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November 13, 2003 - 13,509 subscribers
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Legislators Agree to Block IRS Cash Balance/Hybrid Plan Regs From Being Finalized
Excerpt: "Congressional negotiators agreed on Wednesday night to block the Bush administration from finalizing its proposed pension rules on cash balance plans, in an attempt to stop changes that can reduce payouts to older workers. But the lawmakers also said the Treasury must offer legislation within 180 days on how best to convert traditional pensions to the newer cash balance plans ..." (Reuters via Forbes)
New Disclosures for Pensions and Other Benefits; FASB Backs Off a Bit on Earlier Proposal (PDF)
2 pages; 11/12/03. Excerpt: "New financial statement disclosures for sponsors of pensions and postretirement benefits will be required under a new accounting standard expected to be published by [FASB] in December. For employers with calendar fiscal years, most of the new requirements will apply to the upcoming December 31, 2003 year-end financial statements. The decisions made yesterday by the FASB Board ... incorporate several key modifications to the proposal issued this past September ..." (Milliman USA)
Nevada Retirement System Terminates Putnam
Excerpt: "The Nevada Public Employees Retirement System's directors voted unanimously Wednesday to terminate dealings with Putnam Investments, facing allegations of mutual fund trading irregularities, which had a $400 million portfolio with the system." (AP via Las Vegas Sun)
Text of American Bankers Association Comments to SEC on Possible 4 p.m. Deadline for Fund Orders (PDF)
5 pages. Excerpt: "We are concerned ... that the regulatory solutions suggested to date ... ignore the operational complexities and other problems associated with these proposed changes, particularly as they impact the retirement savings of millions of 401(k) plan participants. We believe there are alternative solutions that can satisfy the need to curb late trading, while, at the same time, minimize problems associated with some of these suggested solutions." (American Bankers Association)
Surviving the Fund Scandal, Part II
Excerpt: "Investors who hold funds in an individual retirement account, or IRA, can move it without facing any tax consequences. There may, however, be transfer fees, deferred sales charges -- if you own a fund's B share class -- and potentially new sales charges if a financial adviser is involved in making the switch." (Boston Globe)
Written Testimony of American Benefits Council at IRS Hearing on 401(k) Regulations (PDF)
4 pages. Excerpt: "Under the proposed regulations, the portion of a cash or deferred arrangement that is an ESOP and the portion that is not an ESOP would no longer have to perform the plan's ADP and ACP tests on a disaggregated basis. We strongly support this change ... [W]e ask the Service and Treasury to permit early implementation of the new ESOP testing rule." (American Benefits Council)
PBGC Announces Maximum Guaranteed Pension Benefit for 2004 Terminations: $3,698.86 Per Month (PDF)
2 pages; press release. Excerpt: "PBGC insures pension benefits worth $1.5 trillion and is responsible for paying current and future benefits to nearly 1 million people in over 3,200 terminated defined benefit plans. The maximum monthly guaranteed amounts for plans terminating each year for the past 10 years are: ..." (Pension Benefit Guaranty Corporation)
German Parliament Votes Not to Apply COLA to Public Pension Payments Next Year
Excerpt: "German pensioners will get less money next year after parliament voted to cap pensions and require the elderly to pay for nursing insurance. Supporters claim this cuts labor costs and boosts economic recovery." (Deutsche Welle)
Pension Funds Recovering, Report Says
Excerpt: "Overall, the 100 companies in the Standard & Poor's 500 index with the largest employee benefit obligations will be underfunded by 12% at the end of this year, compared with 18% at the end of last year, the [Bear Stearns] report said." (Reuters via Los Angeles Times; one-time registration required)
PBGC: Special Pension Funding Break Would Widen Gap In Worst-Funded Plans By $40 Billion
Press release. Excerpt: "If Congress waives the special rules designed to speed up cash contributions to severely underfunded pension plans, the shortfall in these plans would grow by $40 billion over the next three years, according to an analysis by the Pension Benefit Guaranty Corporation." (Pension Benefit Guaranty Corporation)
Perceptions of Mortality Risk: Implications for Annuities (PDF)
22 pages. Excerpt: "Consumers attempting to incorporate mortality risks into their retirement strategy are often told to use life expectancy estimates, even though life expectancy is an inadequate and often inappropriate planning concept. Moreover, consumers are usually invited to use the same approach to post-retirement retirement planning as pre-retirement financial planning, which undermines the importance of mortality risk and the role of products such as income annuities ..." (Pension Research Council Working Paper)
Annuities and Retirement Satisfaction (PDF)
