Headlines about "Ret plans - cash balance, hybrid"
Gathered from the web by the editors at BenefitsLink.com.
Cash Balance Plan Wins in Eighth Circuit on Opening-Balance and Age-Bias Claims
Excerpt: "No ERISA violation occurred when a pension plan used an 8 percent interest rate to establish opening balances in connection with a 1998 cash balance conversion, the US Eighth Circuit Court of Appeals has ruled. Participants claimed the rate was too high, but the appeals court said the plan was free at that time -- before passage of the Pension Protection Act -- to set opening balances as it wished, as long as already-accrued benefits did not decrease. The court also dismissed participants' age-bias claims, consistent with rulings by five other appeals courts." (Mercer LLC)
Hybrid Retirement Plan in the Works: DB(k) Alongside 401(k) Would Provide Security, Guaranteed Pension
Excerpt: "The vulnerabilities of the 401(k) plan have cast doubt on whether a voluntary savings plan is the best way for workers to prepare for retirement. There are possible alternatives coming, however, that might catch on. One that may become available in January offers a guaranteed pension-like retirement benefit alongside a 401(k). It's called the DB(k), and it was created in the tax code in 2006. The law allows companies with fewer than 500 workers to start the hybrid plan after Jan. 1, 2010, and some proponents would like to see it available to all workers. As it is now, barely 40 percent of all workers even participate in a retirement plan at work." (The Washington Post; free registration required)
[Guidance Overview] IRS Grant of Hybrid Pension Plan Relief on Timing of Amendments and Notices (PDF)
3 pages. Excerpt: "On November 10, the IRS released Announcement 2009-82, which gives sponsors of cash balance and other hybrid pension plans additional time to bring their plans into compliance with the Pension Protection Act of 2006 (PPA) requirement that the plan's interest-crediting rate not exceed a 'market rate of interest.' The IRS indicated in the announcement that regulations outlining what constitutes a market rate of interest under PPA will be issued 'in the near future.' The announcement also grants 204(h) notice relief for plan sponsors that adopt amendments to adopt a market rate of interest by the end of the 2009 plan year." (Morgan, Lewis & Bockius LLP)
[Guidance Overview] IRS Relief for Hybrid Plans Pending Soon to be Released Regulations (PDF)
Excerpt: "[T]he IRS issued Announcement 2009-82 providing relief for plan sponsors of statutory hybrid defined benefit plans (including cash balance plans) to comply with the Pension Protection Act of 2006 (PPA) requirement to not have interest crediting rates in excess of a market rate of return." (Buck Consultants)
[Official Guidance] Text of IRS Announcement 2009-82: Hybrid Plan Guidance (PDF)
2 pages. Excerpt: "The Treasury Department and the Internal Revenue Service are announcing relief for sponsors of statutory hybrid plans that must amend the interest crediting rate in those plans. Plan sponsors may rely on this announcement pending publication of the anticipated additional guidance described below. Treasury and the Service expect to issue in the near future final regulations and proposed regulations relating to statutory hybrid plans. The regulations will include rules interpreting the requirement in ? 411(b)(5)(B)(i) of the InternalRevenue Code that such plans not have an interest crediting rate in excess of a market rate of return. The rules in the regulations specifying permissible market rates of return are not expected to go into effect before the first plan year that begins on or after January 1, 2011." (Internal Revenue Service via American Benefits Council)
[Guidance Overview] IRS Offers Relief on Interest Crediting Rate Amendment
Excerpt: "The Treasury Department and the Internal Revenue Service have announced relief for sponsors of statutory hybrid plans that must amend the interest crediting rate in those plans. The IRS said plan sponsors may rely on announcement 2009-82 pending publication of anticipated additional guidance. Anticipated guidance includes rules interpreting the requirement in ? 411(b)(5)(B)(i) of the Internal Revenue Code that hybrid plans not have an interest crediting rate in excess of a market rate of return. The rules specifying permissible market rates of return are not expected to go into effect before the first plan year that begins on or after January 1, 2011." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Verizon Escapes $1.6 Billion Pension Liability for Drafting Error
