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Month: April 2020

It’s High Time to Do-Away With the “Arbitrary and Capricious” Standard of Review for Employee Benefit Claims

It’s High Time to Do-Away With the “Arbitrary and Capricious” Standard of Review for Employee Benefit Claims

The Employee Retirement Security Act (ERISA) has long-required that employee benefit plans (e.g., pension and welfare plans) provide “a full and fair review” of any decision denying a participant’s claim for benefits. ERISA §503, 29 U.S.C. §1133. Accordingly, most employee benefit plans provide procedures for submitting a claim for benefits to the plan administrator and for requesting a review of any denial of the claim. Often, the merits of a participant’s claim will turn on the interpretation of disputed plan…

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Financial Impacts of Coronavirus Could Significantly Reduce the Social Security Benefits of Persons Who Turn Age 60 This Year

Financial Impacts of Coronavirus Could Significantly Reduce the Social Security Benefits of Persons Who Turn Age 60 This Year

An intriguing working paper authored by Andrew Biggs issued by the American Enterprise Institute posits that the financial impacts of the Coronavirus could significantly reduce the Social Security benefits of persons who turn 60 this year; that is, of persons born in 1960. See “American Enterprise Institute: How the Coronavirus Could Permanently Cut Near-Retirees’ Social Security Benefits.” Biggs explains that, in calculating a worker’s Social Security benefit, Social Security initially indexes the worker’s earnings each year to economywide earnings as…

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Growing Trend: Employers Are “De-Risking” Their Pension Plans Through the Purchase of Group Annuity Contracts

Growing Trend: Employers Are “De-Risking” Their Pension Plans Through the Purchase of Group Annuity Contracts

The past five years have seen a growing trend among sponsors of single-employer defined-benefit plans: They are “de-risking” their pension plans by transferring all or a portion of their pension obligations to a life insurance company through the purchase of a group annuity contract. Thereafter, the life insurance company is responsible for paying retirees’ pension benefits. The arrangement is appealing to plan sponsors because it enables them to reduce the risks of funding their pension obligations in a volatile asset…

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