November 5, 2013 (PLANSPONSOR.com) – The first half of 2013 saw little change in saving and withdrawal activity among employer-sponsored defined contribution (DC) plan participants, an Investment Company Institute (ICI) study found.
According to “Defined Contribution Plan Participants’ Activities, First Half 2013,” contribution rates remained high during the first half of the year. Just 1.5% of DC plan participants stopped contributing in the first half of 2013—a slight decrease from the 1.6% measured during the first half of 2011 and 2012.
Withdrawal activity also remained low during the first six months of 2013, with 2.1% of DC plan participants taking any type of withdrawal in the first half of 2013. Hardship withdrawals clocked in at 0.9% for participants. Researchers observed the same withdrawal levels last year.
DC plan loan activity, down fractionally over last year, remains elevated compared with rates before the 2008-09 financial crisis. At the end of June 2013, 18.1% of DC plan participants had loans outstanding, compared with 17.9% at the end of March 2013, 18.2% at year-end 2012, and 15.3% at year-end 2008.
Asset allocation strategies for DC plans remained steady as well from January to the end of June, with 7.4% of DC plan participants changing the asset allocation of their account balances and 6.0% altering contribution allocations.
More about the study’s findings and methodology is here.
November 5, 2013 (PLANSPONSOR.com) – A federal appellate court dismissed a lawsuit filed against the Pension Benefit Guaranty Corporation (PBGC) by retired U.S. Airways pilots.
The lawsuit, Thomas G. Davis, et al. v. Pension Benefit
Guaranty Corporation, was filed in the U.S. Court of Appeals for the District of Columbia
Circuit on behalf of approximately 1,700
retired airline pilots from U.S. Airways and their beneficiaries, who were
appealing the grant of summary judgment to the PBGC on their claims regarding
pension benefits payable under the terminated Retirement Income Plan for U.S.
Airways Pilots.
In 2002, U.S. Airways filed for bankruptcy and requested
that its retirement plan be terminated, and it was in March 2003. The PBGC
became trustee and began making estimated payments to the retired pilots
pending its initial determinations on proper asset allocation.
According to the court, the administrator of a terminated
plan distributes assets in accordance with a six-tier priority scheme set forth
in 29 U.S. Code Section 1344. The suit by the pilots related to the third of
these tiers, which included allocations.
The court cited that while the pilots appealed nine of the
claims stated in their amended complaint, they only provided arguments in
support of five of those claims. The court stated, “In this circuit, it is not
enough merely to mention a possible argument in the most skeletal way, leaving
the court to do counsel’s work, create the [framework] for the argument and put
flesh on its bones.” The court further stated that by failing to include
relevant arguments in their appellate briefs, the appellants failed to show
that the district court’s determination was erroneous.
The appellate court also found that it “need not decide the
level of deference due to the PBGC’s interpretation of the plan provisions
because the pilots have not demonstrated Article III standing for part one of
their claim and their other claims fail regardless of the standard.” The court cited
Chevron, U.S.A., Inc. v. NRDC, which supported that the PBGC is entitled to
deference when it acts as trustee in an involuntary retirement plan
termination.
In terms of the suit’s claim that benefits should not have
been fixed as of the date that the pilots could have taken retirement, but
instead be increased to compensate for value lost by not having benefits commence
earlier, the court said, “The pilots fail to show that the PBGC has not adopted
the better interpretation of [the relevant] ERISA Section 1344(a)(3)(B).”
As for the suit’s claim about the identification of which
pilots were eligible for the basic retirement income guarantee provided by the
plan, the court said “the pilots provided no record citation to show that
the PBGC’s reading was inconsistent with other provisions of the plan…and
failed to show that the PBGC erred in relying on the plan’s plain text.”
The full text for the court’s opinion can be
found here.