Excerpt: "A federal judge in Illinois who ruled last year that Verizon was bound by the language in its defined benefit plan document even if it included a drafting error has now decided that Verizon can simply correct the error that could have cost $1.67 billion." (PLANSPONSOR)
[Guidance Overview] In District Court, Verizon Defeats Group Lawsuit Over Cash Balance Plan That Might Have Cost $1.67 Billion
Excerpt: "The complaint was brought after Verizon mistakenly included language in its pension plan documents, U.S. Magistrate Judge Morton Denlow wrote in a ruling issued Nov. 2. The mistake was in a formula for converting Bell Atlantic employees onto the same pension system following a series of mergers. The new calculations would have almost tripled the opening balances that some employees had accrued, according to the ruling." (Bloomberg)
[Guidance Overview] PPA-Related Cash Balance Plan Amendments Required by End of 2009
Excerpt: "A number of provisions in the Pension Protection Act of 2006 (PPA) apply to cash balance plans, including: (1) a requirement that a plan's interest crediting rate not exceed a market rate of return; and (2) a clarification that the payment of a participant's vested cash balance account satisfies the minimum lump sum requirements of sections 411(c) and 417(e) of the Internal Revenue Code." (Hewitt)
IRS Personnel Share Unofficial Comments on Compliance Issues with ABA Employee Benefits Committee
Excerpt: "IRS representatives shared their unofficial views on certain benefits issues that were presented earlier this year by the Employee Benefits Committee of the Tax Section of the American Bar Association. Although the views cited by the IRS representatives are not binding and do not represent the policy of the agency, they provide useful insight into areas of concern. Some of the notable unofficial and non-binding views shared by the IRS representatives were the following . . . ." (Deloitte via BenefitsLink.com)
[Guidance Overview] Administrative Remedies Need not be Exhausted in Cash Balance Case
Excerpt: "The U.S. District Court for the Eastern District of Kentucky has declined to dismiss a case against BP Corporation North America over calculations used in its cash balance plan, saying the plaintiff was not required to exhaust his administrative remedies under the plan. The court found that Robert French's complaint challenges the overall legality of BP's plan methodology, so administrative exhaustion would be futile and is not required. The court said a 6th U.S. Circuit Court of Appeals opinion makes clear that when a plaintiff's 'suit [i]s directed to the legality of [a plan], not mere interpretation of it[,] exhaustion of the plan's administrative remedies would be futile.'" (PLANSPONSOR.com; free registration required)
[Guidance Overview] In Re: Citigroup Pension Plan ERISA
Excerpt: "A somewhat surprising, technical decision that permits Citigroup to skirt ERISA prohibitions against 'backloading,' which occurs when a pension plan awards covered employees disproportionately higher benefit accruals for later years of service." (Wrobel & Schatz LLP)
[Guidance Overview] Cash Balance Plan Sponsor Liable for Deficient Disclosures, Appeals Court Rules
Excerpt: "A cash balance plan sponsor is liable for deficient communications about wearaway periods, the US Second Circuit Court of Appeals has ruled in a summary opinion with no precedential effect (Amara v. CIGNA). The appeals court upheld the lower court's order to determine benefits after a pre-PPA cash balance conversion using an 'A+B' approach (instead of the plan's opening balance approach) because the SPD didn't sufficiently alert participants to possible wearaways. The court did not reinstate the traditional formula, which plaintiffs argued was the proper remedy for a faulty '204(h)' notice." (Mercer LLC)
[Guidance Overview] Court Finds No ERISA Violation for Cash Balance Plan with Interest Credits Tied to Asset Performance
Excerpt: "Where a cash balance plan's interest credits are based on the plan's actual investment returns, investment policy changes that result in lower returns do not violate ERISA's anti-cutback rules, a federal court in Wisconsin has ruled (Thompson v. Ret. Plan for Employees of S.C. Johnson). The plan credited participants' accounts with interest equal to 75 percent of actual returns (with a 4 percent floor). The court concluded participants have no protected right 'to any particular investment policy decision or particular mix of investments,' so no reduction in accrued benefits occurred." (Mercer LLC)
