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401(k) Lawsuits: What Are the Causes and Consequences?
Source: Center for Retirement Research

The brief’s key findings are:

  • Employers with 401(k)s are required to administer their plans for the “sole benefit” of workers, a standard that has been the subject of substantial litigation.
  • Recent lawsuits have focused on excessive fees, although inappropriate investment options and self-dealing are other common reasons for suits.
  • Court rulings in these cases often hinge on whether plan fiduciaries follow a “prudent” decisionmaking process, rather than on specific outcomes.
  • Perhaps in part to avoid such litigation, 401(k) sponsors have begun to rely more on low-cost index funds and have taken steps to reduce fees.
  • At the same time, concerns about litigation could dissuade 401(k) sponsors from offering potentially useful innovations, such as lifetime income options.

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Study: Police Officers & Firefighters Are More Likely to Die by Suicide than in Line of Duty
Source: Ruderman Family Foundation

 

A white paper commissioned by the Foundation has revealed that first responders (policemen and firefighters) are more likely to die by suicide than in the line of duty. In 2017, there were at least 103 firefighter suicides and 140 police officer suicides. In contrast, 93 firefighters and 129 police officers died in the line of duty. Suicide is a result of mental illness, including depression and PTSD, which stems from constant exposure to death and destruction.

 

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Modernizing Social Security: An Overview
Source: Center for Retirement Research

The brief’s key findings are:

  • Many policy experts support targeted changes to Social Security benefits for vulnerable groups, such as caregivers, widows, the very old, and low earners
  • Several of these changes have been endorsed by bipartisan groups, which indicates the potential for widespread support.
  • Such changes, by themselves, would raise Social Security’s long-term deficit.
  • But if the cost increases were offset by reducing other benefits, Social Security could be modernized in a way that is both effective and cost-neutral.
  • Further briefs in this series will evaluate the policy options for specific groups in more detail, including potential offsets to cover the costs.
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An Analysis of Retirement Models to Improve Portability and Coverage
Source: Center for Retirement Research

To better understand the challenges of the 401(k) system and its coverage and to assess possible strategies to improve it, this report presents a three-part analysis. The first part focuses on 401(k)s and documents the extent and nature of portability, the flow of money to IRAs, and leakage from both systems. It summarizes resulting problems and potential solutions. But beyond the existing 401(k) system, a coverage gap remains. So, the second part of the analysis identifies the nature of the coverage gap among wage and salary employees and assesses proposed solutions. But these solutions would not affect the 16 percent of workers in non-standard employment. Therefore, the third part of the analysis looks at options for covering these workers.

The objective of this report is to assess and present a wide – though not comprehensive – range of available options by examining and summarizing existing proposals and, where relevant, examples from other countries.

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Illinois State Retirement Systems Financial Condition as of June 30, 2017
Source: CGFA

This report examines the financial status of the five State-funded retirement systems.

The following is a summary of the findings:
• Public Act 88-0593 requires the State to make contributions to the State retirement systems such that the total assets of the systems will equal 90% of their total actuarial liabilities by Fiscal Year 2045. The contributions are required to be made at a level percent of payroll in Fiscal Years 2011 through 2045, following a phase-in period that began in Fiscal Year 1996.
• From FY 2003 through FY 2017, the combined unfunded liabilities of the systems increased by $86.0 billion based upon the market value of assets. The main factors for this increase in unfunded liabilities were actuarially insufficient employer contributions, changes in actuarial assumptions and demographics and other miscellaneous actuarial factors, along with lower-than-assumed investment returns over 5 years.
• The discussion of the financial condition of the State retirement systems centers on the funded ratio, or net assets divided by accrued liabilities. A system with a 100% funded ratio is fully funded because its assets are sufficient to pay all benefits earned by employees. Based upon the market value of assets, the funded ratio of the State retirement systems combined was 39.8% as of June 30, 2017.
• Projections of the future financial condition of the State retirement systems provide…….

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How Have Pension Cuts Affected Public Sector Competitiveness?
Source: Center for Retirement Research

The brief’s key findings are:

  • To improve the funded status of state and local pensions, many plan sponsors have cut benefits, particularly for new hires.
  • Such cuts, without offsetting increases in wages, could potentially make government employment less attractive to workers.
  • The analysis found that workers joining the public sector after benefit cuts had earned less in the private sector than those hired before the cuts.
  • This result suggests that pension cuts may have hurt governments’ ability to compete with the private sector for workers.

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Dependence on Social Security is Striking
Source: Center for Retirement Research

 

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Covet vs. Begrudge
Source: Lagers Bloggers

Let’s think about these two words for a moment…”covet” (to yearn to possess or have something) vs. “begrudge” (to envy or resent the good fortune of someone, to be unhappy or upset because someone has something you think they do not deserve).

Most of us growing up and going to church probably believe to covet something is bad (it is a commandment after all). Is it possible though that a little coveting is a good thing? If I want something bad enough, perhaps I’ll work harder to make sure I get it. And this doesn’t just apply to material things—it could be getting in better physical shape, finishing a college degree, etc. But what does that have to do with pensions?

 

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How Much Will Your Social Security Be Reduced If You Retire Early?
Source: The Motley Fool

 

Are you thinking about claiming your Social Security benefits soon? Before you decide to start taking your benefits, it’s important to determine if you’ve reached your full retirement age. If you haven’t, claiming Social Security now instead of waiting could result in much lower benefits.

How much will your Social Security benefit be reduced if you retire early?

Social Security benefits are calculated based on a formula that factors in your highest 35 years of earnings, adjusted for wage growth. The formula determines what your standard benefit amount is, which is the benefit you receive if you retire at the age the Social Security Administration designated as your full retirement age (FRA).

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This Week in Pensions
Source: NPPC

Welcome to the latest edition of This Week in Pensions! As we do most weeks, we have gathered the best stories about pensions and retirement security from the previous week. This is the news you need to know in the fight for a secure retirement.

Here are this week’s top stories:

 

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