Compliance March 18, 2016

Sears Reaches Agreement on PBGC Protection

The PBGC and Sears have reached an agreement on financial protection for approximately 200,000 Sears pension plan participants and beneficiaries. 

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The Pension Benefit Guaranty Corporation (PBGC) and Sears Holdings Corp. have reached a final agreement that provides substantial protections for the Sears pension plan, which covers nearly 200,000 people.

A tentative arrangement was first announced in September 2015, the parties explain, “and after extensive talks, the agreement is now final.”

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According to the agreement, Sears will continue to protect the assets of certain special purpose subsidiaries, which hold real estate and/or intellectual property assets. Additionally, the subsidiaries will “grant springing liens on the protected assets in favor of PBGC. The liens will be triggered only by failure to make required contributions to the plan, prohibited transfers of ownership interests in the subsidiaries, termination of the plan, or bankruptcy of the company or certain of its subsidiaries.”

While Sears is currently making required minimum contributions to its pension plan, the plan’s assets would not be sufficient to satisfy all benefits if it were to terminate.

“This represents what sponsors and PBGC can achieve when we work together for the benefit of current and future retirees,” says PBGC Director Tom Reeder. “We applaud Sears for working with us so closely on this issue.”

Products March 18, 2016

White Paper Helps Guide Auto Enrollment Decisions

A white paper from Paragon Alliance Group intends to aid defined contribution plan sponsors in deciding whether auto enrollment is right for their plans.

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Automatic enrollment has been hailed as an effective tool for getting more employees to save for retirement and to save more.

However, there are several factors to consider when deciding whether and how to implement automatic enrollment before making it a done deal (see “Making the Best Auto Enrollment Decisions”).

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The Paragon Alliance Group, LLC, a regional benefits consulting and third-party administration firm, has developed a new whitepaper that is designed to provide insight into the pros and cons of auto enrollment, and why it may or may not be suitable for all plan sponsors.

The white paper provides key information for plan sponsors and plan advisers about:

  • The traditional approach to 401(k) or 403(b) plans;
  • Why auto enrollment was developed as a plan design feature to overcome some problems in traditional 401(k) or 403(b) plans;
  • Auto enrollment options;
  • Why proper oversight and execution is critical to avoid costly plan corrections;
  • Business benefits if designed, implemented and managed correctly; and
  • Critical questions to consider.

The white paper may be downloaded from the Paragon website.

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