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December 1, 2003 - 13,525 subscribers
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Supreme Court to Consider Early Retirement Anti-Cutback Case
Excerpt: "Thomas E. Heinz and Richard J. Schmitt Jr. both became construction supervisors when they retired from their original jobs in 1996. At the time, that meant they were still eligible for their pension benefits. In 1998, however, the pension fund said it would no longer allow early retirement pension payments to people who began second careers in any kind of construction industry job. The fund suspended benefits to Heinz and Schmitt, who sued in federal court." (AP via Newsday)
Analysis: Two U.S. Circuit Courts Disagree Over Legality of Tightening Suspension of Benefit Rules (PDF)
5 pages; originally published 9/26/02. Excerpt: "One of the most complicated and litigated sections in ERISA is section 203 dealing with the suspension of benefit rules. Not surprisingly, the complexity of the rules has lead to conflicting U.S. appellate court decisions involving multiemployer pension plans." (TIC International Corporation)
Text of Justice Department's Amicus Brief Supporting Certiorari for Anti-Cutback Case
Central Laborers' Pension Fund v. Heinz. Excerpt: "The question presented is whether an amendment to a multiemployer pension plan that provides for the suspension of the payment of early retirement benefits during the period that a participant, after retiring, is employed by another firm in the same industry is a prohibited elimination or reduction of such benefits when applied to employees who retired prior to adoption of the amendment." (U.S. Department of Justice)
Text of Employees' Brief Opposing Certiorari, Supporting 7th Circuit's Decision in Their Favor (PDF)
27 pages. Excerpt: "Although ... it is true that in Spacek v. Maritime Association ... the Fifth Circuit held that 'suspending' pension benefits is not a form of 'reducing' or 'eliminating' those benefits, and thus does not violate the anti-cutback rule, the Spacek decision is in considerable tension with earlier Fifth Circuit precedent and therefore may not be binding even in that Circuit. Petitioner's broad assertions about the importance of this litigation ... have no merit." (Central Laborers' Pension Fund v. Heinz via Appellate.net)
It's Curtains for Security Trust Company
Excerpt: "Based in Phoenix, Security Trust Company manages $13 billion in retirement and pension assets for about 2,300 retirement plans, making it the largest of the independent trust companies." (Financial-Planning.com)
Invest Wisely: An Introduction to Mutual Funds
(Last modified 6/2/03.) Excerpt: "This brochure explains the basics of mutual fund investing -- how mutual funds work, what factors to consider before investing, and how to avoid common pitfalls." (U.S. Securities and Exchange Commission)
Opinion: Dire Consequences of the Mutual Fund Industry's History of Transgressions
Excerpt: "Illegal and improper mutual fund activity costs investors billions annually. Our investigations reveal that at a minimum 50% of all mutual fund investment advisory fees and portfolio trading costs are excessive. Fund boards have breached their fiduciary duties by causing investors to pay these costs." (Edward Siedle of The Benchmark Companies)
Commentary: the Mutual Fund Scandal-- Unfair Fight
Excerpt: "Mutual funds were supposed to be the smart, safe choice for small investors. But the latest scandal shows how Wall Street big shots make profits, while the little guys take a beating." (Newsweek via MSNBC.com)
Opinion: What Do All Those Mutual Fund Fees Add Up To?
Excerpt: "In dollar terms, however, the fees are staggering. And when the managers receiving them turn in a woeful performance, as has been the case recently more often than not, the fees represent an enormous and troubling transfer of wealth from hard-working individuals to some seriously fat cats." (New York Times; one-time registration required)
Thomson Drops Putnam International Fund from 401(k) Plan
Excerpt: "Thomson Corp., an electronic-publishing company with $7.5 billion in 2002 revenue from continuing operations, is the latest to announce that it is withdrawing money from Putnam's funds." (AP via SFGate.com)
Pension Costs Could Go From Bad To Worse for New York Governmental Employers
Excerpt: "From the biggest of local governments to the smallest school districts, officials across New York State are bracing for a fiscal nightmare come 2004. Huge bills for this year are due in just a couple of weeks. As they pay them, officials shudder at the thought of higher costs on the horizon." (Buffalo [N.Y.] News)
CNF Retirees' Pension Suit Is Dismissed by U.S. Judge
Excerpt: "A federal judge has dismissed a lawsuit brought by a group of retirees from CNF and its spinoff company, Consolidated Freightways, who said their pensions had been improperly reduced." (New York Times; one-time registration required)
Illinois Governor Wants His Own Experts To Examine State Pension Funding
Excerpt: "Gov. Blagojevich wants to go around the financial analysts at the state retirement systems and hire his own experts to look for ways of saving more money." (Chicago Sun-Times)
GAO Report: Issues Related to the Postal Service's Proposed Use of Pension Savings
44 pages. Excerpt: "In April 2003, Congress enacted the Postal Civil Service Retirement System (CSRS) Funding Reform Act of 2003 ... which lowered the Postal Service's (Service) annual payment for its CSRS obligation by over $2.5 billion beginning in fiscal year 2003.... Congress could direct the Service to fund specific purposes, such as prefunding its retiree health benefits obligation ..." (U.S. General Accounting Office)
New Simplified Reporting Regime Developed for Taxpayers Holding Interests in Canadian RRSPs
Excerpt: "The IRS has developed a new simplified reporting regime for taxpayers who hold interests in Canadian registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs). The new reporting regime, which is effective for tax years beginning after December 31, 2002, is in lieu of the filing obligations under Code Sec. 6048 ... that otherwise apply to U.S. citizens and resident aliens who hold interests in RRSPs and RRIFs and to the custodians of such plans." (CCH Tax News - http://tax.cchgroup.com/news/default)