[Guidance Overview] Flight from Equities in Cash Balance Plan no ERISA Miscue, According to Judge
Excerpt: "An employer's move to reduce its equity holdings and increase fixed income investments in its cash balance pension plan did not represent an illegal benefits reduction, a federal judge has ruled. U.S. District Judge J.P. Stadtmeuller of the U.S. District Court for the Eastern District of Wisconsin asserted that the decision by S.C. Johnson & Sons did not violate the anti-cutback rule in the Employee Retirement Income Security Act (ERISA). Stadtmeuller said the employer's pension plan changes did not result in a 'reduction of accrued benefits' that would trigger the ERISA provision prohibiting sponsors from changing their plan in a way that generates lesser benefits for participants." (PLANSPONSOR.com; free registration required)
[Opinion] Industry Group Letter to Treasury Regarding Hybrid Plan Guidance (PDF)
6 pages. Excerpt: "This letter, which is submitted by the Coalition to Preserve the Defined Benefit System (the 'Coalition'), the American Benefits Council (the 'Council') and The ERISA Industry Committee ('ERIC'), identifies key transition and process issues with respect to upcoming hybrid plan guidance." (American Benefits Council)
[Opinion] ERIC Letter Identifies Key Transition and Process Issues on Upcoming Hybrid Plan Guidance
Excerpt: "The ERISA Industry Committee (ERIC), in conjunction with the Coalition to Preserve the Defined Benefit System and the American Benefits Council, on October 1 submitted a letter to the Internal Revenue Service and the Department of Treasury identifying key transitional and procedural issues related to upcoming proposed regulations on hybrid plans. It is the organizations' understanding that Treasury and IRS may soon issue final regulations on substantially all of the hybrid plan amendments contained in the Pension Protection Act, and that the (1) requirement that a hybrid plan's interest crediting rate not exceed a market rate of return and (2) the rules regarding pension equity plans (PEPs) may be addressed separately in proposed regulations. The letter says that the organizations strongly support this three-part approach to hybrid plan guidance." (The ERISA Industry Committee)
Hybrid Plan Sponsors Concerned About Lack of Regulatory Guidance
Excerpt: "The Pension Protection Act of 2006 (PPA) established new rules for the operation and administration of hybrid pension plans, but plan sponsors are still waiting for guidance. The lack of final (or in a number of cases even proposed) guidance leaves hybrid sponsors in a difficult position -- required to act without knowing the rules for doing so. Watson Wyatt recently conducted a survey to identify the issues most important to these plan sponsors." (Watson Wyatt Worldwide)
[Guidance Overview] U.S. District Court Says Cash Balance Plan ADEA Claim Not Time Barred Under Lilly Ledbetter Act (PDF)
2 pages. Excerpt: "In Tomlinson v. El Paso Corporation, a federal court in Colorado applied the Lilly Ledbetter Fair Pay Act to allow an age discrimination claim involving a cash balance plan conversion to proceed, reversing its prior dismissal of the lawsuit. The case involves a company that converted its traditional defined benefit pension plan to a cash balance plan in 1997 with a wearaway provision. Although the court initially dismissed the case for not being timely filed, it found that the subsequently enacted Ledbetter Act required it to reconsider this decision. While this is one court's ruling and is limited to Colorado, it demonstrates the potential reach of the Ledbetter Act beyond payroll practices to pension-related claims." (Buck Consultants)
Court Finds Ledbetter Act Revives Age-Bias Claim Arising from Cash Balance Conversion
Excerpt: "An active pension plan participant's age-bias challenge to a cash balance conversion may be timely, even though filed years after the plan change, a federal court has ruled (Tomlinson v. El Paso Corp.). The suit alleges that a 'wearaway' period after the conversion discriminated against older employees. Last Jan. 21, the court had held that the claim was not filed soon enough after the conversion. Now the court has overturned its own ruling in the wake of the Jan. 29 enactment of the Lilly Ledbetter Fair Pay Act. The new ruling addresses only the timeliness, not the merits, of the claim." (Mercer LLC)
Ledbetter Act Revives Pension Accrual Age Discrimination Claim
