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Canada?ÇÖs Office of the Superintendent of Financial Institutions (OSFI) Publishes FAQs on Letters of Credit

Beginning in April, 2011, sponsors of Canadian pension plans were allowed to use letters of credit in lieu of making solvency payments to a pension plan fund for up to 15 percent of a plan?ÇÖs assets. In response to the ?Ç£letters of credit?Ç¥ changes, the OSFI updated FAQs addressing changes to pension funding rules to include new FAQs on letters of credit. The new FAQs can be accessed here.

Australia?ÇÖs Superannuation Funds Receive Consumer Protections under Proposed Regulations

Australia?ÇÖs Governor-General issued proposed regulations that would make limited recourse borrowing arrangements financial products under the Corporations Act 2001 when entered into by regulated superannuation funds. The proposed regulations also amend current regulations to provide that limited recourse borrowing arrangements are not a credit facility under the Corporations Act 2001 when acquired by superannuation funds, and an Australian Financial Services Licence covering derivatives or securities is taken to also cover limited recourse borrowing arrangements. The superannuation funds would receive consumer protections when purchasing installment warrants. The proposed regulations are located here, and an explanatory memo is located here.

FACTA Requires U.S. Employees to Report Value of Non-U.S. Equity Compensation, Deferred Compensation and Pension Benefits on their U.S. Tax Returns

Temporary regulations issued under Section 6038D of the Internal Revenue Code (which was added by the Foreign Account Tax Compliance Act (FACTA)), require certain U.S. taxpayers to file a statement on IRS Form 8938 with their personal income tax returns reporting interests in ?Ç£specific foreign financial assets?Ç¥ if the aggregate value of those assets exceeds certain thresholds. The thresholds vary depending on the individual?ÇÖs filing status and whether the individual lives in or outside of the United States. Reportable assets include financial accounts maintained by non-U.S. financial institutions and non-U.S. financial assets held outside of the U.S., including stock or securities issued by a non-U.S. corporation, non-U.S. partnership interests, indebtedness issued by a non-U.S. person, and options to acquire any of the preceding items. Accordingly, stock purchase rights, stock options, restricted stock units, stock appreciation rights and performance shares issued by non-U.S. entities to U.S. taxpayers, are subject to the… Continue Reading

Sixth Circuit: ERISA Defenses for Employer Stock Fund do not Prevail in Motion to Dismiss

The U.S. Court of Appeals for the Sixth Circuit found that several common defenses to participant stock-drop lawsuits alleging fiduciary breach are not available in the motion to dismiss stage. In its opinion, the Sixth Circuit held that the Moench presumption (presumption of prudence when the plan?ÇÖs terms require a company stock fund) does not apply at the motion to dismiss stage. Plaintiffs do not have to plead enough facts to overcome the presumption in order to survive a motion to dismiss. Additionally, the Sixth Circuit held that ERISA section 404(c) is not available as an affirmative defense at the motion to dismiss stage. The court found that ERISA section 404(c) does not shield fiduciaries from liability for allowing imprudent investment choices to be offered to plan participants. The court also refused to dismiss for inadequate causation on the basis that the participants had an unrestricted right to transfer their… Continue Reading

FAQs Provide Additional Guidance on Essential Health Benefits under Health Reform

The U.S. Department of Health and Human Services (?Ç£HHS?Ç¥) released a set of FAQs providing additional guidance on HHS?ÇÖs approach for defining ?Ç£essential health benefits?Ç¥ under the Affordable Care Act. In December 2011, an HHS bulletin explained that essential health benefits would be defined by a benchmark plan selected by each state, which could be modified so long as the value of coverage is not reduced. The new FAQs supplement that December bulletin by addressing, among other issues, updates to benefits in benchmark plans, the timing for selecting a benchmark plan, and state supplementation of benchmark plans. The FAQs can be found here.

March 2012