Data & Research February 21, 2013

Executives May Be Rethinking Retirement

Some executives dreaming of their golden years are unsure when those years will actually start, a survey found.
Reported by

More than a third (38%) of chief financial officers (CFOs) said they are more uncertain about when they’re going to retire than they were five years ago, according to a survey by Robert Half Management Resources. Another 13% mentioned that their expected retirement plans have changed compared to five years ago.

Chief financial officers were asked, “How, if at all, have your retirement plans changed in the last five years?” Their responses were:

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

  • Retirement plans are unchanged: 49%
  • I am more uncertain and cannot predict when I will retire: 38%
  • I plan to spend more time working than I did five years ago: 7%
  • I plan to spend fewer years working than I had intended five years ago: 6%

Economic trends and personal demands are among the reasons many executives are re-examining their retirement plans, according to Paul McDonald, senior executive director at Robert Half.  “A growing number of professionals nearing the traditional retirement age are exploring project and part-time work so they can continue their careers, while gaining the flexibility to gradually transition into retirement,” McDonald said.

“Employers can accommodate seasoned employees who want to ease into retirement by enhancing succession planning efforts and offering consulting opportunities,” McDonald said. “This allows firms to retain legacy expertise and transfer knowledge from departing executives to future company leaders.”

The survey was developed by Robert Half Management Resources. It was conducted by an independent research firm by telephone with 1,400 CFOs from a random sample of U.S. companies with 20 or more employees.

Compliance February 21, 2013

DOL Obtains $80M for Sherwin-Williams Participants

The Department of Labor (DOL) has obtained $80 million for participants of Sherwin-Williams’ employee stock purchase and savings plan.
Reported by

According to the DOL, the paint company, based in Cleveland, sought tax breaks at the expense of the worker benefit plan.

The agreement stems from an investigation by the department’s Employee Benefits Security Administration (EBSA) into whether Sherwin-Williams, seeking to take advantage of tax breaks, improperly managed the plan in violation of the Employee Retirement Income Security Act (ERISA). The settlement also requires Illinois-based GreatBanc Trust Co. to undergo an audit of its pension plan activities. 

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Sherwin-Williams issued a statement saying it believes that the DOL’s claims are without merit and strongly disagrees with the allegation that ESOP (employee stock ownership plan) participants sustained losses of any kind as a result of these transactions. The company said its position is supported by internal audits, and audits by an independent third-party and the DOL.

“Those who manage retirement plan assets are in a special position of trust and are required by law to always put the interests of plan participants ahead of anything else. That did not happen in this situation,” said acting Secretary of Labor Seth D. Harris. “This agreement rightfully restores money to the workers who’ve played by the rules, done the right thing and worked hard to save for a secure retirement.”  

“When fiduciaries expend retirement plan assets, they have to act with undivided loyalty to the plan participants and make sure that the plan receives full value for its money,” said Phyllis C. Borzi, assistant secretary of labor for EBSA. “The fiduciaries’ job is to manage plan investments to provide a secure retirement, not to help the plan sponsor secure tax breaks that are wholly disproportionate to the benefits actually provided to retirees.”

Two transactions came under scrutiny, one in 2003 and one in 2006, in which Sherwin-Williams and GreatBanc caused the plan to purchase specially designed stock issued by Sherwin-Williams solely for the purpose of the transactions. The investigation also examined whether the paint company had forwarded employee salary deferrals appropriately and promptly to their individual plan accounts.

(Cont’d…)

As a result of Sherwin-Williams’ and GreatBanc’s violations of their fiduciary duties and the design of the transactions, EBSA concluded that the stock purchases did not provide benefits to the plan and its participants that were commensurate with the amount the plan paid for the stock.

EBSA also found that the transactions were not primarily for the purpose of providing benefits to plan participants, and did not promote employee ownership of Sherwin-Williams. At times, employee salary deferrals were not appropriately paid to the plan, EBSA said as a result of its investigation.

As a result of these findings, the department found Sherwin-Williams and GreatBanc liable for violations of ERISA.

According to EBSA, Sherwin-Williams’ purpose in the transactions was to take advantage of substantial tax benefits designed to reward companies that provide their workers with significant stock ownership while, at the same time, ensuring that its employees did not actually receive stock or retirement benefits in amounts close to what the plan spent on the transactions or that the company claimed on its government filings.

In October 2011, Sherwin-Williams reached a settlement with the Internal Revenue Service (IRS) in connection with the transactions for excise tax and penalty claims. (That settlement did not address ERISA fiduciary violations or resolve the department’s concerns about Sherwin-Williams’ use of employee salary deferrals.) 

The settlement will result in payments of $80 million to current and former plan participants as well as to their beneficiaries. In addition, GreatBanc will audit its engagements involving plan investments in employer stock and submit a full report of that audit to the department. 

As of December 2011, the date of the most recent Form 5500 filing, the plan had 34,591  participants and $2.5 billion in assets.

«