Compliance December 26, 2013

Puerto Rico Governor Signs Pension Reform into Law

December 26, 2013 (PLANSPONSOR.com) – A set of proposed changes to Puerto Rico’s Teacher Pension System has now been signed into law.
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Puerto Rico Governor Alejandro Garcia Padilla approved several reform measures designed to improve the long-term financial stability of the retirement system, which include:

  • Setting a minimum pension of $1,625 for all teachers who retire after the passing of the law;
  • Increasing the minimum pension for teachers already retired from $400 to $500 per month;
  • Replacing the current defined benefit plan with a defined contribution plan and balancing an increase in contributions of 1% by providing a 10-year, $300 annual salary increase;
  • Setting a retirement age of 55, along with 30 years of service, while guaranteeing benefits accrued up to July 31, 2014; and
  • Allowing any teacher with 28 years of service to apply for a 70% credit-based pension.

The new law also keeps in place previously accrued benefits, as well as guaranteeing a Christmas bonus of $200, a $100 prescription drug bonus and a medical plan contribution of $1,200 a year.

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According to the Office of the Governor, the reforms are designed to stabilize Puerto Rico’s finances and safeguard its public school system by addressing a more than $500 million annual projected shortfall. The governor credits the success of the bill transitioning into law to cooperation between Puerto Rico’s teachers’ unions and legislators.

Products December 26, 2013

Prudential Adds DST Clearing Service

December 26, 2013 (PLANSPONSOR.com) – Financial services and asset management firm DST reached an agreement to bring its retirement income clearing calculator (RICC) services to Prudential Retirement clients.
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DST’s retirement income clearing calculator tools are designed to enable easier distribution of retirement income across traditional recordkeeping platforms. The goal is to connect product providers with recordkeepers to better facilitate the delivery and portability of retirement income products, according to a statement from DST. 

Prudential Retirement, a business unit of Prudential Financial, plans to use the income clearing calculator to distribute retirement income products—such as its Prudential IncomeFlex Target—across multiple recordkeeping platforms.

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According to Jude Metcalfe, president of DST Retirement Solutions, the tool will provide Prudential the opportunity to make its guaranteed retirement income products available to more distributors and large plan sponsors.

"RICC breaks through the technology barriers to enable providers like Prudential Retirement to reach the marketplace without the immense and costly effort of continuously updating systems," says Metcalfe. "With RICC, building one platform allows you to reach many guaranteed income products."

Specifically designed to effectively work with a broad array of income solutions, RICC enables providers to incorporate various functionalities to deliver income solutions to the market. The platform incorporates all of the calculations, and product and business rules around a guaranteed income product.

DST Retirement Solutions provides a broad array of front- and back-office technology and servicing solutions to financial service organizations offering retirement plan recordkeeping.

More information is available at www.dstsystems.com.

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