Data & Research September 30, 2009

Employers Put Retirement Plan Changes on Hold

An Aon Consulting survey indicates employers are taking a wait-and-see approach before changing their retirement programs.

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Aon Consulting surveyed 1,313 employers nationwide in its 2009 Benefits & Talent Survey and found that more than 90% are not changing their retirement programs, in terms of benefits or management.

According to Aon, despite the fact that 64% of responding employers said there was an increase in investment-related questions from participants in 2008 versus 2007, only about a third of these organizations increased their communications around the importance of saving for retirement last year, while 62% said their communication remained unchanged from the previous year.

Fifty-six percent of respondents offer matching contributions on defined contribution (DC) plans, and most did not cite changes to their matching contributions; but Aon said some financially constrained companies did suspend or modify their matches during the economic downturn. Additionally, 41% of employers have an automatic enrollment plan, with 53% implementing a default at 3%, and nearly all (99%) planning to keep their default percentage the same this year.

Employees Also on Hold

The overwhelming majority (87%) of surveyed employers also said employees are delaying retirement due to economic conditions.

A third of employers have less than 70% of their employees enrolled in their DC plans, with the majority (67%) saying they believe workers are not enrolled because they cannot afford it. According to Aon, 38% of these employers believe employees have little knowledge of the funds needed for retirement, and 52% said employees have only some idea of what is needed to retire with enough funds.

Just 8% of employers said they believe their employees have a strong understanding of the amount of funds needed in retirement.

More information about the study is available here.


Compliance September 30, 2009

Vick to Turn Over $400K to DoL

Disgraced NFL quarterback Michael D. Vick has agreed to pay $416,461 in restitution to a pension plan sponsored by his company MV7 LLC to settle allegations Vick had funneled off plan assets for his personal use.

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A U.S. Department of Labor (DoL) news release said Vick will also pay a civil penalty to settle the prohibited transactions charge.

According to the announcement, Vick violated his duties as a plan trustee by making the transfers from March 2007 to July 2008 from plan assets that were partially used to help pay the criminal restitution imposed on Vick after his conviction for unlawful dog fighting as well as fees for the attorney in Vick’s bankruptcy cases (see “Michael Vick and Financial Advisers Sued for ERISA Violations”).

The judgment permanently bars Vick from serving as a fiduciary to any plan governed by the Employee Retirement Income Security Act (ERISA), requires him to pay all expenses associated with termination of the plan, and appoints an independent fiduciary to manage the plan until it is terminated.

“Corporations and executives who are plan fiduciaries have a duty to protect the pension assets of participants,” said Phyllis C. Borzi, assistant secretary for the Labor Department’s Employee Benefits Security Administration (EBSA). “Our legal action ensures that these participants will get the plan assets owed to them.”

MV7 LLV was a celebrity marketing enterprise owned by Vick, who filed for Chapter 11 bankruptcy July 7, 2008, the DoL said. The company sponsored a defined benefit retirement plan for nine current and former employees as of October 2008.

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