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The BenefitsLink Newsletter -
Retirement Plans Edition
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August 23, 2001 - 12,875 subscribers
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(Please help us continue to provide this valuable newsletter at no charge to you -- our sponsors pay our way. Remember to visit them periodically; we try to make sure their products and services will be of interest to you. Thanks! --Editor)
PBGC Publishes Updated Data Book
Excerpt: "The book, Pension Insurance Data Book 2000, tracks the experience of PBGC's two insurance programs and the defined benefit pension plans they protect. Defined benefit plans are the traditional pension plans that promise workers a specific monthly benefit at retirement. The new edition also features graphs that illustrate current data, and trends, both in PBGC operations and in the universe of private pension plans insured by PBGC." (Pension Benefit Guaranty Corporation)

Class Action Status Granted in Deferred Compensation Forfeiture Case
Excerpt: "A state judge in California has granted class-action status to a suit brought against Salomon Smith Barney (SSB), a unit of Citigroup by a group of former employees. The group of 500 former employees alleges that the company forced them to illegally forfeit some $35 million paid into Citigroup's deferred compensation plan, when they left the firm." (PLANSPONSOR.com; free registration required)

Report: Firefighter Retirement Age Rises to 57
Excerpt: "Under the new law, agencies could fill some vacant, permanent positions with experienced firefighters who missed the age cut-off earlier this year." (GovExec.com)

Bush Signs Bill Increasing Mandatory Retirement Age for Federal Firefighters to 57, Up from 55
Excerpt: "The move allows more firefighters to work the 20 years necessary to collect a pension - a hurdle that has kept some older firefighters from receiving permanent posts. The Forest Service had refused to hire people over the age of 35 for new permanent jobs because officials said it was unfair to use workers for years and not allow them a pension." (Associated Press via Excite News)

Nevada Faces More Requests for Pension Payments While Still Working
Excerpt: "The 2001 Legislature enacted a law allowing governments to designate a position as a 'critical labor shortage' post because of high turnover, recruitment difficulties or the length the job has been vacant. The individual selected would then be able to draw both a pension and government pay. The first group of employees approved by the examiners board drew sharp criticism." (Las Vegas Sun)

Private Social Security Logistics Eyed
Excerpt: "The biggest challenge to creating private Social Security savings accounts will be managing the information, the director of the government's investment retirement program for federal employees told President Bush's Social Security commission yesterday [August 22, 2001].... Mr. Wolf's program receives an average three calls per participant per year -- two of every three calls can be handled by automated systems, but the third requires a person to answer questions." (Washington Times)

Opinion: Financing Private Accounts in the Aftermath of the Tax Bill
Excerpt: "This analysis explores the dilemma in which policymakers find themselves following the tax cut and includes an examination of three types of accounting gimmicks that policymakers could be tempted to consider to finance private accounts [that are funded by a portion of an individual's Social Security payroll taxes] ..." (Center on Budget and Policy Priorities)

Opinion: Voluntary Individual Accounts For Social Security-- What Are the Costs?
Excerpt: "Voluntary individual accounts would undermine progressivity and the social compact behind Social Security.... [They] involve a number of difficult and complicated administrative issues.... Experience from other countries ... especially the United Kingdom, is far from encouraging.... [They] worsen Social Security's financing problems and require larger benefit cuts within the traditional program ... Individual accounts do not produce higher rates of return when properly measured." (Center on Budget and Policy Priorities)

Opinion: Ten Deceptive Myths About Social Security, the Budget and the Economy
Excerpt: "The disposition of the current Social Security surplus has no direct impact on either Social Security's long-term fiscal health or on its ability, or inability, to pay promised benefits.... There is no evidence that budget surpluses and debt reduction are economic elixirs. Indeed, proponents of this view are confusing cause and effect." (Daniel J. Mitchell, Ph.D., published by the Heritage Foundation)

New Social Security Indexing Mulled
Excerpt: "Members of President Bush's Social Security commission worked yesterday [August 22, 2001] on a plan to peg future retirement benefits to inflation rather than wage growth, a proposal that would cure Social Security's solvency woes but would be condemned by Democrats as a massive cut in benefits." (Washington Post)

Social Security Panel Says Cuts in Benefits Are an Option
Excerpt: "Richard D. Parsons, co-chairman of President Bush's commission on Social Security, said [on Wednesday August 22, 2001] that the panel had looked at benefit cuts as one means to ensure the program's long- range stability. But he insisted that no conclusions had been reached on that or anything else." (New York Times; free registration required)

