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November 18, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.


Today's sponsor is ASC & The ASC Institute

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Banner ad for ASC & The ASC Institute

Failed a discrimination test?

Let ASC help you provide money saving solutions to your clients!

ASCís Compliance Testing software automatically provides multiple ADP/ACP corrective options Ė including HCE distributions, prorata and contributory Qnecs, as well as Targeted Qnecs. Our 401(a)(4) testing provides multiple rate calculation methods, as well as banding and component testing options. Partner the sophistication of the Compliance Testing software with our Money Manager Link (MML) and Single Step Processing (SSP) automation tools for even more efficiencies. Learn more! Email: sales@asc-net.com


[Official Guidance] Text of Final Regs: Disclosure to Participants of Distress Termination Filing with PBGC
Excerpt: "The final regulation is unchanged from the proposed regulation, except that the final regulation states explicitly, with reference to the applicable statutory provisions, that plan administrators in distress and PBGC-initiated terminations, and plan sponsors in PBGC-initiated terminations, may charge a reasonable fee for any information provided in other than electronic form." (Pension Benefit Guaranty Corporation)


[Guidance Overview] Governmental Qualified Retirement Plans Can Delay Filing Until Cycle E (PDF)
2 pages. Excerpt: "To encourage governmental plan sponsors to file under Cycle C, the IRS provides some incentives. . . . For many governmental plans that file for determination letters, this delay will be useful -- either because they are not able to meet the current deadline or because there will be more time to receive further information on what the IRS is looking for in the applications for governmental plans. On the other hand, if a plan sponsor is ready and able to file by the Cycle C deadline, it may be advisable to do so." (Buck Consultants)


Designing a New Universal Tier of Retirement Savings to Supplement Social Security and 401(k)s: How Much Risk is Acceptable?
Excerpt: "The brief's key findings are: The financial crisis suggests the need for a new universal tier of retirement saving to supplement Social Security and 401(k)s. If the tier were a defined contribution system, asset levels would vary with market returns and payouts with interest rates. Replacement rates could fluctuate as much as 30 percentage points -- even if everyone invested in an identical target-date fund. An alternative is to guarantee a fixed return, but this return will almost always be lower than that under a target-date fund, and guarantees are not costless." (Center for Retirement Research at Boston College)


Pension Plan Deficits to Grow in Comparison to Plan Sponsors' Values During 2008
Excerpt: "Combined with declines in the value of sponsoring companies, pension plan deficits compared with firms' values are larger and could indicate potential disturbances in some companies by the end of 2008. Weaker funding positions could necessitate larger cash contributions from sponsors to shore up pension funding. And with market values dropping and profitability shrinking, larger contributions could present some companies with a cash flow challenge." (Watson Wyatt)


Full Text of 2008 Annual Management Report by PBGC (PDF)
88 pages. Excerpt: "I am pleased to transmit the Pension Benefit Guaranty Corporation's Annual Management Report for fiscal year 2008. This report includes PBGC's financial statements, the transmittal letter of PBGC's Inspector General, and the independent auditor's combined report on the Corporation's financial statements, internal controls, and compliance with laws and regulations. Also included is the Corporation's Annual Performance Report as required under the Government Performance and Results Act." (Pension Benefit Guaranty Corporation)


National Retiree Legislative Network Would OK Proposed Delay in PPA Funding Rules If Accompanied by New Pension Protections
Excerpt: "Given the dire financial circumstances our country is experiencing, the NRLN's legislative team has concluded that we could accept a temporary delay in the implementation of pension funding and accounting requirements if Congress will include in any ERISA relief legislation the NRLN's proposals to protect pension assets. The measures we want included are: (1) Protect pension plan assets by preventing companies from using assets for restructuring expenses, such as paying lump-sum severance or layoff payments. (2) Prevent the purchase of pension plans by third parties, such as financial firms. (3) Prevent the use of pension plan assets to enhance deferred compensation of executives." (National Retiree Legislative Network)


American Benefits Council Asks Plan Sponsors to Urge Legislators to Pass Pension Funding Legislation
Excerpt: "Congress will return next week for a brief 'lame duck' session. It is critical that members of Congress hear from individual companies. This will improve the likelihood that lawmakers will consider legislation addressing pension concerns before the end of the year. It is important that they understand that the need is urgent and that they must consider legislation that is sufficient enough to help companies manage the volatility caused by the financial turmoil." (American Benefits Council)


