1. RETROACTIVELY CONFERRED BENEFIT DURING COURSE OF EMPLOYMENT IS SUBJECT TO ERISA’S ANTI-CUT BACK RULE: A federal appeals court was presented with a dispute between a group of now-retired union employees over certain "banked hour" benefits that the union pension trust wanted to eliminate, and the trust, which was in distress and trying to find sources of funding to meet its obligations to its larger group of plan participants. The trustees agreed not to impose the cuts until a court had finally determined whether these cuts, effectuated through a plan amendment, violated the anti-cutback provisions of the Employee Retirement Income Security Act of 1974, which protects "accrued benefits" against reduction by amendment. The question raised was one of first impression in the circuit. On cross-motions for summary judgment, the district court entered summary judgment for the employees. While the trustees' arguments to the contrary were far from frivolous, the court found the employees' benefits were in fact, "accrued" and that the amendment would violate the anti-cutback provisions. Thus, the district court ruling was affirmed. "Banked hours" benefits are hours of service worked in covered employment or otherwise accrued by plan participants within a given year in excess of the minimum number of hours required to earn a full year of service for pension credit under the plan. Such hours are "banked" for a variety of uses, including filling in of hours of service for years in which the participant fell short of the minimum required for a full year of credit and "cashing in" as additional pension credits upon retirement. The trustees argue, based on the concept of "earned" benefits, that the "banked hour" benefits were conferred retroactively, and that retroactively conferred benefits are unearned gratuities and as a result cannot accrue. The trustees' position is not irrational, as a matter of policy, but Congress chose otherwise. The trustees' position had no basis in the statutory text. Bonneau v. Plumbers and Pipefitters Local Union 51 Pension Trust Fund, Case No. 13-1515 (U.S. 1st Cir. November 15, 2013).
2. NYC PENSION FUNDS’ FEES CLIMB ALMOST ONE-THIRD:Scott Stringer vowed during his successful campaign for New York comptroller to reduce the $370 million in fees the city’s five pension funds annually pay money managers and consultants. His job, whichstarts January 1, 2014, just got harder. The charges climbed to $472.5 million in the year ended June 30, 2013, enough to pay the salaries of 6,440 teachers. The 28% gain is more than double the return on the $137.4 billion retirement systems’ assets in the same period. In the past seven years, investment expenses for the pensions, which are overseen by the comptroller’s office, surged by $280 million. The growing cost underscores the challenge Stringer and municipal officials across the U.S. face in reducing pension-management fees and boosting returns, as the gap between promises to retirees and assets widens. To help shore up their funding, retirement systems like New York’s have turned to riskier and more expensive asset classes, such as private equity, hedge funds and real estate, to hit targeted annual returns of 7% to 8%. Money managers of those funds typically charge 2% of assets, plus 20% of profits, which is higher than traditional stock and bond funds. New York City’s pensions had 11.6% of their assets in such alternatives at the end of fiscal 2013, compared with 4% in fiscal 2006. (The city’s funds utilize almost 250 money managers!) It is altogether fitting and proper that this report comes to us from Bloomberg.
3. ANNUAL STATISTICAL REPORT ON THE SOCIAL SECURITY DISABILITY INSURANCE PROGRAM: Since 1956, the Social Security program has provided cash benefits to people with disabilities. The annual report provides program and demographic information about the people who receive those benefits. The basic topics covered are
· Beneficiaries in current-payment status;
· Workers' compensation and public disability benefits;
· Benefits awarded, withheld and terminated;
· Disabled workers who have returned to work;
· Outcomes of applications for disability benefits; and
· Disabled beneficiaries receiving Social Security, Supplemental Security Income or both.
Consider the size and scope of the Social Security Disability Program:
· Disability benefits were paid to just over 10.1 million people.
· Awards to disabled workers (960,206) accounted for over 90% of awards to all disabled beneficiaries (1,063,045).
· In December, payments to disabled beneficiaries totaled about $10.9 billion.
· Benefits were terminated for 728,320 disabled workers.
· Supplemental Security Income payments were another source of income for about one out of seven disabled beneficiaries.
Here is a profile of disabled-worker beneficiaries:
· Workers accounted for the largest share of disabled beneficiaries (87.5%).
· Average age was 53.
· Men represented under 53%.
· Mental disorders were the diagnoses for about a third.
· Average monthly benefit received was $1,134.86.
· Supplemental Security Income payments were another source of income for about one out of eight.
