In
determining whether an employer was subject to the Multiemployer Pension Plan
Amendments Act (MPPAA) rules for withdrawal liability when a contributing
employer ceased operations, a district court misapplied the continuity of the
workforce factor in determining whether another company was a successor
employer, an appellate court found.
The
9th U.S. Circuit Court of Appeals said the district court had given too much weight
to the continuity of the workforce factor. The appellate court held that the
most important factor in assessing whether an employer is a successor for
purposes of withdrawal liability is whether there is substantial continuity in
the business operations between the predecessor and successor, as determined in
large part by whether the new employer has taken over the economically critical
bulk of the prior employer’s customer base.
In
addition, the 9th Circuit found the district court applied incorrect measures
to both the business continuity and workforce continuity factors. The district
court had looked at the number of customers of the predecessor that the
successor had continued to serve, but the appellate court said it should have
considered invoices and calculated the amount of revenue the continuing
customers generated—what the court called a market share factor.
As
for workforce continuity, the appellate court found that the lower court failed
to limit its calculation to just those employees covered by the multiemployer
plan. Looking at just bargaining unit employees, the successor had hired a
majority who had previously worked for the predecessor.
The 9th Circuit’s
opinion in Resilient Floor Covering
Pension Trust Fund Board of Trustees v. Michael’s Floor Covering, Inc. is
here.
Measuring and comparing retirement confidence around the
world yields some interesting results. State Street Global Advisors (SSGA)
certainly found this in their third annual Global Retirement Survey, which
delved into retirement contribution and participation levels in the U.S., U.K.,
Ireland and Australia.
While the U.K. showed the greatest rise in percentage points
from the previous survey, from 24% to 43%, in
confidence levels, the U.S. had the highest level (51%). But that level of
confidence does not necessarily reflect whether Americans are on track for a
successful retirement, researchers warn.
SSGA found that despite having smaller average savings
balances than their Australian counterparts, Americans were more confident. And
Australians, with higher balances and greater participation rates, were less
confident, at 32%, about meeting retirement goals. While Australian respondents
earned 38% less than U.S. respondents, they saved 41% more on average. U.S.
participants who aren’t confident cite having not saved enough (80%) and having
other financial priorities (44%) as contributing factors.
Initially, SSgA was struck by the lack of confidence among
Australians, calling it the “Australian paradox.” Nigel Aston, head of
European defined contribution at SSGA, says the firm scouted a number of
potential explanations—cultural, legislative or economic, among others—to
explain the gap between preparedness and confidence, and came to see the
situation rather as an American paradox. “Why are Americans over-confident
about retirement, when contribution and retirement savings levels are so much
lower?” he asks.
One possibility is that public policy has boosted the
American confidence level, says Melissa Kahn, retirement policy strategist,
defined contribution at SSGA. The Pension Protection Act led companies to
automatically enroll more employees under the safe harbor contribution level of
3%, she notes, and employees who go in at that contribution level often stay
there. Plan sponsors are viewed as trusted providers of a benefit that American
workers value highly, Kahn believes. “That 3% level imparts confidence that
they are saving at the right level, when really they are not,” she says, adding
that a change in policy would be needed to increase the safe harbor to more
effective savings levels.
NEXT: Calibrating confidence is the next step
After confidence is measured, Fredrik Axsater, global head
of defined contribution, says SSGA aims to see how that level can be changed,
and then how to calibrate confidence so it accurately reflects savings and
participation levels. “We don’t want people to be over- or under-confident,” he
explains. “We want to provide the right measure for people to know what kind of
retirement they can have.”
But confidence levels can also help SSGA understand its own
impact on retirement plan participants. “Confidence is one of the ways we have
to measure how successful we are in helping people retire,” Axsater says. “One
way to gauge if we’re making progress overall with participants is to ask if
are we increasing their confidence levels.”
Internally, too, confidence levels can be useful and
motivating for sponsoring firms. “We’re all aligned around a very clear goal of
making retirement work,” Axsater tells PLANSPONSOR. Since striving to achieve
retirement readiness for plan participants can drive different team members, he
believes, “It makes so much sense from a business standpoint to have that type
of broader goal.” As retirement can be a mission that a plan sponsor feels
strongly about, “It’s the greater good,” he says, “and it also helps build a
stronger team.”
The Australian paradox debunks the widely held belief that
confidence is driven by the balance in a retirement portfolio savings account,
Axsater explains. “Both plan sponsors and participants need to consider other
factors when assessing confidence, such as culture, the state of the economy,
pending legislation, plan design and individual circumstances. It is important
that we move away from a singular view of confidence to a broader view of the
financial life of people.”
SSGA surveyed 3,652 retirement savers, age 22 to 81, who
were working at least part-time and participating in a retirement savings plan,
with or without the guidance of a financial adviser. The survey was conducted
online by TRC Market Research and Rice Warner in May.
The Global Retirement Survey 2015 can be accessed from SSGA’s website.