Compliance October 23, 2018

Neuroscience Center Pension Plan Fiduciary Settles ERISA Dispute

Under DOL scrutiny, the Illinois-based employer has agreed to restore nearly $420,000 to its defined benefit pension plan.

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The U.S. Department of Labor (DOL) has entered into an agreement with the fiduciaries of the Neuroscience Center LLC Defined Benefit Pension Plan, with the firm consenting to restore $419,758 to the plan.

According to a DOL statement, the agreed-upon restoration is part of a consent judgment approved by the U.S. District Court for the Northern District of Illinois.

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The settlement follows an investigation by the DOL’s Employee Benefits Security Administration (EBSA) that found violations of the Employee Retirement Income Security Act (ERISA) by fiduciary and sole trustee Steven Devore Best. According to the DOL statement, EBSA investigators found Best used monies from the plan for the Neuroscience Center LLC’s operating expenses, funded other companies he owns, and made personal loans to himself. All of these actions, DOL says, were taken in direct violation of ERISA. Best conducted most of the unauthorized transactions in 2014 and 2015.

“Our investigation and the settlement that followed restores hard-earned retirement benefits to employees and protects their future,” says Employee Benefits Security Administration Regional Director Jeffrey Monhart, in Chicago. “This case should remind all fiduciaries that they must work solely in the interest of plans and participants.”

The consent judgment enjoins Best and the Neuroscience Center LLC from serving as fiduciaries to any employee benefit plan subject to ERISA in the future. The court ordered the restored monies to be allocated to participants’ pension accounts, with the exception of Best’s own account, and appointed an independent fiduciary to distribute benefits to eligible participants.

Client Service October 23, 2018

SOA Mortality Scale Shows Lowered Pension Plan Obligations

The report also found a decline in future rates of mortality improvement. 

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The Society of Actuaries (SOA) has updated its annual mortality improvement scale for pension plans through the publication of  “MP-2018,” finding a decline in future rates of mortality improvement and lower pension plan obligations compared with its 2017 scale.

The SOA’s projections suggest that adding the MP-2018 improvement scale could sink pension obligations by 0.2% to 0.4% for women, and 0.3% to 0.6% for men, when gauged with a 4% discount rate.

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Additionally, the recent scale shows a slim drop in life expectancy due to raised mortality rates for three out of the 10 leading causes of death in the U.S., which according to the Centers for Disease Control and Prevention (CDC) are unintentional injuries (with a 9.7% increase in mortality rates); Alzheimer’s disease (3.1% increase); and suicide (1.5% increase).

When compared with MP-2017, life expectancy for 65-year-old private pension participants decreased slightly less than one month for women, and faintly more than a month for men. According to the new report, life expectancy for men is now at 85.6 total, and 87.61 for women.

“In MP-2018, we see continued reduction of overall U.S. mortality improvement trends that we started seeing in 2010,” said Dale Hall, managing director of research for the SOA. “However, because we are also continuing to see varied mortality improvement across the age groups, it’s imperative for industry professionals to perform their own calculations, using the demographics of their pension population to determine the impact of implementing MP-2018 on their individual plan.”

For more information, read the full Mortality Improvement Scale MP-2018 report here. 

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