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The BenefitsLink Newsletter -
Retirement Plans Edition

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September 26, 2000

Retirement Assets' Fate Worries 20,000 Union Members; Fund Manager Accused of Massive Fraud
Excerpt: "With $1 billion under management and union clients stretching from California to Colorado to Kentucky, Capital Consultants was a major player in the union pension world. At least 20,000 union workers ... entrusted hundreds of millions of dollars to the firm. In all, retirement funds provided more than half of Capital Consultants' $1 billion under management." (The Oregonian)

Public Supports Increasing 401(k) Contribution Limits, Survey Finds
Excerpt: "A planned increase in the contribution limits to 401(k) retirement plans is broadly popular with the public and the mutual fund business, industry experts said Monday." (Reuters via Excite! News)

Pension Protection Astray?
Excerpt: "Pension legislation approved by the House and anticipated on the Senate floor in coming weeks, although characterized as liberalization by its sponsors, could have serious, perhaps unintended, adverse consequences that would reduce pension security for millions of working Americans." (Attorney Dianne Bennett, in the Washington Times)

Congress is Back and Charging Ahead on Pension Bill
Excerpt: "On September 19th ... the House passed H.R. 5203, a $42 billion debt reduction and reconciliation package. The Debt Relief and Retirement Security Reconciliation Act of 2000 combines the provisions of H.R. 1102, with allocating 90% of the 2001 surplus ($240 billion) for debt reduction, while the other 10% ($28 billion) will go towards tax relief and spending." (National Conference on Public Employee Retirement Systems)

Is Day Trading Your 401(k) A Good Idea?
Excerpt: "From all of the hoopla surrounding it, day trading seems to be a way to make a quick buck. What better way to quickly build your retirement portfolio? That's the wrong attitude to take, financial planners say." (401Kafe.com)

Most 401(K) Investors Woefully Uninformed About Investment Options
(Wiese Research Associates)

Pension Benefit Guaranty Corporation: Contract Management Needs Improvement (PDF)
Excerpt: "Due to the number of contractors involved in supporting PBGC's mission, you asked us to (1) determine the basis for PBGC's decisions regarding the use of contractors versus government personnel to address its workloads, (2) assess PBGC's processes and procedures for selecting contractors, and (3) determine how effective PBGC has been in monitoring the performance of its contractors." (General Accounting Office)

Another Question is Answered in the Plan Qualification: Nondiscrimination Q&A Column
We used Qualified Separate Lines of Business for nondiscrimination testing in 1998 and we would like to discontinue in 1999. What can we do? (BenefitsLink.com)

Alternate Payee Gets Second Bite at QDRO Apple, Asserting Earlier Order in Her Favor Was Invalid
Excerpt: "Between the time of the divorce and the time of distribution, the value of the alternate payee's interest in the participant's 401(k) plan account had dropped approximately $85,000. In 1995, the alternate payee notified the plan that the court order had never been approved, so it could therefore not have constituted a QDRO." (EBIA Weekly)

7th Cir.: Multiple Plan Years and Fully Vested Participants Count in Partial Term. Determination
Matz v. Household International Tax Reduction Investment Plan. Excerpt: "Now before us are the questions: (1) whether, for purposes of determining if the Plan was 'partially terminated,' the court's analysis should include fully-vested employees terminated after the 1995 Plan amendment; and (2) whether the plaintiff's partial termination analysis may include terminations that take place over multiple (here, three) plan years." (United States Court of Appeals for the Seventh Circuit)

Description of Chairman's Mark: Railroad Retirement And Survivors' Improvement Act of 2000 (PDF)
(Joint Committee on Taxation)

Pension Benefit Guaranty Corporation: Appearance of Improper Influence in Certain Contract Awards
Excerpt: "In brief, Mr. Hagans' actions, as summarized in the balance of my testimony, demonstrated a lack of impartiality with respect to IMRG and created the appearance of improperly influencing the award of the two contracts we investigated. As a result, we plan on referring this matter to PBGC and the Department of Justice for them to determine what, if any, additional action may be appropriate." (General Accounting Office)

The Top Three Reasons That TPAs Get Sued
An article reprinted online by Professional Practice Insurance Brokers.

