Employee Benefits Headlines
Gathered from the web by the editors at BenefitsLink.com.
Wal-Mart Supports Employer-Mandated Health Coverage
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." (Reuters)
[Opinion] There's a Very Good Reason Wal-Mart Supports an Employer Mandate
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." (The Heritage Foundation)
Tennessee Bank Makes It Easy for Its Employees Who Want to Adopt or Foster Children
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." (Memphis Commercial Appeal)
Who Gets Employer-Based Health Insurance?
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." (The New York Times; free registration required)
[Guidance Overview] Supreme Court Accepts Xerox ERISA Case for Review
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." (PLANSPONSOR.com; free registration required)
HELP Committee Democrats Draft New Bill with Public Plan and Employer Mandate They Say Is Cheaper
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." (Kaiser Family Foundation)
SEC May Tighten Executive Pay Rules
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." (Reuters)
Public Pension Funds to Lead Suit Against Bank of America
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." (The New York Times; free registration required)
[Guidance Overview] Claiming Damages and Evaluating New Prescription Drug Pricing Methodologies in the Wake of Two Final Settlements of a Class Action AWP Lawsuit: Action Needed by July 9, 2009 (PDF)
2 pages. Excerpt: "Effective September 26, 2009, the Average Wholesale Price (AWP) of more than 400 brand-name drugs will decrease as the result of final settlements in a class action lawsuit involving two major publishers of AWP information. Plan sponsors are eligible for damages under the settlement for one of those publishers (the McKesson Corporation) provided they meet certain requirements and file a claim by July 9, 2009." (The Segal Group, Inc.)
The Effect of Uncertain Labor Income and Social Security on Life-Cycle Portfolios
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." (Pension Research Council; registration required to download fulltext of paper)
[Guidance Overview] Avoiding Personal Liability for 401(k) and Retirement Plan Investments: From Fees to Losses (PDF)
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 [at http://blawweb.private.bloomberg.com/blaw/showDoc.pl?docId=91111944&summary=yes#APPENDIX#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." (Bloomberg Law Reports via Paul, Hastings, Janofsky & Walker LLP)
Stock Options Opened for 'Call Writing'
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." (Michael Melbinger via Winston & Strawn LLP)
[Guidance Overview] District Court Holds That Potential Claim for Benefits Forecloses Other ERISA Relief
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." (Roy Harmon III via Health Plan Law)
SEC Votes on New Executive Compensation Disclosure Proposals
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 . . . ." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Anheuser-Busch Sued Over QDIA Selection
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.'" (PLANSPONSOR.com; free registration required)
Actuarial Methods and Public Pension Funding Objectives: An Empirical Examination (PDF)
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." (Society of Actuaries)
Advisers Step In Amid 401(k) Match Cuts
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." (The Wall Street Journal)
Public Pension Shortfall is Worse than You Think
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." (The Reason Foundation)
Public Pension Promises: How Big Are They and What Are They Worth?
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." (Social Science Research Network)
Employee Ownership Update for July 1, 2009
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. (National Center for Employee Ownership)
Debate: Should All Advisors Be Required to Meet the Fiduciary Standard, or Should Everyone Fall Under a Suitability Standard
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." (On Wall Street and SourceMedia, Inc.)
Worker-Owners Sue Top Leaders at the Antioch Co.
