Deals & People March 16, 2009

Seyfarth Shaw Makes Benefits Counsel Additions

Law firm Seyfarth Shaw announced the expansion of its Employee Benefits&Executive Compensation department with the addition of nine attorneys and staff from the firm of Epstein, Becker&Green, P.C.
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The attorneys will join the Seyfarth Shaw New York office. Among the attorneys were former partners at Epstein: Howard Pianko, Richard Schwartz, and Randell Montellaro.

Also hired were six additional employee benefits practitioner: Counsel Richard I. Loebl; associates Melissa K. Kass, Abigail R. Levy, Kelly Pointer, and Evanthia M. Voreadis; and Benefits Specialist Linda Rentz.

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“Howard, Richard and Randy have built one of the best employee benefits teams in New York City, and we are delighted to welcome their group to the firm,” said J. Stephen Poor, chair and managing partner of Seyfarth Shaw, in the news release. “Their addition reinforces our ability to deliver quality compliance-based employee benefits and executive compensation services on the East Coast and internationally.”

The Markets March 16, 2009

Equity Declines Could Significantly Impact Retirement Planning

The Callan DC Index declined 15.5% in the fourth quarter for a total loss of more than 28% for the year.
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While the DC Index results lagged that of the average corporate DB plan by more than 3% (-12.19%) for the quarter, it bested the average 2030 target-date fund’s performance (-20.20%) by a significant margin. Callan said the index outperformed as a result of participants’ failure to rebalance their accounts, which resulted in declining equity allocations going into the worst of the downturn.

Using its capital market assumptions, Callan estimated that the year over year reduction in equity allocation could shave 0.60% annually from participants’ total return over a 20-year period. This translates into 10% less annualized, inflation-protected income per year in retirement, Callan said.

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Fixed income reached an all time high of 42.3% within the Index, compared to a low of 29.5% a year ago and an average of 32.2%. Market performance, failure to rebalance, and transfers out all contributed to the trend away from equities.

DC participants engaged in little transfer activity. Total index turnover declined to 0.51% in the fourth quarter from 1.13% in the previous quarter, well under the historical average of 0.77% over the life of the index.

When monies were transferred, movements were generally away from equities and into “safe haven” asset classes, according to Callan. Nearly two-thirds (65%) of flows went into stable value during the quarter, with target-date funds capturing most of the rest. Flows include participant contributions and target-date funds remain a very popular default option within DC plans.

Monies flowed out of domestic/global balanced, domestic small/mid cap, global, international and emerging markets, as well as real return/TIPS and specialty equity.

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