April 18, 2016
By Silver Krieger
New York, NY – On April 13th, LaborPress, SaxBST, and Milliman made a joint presentation titled “Doin’ It Right: Hot Button Compliance Issues for Union Benefit Plans” at the DC1707 headquarters in Manhattan. The talk featured four speakers, along with slides to accompany them, each with a wealth of information designed for the public service seminar. Here’s a recap of some of the speakers’ main concerns.
LaborPress publisher Neal Tepel started things off by letting attendees know that this would be the model and the first of a series. He was followed by Pat Stines, CPA and Partner at accounting firm SaxBST, who introduced Shenice Franklin, Esq., of Cary Kane LLP, to talk about Department of Labor audits.
Ms. Franklin, a former Department of Labor investigator, offered do’s and don’ts for plan administrators in case they face an investigation by the Employee Benefits Security Administration – the division of the Department of Labor that investigates qualified pension plans, health plans, annuity plans, and other employee benefit plans. When many members of the audience revealed by a show of hands that they had been investigated by the EBSA, she said that much of this activity had been triggered by the Affordable Care Act. She said that firms chosen for investigation typically had to do with Form 5500 reviews, specifically Schedule H, which is
financial information on the 5500. Others triggers for an investigation include participant complaints, Office Targeting and Department Initiatives, and referrals from other agencies such as the IRS and the DOJ. Her biggest piece of advice, when receiving a letter from the DOL was to call counsel, and, if necessary, request an extension in order to have time to organize your documents.
Next up was Timothy L. Connor of Milliman, who has been working in the pension field for twenty years, with Pension Hot Topics for Multiemployer Plans. He noted that, out of the approximately 1300 multiemployer defined benefit pension plans in the United States, many are underfunded. Milliman’s last review of these plans showed that the aggregate level of funding was only 79%, and that there are 200 plans with are underfunded by 65% or more. The total amount that the plans are underfunded, he said, is approximately $125 billion. Part of the reason for the serious funding shortfall, he said, is that corporate pension plans surveyed by Milliman had a return of only .9% for 2015.
Reza Vahid, a Health Care Actuary also with Milliman, reviewed new requirements under the Affordable Care Act, and said that many of the predictions of plans having to cut benefits had not come to pass. The Medicare exchanges helped preserve benefits, along with public exchanges, he said. He drew attention to higher than expected increases in drug prices. The Consolidated Appropriations Act of 2016, he said, brought with it an important development for all administrators of union plans – the delay of the “excise tax” or “Cadillac tax” on high-value plans for an additional two years, pushing it back to 2020. Most union leaders would agree that this could have been a potent election-year issue against the Democrats, should this delay not have been granted.
On the topic of retiree health programs, Mr. Vahid noted that they are generally not as well funded as those of active employees, but that the government has recently given plans more flexibility and subjected them to means testing. He also delved into new developments in bankruptcy law in the cases of Stockton, CA and Flint, MI, where the findings of a bankruptcy judge trumps state law.
LaborPress will keep our subscribers and readers updated on the dates for upcoming seminars.