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Retirement Plans Edition


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July 1 - 5, 2000

ERISA Provisions on Liability of Investment Advisers Should Be Relaxed, Insurers Say
Excerpt: "Life insurers are strongly supporting legislation that would ease some of the restrictions in the Employee Retirement Income Security Act that limit the kinds of investment advice insurers can provided to workers with defined contribution pension plans." (National Underwriter Company)

New Bill Would Encourage Investment Advice By 'Fiduciary Advisors' To Retirement Plan Participants
Excerpt: "House Education and Workforce Subcommittee Chairman John A. Boehner (R-OH) introduced legislation to allow financial service providers, including mutual funds, to provide personal investment advice to employer-sponsored retirement plans and their participants." (Investment Company Institute)

More Companies Making Brokerage Accounts Available As 401(k) Plan Option
Excerpt: "In the latest trend in 401(k)s, a small but growing percentage of plans are giving participants the chance to invest their retirement money in almost anything, through their own brokerage accounts." (Akron Beacon Journal)

Retirement Plans Come In Various Flavors--403(b)'S Can Leave A Bad Taste
Excerpt: "While more than 30 million Americans are enjoying the bull market's bounty through their 401(k) accounts, millions more--chief among them teachers and many nonprofit workers--are making do with a retirement system that's not only separate but decidedly unequal." (Thanks to Tim Younkin for recommending the link!) (U.S. News)

Pensions and Contemporary Socioeconomic Change
Link to a Working Paper available for downloading from the National Bureau of Economic Research: "The paper discusses the consequences for the functioning of different pension systems of various types of socioeconomic changes, mainly demographic developments, variations in productivity growth and changes in real interest rates." (National Bureau of Economic Research Working Paper)

Questions & Answers About Social Security's Financial Condition
Excerpt: "The debate over Social Security's financial condition has raised many important questions. The American Academy of Actuaries, the nonpartisan professional association for all actuaries in the United States, offers this brief question-and-answer piece to address and try to clarify some issues that have been raised." (American Academy of Actuaries)

Protecting Retirement Benefits From Creditors
Nice overview of applicable statutes. (RIA Pension & Benefits Week)

BenefitsLink Now Running on New, Faster Server
We're happy to report that our weekend upgrade to a new, faster server is complete. The old server got bogged down a couple of times each day. The upgrade should be transparent to you. If you encounter any trouble connecting, please contact davebaker@benefitslink.com (BenefitsLink)

Opinion: Vanishing Pensions -- the Cruelest Betrayal
Excerpt: "Conversions of traditional pension benefit plans to cash balance pensions (CBP) in the recent past have resulted in the slashing of expected pension benefits for many tens of thousands of mid-career and late career employees, as well as recent retirees, by 20-66%." (Stephen Langlie in MetroLutheran.com)

Insurers Disappointed in Nonfiduciary Liability Ruling by Supreme Court
Excerpt: "Insurers are expressing disappointment with a decision by the U.S. Supreme Court ruling that nonfiduciary parties-in-interest can be sued for violations of the prohibited transactions clause of the Employee Retirement Income Security Act." (National Underwriter Company)

South Carolina Bank, Executive To Restore $42 Million To ESOP In Settlement Of DOL Suit
Excerpt: "The Department of Labor has announced that it has reached a settlement agreement pursuant to which Wachovia National Bank, the successor to South Carolina National Bank (SCNB), and the former president and chief executive officer of Charter Medical Corporation will restore $42 million to the corporation's employee stock ownership plan." (Spencernet)

Tax Court: IRS Properly Disqualified ESOP For Failure To Satisfy Sec. 415 Limitations
Excerpt: "The Internal Revenue Service properly disqualified a corporation's employee stock ownership plan because the contributions to the plan for the tax years at issue exceeded the limitations of IRC Sec. 415(c). This was the decision of the U.S. Tax Court in Van Roekel Farms, Inc. v. Commissioner." (Spencernet)

Honeywell Pays Bonsignore Like a Prize Catch
Excerpt: "If a company decides to look outside for a new chief executive, it probably will have to pay through the nose, but for all that extra money it can be selective and demand the best. How about if it picks a candidate from inside but pays the guy like a prize lured from outside?" (Graef Crystal, on Bloomberg.com)

The Benefit of 'Boomeranging' Lies in the Padding of the Pension
Excerpt: "Many people who leave 'dot-coms' find a bonus in returning to their former employer--a bridge over their service gap that means more money at retirement." (Los Angeles Times)

Employ Caution With Company Stock
Excerpt: "Are you in a 401(k) plan that invests heavily in your own company's stock? You and your company ought to take another look. You're gambling with your future, at doubtful odds." (Jane Bryant Quinn, in the Washington Post)

New Auditor Rules Spark Debates
Excerpt: "Proposed new rules designed to keep accountants independent from companies they audit are sparking a debate touching on family values and working women." (Associated Press, via news.excite.com)

For Canadian Pension Fund Trustees, Maximizing Return for Beneficiaries Is Job One, Not Correctness
Excerpt: "Provincial and federal pension legislation decrees first and foremost that fund managers must be prudent investors working in the best financial interest of all beneficiaries." (Canadian Presse)

Approach Variable Annuity Bonuses With Caution
Excerpt: "... these bonus annuities often have serious trade-offs, including higher fees and longer surrender periods. Securities regulators, who are concerned that agents and brokers are not disclosing the downside of these bonuses to consumers, are now investigating the sales of annuities with bonus credits." (insure.com)


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