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Miami

Cypen & Cypen
NEWSLETTER
for
October 10, 2013

Stephen H. Cypen, Esq., Editor

1.  RETIREMENT ASSETS TOTAL $20.9 TRILLION: Total U.S. retirement assets were $20.9 trillion as of June 30, 2013, up 1.0% from $20.7 trillion on March 31, 2013. Retirement savings accounted for 34% of all household financial assets in the United States at the end of the second quarter of 2013. Assets in individual retirement accounts totaled $5.7 trillion, an increase of 0.9% from the end of the first quarter. Defined contribution plan assets rose 1.0% in the second quarter, to $5.3 trillion. Government pension plans -- including federal, state, and local government plans -- held $5.2 trillion in assets, a 1.4% percent increase from the end of March. Private-sector defined benefit plans held $2.8 trillion in assets at the end of the second quarter of 2013, and annuity reserves outside of retirement accounts amounted to another $1.8 trillion. 

2.  MAXIMUM BENEFITS AND CONTRIBUTION LIMITS FOR 2014 PREDICTED: Benefitsattorney.com “predicts” maximum benefits and contribution limits for 2014:

  • Elective Deferrals (401(k) and 403(b) - $17,500 (unchanged)
  • 457 - $17,500 (unchanged)
  • Defined Benefit Plans - $210,000 (up from $205,000)
  • Defined Contribution Plans - $52,000 (up from $51,000)
  • Annual Compensation Limit  - $260,000 (up from $255,000)
  • IRAs for individuals 49 and below - $5,500 (unchanged)
  • IRAs for individuals 50 and above - $6,500 (unchanged)

3.  AVERAGE U.S. SALARY INCREASES TO REMAIN AT 3%:Base pay increases for 2014 will remain at 3% for the second year in a row, roughly one percentage point below pre-recession levels, according to the seventh annual “Compensation Planning Survey” released by Buck Consultants.  However, survey respondents provided larger base pay increases for employees with particular skills and for those in IT and medical professions. Fewer respondents provided larger increases to workers in sales and engineering than was the case previously.  The survey analyzed responses from more than 320 organizations to determine trends in compensation and other workforce issues. Both short-term and long-term incentives weakened with fewer employees receiving STI in 2012, the last full year the data were collected. Fewer managers and lower-level employees are expected to receive STI payouts in 2014, and the expected size of STI awards forecasted for 2014 is smaller than 2012 actual awards. The average percentage of employees expected to receive new hire LTI grants is down for most employees. Talent retention remains employers’ top Human Resource priority. Employers project no increased hiring activity for 2014, with a mere 19% of respondents anticipating adding workers next year, the same as in 2013. According to the survey, recruitment and sourcing talent increased in importance and surpassed employee engagement as the second highest HR priority. The fact that employers are more concerned about hiring but not planning to increase hiring suggests that 2014 could be yet another anxious year for both employers, who are still hesitating to act on hiring, and the labor pool, anxious for anxious for improved employment prospects. 

4. FEDERAL JUDGES RULES SACRAMENTO COUNTY RETIREES NOT ENTITLED TO PERMANENT HEALTH CARE SUBSIDIES:  Retired Sacramento County employees have no legal right to unending health care subsidies from the county, a federal judge has ruled. According to sacbee.com, the Sacramento County Retired Employees Association and six individuals sued the county on behalf of four categories of retirees, challenging the decision to reduce or terminate subsidies that helped pay for medical and dental care. As a cost-saving measure in tough economic times, the Board of Supervisors slashed the subsidy in 2010 by $100 a month -- from a maximum $244 to $144 -- and then, in 2011, to a maximum of $80.64 a month. The 8,000–member association argued that the long history of subsidies created an implied contract guaranteeing them in perpetuity. Citing a report by a health benefit task force to the supervisors, the retirees claimed that, under the terms of various contracts between the county and its medical plans, its retirement system was required to maintain a minimum level of funding for the subsidies. U.S. District Judge Kimberly J. Mueller saw it differently, ruling that the association failed to back up its claims.  She found the plaintiffs had not presented copies of any such contracts, or pointed to anything else in the record supporting their claim that these contracts existed, or explained how their alleged status as third-party beneficiaries of such contracts fits within the law.  Thus, the plaintiffs were unable to demonstrate that the alleged existence of an explicit contract was enough of an issue requiring a trial.  The report provided to the Board of Supervisors confirmed the conclusion: it says that provision of these health benefit subsidies has been on an annual review basis. They are not legally considered vested benefits. They may be lowered or eliminated entirely whenever the Sacramento County Employee Retirement System Board deems it to be prudent, appropriate or necessary, for example, whenever excess interest earnings are inadequate or nonexistent. Annuitants are advised annually of the tentative nature of these benefits. Summary judgment granted in favor the county.

5.  ALL PRO-QUARTERBACK AND NFL GREAT ARCHIE MANNING TO SPEAK AT "THE NUTS AND BOLTS OF SHAREHOLDER LITIGATION:" All Pro-Quarterback and NFL Great Archie Manning will be speaking at the educational seminar, entitled "The Nuts and Bolts of Shareholder Litigation." The seminar has been developed specifically for pension funds and other institutional investors. It will take place on October 16, 2013 at the Westin Diplomat Hotel in Hollywood, Florida. The seminar is free of charge and includes lunch and post-seminar cocktails and snacks. An application for CLE accreditation in Florida is currently pending. The invitation and registration form is available at the following linkhttp://goo.gl/Y3VPJ7. The seminar is sponsored by the law firm of Bernstein Litowitz Berger & Grossmann LLP ("BLB&G").

6. FLORIDA DIVISION OF RETIREMENT ANNUAL POLICE OFFICERS' AND FIREFIGHTERS' PENSION TRUSTEES' FALL CONFERENCE: The 43rd Annual Police Officers' and Firefighters' Pension Trustees Fall Conference will take place on October 22-24, 2013. You may access information and updates about the Fall Conference, including area maps, a copy of the program when completed, and links to register with at the Doubletree by Hilton Hotel Orlando at Seaworld. Please continue to check the FRS website for updates regarding the program at www.myflorida.com/frs/mpf. All police officer and firefighter plan participants, board of trustee members, plan sponsors, and anyone interested in the administration and operation of the Chapters 175 and 185 pension plans should take advantage of this unique, insightful and informative program.

7. JEWISH WISDOMS: I once wanted to become an atheist but I gave up. They have no holidays.  Henny Youngman

8. DID I READ THAT SIGN CORRECTLY? Outside a secondhand shop:  WE EXCHANGE ANYTHING BICYCLES, WASHING MACHINES, ETC. WHY NOT BRING YOUR WIFE ALONG AND GET A WONDERFUL BARGAIN?

9. TODAY IN HISTORY: In 1973, VP Spiro T. Agnew pleads no contest to tax evasion and resigns.

10. KEEP THOSE CARDS AND LETTERS COMING: Several readers regularly supply us with suggestions or tips for newsletter items. Please feel free to send us or point us to matters you think would be of interest to our readers. Subject to editorial discretion, we may print them.  Rest assured that we will not publish any names as referring   sources.

11. PLEASE SHARE OUR NEWSLETTER: Our newsletter readership is not  limited  to  the   number  of  people  who  choose  to  enter  a  free subscription. Many pension board administrators provide hard copies in their   meeting   agenda.   Other   administrators   forward   the   newsletter electronically to trustees. In any event, please tell those you feel may be interested that they can subscribe to their own free copy of the newsletter at http://www.cypen.com/subscribe.htm.

Copyright, 1996-2013, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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