PBGC Request To GM For Pension Information Goes Unanswered
Excerpt: "Agency spokesman Marc Hopkins said the PBGC is looking for a 'more accurate' picture of the auto maker's pension programs stability, which is necessary for the agency to effectively monitor the financial health of auto makers." (Dow Jones via CNN.com)


Record Losses Hit Pensions of Large Employers
Excerpt: "The nation's largest corporate pensions had record losses in October and won't meet federal-funding requirements without a massive infusion of cash, improved asset values or a change in law." (Wall Street Journal)


[Opinion] Why Isn't Anyone Talking Later Retirement for Government Workers?
Excerpt: "As states try to figure out how to cut costs and services to current taxpayers, it seems no one is talking about is rolling back the retirement age for government workers to help ease at least one part of the budget problem: massive pension burdens." (Brian Sullivan)



Sponsored by: ASPPA

(Click on company name or banner to learn more.)
Banner ad for ASPPA

The ASPPA 401(k) SUMMIT, March 22- 24, 2009

Register now and be a part of this unique forum for retirement sales and investment professionals in the 401(k) arena. Hear Arthur Laffer discuss the condition of our new global economy, participate in interactive networking activities and specialized education tracks, and listen to our industryís leaders discuss where the trends are taking us and how to be prepared. Donít miss out on the longest running event dedicated solely to the sales and investment segment of our industry, register now.

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Links to Items on Executive Comp, Benefits in General

[Guidance Overview] Congress to Offshore Deferred Compensation: Drop Dead
Excerpt: "After December 31, 2008, Code Section 457A prohibits deferrals by US taxpayers under certain deferred compensation and equity-related arrangements of 'tax indifferent parties', which include entities located in certain tax free (so-called 'tax haven') jurisdictions. Code Section 457A requires that such compensation be included in the income of US employees and other service providers subject to US income tax in the year in which it is no longer subject to a substantial risk of forfeiture." (Baker & McKenzie)


Growing Sense of Outrage Over Executive Pay
Excerpt: "The public's indignation over lavish executive pay has rippled beyond the circles of activist investors and corporate governance watchdogs, who for years have wrung their hands over compensation practices. It has spread even beyond grass-roots community organizers and public policy think tanks to people who make their living in the financial industry . . . ." (Washington Post via California Nurses Association)


Employee Ownership Update for November 17, 2008
NCEO Executive Director Corey Rosen discusses a new study finding that ESOPs owning less than 5% of company shares have a small but positive effect on total compensation, while in companies where the ESOP owns more than 5%, total compensation is 5.2% higher; a trend to reprice stock options; a new resource for business school case studies on employee ownership; a cautionary tale of planning for the ESOP repurchase obligation; a job at the NCEO; and NCEO board nominations. (National Center for Employee Ownership)


[Opinion] Our Spendthrift States Don't Need a Bailout; Grants of New Unfunded Benefits Were Irresponsible
Excerpt: "[One reason states incur budget deficits] is their failure to deal with huge and growing employee pension and benefits liabilities. . . . A study three years ago by the Employee Benefit Research Institute estimated that the average public sector worker earns 46% more in total compensation than his counterpart in the private sector, largely because government employers spend 60% more per worker on benefits than counterparts in the private sector." (Steve Malanga in the Wall Street Journal)




Newly Posted Events
(Post Yours!)

FMLA Final Regulations - Teleconference
Nationwide on December 12, 2008
presented by Ballard Spahr Andrews & Ingersoll, LLP



Newly Posted Press Releases
(Post Yours!)

Watson Wyatt Data Servicesí Latest Report Covers Latest Trends in Compensation Policies and Practices
Watson Wyatt Data Services

PBGC Releases Annual Management Report for Fiscal Year 2008
Pension Benefit Guaranty Corporation (PBGC)

U.S. Department Of Labor Final Rule Will Expand FMLA For Military Families And Clarify Rules For Workers And Employers
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Entrustís Revolutionary IRA Debit CardSM Provides Unparalleled Convenience & Flexibility
The Entrust Group

Secure Services Corp. Launches Consumer Gateway for SHAPE PHRô
Secure Services Corporation

Kiplinger and BBB Military Line Arm Military Families for Financial Future
Kiplinger and BBB Military Line



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