| The BenefitsLink Newsletter - Retirement Plans Edition |  |
May 21, 2001
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Changing Retirement Age: Ups and Downs
From the Monthly Labor Review for April 2001. Excerpt: "In recent years, legislative changes, new types of retirement plans, and increases in life expectancy have led to differences in retirement ages; workers now have many alternatives to traditional retirement at age 65." (U.S. Department of Labor, Bureau of Labor Statistics)
The "Whipsaw" Issue in Cash Balance Plans
Excerpt: "Legislative and legal developments have created an uncertain climate for employers sponsoring hybrid pension plans. Much of this uncertainty involves 'whipsaw' -- the way lump sum distributions are calculated in cash balance plans. Eric Lofgren, Watson Wyatt's Global Director of Benefits Consulting, took this opportunity to write to key lawmakers to discuss the problem and suggest simple solutions." (Watson Wyatt)
Choice Between DB, Cash Balance Plans on Agenda of AT&T Shareholders' Meeting This Week
Excerpt: "Various shareholder proposals also will be considered at the meeting, including a recommendation that two directors be nominated for each available board seat, and a call for AT&T employees to have a choice of either a traditional defined benefit pension plan or a cash-balance plan. AT&T switched to a cash-balance plan in 1997." (Reuters via Excite News)
California Taxes Portion of Excess Assets on Pension Plan Reversion
Hoechst Celanese Corporation, v. Franchise Tax Board (Cal. Ct. App. 2001). Excerpt: "In this case, we consider whether a reversion of surplus pension plan assets is taxable by California as apportionable business income. We conclude that it is." (FindLaw.com)
Pension Lawsuit Against PBGC Has Wide Implications
Excerpt: "It's been 10 years since the failure of Pan American World Airways, and former Pan Am mechanic Richard Brooks still is in court, fighting the government to get all of the retirement pay he believes he's owed. The sum isn't inconsiderable--his monthly $231 pension check is less than half what Brooks thinks it should be--and neither are the implications of his lawsuit, which could affect the fortunes of 40,000 former Pan Am workers." (Los Angeles Times)
Xerox Pension Plan's SPD Violated ERISA, Court Rules
Excerpt: "The Xerox Corp. Retirement Income Guarantee Plan violated the Employee Retirement Income SecurityAct (ERISA) when its summary plan description (SPD) failed to clearly communicate the decrease in retirement benefits for employees who had previously received distributions from the plan, according to a ruling from the 2nd Circuit Court of Appeals. The case is Layaou v. Xerox Corp." (Thompson Publishing Group)
Opinion: National Football League Has Little Help for Battered Retirees
Excerpt: "Johnny Unitas can't pick up a fork and feed himself with his right hand. It's the same hand, powered by a buggy whip of an arm, that delivered touchdown passes in 47 straight games, an NFL record that no modern quarterback has come close to.... It was disturbing to find out in the May 7 edition of Sports Illustrated that the league turned him down when he applied for disability payments." (The [Philadelphia] Inquirer)
Wachovia CEO: "I Won't Reap Retirement Benefits from Proposed Merger with First Union"
Excerpt: "Wachovia Corp. Chairman and Chief Executive L.M. 'Bud' Baker Jr. said Friday he wouldn't boost his retirement compensation in the bank's pending merger plan with fellow North Carolina bank First Union Corp.... Wachovia said neither Baker nor First Union Chairman and Chief Executive G. Kennedy Thompson chose to receive stock options, restricted stock, other awards, or salary increases." (Reuters via Excite News)
Pension Provisions Still in Senate Bill
Excerpt: "The Senate recessed last evening without completing action on the bill, H.R. 1836. At that point, the pension package remained intact and will likely prevail as long as the four Democrats who supported the package in committee and all the Republicans vote against any changes. The body will reconvene Monday morning, May 21 and hope to complete the bill that day." (National Council on Teacher Retirement)
Washington Update: Comprehensive Pension Reform Legislation (PDF)
10 pages. Excerpt: "Both bills would modernize pension law and would allow American workers to increase retirement savings and security. CIGNA has always and will continue to actively advocate pension reform initiatives, including the Portman-Cardin and Grassley-Baucus bills, which enhance the retirement security of American workers and their families. In general, the proposed legislation focuses on the following key initiatives ..." (CIGNA)
Tax Cut Gets Test Today In Split Senate
Excerpt: "More than any other issue this year, the $1.35 trillion tax cut bill the Senate is expected to vote on today defines the differences between the two political parties -- and the difficulties of governing in a divided Congress." (Boston Globe)
In Senate, a 50-50 Split in Frustration
Excerpt: "As the evenly divided Senate nears showdown votes next week on President Bush's tax and education plans, the chamber's Republican and Democratic leaders are discovering an unintended consequence of their historic power-sharing agreement: What they share is an illusion of power and a lot of frustration." (Washington Post)
Panel Backs Railroad Pension Change
Excerpt: "The U.S. House Transportation Committee approved legislation last week that would allow railroad worker pension funds to invest as much as 39 percent of assets in stocks and other nongovernment securities. Rail workers pay into the Railroad Retirement System instead of Social Security. The committee approved a bill by voice vote to expand investments beyond Treasuries, the sole option now permitted." (The [Philadelphia] Inquirer)
Nondiscrimination Rules and Declining Pension Participation: Cause and Effect?