4. FORBES LISTS 13 THINGS MENTALLY STRONG PEOPLE AVOID: For all the time executives spend concerned about physical strength and health, when it comes down to it, mental strength can mean even more. Particularly for entrepreneurs, numerous articles talk about critical characteristics of mental strength -- tenacity, “grit,” optimism and an ability to “fail up.” Here is the avoidance list, shared by a psychotherapist/ licensed clinical social worker:
· Waste Time Feeling Sorry for Themselves. You do not see mentally strong people feeling sorry for their circumstances or dwelling on the way they have been mistreated. They have learned to take responsibility for their actions and outcomes, and they have an inherent understanding of the fact that frequently life is not fair.
· Give Away Their Power. Mentally strong people avoid giving others the power to make them feel inferior or bad. They understand they are in control of their actions and emotions. They know their strength is in their ability to manage the way they respond.
· Shy Away from Change. Mentally strong people embrace change, and they welcome challenge. Their biggest “fear,” if they have one, is not of the unknown, but of becoming complacent and stagnant.
· Waste Energy on Things They Cannot Control. Mentally strong people do not complain much about bad traffic, lost luggage or especially about other people, as they recognize that all of these factors are generally beyond their control.
· Worry About Pleasing Others. Know any people pleasers? Or, conversely, people who go out of their way to dis-please others as a way of reinforcing an image of strength? Neither position is a good one. A mentally strong person strives to be kind and fair, and to please others where appropriate, but is unafraid to speak up.
· Fear Taking Calculated Risks. A mentally strong person is willing to take calculated risks, which is a different thing entirely than jumping headlong into foolish risks. But with mental strength, an individual can weigh the risks and benefits thoroughly, and will fully assess the potential downsides and even the worst-case scenarios before he takes action.
· Dwell on the Past. There is strength in acknowledging the past and especially in acknowledging the things learned from past experiences -- but a mentally strong person is able to avoid miring his mental energy in past disappointments or in fantasies of the “glory days” gone by.
· Make the Same Mistakes Over and Over. We all know the definition of insanity, right? It is taking the same actions again and again while hoping for a different and better outcome than before. A mentally strong person accepts full responsibility for past behavior and is willing to learn from mistakes.
· Resent Other People’s Success. It takes strength of character to feel genuine joy and excitement for other people’s success. Mentally strong people have this ability. They do not become jealous or resentful when others succeed (although they may take close notes on what the individual did well).
· Give Up After Failure. Every failure is a chance to improve. Even the greatest entrepreneurs are willing to admit that their early efforts invariably brought many failures.
· Fear Alone Time. Mentally strong people enjoy and even treasure the time they spend alone. They use their downtime to reflect, to plan and to be productive. Most importantly, they do not depend on others to shore up their happiness and moods.
· Feel the World Owes Them Something. Particularly in the current economy, executives and employees at every level are gaining the realization that the world does not owe them a salary, a benefits package and a comfortable life, regardless of their preparation and schooling. Mentally strong people enter the world prepared to work and succeed on their merits, at every stage of the game.
· Expect Immediate Results. Whether it is a workout plan, a nutritional regimen or starting a business, mentally strong people are “in it for the long haul”. They know better than to expect immediate results. They apply their energy and time in measured doses, and they celebrate each milestone and increment of success on the way.
5. SEC TO LOOK INTO HEDGE FUND INVESTORS STEALING FROM PENSIONS: State and local pension investments in hedge funds, venture capital and private equity funds alternative investments have doubled in recent years. According to Forbes, such investments now amount to 24% of portfolios. The percentage of assets allocated to these lightly regulated funds is staggering. Tens of billions in public workers’ retirement savings across the country are currently at risk from pervasive, yet largely unknown, abuses related to alternative investments. The need for an immediate response from securities regulators and law enforcement is obvious. Another recent Forbespiece dealt with an investigation of the Employee Retirement System of Rhode Island and questionable conduct by managers (See C & C Newsletter for October 24, 2013, Item 6.) SEC staff has recently expressed concern regarding managers keeping public pensions in the dark about strategies and holdings. In addition, managers may have granted “secret” investors preferences. Although SEC must be aware of these almost routine practices, the Commission has taken no steps to curtail this unethical behavior. Forbes is virtually certain that SEC will deal this situation, and will find corruption rife – perhaps extending to elected officials.
6. HAPPY THANKSGIV-UKKAH!: Tomorrow, November 28, is Thanksgiving. Tomorrow is also the first day of Hanukkah, the eight-day Jewish festival of lights. Incredibly, Thanksgiving and the first day of Hanukkah have never before coincided. (Some “scholars” point out that the coincidence seemingly occurred in 1861 -- except that Thanksgiving was not established until 1868.) Oh, and by the way, the next time this solar and lunar overlap occur will be November 28, 79811! One other potential Jewish dilemma: if Yom Kippur ever falls on Thanksgiving!
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? In a London department store: BARGAIN BASEMENT UPSTAIRS.
9. TODAY IN HISTORY: In 1924, In New York City, the first Macy’s Thanksgiving Parade is held.
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