401(k)-Type Pensions At Top of British Workers' Wish Lists

New York City and State Pension Funds Question AT&T on Restructuring
Excerpt: "New York city and state pension funds holding stakes valued at $725 million in AT&T Corp. have sent the telephone company a letter seeking assurance that any restructuring done to boost the short-term stock price will not hurt long-term shareholder value." (Reuters via Excite! News)

Bring Me the Head of Your Board Chairman!
Excerpt: "Investor activists are gearing up for their regular round of shareholder meetings, and they will not be denied." (Fortune)

Inflation-Indexed Securities: Description and Market
Excerpt: "This Issue Paper aims to show why the market for inflation-indexed securities has been slow to develop since the securities were introduced in 1997.... In theory, however, inflation-indexed securities should appeal to small and large investors alike, because they offer protection against inflation, and also because they add diversity to an investment portfolio." (American Association of Retired Persons)

Germany Set To Overhaul Its Pension Program
Excerpt: "The German government will unveil a long-awaited overhaul of the state-run retirement system Tuesday in the latest reform of its once-sacrosanct welfare state. 'It is radical that they even took up the issue,' said Michael Wolgast, senior economist in Frankfurt at Deutsche Bank AG. 'This is the first time that the federal government openly admits that the state system will not provide sufficient benefits in the medium term.'" (International Herald Tribune)

Employee Stock Options: Their Use and Policy Implications (PDF)
15 pages, published online by OptionWealth.com. Excerpt: "This NCOE policy advisory ... provides a basic policy primer on how stock options work and their role in the recruiting and retention of key personnel. We also summarize the various public policies that affect stock options and offer suggestions for policies that may make the use of options more effective and equitable." (National Commission on Entrepreneurship)

(Following also appears in Welfare Plans Edition)

New issue online of the Pension & Benefits Update email newsletter by Tax Analysts: 9/25/2000
(Tax Analysts, Inc.--see www.taxbase.org)

Advocacy Organization Reports Number of Companies Offering Domestic Partner Benefits Is Up 25%
Excerpt: "The firms that offer these benefits include more than 100 companies on the Fortune 500 list, a 46 percent increase over the previous 12-month period for that group, according to the HRC, the largest homosexual political organization in the United States." (Boston Globe)

FASB Emerging Issues Task Force September Agenda Appears Clear of Nonqualified Plan Items
Excerpt: "... the September (fall) agenda of the Emerging Issues Task Force (EITF) appears clear of any items that would directly impact on nonqualified deferred compensation plans." (Magner Financial Network)

Graef Crystal: Executive Pay Hall of Shame & Fame Class of 2000
(Graef Crystal, on Bloomberg.com)

Job Openings Newly Posted or Reposted on EmployeeBenefitsJobs.com

Balance Forward Allocation Specialistfor The Nyhart Company, Inc.
in IN
Manager of Marketing Intelligence and Researchfor INVESCO Retirement and Benefit Services
in GA
Defined Benefit Plan Administratorfor The Nyhart Company, Inc.
in IN
Defined Benefit Best Practices Leaderfor Hewitt Associates
in IL
Plan Consultantfor Transamerica Insurance and Investments - The Winning Organization
in CA
401(K) Employee Benefits Consultantfor Fidelity Investments
401(k) Plan Administratorfor Polycomp Administrative Services, Inc.
in CA
Benefits Auditorfor Boston Scientific Corporation
in MA
Pension Plan Services Consultantfor American United Life Insurance Company
in IN
Compensation and Benefits Managerfor KPMG
in CO, TX
Client Service Consultantfor Diversified Investment Advisors
in NY
Retirement Consultantfor Invesmart - Cleveland Office
in OH

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