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." (St. Cloud Times)
Panel Suggests 100 Priorities for Comparative Medical Treatment Effectiveness Research
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." (Kaiser Family Foundation)
Hidden Costs of Health Care: Why Americans Are Paying MORE but Getting LESS (PDF)
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." (U.S. Department of Health & Human Services)
Senators Consider Dropping Required Employer Coverage from Health Care Reform Bill
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." (Workforce Management; free registration required)
Bill with Retirement Plan Fee Disclosure, Investment Advice Rules Advances
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." (Thompson Publishing Group)
Supreme Court Will Review Decision Concerning Whether Employer Followed Proper Procedures When Changing Pension Benefits Calculation Rules
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." (The National Underwriter Company; free registration or paid subscription required)
[Guidance Overview] New TARP Executive Compensation Rules: Who's Covered
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?" (K&L Gates LLP)
[Guidance Overview] New TARP Executive Compensation Rules: Who's Covered
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?" (K&L Gates LLP)
[Guidance Overview] New TARP Executive Compensation Rules: Who's Covered
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?" (K&L Gates LLP)
[Guidance Overview] New TARP Executive Compensation Rules: Who's Covered
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?" (K&L Gates LLP)
Using Wellness Programs to Create Employee Engagement (PDF)
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." (Thomson Reuters via Hay Group)
House Committees Examine Draft Legislation, While Senate Committees Delay Mark Ups
Excerpt: "Congress has now recessed for a one-week break from its healthcare reform deliberations, in most cases having fallen short of their self-proclaimed goals for legislative progress. The following is a short recap of where the three major bills are at this point in time." (The ERISA Industry Committee)
New Research Reveals Drivers Impacting Retirement Plan Fees
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." (Deloitte Development LLC)
State Health Care Reform Update
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[.]" (Wolters Kluwer)
[Guidance Overview] Supreme Court Will Hear Case Concerning an ERISA Retirement Plan and Administrator
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)." (LawMemo Employment Law Blog)
West Virginia Considering Alternatives to Dropping Retiree Health Care for New State Employees
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." (The Intelligencer / Wheeling News-Register)
2009 Employee Benefits Survey Report
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." (Society for Human Resource Management)
Pension Funding Proposals Being Considered
Excerpt: "Comprehensive funding relief for defined benefit pension plans is on the radar screen. A discussion draft was released this week in the House of Representatives, and certain proposals are included in the 401(k) Fair Disclosure Bill that was favorably reported this week by the House Education and Labor Committee." (Deloitte via BenefitsLink.com)
Concerns Voiced About Integration of Watson Wyatt and Towers Perrin
Excerpt: "Experts say the creation of such a large company will end up diluting the services that clients get -- at least in the short term. The combined company's new president says processes are in place to make the integration go 'as smoothly as possible.'" (Workforce Management; free registration required)
Defined Benefit Funding Relief at Risk Over an Advice Provision
Excerpt: "A House committee yanked a pension bill provision safeguarding existing investment advice arrangements for DC plans -- jeopardizing employer support for a package that also provides critical funding relief for DB plans. At the 11th hour, Democrats on the House Education and Labor Committee deleted the provision that would have made clear the legislation would not pre-empt existing investment advice arrangements that rely on the Department of Labor's SunAmerica advisory opinion or other DOL advice exemptions." (Pensions & Investments)
Health Insurance Tax Is Focus of New Labor Ads
Excerpt: "One labor union will begin airing ads in two states Tuesday that deal with an . . . explosive issue: Taxing health benefits. The Laborers' International Union of North America will run the ads at least through Thursday in North Dakota and Montana, according to spokesman Jacob Hay. In a demonstration of the fine line labor is walking on this issue, the ads first praise Congress for taking up the health care debate but then criticize an idea that could be included in one draft of the legislation to tax health care premiums." (USA Today)
Insurance Lobbyest at Center of Health Debate