Excerpt: "In 2004, Wayne Tomlinson and other employees brought a class action against their employer, El Paso Corp., for age discrimination caused by changes made to accrual rules when the company switched from a defined benefit plan to a cash balance plan in 1997. Tomlinson alleged that the company selectively froze the pension benefits of workers 40 and older. He alleges that he didn't know enough about the changes to file his action until 2004. The action was originally dismissed in January of this year as untimely, but plaintiffs' attorneys filed a motion to reconsider after the Ledbetter Act was signed into law." (Workplace Prof Blog)
Court Slims Down JPMorgan Cash Balance Suit
Excerpt: "JPMorgan Chase & Co. has successfully convinced a federal judge that a former employee should be barred from moving forward with allegations about the company's cash balance conversion. Plaintiff Frank Bilello's alleged that the financial services company's notices about its cash balance conversion were legally incomplete and inadequate. However, U.S. District Judge Denise Cote of the U.S. District Court for the Southern District of New York also handed the employer a setback by refusing to throw out the plaintiff's claim that the company committed a fiduciary breach by misleading workers about how the planned conversion would affect their benefit levels. Regarding the inadequate notice issue, Cote ruled that the Employee Retirement Income Security Act (ERISA) did not mandate JPMorgan's corporate predecessors to include additional financial analysis about each employee's benefit impact on their conversion notice, but merely required an alert the conversion was taking place and the date it would happen." (planadvisor)
[Guidance Overview] Five Years of Service Is Valid 'Normal Retirement Age' in Pre-2006 Plan
Excerpt: "A pre-2006 cash balance plan did not violate ERISA when it defined 'normal retirement age' to be five years of service with the employer, the U.S. Court of Appeals in Chicago (CA-7) has ruled in Fry v. Exelon Corporation Cash Balance Pension Plan." (Wolters Kluwer)
[Guidance Overview] ERISA Litigation Newsletter for August 2009 from Proskauer Rose (PDF)
Articles include Bucking the Trend, District Court Finds That Utah's Attempt to Bar Discretionary Clauses Is Preempted By ERISA; When Discretion Is Gone... Is There Full Blown Federal Discovery?; Are Unpaid Employer Contributions to an ERISA Plan 'Plan Assets'? Courts and Government Weigh In; Defendants Acquire Favorable Judgments in Latest Round of Stock Drop Cases Involving Subprime and Stock Option Claims; Seventh Circuit Rules That 'Normal Retirement Age' Need Not Be Defined By Reference To A Specific Age. (Proskauer Rose)
Two 'Big Picture' Pension Policy Issues of Interest to IRS Addressed by Seventh Circuit During 2009 Spring Term (PDF)
Excerpt: "In March, the court decided Contilli v. Local 705, Int'l Bhd. of Teamsters Pension Fund, 559 F.3d 720 (7th Cir. 2009) (Easterbrook, J.). In July, the court decided Fry v. Exelon Corporation Cash Balance Plan, 2009 U.S. App. LEXIS 14395 (7th Cir. 2009) (Easterbrook, J.). Contilli was a clear win for the IRS. Fry a resounding loss." (Ivins, Phillips & Barker)
[Guidance Overview] Five Years of Service is a Permissible 'Normal Retirement Age' for Cash Balance Plan, According to Court
Excerpt: "In what appears to be a case of first impression, the 7th Circuit Court of Appeals ruled that a cash balance plan was permitted to define 'normal retirement age' as the completion of five years of service in order to avoid a 'whip saw' calculation of the participants' lump sum benefits. The case involved plan language that was in effect in 2003 and, therefore, did not address the validity of the 2007 Treasury Regulations that now restrict a plan's ability to define normal retirement age as lower than age 62. The distribution at issue also occurred before August 17, 2006, the effective date of new PPA rules explicitly eliminating the whip saw calculation for certain cash balance plans." (Deloitte via BenefitsLink.com)
[Guidance Overview] 7th Circuit Affirm Years-of-Service Definition for Retirement Under Cash Balance Plan
Excerpt: "An employer with a legacy cash balance plan could define normal retirement age as the completion of five years of service without running afoul of federal benefits law, an appellate court has ruled." (PLANSPONSOR.com)
[Guidance Overview] Appellate Judges Affirm Years-of-Service Definition for Retirement
Excerpt: "An employer with a legacy cash balance plan could define normal retirement age as the completion of five years of service without running afoul of federal benefits law, an appellate court has ruled." (PLANSPONSOR.com; free registration required)
