7/2/2009: Wal-Mart Supports Employer-Mandated Health Coverage (Reuters)
Excerpt: "Wal-Mart Stores Inc, the world's largest retailer, said on Tuesday that it supports President Barack Obama's push to require large employers to offer health insurance to workers. 'We are for an employer mandate which is fair and broad in its coverage,' stated a letter addressed to Obama and signed by Mike Duke, the chief executive of Wal-Mart; Andy Stern, the president of Service Employees International Union (SEIU) and John Podesta, the CEO of the Center for American Progress."
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7/2/2009: There's a Very Good Reason Wal-Mart Supports an Employer Mandate (The Heritage Foundation)
Excerpt: "Recent press reports, including a front-page story in the Wall Street Journal, have the news that Wal-Mart has signed a letter to President Obama endorsing the idea of an 'employer mandate' ? a requirement that employers offer health insurance to their employees. Why would Wal-Mart ? the nation's largest employer ? endorse such an idea? Simple: It would cripple many of their competitors."
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7/2/2009: Tennessee Bank Makes It Easy for Its Employees Who Want to Adopt or Foster Children (Memphis Commercial Appeal)
Excerpt: "The bank and its parent company, First Horizon, are intentional about accommodating any of their 6,000 employees who want to adopt or foster. So much so that last month the Dave Thomas Foundation for Adoption placed First Tennessee among its 'America's 100 Best Adoption-Friendly Workplaces.' The foundation noted that the bank reimburses expenses up to $5,000 for each adoption. It also offers paid time off."
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7/2/2009: Who Gets Employer-Based Health Insurance? (The New York Times; free registration required)
Excerpt: "One important issue of the health care debate is what to do with the employer-based health insurance system. As Uwe Reinhardt has written, nowhere else in the industrialized world does losing your job also mean losing your health care. But which Americans are actually in the system? It's easy enough to say those who are employed (and some who are dependents of the employed), but that doesn't tell the whole story."
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7/2/2009: Supreme Court Accepts Xerox ERISA Case for Review (PLANSPONSOR.com; free registration required)
Excerpt: "U.S. Supreme Court justices have agreed to consider an appeal of an Employee Retirement Income Security Act (ERISA) violations case involving the method used by the Xerox Corp. pension plan to figure out how much to offset a participant's benefits to properly reflect distributions already taken."
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7/2/2009: HELP Committee Democrats Draft New Bill with Public Plan and Employer Mandate They Say Is Cheaper (Kaiser Family Foundation)
Excerpt: "Democrats on a key Senate committee are readying a plan that has a government-run insurance option and a $750-per-worker annual fee on larger companies that do not offer coverage to its employees, The Associated Press reports. 'In a letter outlining the details, Sens. Edward M. Kennedy, D-Mass., and Christopher Dodd, D-Conn., said their revised plan would cost dramatically less than an earlier, incomplete proposal, and help show the way toward coverage for 97 percent of all Americans."
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7/2/2009: SEC May Tighten Executive Pay Rules (Reuters)
Excerpt: "U.S. securities regulators are considering changing how companies are required to disclose stock options awarded to executives, people familiar with the Securities and Exchange Commission's thinking told Reuters on Tuesday. At an SEC meeting on Wednesday, the commissioners also will propose giving investors a greater voice in setting executive pay at companies that were given taxpayer funds under the U.S. government's Troubled Asset Relief Program. Among the possible changes is a revision to how companies value equity awards in the 'summary compensation table' for top executives that they file with the commission each year. The SEC is considering requiring companies to include the estimated value for stock options granted during the year, the people said. The sources requested anonymity because the proposal is still being crafted and may change."
