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May 27, 2004 - 13586 subscribers
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
S.E.C. Backs Rules on Fund Ethics and Disclosure
Excerpt: "The Securities and Exchange Commission unanimously approved new rules on Wednesday to require mutual funds to adopt new ethics codes and provide clearer disclosure of their discounts for large investors." (New York Times; one-time registration required)

Mandatory IRA Rollovers: Unexpected Impact on Non-Profit Plans and Other Hidden Issues for All Plans
Excerpt: "The Internal Revenue Service ('IRS'), in a footnote to proposed Department of Labor ('DOL') regulations outlining safe harbor fiduciary rules under the Employee Retirement Income Security Act of 1974 ('ERISA') for mandatory rollovers for small cashouts, indicated its intent to extend the rule's application to all types of tax-favored plans of both private and public/non-profit employers. (Prop Labor Reg 2550.404a-2) Importantly, this includes plans not otherwise covered by ERISA ..." (Groom Law Group)

Information Overload: the Influence of Information Display, Asset Choice and Investor Experience
Working paper by Julie Agnew and Lisa R. Szykman. Excerpt: "We hypothesize that information overload is one reason DC participants often choose the default options. In two experiments, we manipulate the display of the investment information, the number of choices offered, and the similarity of these choices.... Our findings suggest individuals with below average knowledge are simply overwhelmed by the investment decision in general." (Center for Retirement Research at Boston College)

Overview: New Pension Law Reduces Contribution Requirements
Excerpt: "For many companies, the two-year relief provided by the new law has major ramifications that go directly to their retirement financial management strategy. Given unfavorable investment returns for 2000-2002, historically low interest rates and the expiration of prior funding relief, many plan sponsors would have been subject to large and rapidly increasing contribution requirements in 2004 and beyond." (Towers Perrin)

Pension Funding Debate to Involve Broad Review
Excerpt: "Now that Congress has enacted a pension interest rate for plan years beginning in 2004 and 2005 (see Pension Funding Equity Act Becomes Law), lawmakers will shift their attention to broader and more thorough review of the defined benefit system and pension funding reform." (Watson Wyatt)

Treasury's Mark J. Warshawsky's Speech on Pension Funding (May 6, 2004)
Target page includes link to 12-page document. Excerpt: "With the imminent retirement of the Baby Boom generation and rapidly rising health care costs, our country faces a set of challenges in providing retirement security for the coming generation of retirees. I would like to discuss with you today in some detail the challenges we face, and how the Administration is confronting them." (Via ERISA Industry Committee)

Workforce Realities, Not Cost, Drive Hybrid Plan Conversions
Excerpt: "[M]ost of the charges being leveled at hybrid conversions are based on a few early conversions. Watson Wyatt's new study, 'Hybrid Pension Conversions Post-1999: Meeting the Needs of a Mobile Workforce,' examines later conversions and their effects on employers' costs and workers' retirement security." (Watson Wyatt)

Statement of Annuity Board of the Southern Baptist Convention on Investment in Carnival Cruise Lines
Excerpt: "We wish hotels, airlines, cruise ships, etc. did not serve alcohol and the like but if we start down that road there is no end and the result would be little possibility of having any facsimile of a well-diversified retirement portfolio.... This issue is much more involved for a retirement organization than just saying, ‘Do away with this company because it does this or that.'" (Florida Baptist Witness)

In Connecticut, a Pension Fund Trial Could Shake Wall Street
Excerpt: "The civil case, one of the first in which a state pension fund has sued such a vaunted buyout shop, could, if the plaintiffs prevail, presage a wave of potentially crippling suits against Forstmann Little and other buyout firms that have lost investors' money." (New York Times; one-time registration required)

Overview: IRS-Required Annuity Disclosures Have July 1, 2004 Deadline
Excerpt: "Late last year, the IRS issued final regulations regarding the information that must be included in the explanation of the qualified joint and survivor annuity (QJSA) and the qualified pre-retirement survivor annuity (QPSA). These regulations are effective with respect to annuity starting dates on or after October 1, 2004, and with respect to QPSA explanations provided on or after July 1, 2004." (McDermott, Will & Emery)