[Guidance Overview] AK Steel Faces New Lawsuit on Whipsaw Calculation for Distributions
Excerpt: "A new lawsuit alleging AK Steel Corp. violated the Employee Retirement Income Security Act (ERISA) by failing to use a 'whipsaw' calculation in computing lump-sum distributions has been filed on behalf of union-represented employees who retired between July 1994 and August 2006. According to a BNA news report, the complaint alleges the company calculated the retirees' lump-sum distributions as being equal to the then-current cash balance amount held in the retirees' accounts, instead of using the two-step whipsaw calculation that was required of cash balance plans prior to the passage of the Pension Protection Act in 2006." (PLANSPONSOR.com; free registration required)
Cash-Balance Plans Appeal to Small Firms
Excerpt: "Cash-balance plans are a type of defined-benefit plan governed by the Employee Retirement Income Security Act. They can be effective for high earners, particularly professionals, because they allow far more pretax dollars to be socked away than a traditional 401(k) or profit-sharing plan. 'They allow you to turbo-charge what you're putting away,' says Matthew Tuttle, a financial adviser in Stamford, Conn. In 2009, the maximum 401(k) contribution for someone under 50 is $16,500; it's $49,000 for a profit-sharing plan. In contrast, someone using a cash-balance plan could 'save larger sums in a relatively short period of time,' . . . ." (The Wall Street Journal)
IBM Reinvents the 401(k)
Excerpt: "Back in January 2008, IBM (IBM) replaced the last of its pensions with a new-and-improved 401(k). The plan came with plenty of enticements, befitting a company that earned more than $10 billion on $99 billion in revenue the previous year. There were generous matching contributions, super-low fees, custom-designed portfolios, free access to financial coaches, and more. Even so, critics hammered IBM's move as one more sign of retreat from the secure retirement benefits of the past. Today, hardly anyone is complaining about IBM's 401(k), least of all the participants. The plan is sumptuous compared with offerings from most companies." (BusinessWeek)
[Guidance Overview] Monsanto Co. Receives Mixed Outcome from Two Rulings by Federal Judge in Illinois Regarding Monsanto's Cash Balance Plan
Excerpt: "In one decision, U.S. District Judge J. Phil Gilbert of the U.S. District Court for the Southern District of Illinois ruled that Monsanto had not violated the Employee Retirement Income Security Act (ERISA) by directing that cash balance plan 'interest credits' stop at age 55. . . . Later the same day, Gilbert put out a second ruling, turning aside the employer's request to dismiss claims that it violated the plan terms by refusing to use the plan's 8.5% interest rate on delayed lump-sum distributions. . . . The court said the plan clearly mandated that the interest rate for payments delayed by administrative processing must be the same as the rate used for voluntary deferrals of benefits." (planadvisor)
New Milestone in Death of Traditional Pensions, But Hybrid Plans May Grow
Excerpt: "More than half of Fortune 100 companies now offer only a 401(k) or other defined-contribution plan to new employees, the first time a majority of the nation's 100 largest firms does not offer a traditional pension, according to an annual survey released Monday by consulting firm Watson Wyatt." (MarketWatch)
Podcast: Al Lurie Discusses Cash Balance Plans and Applicable Nondiscrimination Rules
Excerpt: "On this edition, Al Lurie, President of Alvin D. Lurie, P.C., Larchmont NY and Of Counsel with The Wagner Law Group, P.C. in Boston, discusses classifying cash balance plans and establishing discrimination rules." (LexisNexis Tax Law Center)
Wells Fargo Freezes Traditional Pension Plan
Excerpt: "Wells Fargo & Co. told employees on Monday it will no longer contribute to their traditional pension plan, effectively cutting the total compensation of its workers less than two weeks after announcing record first-quarter profit. The San Francisco bank is combining its existing program with that of Wachovia Corp., the Charlotte, N.C., bank it acquired in December, and freezing both companies' cash balance plans, a type of defined benefit plan." (San Francisco Chronicle)
Wells Fargo to Freeze Cash Balance Plan
