Deals & People March 31, 2015

Scott Powers to Retire from SSgA in 2015

State Street Corporation announced that Scott Powers, president and chief executive officer of State Street Global Advisors (SSgA), intends to retire later this year after more than seven years leading the firm and three decades in the investment management industry.
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Ronald O’Hanley will succeed Powers at the beginning of April, the firm says. He and Powers will work together over the next several months to ensure a smooth transition of responsibilities. O’Hanley will report to Jay Hooley, chairman and chief executive officer of State Street, and will join the company’s management committee, its senior-most strategy and policy-making team. 

Powers says it’s “bittersweet to be retiring from SSgA,” but he feels the firm is on a solid footing for the future. “It’s been a privilege to work with such a talented team of professionals and global clients,” he adds.

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Hooley says he has known O’Hanley personally for many years. “[He] has a proven track record and extensive experience running a global multi-asset class investment management business,” Hooley notes. “He also has broad experience across asset servicing, both as a leader and State Street client.”

O’Hanley also has nearly 30 years of experience in leadership roles within the industry and most recently served as president of asset management and corporate services for Fidelity Investments. Prior to joining Fidelity, O’Hanley spent 13 years in leadership positions at Mellon Bank and Bank of New York Mellon, ultimately becoming president and chief executive officer of BNY Mellon Asset Management in Boston, vice chairman of Bank of New York Mellon Corp and a member of its executive committee. 

During Powers’ tenure, SSgA says it has “expanded its services across the risk-return spectrum, increased profitability and grown market share across both the institutional and intermediary channels.”

More information is available at State Street’s website: www.statestreet.com. 

Compliance March 31, 2015

IRS Modifies Compliance Resolution System

The Internal Revenue Service (IRS) has announced modifications to Revenue Procedure 2013-12 to make miscellaneous changes designed to improve the agency’s Employee Plans Compliance Resolution System (EPCRS).
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In Revenue Procedure 2015-27, the IRS said it is reducing voluntary correction program (VCP) compliance fees relating to failures to meet requirements with respect to participant loans. In addition, the agency clarifies that for certain overpayments, as defined in sections 5.01(3)(c) and 5.02(4) of Rev. Proc. 2013-12, a plan may use correction methods other than the correction methods set forth in sections 6.06(3) and 6.06(4) of Rev. Proc. 2013-12. 

The IRS explains that Section 6.02(2) of Rev. Proc. 2013-12 provides that any correction of a failure should be reasonable and appropriate for the failure. Under correction rules described in sections 6.06(3) and 6.06(4), the employer is to take reasonable steps to have the overpayment returned to the plan. The agency says it has been informed that some plans have demanded recoupment of large amounts from plan participants and beneficiaries on account of plan administration errors made over lengthy periods of time, and that plan participants and beneficiaries, particularly those who are older individuals, may have financial difficulty meeting some corrective actions that have been sought by plan administrators, including the return of overpayments with substantial accumulated interest. 

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According to the IRS, some plans may be interpreting the correction rules as requiring a demand for recoupment from plan participants and beneficiaries in all cases. However, depending on the facts and circumstances, this may not be the case. 

For example, depending on the nature of the overpayment failure (such as an overpayment failure resulting from a benefit calculation error), an appropriate correction method may include having the employer or another person contribute the amount of the overpayment (with appropriate interest) to the plan in lieu of seeking recoupment from plan participants and beneficiaries. Another example of an appropriate correction method includes a plan sponsor adopting a retroactive amendment to conform the plan document to the plan’s operations. 

In Revenue Procedure 2015-27, the IRS also requests comments about recoupment of overpayments. Text of the document is here.

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