http://www.watsonwyatt.com Latest Watson Wyatt Retirement Articles and News en-us Copyright 2009 Watson Wyatt Worldwide http://backend.userland.com/rss091 1/5/2009 9:12:32 PM 20 The final report of the Alberta-British Columbia Joint Expert Panel on Pension Standards was published on November 28, 2008. The report makes over 130 recommendations, many of which will require several important legislative and regulatory changes. The importance of finding a balance between protecting the pension promise and encouraging the creation and maintenance of pension plans is highlighted throughout. [CANADA - ENGLISH]http://www.watsonwyatt.com/search/parser.asp?ID=20309Spouses will be able to apply to transfer a lump sum of their pension entitlement following a breakdown of their marriage, according to a proposal by Ontario’s Minister of the Attorney General on November 24, 2008. This proposal will imply a significant shift from the current system, in which division of pension income is deferred until payments start – upon the member’s termination, retirement or death. [CANADA - ENGLISH]http://www.watsonwyatt.com/search/parser.asp?ID=20312A recent benchmark study shows how Chilean firms are responding to the new APVC (collective voluntary provisional savings) system. In particular, a key finding is that there will not be an immediate widespread adoption of APVC plans, but that acceptance will be gradual. [CHILE]http://www.watsonwyatt.com/search/parser.asp?ID=20340In response to changes in life expectancy and long-term return assumptions, the Social Security committee of the Swiss parliament has approved a reduction in the minimum required conversion factor, the ratio that converts retirement savings to an annual pension. [SWITZERLAND]http://www.watsonwyatt.com/search/parser.asp?ID=20304Valuation models were the subject of intense debate during the drafting of “Statement of Financial Accounting Standards (SFAS) No. 123(R) — Share-Based Payment.” The exposure draft would have required companies to use a binomial lattice model (or something similar) to value employee stock option awards, but the final standard has allowed companies to use either a binomial lattice or a closed-form model, such as Black-Scholes, without preference. [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20306A draft regulation to amend unlocking rules and bring the old Life Income Funds (LIF) and Locked-in Retirement Income Funds (LRIF) into line with new LIFs has been proposed by the Ontario Ministry of Finance. If approved, the regulation would allow one withdrawal from LIFs and LRIFs; modify the annual payment from these accounts to match the new LIF regulations; and move the existing Locked-in Retirement Account (LIRA) provisions to a separate, new schedule. [CANADA - ENGLISH]http://www.watsonwyatt.com/search/parser.asp?ID=20307Rules governing lump-sum disbursements in Romania’s pension system have been approved. The state pension has also been raised in changes implemented on October 1, 2008. [ROMANIA]http://www.watsonwyatt.com/search/parser.asp?ID=20308Effective January 1, 2009, mandatory public health insurance and unemployment insurance contributions will change, according to the so-called “Sozialversicherungs-Rechengrößenverordnung 2009”. [GERMANY]http://www.watsonwyatt.com/search/parser.asp?ID=20298On December 23, 2008, President Bush signed the Worker, Retiree and Employer Recovery Act of 2008 into law. While the legislation, which Congress passed by unanimous consent, includes provisions to provide much-needed relief for pension plan sponsors as well as individual investors, it does not include a number of key proposals the business community is seeking. [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20292Implementation clarifications for China’s Labor Contract Law have been published and are in effect as of September 18, 2008. The new regulations include provisions for the absence of employment contracts and the calculation of severance payment. [CHINA]http://www.watsonwyatt.com/search/parser.asp?ID=20291A new law approved on October 19, 2008 reduced the requisite minimum working years to retire in Uruguay. The legislation also introduces special compensation for older retirees, new requirements to obtain disability pensions and special maternity benefits. Most of the changes will become effective in February 2009. [URUGUAY]http://www.watsonwyatt.com/search/parser.asp?ID=20293Workers are much less willing to pay higher premiums in order to keep their out-of-pocket costs such as deductibles and co-pays lower and more predictable, according to a recent survey. As they take steps to lower their current costs, many of their actions could lead to much higher costs in the future. [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20294Proposals announced in the 2008 Pre-Budget Report, released by the U.K. government on November 24, 2008 include increases in employer and employee National Insurance contributions. This increase is part of a move to improve the economic sustainability of public finances in the medium term, and will take effect largely in 2011 when the government expects the economy to be recovering from the current downturn. Also proposed were several measures intended to provide an immediate boost to the national economy, including a reduction in value-added tax. [UNITED KINGDOM]http://www.watsonwyatt.com/search/parser.asp?ID=20295According to recent survey findings, many defined benefit plans (DB) in the U.K. expect employer contributions to rise following their next valuation. Also, the financial turmoil and subsequent recession is expected to drive pension plan change generally, including plans closing to new entrants, closing to future accrual for existing members or making other changes to reduce costs. [UNITED KINGDOM]http://www.watsonwyatt.com/search/parser.asp?ID=20296The overlay of the dramatic decline in asset values of the last few months on the incipient tougher funding requirements of the Pension Protection Act of 2006 (PPA) has prompted widespread concern about the magnitude of the required contributions to single-employer defined benefit (DB) plans in 2009 and 2010. In this analysis, Watson Wyatt estimates contribution amounts using a comprehensive and realistic model of plan funding under four scenarios: PPA; provisions in the Worker, Retiree, and Employer Recovery Act of 2008 (H.R. 7327) (signed into law by President Bush on December 23); and two other major relief proposals, individually and in combination. Our calculations are based on market conditions as of Dec. 12, 2008 (see appendix for further details). [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20284WASHINGTON, D.C., December 18, 2008 — The number of companies implementing cost-cutting measures, including layoffs, hiring and salary freezes and smaller pay raises, has risen sharply in just two months, according to a new survey by Watson Wyatt, a leading global consulting firm. [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20269The U.S. Department of Labor (DOL) recently issued Interpretive Bulletin 08-1, which warns plan fiduciaries against selecting investments to promote public policy preferences. The notice specifically addresses economically targeted investments (ETIs), which create economic benefits apart from their investment return. The bulletin replaces Interpretive Bulletin 94-1 and clarifies and formalizes the DOL’s position. [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20229As workers approach retirement, they must make decisions that will affect their long-term financial futures. One of these is choosing the form of distribution from their defined benefit (DB) plan and defined contribution (DC) account. While there might be several distribution options, for many DB plan participants it comes down to a choice between a life annuity and a lump sum. But how many older workers know enough to make an informed decision? [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20230The U.S. Department of Labor (DOL) has finalized regulations establishing a safe harbor for the selection of an annuity provider and purchase of annuity contracts for defined contribution (DC) plans. The final regulations simplify the safe harbor proposed in September 2007 and clarify that the safe harbor is an optional means of satisfying the fiduciary standards of the Employee Retirement Income Security Act (ERISA). The regulations took effect Dec. 8, 2008. [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20231The IRS has proposed regulations that would require plan sponsors to include more information in the participant notices explaining the consequences of failing to defer a distribution. The regulations also would extend from 90 days to 180 days the election period for waiving the Qualified Joint and Survivor Annuity (QJSA) and the period for distribution of notices addressing rollover eligibility and the tax treatment of distributions. [UNITED STATES]http://www.watsonwyatt.com/search/parser.asp?ID=20232