Excerpt: "Wells Fargo & Co. is freezing its cash balance pension plan, making it one of the largest employers to do so. Effective July 1, employees no longer will earn benefits in the plan. Wells Fargo also is freezing the cash balance plan sponsored by Wachovia Corp., a Charlotte, N.C.-based bank Wells Fargo acquired last year. Wells Fargo will continue to match 100% of employees' 401(k) plan salary deferrals, up to the first 6% of pay." (Business Insurance)
While Move Away from Traditional Defined Benefit Plans Continues, Sponsors Not Converting to Cash Balance Designs
Excerpt: "[D]espite the legal clarity and financial advantages to participants, large employers, for the most part, are not showing much interest in converting or setting up new plans, says William Sweetnam, a Partner in The Groom Law Group in Washington. There have been some recent high-profile conversions to cash balance plans, including Federal Express and Coca-Cola, but no wholesale movement to the cash balance format. Instead, for the most part, the IRS in 2008 spent much of the time clearing up old determination requests from older conversions, says Sweetnam." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Court Dismisses Claims against JPMorgan Cash Balance Plan
Excerpt: "JPMorgan Chase & Co. did not violate the Employee Retirement Income Security Act (ERISA) with its 1989 conversion to a cash balance pension plan and subsequent plan amendments, a court ruled. The U.S. District Court for the Southern District of New York also ruled that JPMorgan's predecessor banks, including Chemical Banking Corporation, did not violate ERISA. Former participant Frank Bilello alleged that the plan's failure to specify a projection method for the accrual of benefits resulted in an accrual that was not 'definitely determinable' in violation of ERISA." (planadvisor)
[Guidance Overview] Appeals Court Finds LaRue Does Not Apply in Cash Balance Fiduciary Breach Case
Excerpt: "A cash balance plan participant has no fiduciary breach claim arising from the denial of a lump sum payment, the Second Circuit Court of Appeals ruled (Fisher v. Penn Traffic Co., unpublished), concluding that the Supreme Court's decision in LaRue v. DeWolff did not apply. LaRue recognized the right of a defined contribution participant to recover for individual losses due to fiduciary breach. The Second Circuit noted that a cash balance plan was not an individual account plan, so fiduciary breach remedies are available only to protect the entire plan, not the rights of one participant." (Mercer LLC)
[Guidance Overview] Legality of 'Whipsaw' Lump Sum Calculation Under Cash Balance Plan Can Be Challenged in Court
Excerpt: "A former employee who challenged the calculation of her lump sum distribution under a cash balance plan was not required to exhaust her administrative remedies under the plan because an appeal would have been futile. This was the decision of the Sixth Circuit U.S. Court of Appeals in Durand v. The Hanover Insurance Group, Inc. and The Allmerica Financial Cash Balance Pension Plan (No. 07-6468)." (Wolters Kluwer)
[Guidance Overview] District Court Upholds Whipsaw Calculation for Pre-PPA Distributions
Excerpt: "In Traylor v. Avnet Pension Plan, a District Court ruled that the elimination of the so-called whipsaw calculation by the Pension Protection Act of 2006 (PPA) does not quash claims for additional benefits based on pre-PPA lump-sum distributions." (Watson Wyatt Worldwide)
Coca-Cola Co. Bucks the Trend, Moves to Cash Balance Plan
Excerpt: "The Coca-Cola Co. is adopting a cash balance pension plan for new and current employees. Under the cash balance plan design, employees will receive annual age-weighted credits equal to a percentage of pay. Those credits will start at 3% of pay and increase with age. Employees' cash balance plan accounts also will be credited with interest, though Coca-Cola hasn't yet decided on the interest-rate formula it will use. The plan will be offered to most U.S. salaried and hourly employees hired as of Jan. 1, 2010. Current employees now in Coca-Cola's traditional $1.5 billion final average pay plan will earn future benefits in the new plan starting Jan. 1, 2010." (Financial Week)
[Guidance Overview] Whipsaw Calculation Case Filed by Two Cash Balance Participants Deemed Class Action
Excerpt: "A federal judge in Wisconsin has declared as a class action a lawsuit by two cash balance participants over the failure to use a whipsaw calculation in determining pre-retirement lump-sum distributions. U.S. District Judge Barbara B. Crabb of the U.S. District Court for the Western District of Wisconsin turned aside arguments by the Alliant Energy Cash Balance Pension Plan that the claims by the two named plaintiffs were not typical of other workers because they agreed not to sue over their pension benefits as part of their severance agreements." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Cash Balance Suit Plaintiff Seeks Dismissal Rehearing