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7/2/2009: Public Pension Funds to Lead Suit Against Bank of America (The New York Times; free registration required)
Excerpt: "A group of five public pension funds, including state funds in Ohio and Texas, have won the right to lead investor class-action lawsuits against the Bank of America Corporation over its acquisition of Merrill Lynch & Company. Judge Denny Chin of United States District Court in Manhattan granted lead plaintiff status on Tuesday to funds including the State Teachers Retirement System of Ohio, the Ohio Public Employees Retirement System and the Teachers Retirement System of Texas. Investors are accusing Bank of America of misleading them about the state of Merrill's health ahead of the Jan. 1 closing, even as it was becoming clear Merrill was on its way to what would be a loss of $15.84 billion in its fourth quarter."
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7/2/2009: The Effect of Uncertain Labor Income and Social Security on Life-Cycle Portfolios (Pension Research Council; registration required to download fulltext of paper)
Excerpt: "This paper examines how labor income volatility and social security benefits influence life-cycle household portfolios. We examine how much the individual saves, and where, taking into account liquid financial wealth and annuities, and stocks versus bonds. Higher labor income uncertainty and lower old-age benefits boost demand for stable income in retirement, but also when young. In addition, a declining equity glide path with age is appropriate for the worker with low income uncertainty but for the high income risk worker, equity exposure rises until retirement. We also evaluate how changes in social security benefits influence retirement risk management."
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7/2/2009: Avoiding Personal Liability for 401(k) and Retirement Plan Investments: From Fees to Losses (PDF) (Bloomberg Law Reports via Paul, Hastings, Janofsky & Walker LLP)
6 pages. Excerpt: "Now is the time for ERISA risk management. Plan fiduciaries should engage in a deliberative process that demonstrates their attention to the 'money' issues involving plan investments ? from their selection, costs, and performance, to the credentials, terms, conditions, and costs associated with the professionals who recommend them. With this in mind, presented below are five general questions that all plan fiduciaries should be asking . . . and getting answered. They should drill deeper these days, which is why the Appendix lists the critical investment issues that plan fiduciaries should now be addressing with their advisors. ERISA demands careful attention to plan investments, and this is needed to protect plan fiduciaries from personal liability during these turbulent and unpredictable times."
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7/2/2009: Stock Options Opened for 'Call Writing' (Michael Melbinger via Winston & Strawn LLP)
Excerpt: "Briefly, the SEC approved a rule on June 17, 2009, which would permit public companies to allow their employees to use vested stock options as collateral for writing exchange-listed calls. Permitting this activity would require some affirmative actions by the Company, such as revise plan documents and putting in place guidelines. A company also should consider whether this activity is consistent with its stock ownership guidelines."
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7/2/2009: District Court Holds That Potential Claim for Benefits Forecloses Other ERISA Relief (Roy Harmon III via Health Plan Law)
Excerpt: "This unpublished district court opinion addresses two frequent issues in claim denial cases - whether 29 U.S.C. 1132(a)(3) remedies available when (a)(2) claims may have been brought and whether equitable estoppel may apply in an ERISA case. One of the several unfortunate aspects of 29 U.S.C. 1132(a)(3) often complained about from a policy perspective is the notion that it is unavailable if a claim for benefit case could have been brought instead under (a)(2). That, coupled with ERISA's broad preemption of state law and limited equitable remedies even when (a)(3) does apply, limits claimants to a narrow channel of relief."
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7/1/2009: SEC Votes on New Executive Compensation Disclosure Proposals (PLANSPONSOR.com; free registration required)
Excerpt: "The Securities and Exchange Commission voted on Wednesday to propose sweeping new disclosure rules about a company's leadership and compensation practices. According to the Wall Street Journal, the proposed rules, approved for consideration in a 5-0 vote, would require public companies to include information in proxy and information statements about an array of things, such as the relationship of a company's overall compensation policies to risk and the background and qualifications of directors, executive officers and nominees . . . ."
