| The BenefitsLink Newsletter - Retirement Plans Edition |  |
March 26, 2001
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First Union Says Settlement Being Paid by Insurance Company
Excerpt: "Ginny Mackin, a First Union spokeswoman, said the settlement would be paid entirely by insurance and would have no impact on the company's earnings. She said the company admitted no guilt in the settlement." (American Banker)
First Union Agrees to Settle 401(k) Lawsuits
Excerpt: "First Union Corp. agreed yesterday to pay $26 million to settle two class-action lawsuits alleging that it acted in its own interest, rather than for the benefit of its employees, in managing its 401(k) plans.... In the settlement, $10 million is designated for about 4,000 former employees of Signet Banking Corp.... The balance would go to resolve the claims of current and former First Union employees ... More than $8 million of the settlement would go to the lawyers." (Knight Ridder/Tribune)
Legislation Would Address Snags In Public Employee Pension Plans
Excerpt: "Known as the Portman-Cardin bill ... the measure would mean big changes for Americans who save for retirement using 401(k) plans, individual retirement accounts and other vehicles.... [T]he bill would fix what many say are problems with the specialized 403(b) and 457 retirement plans available to about 19 million public employees such as school teachers, firefighters, police officers and bureaucrats." (Los Angeles Times)
More Comments Sought on Proposed Pension Standard
Excerpt: "Last June, the Actuarial Standards Board (ASB) proposed an innovative new actuarial standard of practice, Projected Benefit Illustrations in Connection with Retirement Plan Amendments.... [including an] 'actuarial opinion of compliance' [which would] be a certification from an actuary indicating that a benefit illustration had been prepared based on generally accepted actuarial principles and that the illustration contained information that was comprehensive and fair." (Bruce Gaffney, published by American Academy of Actuaries)
Another Question is Answered in the Who's the Employer Q&A Column
I run a company, and I've had all the workers sign independent contractor agreements in which we agree (i) they're not my employees, (ii) I won't do withholding, and (iii) I won't provide them with any benefits. Now I want to set up a retirement plan for me, and my administrator says I may have to include them anyway. Why should I? Isn't that the whole purpose of having an independent contractor agreement? (BenefitsLink.com)
GAO to Harkin: IRS Overstepped in Preamble to Cash Balance Plan Regulations (PDF)
Excerpt: "The preamble to final regulations on pension plans issued by the Internal Revenue Service (IRS), Department of the Treasury, in 1991, included a last-minute addition. A sentence was inserted indicating that IRS would not regard cash balance plans, a type of pension plan, as age discriminatory. Some believe that the sentence may have contributed to an increase in the number of cash balance plans adopted by employers." (General Accounting Office)
Proposed Minimum Distribution Rules
Excerpt: "The IRS recently proposed changes to the 1987 proposed regulations under Section 401(a)(9). The 2001 proposed rules provide a uniform table for calculating annual minimum distribution amounts from individual account plans, allow more time to identify beneficiaries after an employee's death, extend the deadline for providing documentation to plan administrators on trust beneficiary designations, and propose other changes to the minimum distribution rules." (Watson Wyatt)
Working As If They Own the Place: Turning Employees Into Owners
Excerpt: "BCI Group is one of the nation's top technical consultants for employee stock ownership plans (ESOPs). Since Long started the business as an employee benefits adviser 23 years ago, the company has been responsible for the creation of about 1,000 ESOPs across the country. It maintains about 550 ESOPs as clients, including 40 of the 100 largest nationwide." (Milwaukee Journal Sentinel)
Winter 2001 Issue of TEXPERS Pension Observer
Winter 2001 issue. Includes articles on Enhanced Equity Indexing: Finding Incremental Returns in Market Anomalies; Small Cap to the Rescue!; Washington Outlook; A New Approach to Styling Equity Portfolios; Private Equity: Too Much Money Chasing Too Few Deals? (Texas Association of Public Employee Retirement Systems)