Details Emerge on FASB Pension Disclosure Proposal
Excerpt: "Expected later this year, the new rule would require companies to disclose publicly the proportion of stocks, bonds and other investments including real estate and private equity they hold in their pension portfolios. Also approved was a requirement that companies estimate and disclose pension benefits to be paid out to employees for each of the next five years." (PLANSPONSOR.com; one-time registration required)
FASB to Require Reporting on Investments by Retirement Plans
Excerpt: "All U.S. companies with traditional retirement plans will have to start disclosing the investment strategies they use in the plans under a pending rule, accounting rule-makers said Wednesday." (AP via [Minneapolis] StarTribune.com)
Pension Coverage in the United Kingdom: the Underpensioned
Excerpt: "Most people are at risk of being ‘under-pensioned' and recent reforms to the pension system will not solve the problem, a new report published today by the Pensions Policy Institute says." (Pensions Policy Institute)
Opinion: Bush Can Vindicate His Medicare Giveaway By Reforming Social Security
Excerpt: "As Peter Ferrara details in The Wall Street Journal, the big news is that a transition to even large personal Social Security investment accounts can be financed without cutting benefits or raising taxes. This is the conclusion of Steve Goss, the nonpartisan chief actuary of the Social Security Administration, and his professional career staff." (Wall Street Journal Editors on OpinionJournal.com)
A Tribal Executive's Guide: Deferred Per Capita Plans (PDF)
Excerpt: "This Client Alert addresses a topic that has received increased attention from tribal members, financial service providers and tribal executives: How to offer tribal members the opportunity to elect on a year by year basis to place a portion of their per capita payments into a taxdeferred long-term saving vehicle.... This Alert calls attention to those benefits but also explores key structural issues for minimizing the risks of deferred income plans." (Gardner Carton & Douglas)
Retirement Plan Coverage and Saving Trends of Baby Boomer Cohorts by Gender
Excerpt: "Over the next three decades, the retirement of the baby boom generation will present enormous challenges to America's retirement income security system. In this AARP Public Policy Institute Data Digest, Jules H. Lichtenstein and Ke Bin Wu examine recent changes in boomer retirement plan coverage (i.e., pension and Individual Retirement Account [IRA]) and savings, focusing on the differences between older and younger boomers as well as the differences between women and men." (AARP Research)
Links to Items on Executive Comp, Benefits in General
Text of Advisory Opinion 2003-15A on Real Estate Investments via Limited Partnerships
Excerpt: "Whether a limited partnership in which employee benefit plans invest would be deemed a party in interest with respect to the plans under section 3(14)(G) of ERISA where the plan trustee would hold more than fifty percent of the interests in the limited partnership on behalf of the plans." (U.S. Department of Labor, Employee Benefits Security Administration)
Executive Compensation Legislation Still Pending
Excerpt: "The current session of the 108th Congress is quickly drawing to a close, and finishing work on executive compensation legislation this year does not appear to be a priority for House and Senate leaders. But executive compensation still will be on the agenda when Congress returns to work in January, and there appears to be a very good chance it will enact some changes next year-- perhaps as part of an international tax bill." (Deloitte's Human Capital Advisory Services)
A Workers' Lobby to Provide Portable Benefits (PDF)
37 pages; working paper, 10/30/03 version. Excerpt: "Sara Horowitz founded an employees' lobby she called Working Today ... Working Today has shifted from seeking to represent all workers ... to providing private services to independent workers, with the primary emphasis on provision of portable benefits.... Section VII [of this paper] evaluates the accomplishments and prospects of Working Today. I conclude with an evaluation of the prospects of a broadbased workers' lobby." (Joni Hersch, Harvard Law School, via National Bureau of Economic Research)
Older Germans Being Pressured on Benefits
Excerpt: "[A]s Germany struggles to reduce public spending, generous retirement benefits long taken for granted are being openly debated -- even crudely when a member of the Christian Democrat youth organization this summer publicly said taxpayers should not have to pay for hip replacements for the elderly.... The suggestion to sacrifice again ... is particularly distasteful to those whose hard work in the decades after the Nazi defeat helped ensure Germany's generous welfare state." (AP via Newsday)
The End of Incentive Compensation for Employees in California?
Excerpt: "In this case, decided in October 2003, the court held that Ralphs's incentive compensation plan violated the [California] Labor Code because the calculation of employee bonuses was based on a formula that considered the store's profits and certain losses, including cash shortages, merchandise shortages, shrinkage, and workers' compensation costs." (Littler Mendelson)
Newly Posted or Renewed Job Openings
Consulting Actuary
for New York Life Investment Management LLC
in MA
Administrative Assistant
for 401(k) Advisors
in CA
Associate - Employee Solutions
for Black Mountain Management, Inc.
in NY
Administrator - Recordkeeping and Administration
for Black Mountain Management, Inc.
in NY
Employee Benefits Paralegal
for Reinhart Boerner VanDeuren s.c.
in WI
Newly Posted Events
Health FSAs and Over-the-Counter Drugs: How IRS Revenue Ruling 2003-102 Changes the Rules
Nationwide on September 3, 2003
presented by Employee Benefits Institute of America LLC (EBIA)
Medicare Reform and the New Prescription Drug Benefit: Overview of the New Legislation with a Focus on the Prescription Drug Benefit
Nationwide on December 16, 2003
presented by American Bar Association (ABA)
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