city. Named “The Peacemaker,” the mobile video surveillance vehicle is a result of a strategic partnership between Fort Lauderdale Police Department and Brinks security services company. The idea is not novel -- several police departments in the United States have adopted mobile video surveillance. But a dramatic drop in Fort Lauderdale’s crime rate following the first few months of the Peacemaker’s deployment may explain why mobile video surveillance is increasingly emerging as a preferred tool for public safety and community protection for police departments nationwide. After the vehicle was acquired from Brinks, FLPD outfitted it with surveillance equipment capable of recording footage 24/7. The Peacemaker had been operational since August 2011. A second Peacemaker was deployed in December last year. The initial purpose of the Peacemaker was to enhance police presence in high-crime areas, and use it as an addition to the patrol vehicles that can only drive through neighborhoods. But when police started stationing the Peacemaker in problem areas, they realized that the vehicle was achieving remarkable results: it was deterring crimes so efficiently that within a few days of deployment, crime rates started dropping dramatically. Since the Peacemakers are armored trucks, they are fortified against vandalism and criminal attempts to thwart surveillance. Undoubtedly the Peacemaker is brazen, but it is not a covert operation: the vehicles are clearly marked.
8. CAR INSURANCE COMPARISON: THE MOST AND LEAST EXPENSIVE 2012 VEHICLES TO INSURE: If you want to drive a flashy new car that turns heads and gives you an adrenaline rush when you step on the gas, you will have to reach more deeply into your pocket to pay for auto insurance. Insure.com’s 2012 ratings of the most and least expensive vehicles to insure found that high-priced cars with powerful engines and European pedigrees come with the highest car insurance quotes. The reasons: more crashes, higher repair bills and expensive injuries. Here are 2012’s most expensive and least expensive vehicles to insure:
- Audi R8 Spyder Quattro Convertible ($3,384)
- Mercedes CL600 Coupe ($3,307)
- Mercedes S600 ($2,948)
- Audi R8 4.2 Quattro Coupe ($2,903)
- Porsche Panamera Turbo ($2,738)
- ToyotaSienna LE ($1,111)
- ToyotaSienna ($1,114)
- Jeep Patriot Sport ($1,116)
- Jeep Compass Sport ($1,118)
- GMC Sierra K1500 Regular Cab ($1,121)
Averages are based on insurance for a single 40-year-old male who commutes 12 miles to work each day, with policy limits of 100,000/300,000/50,000 and a $500 deductible on collision and comprehensive coverage.
9. GOLF WISDOMS: One birdie is a hot streak.
10. PARAPROSDOKIAN: (A paraprosdokian is a figure of speech in which the latter part of a sentence or phrase is surprising or unexpected in a way that causes the reader or listener to reframe or reinterpret the first part. It is frequently used for humorous or dramatic effect.): “Time flies like an arrow; fruit flies like a banana.” — Groucho Marx
11. QUOTE OF THE WEEK: “Alimony is always having to say you’re sorry.” Philip Simborg
12. ON THIS DAY IN HISTORY: In 1959, Fidel Castro named himself Cuba’s premier after overthrowing Batista.
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