Understanding Investment Reporting and Measuring Performance
Excerpt: "If the plan is moving toward the intended objective, little action need be taken, other than occasional rebalancing to keep the asset allocation within the range specified in the investment policy statement (IPS). If the plan is not yielding desirable results, regular reporting provides notice to the client (and the adviser) that the investment objectives are not being achieved, and perhaps changes need to be made." (Practitioners Publishing Company)

Fund of Funds Is Two-edged Sword In Hedge Fund World
Excerpt: "Conservative investors such as pension funds and endowments are dipping into the exclusive world of hedge funds by hiring middlemen to pick the savviest investment pros -- but these go-betweens come at a cost." (Reuters via Excite News)

Japan Implementing First Rules Under New 401(k)-Type Programs
Excerpt: "Japan's Labour Ministry has drawn up rules on 401(K)-type pension funds that will ban companies from promoting their own shares and bonds to employees as a means to push up their prices, a business daily said on Thursday." (Reuters via Yahoo! Finance)

Federal-Mogul Restricts Its Own Shares In Its 401(k) Plans
Federal-Mogul Corporation has stopped contributing its Sec. 401(k) plan matching contributions to its company stock fund under its salaried, nonunion, and union Sec. 401(k) plans. With its stock price plummeting from a high of nearly $70 per share in July 1998 to slightly more than $1 per share at the end of July 2001, the company exercised its fiduciary responsibility and stopped offering company stock as an investment option to plan participants. (Spencernet)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
My husband retired at 62 with 39 years of rail credits. He is receiving an unreduced benefit. I will be 60 in 2003 and I believe I can receive a spouse's benefit without any reduction for my Federal Employee Retirement System (FERS) benefit. I switched from the old Civil Service Retirement System to FERS in 1987. Am I correct? (BenefitsLink.com)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I'm retired and I receive Railroad Retirement. My former wife receives a portion of my Tier 2 benefit, under the terms of the property settlement at the time of our divorce. She's planning to remarry. Will she still get part of my Tier 2 benefit after her remarriage? (BenefitsLink.com)

Company Officials To Repay Pension Plans In Settlement of Three Separate DOL Suits
The Department of Labor has announced that Franz C. Stangl III has repaid $100,000 to the Salt Lake City-based Davidson Lumber Employee Retirement Plan to resolve a complaint by the DOL that Mr. Stangl took part in a prohibited transaction with plan assets. Mr. Stangl made the payment under terms of a consent judgment entered by the U.S. District Court for the District of Utah, in Chao v. Davidson Lumber Sales, Inc., et al. (Civil Action No. 2:90-CV-00716). (Spencernet)

Railroad's Buyout Program Did Not Violate the ADEA, According To Eighth Circuit
A group of plaintiffs failed to prove that a railroad's employee buyout program implemented following a merger violated the Age Discrimination in Employment Act (ADEA). This was the ruling of the Eighth Circuit U.S. Court of Appeals in Cooney, et al. v. Union Pacific Railroad Company (No. 00-3425). (Spencernet)

ASPA Submits Comments To PWBA Regarding Electronic Benefit Plan Administration
The American Society of Pension Actuaries (ASPA) has submitted a letter to the Department of Labor's Pension and Welfare Benefits Administration (PWBA) in which it expresses its support for the Electronic Signatures in Global and National Commerce Act and offers its recommendations regarding electronic benefit plan administration. ASPA submitted the letter to Anne Combs, assistant secretary of the PWBA. (Spencernet)

(Following items are in both editions of the BenefitsLink Newsletter)


Andersen's Executive Compensation Newsletter for 2nd Quarter 2001 (PDF)
8 pages; well-written. Excerpt: "As is sometimes our wont, this issue of the Newsletter covers a potpourri of stock option items, including reverse vesting, rescission, option award practices and even a little something about the legendary Robert Noyce." (Andersen)




Newly Posted or Renewed Job Openings (Post Yours!)
Senior Benefits Consultant for CB Richard Ellis
in CA
Benefits Administration Technology Leader for Andersen Human Capital Consulting Group
in CA
Director of Participant Services Center for Northern Trust Retirement Consulting, L.L.C.
in GA
Relationship Manager for Ceridian
in FL
Pension Administrator for Pension Administration & Consulting Firm in Mystic, CT
in CT



Newly Posted Press Releases
Benefit Software Develops Cutting Edge Employee Benefits Website for Freddie Mac
Mortgage Giant's Employees Give "Rave" Reviews to New Site
(Benefit Software Inc.)

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Copyright 2001 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.