Excerpt: "An employee who had his age discrimination claim against a cash balance plan dismissed has asked a federal judge to reconsider the dismissal in light of the signing of the Lilly Ledbetter Fair Pay Act. Plaintiff Wayne Tomlinson argued that with President Obama's January 29 signing of the Ledbetter bill into law . . ., the U.S. Supreme Court's May 2007 ruling in Ledbetter v. Goodyear Tire & Rubber Co. (which the Ledbetter bill was intended to overturn) should no longer be considered controlling case law . . . ." (PLANSPONSOR.com; free registration required)
The Aftermath of the Cash Balance Controversy: Defining Age Discrimination for Traditional Defined Benefit Pensions
Excerpt: "The appellate decisions upholding cash balance pensions against the claim of age discrimination are unconvincing. Nevertheless, these decisions reach the proper result as a matter of pension policy. These decisions read the statutory term 'benefit accrual' as meaning employer contributions for purposes of measuring for age-based pension discrimination in the defined benefit context. However unpersuasive this reading may be as a textual matter, it reaches a sound outcome in terms of pension policy. In particular, this reading of the pension age discrimination statutes enables employers sponsoring traditional, annuity-paying defined benefit pensions to control their costs by decreasing the annual growth of the accrued benefits earned by older employees." (Benjamin N. Cardozo School of Law via Social Science Research Network)
Cash Balance Pension Plan Works Well for Some
Excerpt: "A cash balance plan is an ERISA-qualified defined benefit pension plan. It takes maximum advantage of higher benefit levels available to such plans under federal law. If you and other highly compensated employees are maximizing contributions to your 401(k) and profit-sharing plans, it can be a valuable new addition." (TheLedger.com)
Cash Balance Plan Participants' Document Requests not Subject to ERISA Time Limit
Excerpt: "The U.S. District Court for the Western District of Kentucky has determined that an employer did not have to provide certain documents requested by cash balance plan participants within 30 days as required by the Employee Retirement Income Security Act (ERISA). In its opinion, the court said Commonwealth Industries, Inc. 'acted in a reasonably timely and sufficient manner to comply with the plaintiffs' requests.' Judge Jennifer B. Coffman noted that the employer attempted to produce the documents, even trying to timely obtain those that were not in its possession." (PLANSPONSOR.com; free registration required)
U.S. Supreme Court Turns Away AK Steel Review Request
Excerpt: "The nation's high court has turned down a request to review a $46-million award to former steel workers in a long-running pension dispute over whipsaw calculations used in determining lump sum pension distributions. The U.S. Supreme Court's decision came in a request by the AK Steel Corp. Retirement Accumulation Plan for it to take a look at an April 2007 6th U.S. Circuit Court of Appeals case (See AK Steel Cash Balance Distributions Not Covered by PPA) that kept intact the award for benefits and interest for the 1,250 former AK Steel workers." (PLANSPONSOR.com; free registration required)
[Guidance Overview] Weighing the Pros and Cons of Cash Balance Plans
Excerpt: "Advantages to plan participants include the following: Employer pays the entire cost. Easy to understand. No investment decisions or investment risk. Portable account balance. Benefit protection provided by the Pension Benefit Guaranty Corporation (PBGC). Compared to traditional defined benefit plans, more attractive to younger, mobile workers." (Journal of Accountancy)
Towers Perrin U.S. Legislative Tracking Chart: Retirement (PDF)
13 pages. Excerpt: "These charts summarize selected federal legislation that would affect employer benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)
[Guidance Overview] Overview of the Worker, Retiree and Employer Recovery Act of 2008
Excerpt: "Emergency Funding Relief For Defined Benefit Plans . . . Technical Modifications to the PPA . . . Non-Technical Retirement Security Provisions . . . Mental Health Parity and Addiction Equity Act For Collectively Bargained Plans . . . ." (McGuireWoods)