28 pages. Excerpt: "This chapter analyzes pre-retirement expectations and post-retirement well-being, in particular their association with the degree to which retirees' financial resources are in the form of annuities.... [R]etirees who could finance more of their consumption in retirement with pension annuities (vs. Social Security benefits and accumulated savings) were more satisfied." (Pension Research Council Working Paper)
How Do Retirees Go From Stock to Flow? (PDF)
39 pages. Excerpt: "When participants in a defined contribution (DC) pension plan retire, they face an important decision regarding how to spend their retirement assets.... [F]ollowing the introduction of non-annuity income options in 1988, there was a significant decline in the use of life-contingent immediate annuity income among those initiating periodic withdrawals from their retirement accounts." (Pension Research Council Working Paper)
Dueling Ohio Pension-Fund Governance Bills Head for Votes
Excerpt: "The House bill requires the [five Ohio public] pension funds-- which control more than $100 billion in assets-- to direct 50 percent or more of money spent on trading and outside-fund management to firms with state operations and minority-owned firms in Ohio. That's a direct threat to the Wall Street firms that get paid millions but generate superior returns, fund managers say." (The Columbus [Oh.] Dispatch via NewsAlert.com)
CIGNA to Sell Retirement Business to Prudential
Excerpt: "CIGNA Corp. could announce, as soon as today or Friday, a deal to sell its Hartford-based retirement business to Prudential Financial Inc. Spokesmen for the two companies wouldn't comment, and an agreement might take longer. However, when it does come, the announcement is not expected to include a substantial reduction in the workforce of CIGNA Retirement & Investment Services." (The Hartford Courant via NewsAlert.com)
Adult Learning Principles and Pension Participant Behavior (PDF)
Excerpt: "Our study suggests that participants who receive information about their retirement savings in accord with research-based principles of how adults learn best, will markedly increase contributions to their retirement plans. Educational activities that are learner-centered guide participants through a recognition of how they can use information about investment options to devise effective financial plans." (Pension Research Council Working Paper)
Retirement Security in a DC World: Using Behavioral Finance to Bridge the Expertise Gap (PDF)
23 pages. Excerpt: "[S]mall barriers to accessing online advisory services seem to have significant impact on the likelihood of their use. We also find that by reducing the number of choices offered to participants from five to two greatly changes behavior. Depending on the decision, curtailing the number of choices changed participant investment choices by 40 to 100 percent." (Pension Research Council Working Paper)
Sex Differences, Financial Education, and Retirement Goals (PDF)
Excerpt: "This chapter examines the impact of participation in financial education seminars on the desired retirement age of individuals and on their expected levels of retirement income. Individuals were found to change their retirement goals after attendance in such a seminar.... Women were much more likely to alter their retirement goals and saving behavior." (Pension Research Council Working Paper)
Opinion: Undefined Contributions
Excerpt: "Although a large number of companies invest in real estate in their defined benefit plans, many deny their employees the same advantages in their 401(k) plans." (Art Gehring in Portfolio, published by the National Association of Real Estate Investment Trusts)
Links to Items on Executive Comp, Benefits in General
Still No Deal Between Clerks, Grocers in Southern California
Excerpt: "Negotiators for grocery clerks and supermarket chains ended three days of closed-door talks without reaching an agreement to end a month-long dispute that has idled 70,000 Southern California workers." (AP via Yahoo! News)
The Long-Term Outlook for Stock Option Plans
Excerpt: "Originally broadcast on November 12, 2003. During this teleconference, participants learned about recent dynamic trends in long-term incentive plan design. If you are interested in receiving a free CD, PDF, or audiocassette of this Hewitt teleconference, please use this online order form." (Hewitt Associates)
Senator Urges Caution on Stock Option Accounting Reform
Excerpt: "The head of the group that writes the nation's accounting rules was told during a Senate hearing yesterday that proposed updates could hurt small businesses and, in turn, imperil economic recovery.... Sen. Mike Enzi (R-Wyo.) told Robert H. Herz, chairman of the Financial Accounting Standards Board ... 'It seems you spend five times as much time speaking as you do listening.'" (Washington Post)
Newly Posted or Renewed Job Openings
Actuarial Benefit Consultant
for Fidelity Employer Service Company
in MA
Senior Employee Benefits Consultant - Las Vegas Office
for Marsh Risk & Insurance Services
in NV
Account Manager
for Andreini and Company (65th largest insurance agency in the U.S.)
in CA
Actuarial Analyst
for RSM McGladrey, Inc.
in IL
Newly Posted Events
Creating New Health Care Behaviors Among Employees
Nationwide on November 19, 2003
presented by Hewitt Associates LLC
The Tower of Benefit Misery
in Florida on November 2, 2003
presented by Florida West Coast Employee Benefits Council
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