Excerpt: "Two central policy questions emerge concerning the nondiscrimination standards. First, are they effective in forcing firms to extend coverage to and provide higher benefits for low-wage workers? Second, do they substantially increase the administrative cost of retirement plans and if so, has that higher cost resulted in fewer employer pension plans?" (Watson Wyatt)
Long Forgotten, Professional Basketball Retirees Are Left in League of Their Own
Excerpt: "About 11 years ago, Bill Tosheff, a one-time NBA pioneer from Gary, Ind., who lives in San Diego, started his solitary campaign to include ... in the NBA's pension plan ... [the 54 living alums from the Basketball Assn. of America and the National Basketball League, the precursors to the NBA, and from the NBA itself in its early days]." (Los Angeles Times)
Guide to the Federal Thrift Savings Plan
A good overview of the kinds of investment funds being made available by the federal government to participants in its self-directed Thrift Savings Plan. The guide is prepared by GovExec.com (not the Federal Retirement Thrift Investment Board, which administers the TSP). (GovExec.com)
401(k) Participants Invest Little Time
Excerpt: ". The recent stock market boom masked a great deal of investor ignorance. You could put your money in the plan and forget it and it still went up. Then came last year, and the market went down, your investments fell and now you don't want to look at quarterly statements or your balances on the Web. But you have to still keep watch and sometimes rebalance your investments, beyond just changing where your new contributions go." (Washington Post)
People Less Confident of Retirement Security
Excerpt: "More American workers are worried they won't have enough money for their basic needs in retirement, in particular medical and long-term care expenses. And more than a third, compared to less than three in 10 last year, admit they are 'a lot behind schedule' in planning and saving for retirement." (The Salt Lake Tribune)
Andersen's Human Capital Alert for May 16, 2001 (PDF)
Contents include: IRS audits this summer will target 403(b) and 457 plans; IRS TE/GE Advisory Committee announced; IRS and Treasury announce 2001 Business Plan; IRS launches on-line Employee Plan News; DOL issues 2000 Form 5500; Troubleshooter's Guide; $26 million settlement in First Union 401(k) cases; COBRA gross misconduct; Retirees win ADEA case; Portman-Cardin pension reform bill passes House; HCFA addresses issues of conversion coverage. (Andersen)
Milliman & Robertson and 22 Partner Firms Launch Milliman Global; Milliman USA is New Name in U.S.
Press release. Excerpt: "Milliman & Robertson and an international group of 22 actuarial and consulting firms announced here today the formation of Milliman Global, a worldwide platform for serving the insurance, employee benefits and healthcare industries. At the same time, M&R announced that it is renaming itself Milliman USA ..." (Business Wire)
ERISA Preempts State Laws That Automatically Revoke Ex-Spouse Beneficiary Designations
Excerpt: "The Supreme Court has ruled that ERISA preempts state laws that automatically revoke spousal beneficiary designations after a divorce. The ruling applies to all ERISA-covered plans, such as life insurance, retirement and most types of executive deferred compensation plans." (Watson Wyatt)
Stock Options Provide An Extended Bull Run
Excerpt: "The stock market fell last year. But top executives at many local companies continued collecting stock-option profits as if the bullish 1990s had never paused." (The [Philadelphia] Inquirer)
Investors Fighting Stock Options War
Excerpt: "Shareholders who wanted to tie executive stock options more closely to company performance came away empty-handed from Office Depot's annual meeting in April. The State of Connecticut Retirement Plans & Trust Funds was unsuccessful in getting enough support for a proposal that would have required future stock options to be issued with an exercise price substantially above the current market price." (Sun-Sentinel.com)
Newly Posted or Renewed Job Openings (Post Yours!)
| Pension Consultant/Administrator | for Gorrelick, Tievy & Associates, Inc. in MD (DC Suburbs) in MD |
| Retirement Plan Administrator | for FM International Services (NY), Ltd. in NY |
| Retirement Plan Workflow Administrator | for FM International Services (NY), Ltd. in NY |
| Benefit Services Director | for Administaff in TX |
| Vice President, Relationship Manager | for Fidelity Investments in MA |
| Benefits Direct Cost Analyst | for Administaff in TX |
| Retirement Plan Specialist | for Administaff in TX |
| Pension Administrator...Great benefits package! | for RAE in NY |
| Employee Benefits Tax Manager | for Deloitte & Touche, a Professional Services Firm in PA |
Newly Posted Conferences (Post Yours!)
| 54th NATIONAL PROFIT SHARING/401(k) CONFERENCE AND EXHIBITION | in AZ on September 12, 2001 presented by Profit Sharing/401(k) Council of America (PSCA) |
Newly Posted Press Releases
| vSimplify, Inc. Releases New Version of Its Web-Based Benefits Administration Platform Featuring vEnroll Benefits Enrollment (vSimplify, Inc.) |
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