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Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 12/31/10

January 02
21:31 2011

Welcome to Fiduciary News Trending Topics. Each Monday, we’ll give you a quick synopsis of the major news events and trends impacting ERISA plan sponsors, 401k fiduciaries and those in the business of supporting these fine folks. If you 1020805_25983300_Trending_Topics_2010.12.31_stock_xchng_royalty_free_300smile when you read these entertaining snippets, well, that’s the idea.

Fiduciary News Lead Story:

Top Ten Most Widely Read Fiduciary News Stories in 2010 (Part I of II),” (Fiduciary News, November 23, 2010). If you’ve been floating in space for the past twelve months, have no fear as these articles are the ones you most want to read to catch up on the happenings of 2010. Incidentally, does the most widely read Fiduciary News story in 2010 reflect a latent concern among 401k fiduciaries or does is represent an eerie omen?

Are the Promise of Pensions Problematic? The drip, drip, drip continues:

Last week saw more trials and tribulations for what is fast becoming the Edsel of the mutual fund industry. Has your office started a pool yet to guess the date when the DOL – which created this whole fad in 2006 – throws in the towel and removes these irreparably misleading products from the list of 401k default options?

The NEXT 10 City Pensions That Will Run Out Of Money,” (Business Insider, December 27, 2010) From 2015 through 2023, ten big name cities face the ultimate crisis of all Ponzi schemes. If you live in these cities, the advice is simple: Move.
Pension impasse continues; council summons mayor,” (Pittsburgh Post Gazette, December 28, 2010) With the Steel City facing a state takeover by the end of the year, city fathers have problems devoted 30 years of municipal revenues to the pension. Funny this is, Pittsburgh isn’t even on the top 20 in the article above.
Investigating Detroit’s public pension boards,” (Detroit Free Press, December 27, 2010) Detroit, on the other hand, comes in at #9 on the Business Insider list. This link takes you to a series of articles that outline an anatomy of a growing pension debacle.
Are State Public Pensions Sustainable? Why the Federal Government Should Worry About State Pension Liabilities,” (Academic paper by Joshua Rauh, Northwestern University) We don’t usually spotlight academic papers, but this trending topic is so overwhelming we couldn’t held it. The abstract just explains there’s a problem – as if nobody knew – but doesn’t appear to offer a solution, leaving an opening for a more enterprising author.
And Now, Here’s The First 11 State Pension Funds That Will Run Out Of Money,” (Business Insider, December 27, 2010) This article was released with its companion article above. Here’s the real surprise: California just misses out on this list. And New York is one of only five states that will never run out of money.
Assets of public pension funds up 6.2 percent in Q3,” (Reuters, December 29, 2010) Even the good news has bad news. While a positive 6.2% in the third quarter looks good, the S&P 500 itself was up more than 10% in the same period.
How to fix state pensions without a federal bailout,” (Christian Science Monitor, December 29, 2010) As if on cue, an enterprising author steps forward with a solution based not on some ivy covered black board, but on the real world experience of actual events and policies. Think others will follow suit?

Are Mutual Fund Measurements Misleading? Another voice from the wilderness goes unheeded:

Everyone talks about mutual fund mismeasurements, but nobody does anything about it. Is it any wonder? The more you try to do something about it, the worse it gets.

Mutual fund measurement may be misleading,” (Financial Planning, January 1, 2011) Craig Israelsen, an associate professor at Brigham Young University, focuses on the problems of timing within a single chronological period. It turns out, performance depends on the timing of cash flows.

Major Plan Sponsor Moves and News:

What are other plan sponsors and fiduciaries doing with their plans? And how are participants responding? The latest in legal proceedings involving plan sponsors and fiduciaries.

401k Participant Wins FINRA Arbitration,” (, December 27, 2010)
Is your 401k plan ripping you off?” (Reuters, December 27, 2010)
Lawyer Entitled to 401k Distribution,” (, December 29, 2010)
Supermarket Stock Drop Case Remains Alive,” (, December 29, 2010)
Lehman Sued by Its Retirement Plan Participants,” (Advisor One, December 29, 2010)
Memorial Health Halts 401k Match,” (, December 31, 2010)
5500 Filings Track 2008 Plan Trends,” (, December 31, 2010)

Wisdom from Some of Our Favorite Blogs:

fi360 Blog: Fiduciary Links: End of year wrap-ups
401kBasics: Plan Sponsor Quick Tips: Common Plan Mistakes – Failure to Follow Plan Terms
401kBasics: Keep the Course: In Plan Roth Rollovers
fi360 Blog: Resolutions for advisors and investors

Hot Tips from Popular Web Resources:

Pensions & Benefits Law: Does Your 401(k) Plan Offer a Target Date Fund? Get Ready for Even More Participant Disclosures
RIABiz: Why a swing-and-miss on fiduciary standards will haunt us for decades

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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