Excerpt: "The face of the insurance industry in Washington is a slight, soft-spoken former AFL-CIO employee benefits director with a penchant for data-driven logic. She has the confidence and intellectual agility of a skilled debater, but prefers to dwell on areas of agreement. On healthcare, Karen Ignagni often sounds like the lifelong Democrat that she is." (The Boston Globe)
DOL Set to Begin Transition to Form 5500 E-Filing on July 1
Excerpt: "As the transition to EFAST2 -- the second-generation e-filing system for Form 5500 -- gets underway, benefit plan sponsors and other filers could see an immediate impact: As of July 1, the Department of Labor (DOL) will eliminate an informal correction process that has allowed filers 30 to 60 days to correct deficiencies in their reports before substantive review begins. Starting with reporting for the 2009 plan year, DOL generally will accept only electronically filed Form 5500 annual reports for retirement, health and welfare plans." (Mercer LLC)
Section 457A Plan Sponsors Face June 30 Deferred Compensation Vesting Decision
Excerpt: "Sponsors of nonqualified deferred compensation (NQDC) plans subject to Section 457A must act by June 30 to take advantage of a transition rule for certain NQDC amounts vesting after Dec. 31, 2008. When 457A applies, NQDC provided to US taxpayers employed by foreign companies is taxable at vesting -- or later in some cases, with even harsher results. Sponsors can soften the blow for some NQDC recipients by retroactively accelerating vesting to a date before Jan. 1, 2009. Employers opting to do so must amend plans by June 30 and apply the changes consistently to all employees in similar plans." (Mercer LLC)
IRS Newsletter Highlights Updates to Web Resource Page on Large Plan Audits
Excerpt: "IRS has updated its web page devoted to the Employee Plans Team Audit Program (EPTA), which focuses on audits of large retirement plans by a team of IRS specialists. The Summer issue of Employee Plans News highlights many changes to the site, including summaries of common audit issues now organized by plan type. IRS also posted its 'Internal Controls Questionnaire,' with examples of audit questions that assess system procedures and internal controls. IRS developed the questionnaire to spotlight compliance responsibilities and areas of coordination between plan sponsors and administrators." (Mercer LLC)
Philadelphia Confronts the Cost of Employee Benefits
Excerpt: "To help inform the public discussion, the Philadelphia Research Initiative, with assistance from the Pew Center on the States, sought to update the situation regarding pension and health-care conditions in Philadelphia and the comparison cities, based on interviews with officials as well as the latest available documents. We reviewed policy changes and proposals that have arisen regarding Philadelphia over the past year and a half. We interviewed two dozen experts on employee benefits from across the spectrum, and three of the four major unions that represent Philadelphia city workers provided varying amounts of information." (The Pew Charitable Trusts)
The Push for Time Off Work Gains in Many States
Excerpt: "Governors in Colorado and Nevada signed laws within the past month that give employees unpaid leave for school-related events, becoming the first states to do so in a decade. Wisconsin lawmakers will take up similar legislation this fall. Lawmakers in roughly a dozen other states are debating measures that would require employers to grant paid family or sick leave; President Barack Obama campaigned in support of such laws last year." (The Wall Street Journal)
San Francisco Aims for Universal Health Coverage
Excerpt: "Three years ago, this city turned itself into a laboratory for remaking the country's health care system with a bold experiment to expand services to the uninsured, working poor and medically underserved. Mayor Gavin Newsom touts Healthy San Francisco as a signature accomplishment ? worthy as a model for the nation. It's too early to tell whether he is right, with researchers only beginning to evaluate the program's early successes and longer-term limitations." (The Sacramento Bee)
General Motors Using Huge Pension Fund in Way It Never Intended
Excerpt: "For now, the pension payments to its younger 'retirees,' part of a deal G.M. negotiated with the United Automobile Workers union in 2007, allow the company to drastically shrink its work force without having to come up with the cash to pay severance. The payments also relieve some of the burden on social service programs in the countless factory towns and counties around the country with large numbers of G.M.'s newly jobless. 'G.M. basically raided the pension plan, by having a lot of these severance benefits paid through it,' said Douglas J. Elliott, a fellow with the Brookings Institution who specializes in financial institutions and policy. What G.M. has done is perfectly legal. Nor is this the first time an employer has used a pension fund to pay for pruning its ranks." (The New York Times; free registration required)
Visteon Seeks to Terminate Retiree Health Care