[Opinion] The PLANSPONSOR 2008 Year in Review
Excerpt: "A year ago, I said that 2008 looked 'to be a pivotal year for retirement plans' -- an observation that, in hindsight, may well qualify as the understatement of the decade. Of course, a year ago, that was a commentary on the changes as plans assimilated the impacts of the Pension Protection Act, and the preparations for a new Administration. There's been all that, of course (though the impact of the latter still lies ahead). Still, what has dominated the headlines of late -- and the focus of plan sponsors and participants alike -- was not even on our radar screen last year. Here's where we've been, where we are, and what's ahead . . . ." (PLANSPONSOR.com; free registration required)
AT&T Pension Plan Class Action Lawsuit About Cash Balance Pension Conversions
The site lists and links to documents relating to Engers v. AT&T Managment Pension Plan, C.A. 98-3660 (D.N.J.). (erisapensionclaims.com)
PBGC Semiannual Regulatory Agenda Addresses Cash Balance Plans
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) has released its semiannual regulatory agenda for Fall 2008, which outlines regulations that have been selected for amendment during the next year, as well as any regulations that have been recently finalized." (Wolters Kluwer)
[Guidance Overview] Plaintiffs in S.C. Johnson Cash Balance Case See One Claim Rejected But Whipsaw Claim Survives
Excerpt: "U.S. District Judge J.P. Stadtmueller of the U.S. District Court for the Eastern District of Wisconsin ruled that the plaintiffs' claim of a violation of ERISA interest credit rules that went into effect earlier this year was premature." (PLANSPONSOR.com)
[Guidance Overview] 2008 Year-End Checkup for Pension and Welfare Benefit Plans (PDF)
17 pages. Excerpt: "This Alert will help identify general year-end administrative and planning issues that could lead to compliance or employee relations problems if not addressed before, or early in, 2009. In addition, we have highlighted recent legislative or regulatory developments that may require plan design or documentation changes." (Aon)
Delaware Company Cleared of Cash Balance Conversion Miscue
Excerpt: "A Newark, Delaware, power company did not have to tell workers when it converted its defined benefit pension plan to a cash balance program because the change was not expected to cut employees' benefits, a federal appellate court ruled. The 3rd U.S. Circuit Court of Appeals asserted in a decision involving a cash balance challenge against Pepco Holdings and its subsidiary, Conectiv, that the conversion did not violate the Employee Retirement Income Security Act (ERISA). The appellate panel decided that because the plan change was not 'reasonably expected to significantly reduce' employees' future benefits, ERISA Section 204(h) did not mandate an employee notice the conversion was taking place." (PLANSPONSOR.com; free registration required)
[Opinion] Amara v. Cigna Pension Plan Class Action Lawsuit About Cash Balance Pension Conversions (PDF)
Excerpt: "On October 14, 2008, AARP and the National Employment Lawyers Association filed an amici curiae . . . brief on behalf of the Plaintiffs, asking the Court to provide full relief to the Plaintiffs." (Stephen R. Bruce via ERISA Pension Claims)
[Guidance Overview] Ninth Circuit Ruling that Cash Balance Plans Do Not Discriminate Against Older Workers (PDF)
3 pages. Excerpt: "BUCK COMMENT. Because the Pension Protection Act of 2006 (PPA) has insulated cash balance plans from such challenges going forward, the discrimination issue only applies retroactively. This ruling by the Ninth Circuit, not usually considered a pro-business court, should largely end the litigation over whether cash balance plans are age discriminatory." (Buck Consultants)
Reports Show How AT&T's Cash Balance Design Created Periods of 'Wear-Away' for Older Employees
Excerpt: "Documents relating to Engers v. AT&T Managment Pension Plan, C.A. 98-3660 (D.N.J.) include the following: Expert statistical report dated Sept. 23, 2008 of Robert A. Bardwell, Ph.D., of Bardwell Consulting, on the impact on older employees of the conversion of AT&T's defined benefit plan to a cash balance pension formula. Expert actuarial report dated Sept. 22, 2008 of Claude Poulin, F.S.A., on the periods of wear-away and benefit reductions produced by the conversion of AT&T's defined benefit plan to a cash balance formula." (Stephen R. Bruce and Zipin Web & Consulting)
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