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7/1/2009: Anheuser-Busch Sued Over QDIA Selection (PLANSPONSOR.com; free registration required)
Excerpt: "Anheuser-Busch has been hit with a federal court lawsuit alleging the beermaker and a trustee improperly designated an overly risky qualified default investment alternative (QDIA) for participants' cash proceeds from a stock sale. Employee David K. Parsons alleged that Anheuser-Busch was obliged under the Employee Retirement Income Security Act (ERISA) to pick a less risky QDIA in November 2008 to house funds in participants' accounts generated when InBev acquired Anheuser-Busch by paying shareholders $70 a share. Shareholders included participants who had built up blocks of stock through their pension plan. According to Parsons' complaint, which seeks class action status, Anheuser-Busch circulated a flyer to its employees just after the sale was completed telling them they would have until November 7 to choose an investment fund for the cash from their stock sale and that if they did not, the money would go to an 'Indexed Balanced Fund.'"
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7/1/2009: Actuarial Methods and Public Pension Funding Objectives: An Empirical Examination (PDF) (Society of Actuaries)
35 pages. Excerpt: "This paper examines the degree to which certain actuarial methods satisfy public pension plan funding objectives. It compares the funding patterns that result from a conventional actuarial approach used by the majority of public plans with patterns that result from the 'market value of liability' (MVL) approach. The comparison is made by applying these approaches to a modeled public plan based on historical demographic, economic, and investment data over the period from 1978 to 2008. The paper finds that funding under the MVL approach would likely result in rapid and erratic changes to a public plan's normal costs, accrued liabilities, and funded levels, largely due to changes in the MVL discount rate. By contrast, conventional funding results in measures that are more stable and predictable over time. Consequently, the paper concludes that the conventional approach is more effective in meeting the funding objectives of public pension plans."
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7/1/2009: Advisers Step In Amid 401(k) Match Cuts (The Wall Street Journal)
Excerpt: "Financial advisers are stepping in when companies stop matching 401(k) retirement plan contributions. They're encouraging clients to continue saving and, in some cases, they're taking a second look at the types of retirement accounts clients are using. . . . 'When they take the match off the table, it's a whole different ballgame,' says Charles Bennett Sachs, a certified financial planner at wealth management firm Evensky & Katz. That's because financial advisers have long advised clients to contribute at least enough to their company-sponsored retirement plan to capture any matching contributions - which is essentially free money. Without the match, investors need to look more closely at their specific situation, including their projected tax exposure, and decide whether they need to adjust their retirement savings strategy."
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7/1/2009: Public Pension Shortfall is Worse than You Think (The Reason Foundation)
Excerpt: "A new research paper, 'Public Pension Promises: How Big are They and What are They Worth?,' from the University of Chicago looks at nationwide public pension obligations and funding. . . . The bottom line of this paper is that: a) By the most realistic measure, public pensions in America are underfunded by more than $10 trillion. b) Future taxes to pay for the benefits promised but not funded by current political leaders will be very burdensome and will distort the economy. Future generations will curse us for this."
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7/1/2009: Public Pension Promises: How Big Are They and What Are They Worth? (Social Science Research Network)
Excerpt: "We calculate two present value measures of already-promised state pension liabilities using discount rates that reflect their risk. If benefits have the same priority in default as general obligation debt, aggregate underfunding is $1.21 trillion. If states cannot default on these benefits, underfunding is $3.12 trillion. The first measure is a lower bound on the value of the liability to taxpayers, and is more than the $0.94 trillion in state municipal debt. The second measure is a better benchmark for funding adequacy. We also estimate broader concepts of accrued liabilities that account for projected salary growth and future service."
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7/1/2009: Employee Ownership Update for July 1, 2009 (National Center for Employee Ownership)
NCEO Executive Director Corey Rosen, in his first column on the newly revised NCEO Web site, reports on what's new in the employee ownership world: SAIC changed its stock structure to eliminate the 10-to-1 voting rights that preferred shares held by employees were given when the company went public, the SEC issued a rule allowing employees with vested stock options to use them as collateral to purchase call options, and the NCEO is soliciting material for a book on what not to do with an ESOP.
