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The Pensions Perspective

The Pensions Perspective provides monthly market and regulatory updates for the Pension community. The articles offer insights from across J.P. Morgan regarding how our Pension clients may continue to mitigate risk, improve operational efficiency and enhance their portfolios performance.

Mitigating Risk

Balanced vs. Lifestyle
Prior to the creation of target date and managed account solutions, balanced funds filled the role of the asset allocation solution within the investment menu.

Fiduciary Update
A recap of a few of the major fiduciary hot topics that surfaced during the last decade and continue to be pertinent information to help retirement plan fiduciaries gain a better understanding of their responsibilities to help them be better fiduciaries.

Year-end 2009 discount rates for retirement plans
Now that 2009 has drawn to a close, it is time to review the current state of interest rates for purposes of year-end accounting measurements for retirement plans under FAS 87 and 106 (ACS Topic 715).

Increasing Operational Efficiency

Decade in Review
As the first decade of the 21st century comes to a close, we’ve examined how private sector DB and DC plans changed between 2000 and 2009. We also explored how participant statistics and assets were impacted during this decade.

Generating Alpha

Securities Lending Quarterly Newsletter, 4Q 2009
2009 was a watershed year for securities lending with sustained market challenges, regulatory reform and a recalibration of risk management for all industry participants. By year-end, stronger fundamentals were in place – on all fronts – setting the stage for a less volatile 2010.

Regulatory Horizon

Legislative Update
The decade of 2000 to 2009 saw some of the most significant retirement legislation since the passage of the Employee Retirement Income Security Act of 1974 (ERISA). In particular, the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the Pension Protection Act of 2006 (PPA).

402 (g) Refund Reminders
It’s that time of year again. As participants enter tax season, they can become aware of situations where they may have contributed in excess of the IRC Section 402(g) limit. The limit is an individual limit so the role of the plan sponsor in the refund process is minimal.

Departments release interim final Mental Health Parity regulations
On January 29, 2010, the U.S. Departments of Labor, Health and Human Services and Treasury jointly issued an advance copy of interim final regulations on the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

February 2010 pension legislative outlook – Administration and Congressional initiatives
On January 25, 2010, President Obama announced five "middle class" initiatives, two of which – automatic workplace IRAs and an expanded Saver's Credit – directly involve retirement policy.

Yield and Rates

J.P. Morgan Aa Yield Curve and Discount Rates
The Aa corporate bond yield curve continued to steepen a bit in February. Short-term yields are now about 0.25% lower than at year-end 2009, while long-term rates have risen about 0.05%-0.10% this year.