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The BenefitsLink Newsletter -
Retirement Plans Edition

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June 23 - 26, 2000

Americans' Expectations of Investment Returns Hit Stellar Levels
Excerpt: "21.7% is Said to be Reasonable Return to Expect, and People Think All is Well as Long as Greenspan's There." (PR Newswire, via news.excite.com)

New York Life Fights Pension Assets Suit
Excerpt: "But New York Life says Prohibited Transaction Exemption 77-3, a 1977 letter ruling, gives it and other mutual fund companies a clear-cut legal right to manage their own employees' pension plan assets." (National Underwriter Company)

Massachusetts Senate Votes to Override Governor's Veto of Teachers' Early Retirement Pension Plan
Excerpt: "A controversial early retirement plan for public school teachers cleared its final hurdle yesterday, as the state Senate voted overwhelmingly to override Governor Paul Cellucci's veto and pass the measure into law." (Knight-Ridder / Tribune Business News)

Survey: 401(k) Participants Who Switch Jobs Shun Rollovers
Excerpt: "But a recent study shows the majority of 401(k) plan participants who changed jobs last year, regardless of age, chose to take lump-sum cash payments, rather than rolling over the money into other tax-deferred savings programs, such as new employers' 401(k) plans or individual retirement accounts." (Knight-Ridder / Tribune Business News)

Employee-Retirement Systems of State and Local Governments (PDF)
Excerpt: "[This report] provides statistics on the financial transactions and characteristics of state and local government retirement systems. Data are presented on the revenues, benefit payments, cash and security holdings, and membership of these employee retirement systems. Data are aggregated by state and level of government." (U.S. Census Bureau)

Managing Employee Benefit Risks in M&A Deals
Excerpt: "Employee benefits issues arise at every stage of an M&A deal. As buyers do due diligence on a target company and negotiate the terms of the purchase agreement, they should be mindful of a wide variety of 'big ticket' liability exposures that may accompany benefits issues." (Faegre & Benson, LLP)

Excluding Participants by Name from a Cross-tested Plan
Excerpt: "In the L.A. Benefits Conference, an IRS official initially said that a cross-tested plan that names each group as consisting of a single participant would still work. Then, he hedged a little by saying that maybe that plan wouldn’t be able to use the Average Benefits Test (ABT) because: 'individual names are bad.'" (Reish & Luftman)

Making Retirement Savings Work Smarter
Excerpt: "With lengthening life expectancies, many retirees face the prospect of outliving their savings. Moreover, most people are unaware of the need to provide for long-term care in their old age, even though one-fourth of the elderly will ultimately require such care." (CNET.com)

Building the Perfect Plan: Combining Defined Contribution and Defined Benefit Plan Designs
Excerpt: "DB plans are still dominant in Canada. But there has been extraordinary growth in hybrid plans since 1995." (Benefits Canada)

SEC Weighs Rule Requiring Mutual Funds to Make Disclosures on After-Tax Basis
Excerpt: "The concept of the proposed regulation is supported by the mutual fund industry. But the industry is raising many concerns over the details of the SEC's proposal." (National Underwriter Company)

Peril in Putting Too Much Money in Your Company Stock
Excerpt: "Thousands of employees across the country have discovered too much employer stock can give their 401(k) retirement plan a case of indigestion. A recent survey confirms what I have seen with several local companies." (Scripps Howard News Service)

The Arrival of Tactical Asset Allocation Overlay
Excerpt: "Tactical asset allocation overlay consistently adds value to pension investments while minimizing risk. With more than $4 billion of TAA overlay mandates assigned in Canada over the past three years, it's not surprising this strategy is gaining ground." (Benefits Canada)

Advisor Says Real Estate Should Be Part of a Pension Plan's Portfolio
Excerpt: "Some of Canada's largest pension funds are now allocating 10% or more to real estate investments. There's good reason for smaller funds to follow suit." (Benefits Canada)

Safe Harbor 401(k) Plans--Beyond SIMPLE
Excerpt: "Safe harbor 401(k) plans are now a valid consideration for employers who want to eliminate the need for ADP testing. Once the ADP safe harbor is satisfied, the employer may also conform to the ACP safe harbor requirements to avoid ACP testing. This article will review some of the lessons learned in discussing these new plan design options with employers." (Pension Edunet)

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