Opinion: Switching Government Employees to DC Plans Not Likely to Win Over Politicians
Excerpt: "I ... don't want to pay extra taxes (or burden my kids' generation with extra taxes) so that government can offer a perk that the private sector is abandoning and that too often results in politically connected retirees living large on fat government annuities." (Eric Zorn in the Chicago Tribune; one-time registration required)

Pension Accounting Changes on the Horizon
Excerpt: "The deadline is quickly approaching for many European companies to implement International Financial Reporting Standards (IRS). Formerly known as International Accounting Standards (IAS), listed companies will need to begin reporting financial results starting in fiscal years beginning after January 1, 2005. In this article we briefly discuss dramatic pension changes key recent employee benefit developments, and other changes currently being considered by IASB." (Aon)

Hidden Costs, High Fees Eat Into 401(k) Plan Benefits
Excerpt: "Although fallout from the mutual-fund trading scandals still dominates the headlines, some companies with 401(k) plans reserve their greatest ire for another issue: fees." (CFO.com)

Putting Chile's Nest Egg To Work
Excerpt: "Its model 401(k)-style pension plan is investing heavily in key public projects." (BusinessWeek Online)

Links to Items on Executive Comp, Benefits in General

Panel Told Pittsburgh's Debt Burden Is Far Too Big; Pension, Healthcare Costs Daunting
Excerpt: "At a time when the board is looking for ways to cut costs, consultants reported that the city was severely underfunding its employee pension program by at least $18 million a year and had no money set aside to cover potential health care costs, which could reach $29 million a year for active and retired employees." (Pittsburgh Post-Gazette)

Overview: Pennsylvania Court Says Deferred Comp Currently Taxable (PDF)
Excerpt: "In a surprising and troubling decision, the Commonwealth Court of Pennsylvania recently decided in Ignatz v. Commonwealth of Pennsylvania that amounts deferred by an employee under an unfunded, non-qualified plan of deferred compensation are subject to personal income tax in the year earned." (Dechert LLP)

Companies Pursuing Major Changes in Executive Pay Strategies
Excerpt: "Many companies are in the process of implementing far-reaching changes in their executive pay strategies, with less emphasis on stock options and more emphasis on cash, restricted stock and performance plans, according to a new Towers Perrin study. The study also confirms that overall pay levels for executives continued to rise last year due to better company performance -- but at a slower pace than during the boom years of the 1990s." (Towers Perrin)

The Rumble Over Executive Pay: How Much Is a CEO Worth?
Excerpt: "In a sense, Spitzer is taking on the whole clubby system that keeps driving CEO pay higher. Boards stacked with cronies too often still rubber-stamp excessively rich packages." (Time Magazine)

Newly Posted Events

Understanding Qualified Plans and 401(k) Plan Update
in Wisconsin on August 18, 2004
presented by Technical Answer Group, Inc. and Global Benefit Advisors

Understanding Qualified Plans and 401(k) Plan Update
in Georgia on November 30, 2004
presented by Technical Answer Group, Inc. and Global Benefit Advisors
Newly Posted Press Releases

American Express Financial Education and Planning Services Publishes Guidebook on Workplace Financial Education and Advice
(American Express Retirement Services)
Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Benefits Manager
for VPC Group
in CA, DC, VA

Defined Contributions Operations Manager
for New York Life Investment Management NYLIM Retirement Plan Services
in MA

Qualified Retirement Plan Administrator
for BKD,LLP
in CO

Account/Client Services Manager
for Zenith Administrators
in CA, WA

Account Coordinator
for The Precept Group
in CA

Individual Consultant
for TIAA-CREF
in MA

Assistant Manager
for HEREIU Welfare-Pension Funds
in IL

Regional Benefits Services Manager
for HEREIU Welfare-Pension Funds
in IL

Clinical Specialist
for HEREIU Welfare-Pension Funds
in IL

NBI Lead Project Manager
for Transamerica
in CA

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