Support Seems to Be Growing for Amending Pension Offset, Windfall Elimination Laws
Excerpt: "Lois Grealis had never heard of the government pension offset law until she filed her retirement papers with the Ohio school system. The offset reduces her retirement income by about $580 a month, and Grealis thinks it's unfair.... Numerous retirees, like Grealis, argue that the government pension offset and another part of Social Security law, known as the windfall elimination provision, unfairly single out workers with local, state or federal government pensions." (Washington Post)
Financial Engines: a Wizard of Odds
Excerpt: "In a big step forward for personal finance, the $560 billion Vanguard fund group will soon be teaching its investors more about risk. In the process, it will bring a cutting-edge planning technique to general public attention. Maybe you think you just took a graduate course in risk because you bought dot-coms just before they crashed." (Jane Bryant Quinn, in The Washington Post)
Important Pension Policy Book on Clearance for $1
PENSIONS IN CRISIS: How the System Is Failing America and How You Can Protect America, by Karen Ferguson and Kate Blackwell. (The book on clearance is no longer in print because it has been revised and retitled by the same authors as a book entitled 'The Pension Book.') (Edward R. Hamilton, Bookseller)
401(k) Plans Causing People to Work Longer (PDF)
Working paper. Excerpt: "The rapid growth of 401(k) and other defined contribution pension plans may alter retirement patterns of older workers.... Our estimates indicate that the financial incentives in defined benefit pensions lead people to retire almost two years earlier on average, compared to people with defined contribution plans." (Leora Friedberg and Anthony Webb, published by University of California, San Diego)
KMart Offers Early Retirements to Several Hundred Headquarters Workers
Excerpt: "The voluntary buyout program is available to about 500 employees who are 50 years or older and have been with Kmart for at least 10 years." (Associated Press)
2000 Form 5500 Changes
Excerpt: "The 2000 Form 5500 has some new features, including changes in ERISA Filing Acceptance System (EFAST) processing, a new EFAST help line and financial reporting requirements for certain plan investments." (Watson Wyatt)
Executive Pay in the Land of Opportunity
Excerpt: "Executive pay in the United States reflects one of the founding values of our country: It is the land of opportunity. This year's report on executive pay reinforces this belief and confirms findings from previous years; namely, that there is a correlation between executive pay programs and company performance." (Watson Wyatt)
Treasury Secretary To Sell Alcoa Stock
Excerpt: "Bowing to critics, Treasury Secretary Paul O'Neill said Sunday he will sell his extensive aluminum company stock to avoid possible conflicts. O'Neill, hammered for two months for keeping about $100 million in stock and stock options from Alcoa Inc., said the decision frees him to focus on all economic issues." (Associated Press, via Yahoo! News)
Recent Equity Compensation and Qualified Retirement Plan Developments
March 1, 2001. Excerpt: "... recent developments in the application of employment taxes to ESPPs and ISOs and Cooley's response to Nasdaq's proposal to require stockholder approval of officer and director stock option plans. In addition: ... upcoming deadlines for GUST amendments, new regulations on summary plan descriptions, a revised IRS compliance program available for correcting [qualified plan] defects ... and recent DOL guidance on payment of retirement plan expenses." (Cooley Godward LLP)
Newly Posted or Renewed Job Openings (Post Yours!)
| Senior Benefit Communication & Project Specialist | for The TJX Companies, Inc. in MA |
| Pension Plan Administrator | for Ralcorp Holdings, Inc., a leader in the store brands food industry in MO |
| VP of Benefits | for Leading Financial Services Company in NY |
| Health and Welfare Associate Consultant | for Arlen Group in CA |
| IRA Product Manager | for Fidelity Investments in MA |
| Senior Administrative Analyst | for University of California, Office of the President, Human Resources and Benefits in CA |
| ERISA or Association Benefit Consultant | for Fidelity Benefit Administrators, Inc., Bradenton in FL |
| Senior Marketing Coordinator - Pension Direct | for Invesmart in OH |
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