Excerpt: "Visteon Corp. has asked a bankruptcy judge today for permission to terminate its health care and life insurance plans that cover 6,650 hourly and salaried retirees, their spouses and dependents, as well as benefits for 700 potential retirees. [Visteon], in court papers, called the programs a 'crippling financial and competitive burden.' Cutting them, the company said is an unavoidable part of its cost-saving plan." (Detroit Free Press)
[Guidance Overview] Another Question is Answered in the 401(k) Plans Q&A Column
There are three companies in a controlled group. Each has a separate but identical 401(k) plan. None of the plans has 100 participants but collectively they would have in excess of 100 participants. Would these individual plans qualify for an audit waiver in connection with the Form 5500 filings? (BenefitsLink.com)
401(k) Has Advantages Even If Employer Cuts Match
Excerpt: "Given the severity of the downturn, employees have learned to live with a certain amount of corporate belt-tightening. But cutbacks in matching contributions to your 401(k) plan are much harder to stomach. More than a quarter of large companies have suspended matching contributions to their employees' 401(k) plans or plan to do so in the near future, according to a survey by CFO Research Services and Charles Schwab. The company match has always been a powerful incentive for contributing to a 401(k) plan, at least up to the match. But what if there is no match? Should you still contribute?" (USA Today)
Shareholder Empowerment Act of 2009 Introduced
Excerpt: "On June 12, 2009, U.S. Representative Gary Peters (D-MI) introduced the Shareholder Empowerment Act of 2009 (the Peters bill). The full text of the bill can be found here. The bill comes one month after the introduction of the Shareholder Bill of Rights Act of 2009 (the Schumer bill) by U.S. Senator Charles Schumer (D-NY), summarized in this WSGR Alert. Like the Schumer bill, the Peters bill, if adopted, would dramatically alter the corporate governance of U.S. public companies. . . . The Peters bill, however, goes further than the Schumer bill on certain executive compensation issues. A summary of the Peters bill is found [in the target document], followed by a chart comparing the two bills." (Wilson Sonsini Goodrich & Rosati)
Study Says High-Cost Cancer Drugs Have Little Benefit, Strain Health System
Excerpt: "'Crunching data from published studies, the authors found that treating a lung-cancer patient with Erbitux, a drug that costs $80,000 for an 18-week regimen, prolongs survival by only 1.2 months,' the Wall Street Journal reports. The study, which estimates that the life of each American who dies or cancer could be extended by one year at the cost of $440 billion, was published in the Journal of the National Cancer Institute. The high cost and relatively low benefit points to 'one of the thorniest questions facing lawmakers working on the overhaul of the U.S. health-care system': reducing growing health care spending in the last months of patient's lives." (Kaiser Family Foundation)
[Guidance Overview] Liquidity Issues for Plan Fiduciaries Relating to Securities Lending or Stable Value Funds
Excerpt: "Plan fiduciaries are currently facing various liquidity issues in connection with pension and 401(k) plans. There are two circumstances, in particular, where plan administrators are dealing with new and unexpected concerns: securities lending programs and stable value funds. Plan administrators have been surprised to learn that, in the current economic climate, what were once considered safe investments, may actually be quite volatile. As discussed in greater detail [in the target document], plan administrators should be aware of the current issues surrounding securities lending programs and the 'stability' of stable value funds." (The Metropolitan Corporate Counsel)
[Guidance Overview] Management and Oversight of Employee Benefit Plans: Good Governance
Excerpt: "I recently discussed the issue with Jeffrey D. Mamorsky, author of the Employee Benefits Handbook, published by West. Mamorsky is a shareholder at Greenberg Traurig, LLP in New York. He serves as employee benefits counsel to large multinational corporations and a variety of other organizations. [I asked]: How have the requirements for good governance in employee benefit plans changed?" (The Metropolitan Corporate Counsel)
[Guidance Overview] Plan Loans: Plan Loan in Excess of 50% Vested Account Balance
Excerpt: "[A]lthough a participant loan of 100% of the vested account balance up to $10,000 is permitted, the amount of the loan in excess of 50% of the vested account balance must be secured by actual collateral to be provided by the participant, not the vested account balance. The additional collateral is required from the participant in order for the participant loan to be considered a prohibited transaction exemption." (McKay Hochman Co., Inc.)
[Guidance Overview] The Worker, Retiree, and Employer Recovery Act of 2008 (WRERA) Provisions by Effective Date
Chart. (McKay Hochman Co., Inc.)
[Guidance Overview] Heroes Earnings Assistance and Relief Tax Act (HEART) Provisions by Effective Date
Chart. (McKay Hochman Co., Inc.)
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