Compliance March 29, 2019

Senators Ask the Administration Why It Has Flipped on Retiree Payout

Murray’s and Wyden’s letter questions why employers will be allowed to offload pension liabilities and transfer risk to retirees.
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Senators Patty Murray, D-Washington, ranking member of the Senate Health,Education, Labor and Pensions (HELP) Committee, and Ron Wyden, D-Oregon, ranking member of the Senate Finance Committee, sent a letter toTreasury Secretary Steven Mnuchin and IRS Commissioner Charles Rettig requesting an explanation for a decision made earlier this month specifically, that the agencies no longer plan, as had been stated, to amend the required minimum distribution regulations under Internal Revenue Code (IRC) Section 401(a)(9) to address the practice of offering retirees and beneficiaries who receive annuity payments the option to elect a lump-sum payment in lieu of future annuity payments.

The letter to Secretary Mnuchin and Commissioner Rettig says, “This practice is particularly concerning for retirees who will once again be required to make critical decisions that could leave their retirement security at much greater risk without receiving sufficient information for making such decisions. Treasury and IRS announced the proposed prohibition four years ago in Notice 2015-49. The decision to reverse course on this issue, without providing any explanation for the reversal, is baffling and alarming.

“A buyout is an offer by a pension plan to a retiree, who is already receiving pension benefits, for a lump-sum payment in lieu of future lifetime payments from the pension plan,” the letter continues. “Companies that sponsor pension plans generally offer lump-sum buyouts to improve their balance sheets and reduce the total liabilities of their pension plans. In doing so, however, they also transfer their risk to retirees that the retirees might outlive their savings.

The complex actuarial formulas used to determine the immediate value of the lifetime pension benefit also often leave retirees who accept a lump-sum offer with less money than they may have received otherwise.”

The senators request a briefing by no later than April 12 that answers the following questions: When was the decision made to allow lump-sum buyout offers to retirees in-pay status again? Who made this decision? What prompted the decision? Was it made following meetings or correspondence with groups, individuals or organizations? If so, identify the groups, individuals and organizations. Were any reports, analyses or data considered or produced by the Treasury or IRS in making this decision? If so, provide such reports, analyses and data. Has the Treasury, the IRS or other part of the Trump administration discussed any of the concerns that prompted Notice 2015-49?

Deals & People March 29, 2019

Retirement Industry People Moves

Horizon Investments names head of portfolio management; FS Investments names chief technology and operations officer; and more.

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Art by Subin Yang

Horizon Investments Names Head of PM

Horizon Investments has named Mike Dickson its new head of portfolio management. In his new role, Dickson will oversee all Horizon’s investment management strategies, including its goals-based portfolios and five mutual funds. Dickson previously served as director of structured financial solutions with Horizon.

Dickson speaks frequently at industry conferences, and his research is often published in scholarly journals. His most recent paper, “Combining Managed Money and Annuities: Improving Outcomes for Retirement Income Solutions,” appeared in the Q4 2018 issue of the Money Management Institute’s Journal of Investment Advisory Solutions.

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FS Investments Adds Chief Executive

FS Investments has hired Vincent Amatulli as chief technology and operations officer. Amatulli reports to Michael Forman, chairman and CEO of FS Investments, serves on the executive committee and is based in the firm’s Philadelphia headquarters.

Amatulli joins FS Investments from New York-based Broadridge Financial Solutions, where he served as the chief technology officer for the company’s global technology and operations division. In that role, he was responsible for the modernization and innovation of Broadridge’s technology platforms and the integration of company acquisitions into the firm’s technological architecture. 

Amatulli began his career as a programmer analyst at Goldman Sachs and spent nearly three decades with the firm, ultimately holding the position of executive vice president and chief information and operations officer.

Amatulli earned his undergraduate degree in computer science from Marist College and an MBA in international business from Pace University. 

Wilshire Phoenix Announces Partner in New Division

Mason Stark has been named a partner and head of Wilshire Phoenix Asset Management’s new alternative investments division.

Stark joins Wilshire Phoenix Asset Management with decades of experience as an equity analyst, trader and portfolio manager, focusing on managed hedged-equity and long/short portfolios.

Stark’s mandate is to help deliver alternative investment solutions that help institutional and private clients achieve their performance goals.

Drinker Biddle & Reath Continues ERISA Litigation Team Expansion

Drinker Biddle & Reath LLP announced that Kimberly Jones has joined the firm’s employee benefits and executive compensation group as a partner, based in its Chicago office. She comes to the firm from Ogletree Deakins.

Jones has represented clients in Employee Retirement Income Security Act (ERISA) and non-ERISA employee benefits matters at both the U.S. federal and state court levels. Her clients include insurance companies, employers, plan administrators, claim administrators, and multiemployer benefit funds. Jones has worked with these clients on a variety of benefit claim litigation matters, including disability, life, health, pension claim denials, and ERISA breach of fiduciary duty claims.

Jones has argued before the U.S. Court of Appeals for the Seventh Circuit and has represented clients in administrative employee benefits matters. She also provides counseling and guidance to clients regarding benefit claims and plan design.

Jones earned her J.D. degree from Chicago-Kent College of Law. She also holds a bachelor’s degree in journalism and communications from the University of Florida.

In addition to Jones, the firm added Gregory Ossi and Jason Luter earlier this year to its Employee Benefits and Executive Compensation Group. Based in Washington, D.C., Ossi’s practice is focused on multiemployer pension plan withdrawal matters, while Luter, residing in the firm’s Dallas office, has experience in ERISA, tax controversy and employment litigation matters.

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