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7/1/2009: Debate: Should All Advisors Be Required to Meet the Fiduciary Standard, or Should Everyone Fall Under a Suitability Standard (On Wall Street and SourceMedia, Inc.)
Excerpt: "At the heart of this debate lies a contentious word: fiduciary. In essence it means that advisors who fall under the fiduciary standard, namely investment advisors who run a fee-based business, must always put clients' interests before of their own. This generally means recommending the lowest-priced product that meets the client's needs and disclosing all conflicts of interest. On the other hand, broker-dealer registered representatives must meet a 'suitability' standard of care."
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7/1/2009: Worker-Owners Sue Top Leaders at the Antioch Co. (St. Cloud Times)
Excerpt: "Current and former employees who lost millions when scrapbooking pioneer Creative Memories filed for bankruptcy protection are suing leaders of their former employer and its parent company. The current and former employees contend that when St. Cloud-based Creative Memories and its parent The Antioch Co. decided to become 100 percent employee-owned, its top leaders and other representatives did so with conflicts of interest and wanted only to avoid taxes and retain personal profit and control. These decisions, along with financial incentives for employees to cash in their stock, eventually led Antioch and Creative Memories to file Chapter 11 bankruptcy in November. The current and former workers' retirement accounts became worthless as a result, they claim in two recently filed lawsuits. Although each lawsuit makes similar accusations, plaintiffs in the two cases argue different points and seek different outcomes."
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7/1/2009: Panel Suggests 100 Priorities for Comparative Medical Treatment Effectiveness Research (Kaiser Family Foundation)
Excerpt: "An Institute of Medicine panel released a list of 100 priorities for comparing the effectiveness of medical treatments as part of a $1.1 billion, stimulus-funded research program on Tuesday, the Associated Press reports. The recommendations - which are not official, but will likely influence government decisions - include comparing treatments for atrial fibrillation, an irregular heartbeat, prostate cancer, age-related hearing loss, attention deficit hyperactivity disorder and lower back pain."
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7/1/2009: Hidden Costs of Health Care: Why Americans Are Paying MORE but Getting LESS (PDF) (U.S. Department of Health & Human Services)
3 pages. Excerpt: "With each passing year, Americans are paying more for health care coverage. Employer-sponsored health insurance premiums have nearly doubled since 2000, a rate three times faster than wages. In 2008, the average premium for a family plan purchased through an employer was $12,680, nearly the annual earnings of a full-time minimum wage job. Americans pay more than ever for health insurance, but get less coverage."
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7/1/2009: Senators Consider Dropping Required Employer Coverage from Health Care Reform Bill (Workforce Management; free registration required)
Excerpt: "In its place would be a 'free rider' provision requiring employers to pay for employees who get their health care with government assistance, according to an outline of the committee's policy proposals. The legislation from the Senate Finance Committee is expected to be released after the July Fourth holiday. Two other drafts of health care legislation, one in the Senate and another in the House, would require employers to provide health insurance to employees. Retailers and other businesses that have minimum- or low-wage employees, such as Wal-Mart, oppose the free-rider clause, which they are describing as a backdoor mandate, says a source who asked not to be named but who is familiar with Wal-Mart's health care policy stance. Around 2.5 percent of Wal-Mart employees receive Medicaid, according to the company."
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7/1/2009: Bill with Retirement Plan Fee Disclosure, Investment Advice Rules Advances (Thompson Publishing Group)
Excerpt: "Specifically, the bill would require the following: Fees would have to be disclosed by 401(k) plans as a single figure in a worker's quarterly statement. Service providers and plan administrators would have to disclose fees to plan sponsors, broken into four categories: 1) administrative fees; 2) investment management fees; 3) transaction fees; and 4) other fees. Plan administrators would be obliged to provide investment information to participants, including information about risks, returns and investment goals."
