Administration March 15, 2011

CalPERS Keeps Discount Rate Steady

March 15, 2011 (PLANSPONSOR.com) – The Benefits and Program Administration Committee of the California Public Employees’ Retirement System (CalPERS) Board of Administration has recommended the fund keep its discount rate at 7.75%.
Reported by

A CalPERS news release said the full board is scheduled to consider the recommendation on Wednesday.

“According to our actuaries, maintaining our discount rate at its current level is prudent and reasonable,” said Rob Feckner, CalPERS Board President and Vice Chair of the Board’s Benefits and Program Administration Committee, in the news release. “Given the current economic environment, we believe keeping our discount rate unchanged is in the best interest of our members, employers, and taxpayers.”

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According to the announcement, the committee made its decision following a comprehensive review and adjustment of the pension fund’s asset allocation and a detailed actuarial analysis.

As a part of its analysis, CalPERS staff generated 10,000 investment performance scenarios covering the next 60 years. The analysis concluded that expected returns will average 7.38% in the first 10 years and 8.50% in years 11 and beyond, which resulted in a 7.95% average annual return over 20 years or more.

Based on the historical performance of the different asset classes and sophisticated computer analysis, the updated asset allocation is expected to produce an average annual return of 7.95% over the next 20 years or more, with a 50-50 chance that returns will be either higher or lower, CalPERS said.

Compliance March 15, 2011

Employer Cleared of FMLA Wrongdoing

March 15, 2011 (PLANSPONSOR.com) – A federal appellate court has upheld a lower court decision sanctioning the firing of an employee for not properly communicating with his supervisor while on family leave.
Reported by

U.S. Circuit Judge Diane S. Sykes, in writing for the 7th U.S. Circuit Court of Appeals, ruled that plaintiff Robert Right did not have a legal leg to stand on in his case against SMC Corporation for violating the Family and Medical Leave Act (FMLA) by firing him for violating company leave policies when he returned from tending to his sick mother.

Sykes said the lower court judge was correct in ruling for the employer after finding Right did not properly tell SMC when he anticipated getting back to work, which was a violation of both company policy and FMLA regulations. He also did not respond to a supervisor’s repeated attempts to contact him while Right was on leave.

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“Right’s failure to respond to these calls or otherwise contact his employer dooms his FMLA claim,” Sykes wrote. “The FMLA does not authorize employees to keep their employers in the dark about when they will return from leave.”

The Righi case very well illustrates how an employer should ask more questions when a request for FMLA leave is in doubt and demonstrates the importance of having policies that require employees to communicate with them while they are on leave, Employer Law Report said in a story about the case.  The ruling is here.

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