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The BenefitsLink Newsletter -
Retirement Plans Edition
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February 1, 2002 - 12,487 subscribers
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(Help BenefitsLink to provide this 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)

White House Proposes 401(k) Protections
Excerpt: "Bush would have company executives undertake responsibility for the employee's investments during such 'blackout periods' when workers are not permitted to sell, and require a 30-day notice before such a blackout period can begin.... The proposal also requires employers to issue quarterly benefit statements to their employees instead of the annual statements currently required by law." (CNN)

Bush Proposes New Pension Rules
Excerpt: "President Bush today proposed giving workers greater freedom to diversify their company retirement accounts ... He said he is proposing that workers be permitted to sell company stock after three years-- even those shares contributed by companies as matching grants ... He also proposed 'pension parity,' in which top executives would be forbidden from selling company stock during 'blackout' periods ..." (Washington Post)

Bush Readies Pension Overhaul Plan
Excerpt: "Bush's proposal would not limit the portion of workers' 401(k) plan that could be invested in their employer's stock, as many in Congress want." (AP via Guardian Unlimited)

Enron's Aftershocks: the New Focus on Retirement Plan Investments in Employer Stock
Excerpt: "Some 11,000 Enron workers participated in the company's 401(k) plan, which allowed employees to invest their individual accounts in Enron shares and matched a portion of employee contributions with company stock. When the company's stock price plummeted from around $85 a share to less than a dollar, about $1 billion in retirement savings was wiped out." (Faegre & Benson LLP)

Bush to Propose More Flexibility for 401(k) Plan Participants
Excerpt: "President Bush plans to propose giving workers more flexibility to sell their company's stock in their 401(k) retirement plans. The proposal is part of a package of legislative changes he will present on Friday ... Mr. Bush's proposal would allow workers to sell any company stock that their employers contribute to 401(k) plans after three years, ending the practice by some businesses of requiring employees to hold stock in their employer's company much longer." (New York Times; free registration required)

Polaroid Pension Threat Seen
Excerpt: "A lawyer for a group of Polaroid creditors issued a letter warning that a quick sale of the bankrupt Cambridge company 'will almost certainly result in the termination of the Polaroid pension plans.' That could hurt hundreds of Polaroid retirees whose pensions could be cut if the pension plan is taken over by a government agency." (Boston Globe)

How Important Are Private Pensions?
Excerpt: "Employer-provided pensions play an important role in assuring a comfortable retirement. In 1992, they accounted for about 20 percent of the total wealth of middle-income households aged 51-61, second only to Social Security. However, many workers still lack pension coverage.... The primary challenge for those interested in retirement security is to expand coverage so that more workers have enough income in retirement to avoid sharp drops in their living standards." (Center for Retirement Research at Boston College)

Opinion: Regaining Lost Trust
Excerpt: "Federal-Mogul and Chiquita were two-of-a-kind. Both let workers diversify out of their plans' company stock option when it became apparent to management that the companies situation had deteriorated to the point where bankruptcy was likely. This was despite plan rules that had until then restricted employees." (401kWire.com)

Opinion: Learning Our Lesson From Enron
Excerpt: "The implosion of Enron and the losses in Enron employee 401(k) plans revive memories of the crash of Studebaker's United Auto Workers' pension plan in the 1960s. Most of that plan was invested in Studebaker stock, which lost 85 percent of its value when the company went bankrupt." (Brooks Hamilton in the Washington Times)

Study Says 401(k)s Can Be a Tax Trap Instead of Tax Shelter
Excerpt: "[A]ccording to a new study by the National Center for Policy Analysis (NCPA), these retirement accounts might actually cause low- and middle-income families to pay more in taxes. 'For those at the upper end of the income scale, 401(k) plans offer a huge tax benefit,' said Laurence Kotlikoff, an economics professor at Boston University and coauthor of the study. 'But for most taxpayers, a 401(k) plan may actually be a tax trap.''" (National Center for Policy Analysis via International Foundation of Employee Benefit Plans)

American Benefits Council Provides Comments on Catch-Up Regulations (PDF)
7 pages. (American Benefits Council)

Is Your 401(k) Squeezed by Costs?
Excerpt: "Human resource professionals who manage their firms' retirement benefits need to get smarter about what their companies now pay-- and what they should be paying-- for their 401(k) plans. As plan vendors see their revenues shrink in the wake of a stumbling economy and a volatile stock market, they may try to restructure their arrangements with employer-sponsored plans. Forewarned is forearmed, benefits experts say." (HR Magazine)

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

What You Can Count On Now: Trends in Retirement and Health Benefits
Excerpt: "Personal retirement funds may be getting a heavy beating from the stock market and layoffs, but the value that employees place in their nest eggs hasn't diminished." (CNN Money)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Benefits Counselor for UCLA
East Coast Channel Manager for Transamerica - The Winning Organization
Director of Pension Plan Administration/Actuarial for SDG Consulting

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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.