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7/1/2009: Supreme Court Will Review Decision Concerning Whether Employer Followed Proper Procedures When Changing Pension Benefits Calculation Rules (The National Underwriter Company; free registration or paid subscription required)
Excerpt: "The court has granted certiorari to Sally L. Conkright et al. Petitioners vs. Paul J. Frommert et al., a class-action brought on behalf of participants in a pension plan sponsored by Xerox Corp., Norwalk, Conn. The plaintiffs sued the administrators of the Xerox Corporation Retirement Income Guarantee Plan and the plan itself, alleging the plan had violated the participants' rights under the Employee Retirement Income Security Act by adding a mechanism that involved use of 'phantom account' factor and the hypothetical growth of an employee's previous lump-sum retirement benefits distribution to calculate current benefits."
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7/1/2009: New TARP Executive Compensation Rules: Who's Covered (K&L Gates LLP)
Excerpt: "This Alert focuses on two fundamental threshold questions: (1) which entities and programs are generally covered by the executive compensation standards under TARP; and (2) which TARP requirements apply to which entities, and when do covered entities escape such coverage?"
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7/1/2009: Using Wellness Programs to Create Employee Engagement (PDF) (Thomson Reuters via Hay Group)
4 pages. Excerpt: "Historically, employers' commitment to Wellness Programs has been dependent on establishing a meaningful and verifiable ROI that is sustainable over the long run. We posit that although making better lifestyle choices will improve health and lead to more productive employees that an alternate perspective is useful as well."
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7/1/2009: New Research Reveals Drivers Impacting Retirement Plan Fees (Deloitte Development LLC)
Excerpt: "The Defined Contribution/401(k) Fee Study research report, conducted by Deloitte and sponsored by the Investment Company Institute (ICI), looks at total fees charged across a broad sample of defined contribution plans with a range of plan sizes, service levels, investment offerings, service providers, and fee structures. This study of 130 plans reveals that lower fees are closely related to a number of factors, including the size of the plan, higher contribution rates by employers and employees, and greater use of automatic enrollment."
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7/1/2009: State Health Care Reform Update (Wolters Kluwer)
Excerpt: "For the last few years, states have been leading the way toward more comprehensive health care coverage to ensure that more people have or can obtain health insurance. Because of the potential impact of this ongoing activity on employer-provided health insurance benefits, Spencer's Benefits Reports provides regular updates about state health care reform[.]"
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7/1/2009: Supreme Court Grants Certiorari in Xerox Pension Offset Case (LawMemo Employment Law Blog)
Excerpt: "The US Supreme Court has granted certiorari in an ERISA case that raises issues on (1) the extent to which a district court must defer to the views of an ERISA plan administrator and (2) the appropriate scope of appellate review. This case will be argued in the fall. Conkright v. Frommert (Certiorari granted 06/29/2009)."
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7/1/2009: West Virginia Considering Alternatives to Dropping Retiree Health Care for New State Employees (The Intelligencer / Wheeling News-Register)
Excerpt: "Newly hired state employees in West Virginia would have to pay the entire cost for their health insurance after retirement under a current proposal by the state Retiree Health Benefit Trust and Public Employees Insurance Association Finance Board. West Virginia's share of Other Post-Employee Pension debt, affecting state employees, is estimated at $7 billion, and the RHBT and PEIA Finance Board is seeking alternative suggestions to eliminating retiree health insurance benefits for new hires."
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7/1/2009: 2009 Employee Benefits Survey Report (Society for Human Resource Management)
Excerpt: "SHRM's 2009 Employee Benefits survey report provides comprehensive information about the types of benefits U.S. employers offer to their employees. In 2009, 274 benefits were explored, covering the areas of health care and welfare benefits, preventive health and wellness benefits, financial and compensation benefits, paid time off benefits, family-friendly benefits, flexible working benefits, personal services benefits, housing and relocation benefits, and business travel benefits. The report breaks the benefits down by organization staff size and organization sector and covers trends in benefits offerings over the last five years."
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