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The BenefitsLink Newsletter -
Retirement Plans Edition
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February 5, 2002 - 12,556 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)

Pension Funds Seek Tougher Audit Rules
Excerpt: "Pension funds and other large nonprofit investors, which among them lost $1.5 billion in the collapse of Enron Corp., yesterday called on Congress and the Securities and Exchange Commission to impose tough new rules on corporations and their accountants to prevent similar catastrophes in the future." (Washington Post)

Cardin, Portman Weigh In With Their Version of Pension Reform Legislation
Excerpt: "As in the President's proposal, the Cardin/Portman version would allow workers to transfer matching employer contributions from company stock once they have attained three years of service with their employer. The Cardin/Portman goes further in specifically identifying non-elective contribution accounts ... and applying a slightly longer five-year service requirement to the ability of workers to diversify those contributions." (PLANSPONSOR.com; free registration required)

The President's Proposal: What It Could Mean For Plan Sponsors
Excerpt: "While the changes have widely been interpreted as a response to the Enron debacle, it is doubtful that the proposals would have done much to mitigate the ultimate result in that case. One notable exception is the proposed requirement that workers be allowed to sell company-contributed shares in their retirement accounts after three years of participation in the plan." (PLANSPONSOR.com; free registration required)

Did Enron Steal From Employees?
Ex-employee claims nearly $15 million taken from employee medical, dental, and 401(k) plans. (CBS News)

Pension Managers Want Head of the S.E.C. to Withdraw from Enron, Andersen Investigations
Excerpt: "The council members manage $2 trillion in pension assets for public and university employees. The organization has a history of shareholder activism, and many members are suing Enron." (New York Times; free registration required)

The Enron Implosion: Cultural Lessons from a Failed Employee-Owned Company
Excerpt: "There is actually but one lesson for you here: create a corporate culture of active employee ownership, and do it now. Employees are going to evaluate the benefits and risks of investing in your company more objectively and critically than ever before." (Foundation for Enterprise Development)

CalPERS and Enron: Even a Watchdog Is Not Always Fully Awake
Excerpt: "For decades, there has been no more formidable advocate for good corporate governance than Calpers, the California Public Employees' Retirement System ... Some institutional investors agree that Calpers had no responsibility to challenge Enron's board or make its concerns public -- although a few said they wished the pension fund had done so before their own Enron investments plummeted in value." (New York Times; free registration required)

American Benefits Council President Urges Caution Against Hasty Pension Legislation
Press release. Excerpt: "Recent events should be a message to business, labor and government that more must be done to educate people about the importance of investment diversification.... The Council hopes Congress will give positive consideration to proposals aimed at helping workers and retirees receive professional investment advice.... We hope Congress will renew interest in traditional defined benefit pension plans." (American Benefits Council)

Testimony of American Benefits Council on Enron Investigation by Senate Gov't Affairs Committee (PDF)
Excerpt: "We ... strongly urge Congress to reject percentage caps on the amount of an employee's 401(k) account that could be invested in company stock. These caps, which are included in legislation put forward by Senators Boxer and Corzine (S. 1838), would be unpopular -- and contrary to the best interests of -- the many employees who benefit from having an ownership stake in their company." (American Benefits Council)

Global Crossing Lockdown Stopped Workers From Protecting Pensions
Excerpt: "Global Crossing Ltd. prevented its workers from selling company shares or other assets in their 401(k) savings plans for a total of four weeks during December and January, at a time when its fate was increasingly uncertain. While this practice is legal, these so-called lockdowns have become a big issue in the wake of Enron Corp.'s collapse." (Wall Street Journal via Global Action on Aging)

Opinion: Pension Tension-- Social Security Privatization is Winning Issue for Republicans
Excerpt: "Private Social Security accounts are, for one thing, the best growth issue the Republicans have. No other policy reform being contemplated today would do as much to help the political fortunes of free markets and limited government." (OpinionJournal.com)

Social Security Takes on Role of a Cash Cow
Excerpt: "In the budget he delivered Monday, President Bush relies on one source of new money more than any other to pay for his proposals: the trillions of dollars in Social Security funds being set aside for the start of the baby boom retirement.... [T]he dimensions of what the administration had in mind were not apparent until the unveiling of the $2.13-trillion spending plan for fiscal 2003" (Los Angeles Times)

Publication 575: Pension and Annuity Income
Updated in January, 2002 to reflect EGTRRA changes. (Internal Revenue Service)

Publication 571: Tax-Sheltered Annuity Plans (403(b) Plans)
Updated to reflect EGTRRA changes. (Internal Revenue Service)

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

IRS Changes Date of Hearing On Proposed Regs On FICA, FUTA Taxation of Stock Options
The Internal Revenue Service has announced that it has changed the date of the public hearing on its proposed regulations governing the application of Social Security (FICA) and unemployment (FUTA) taxes and income tax withholding to statutory stock options. Notice of the change was published in the January 28 Federal Register. (Spencernet)

Top Five Benefit Priorities Survey for 2002
Excerpt: "Cost concerns abruptly displace attraction and retention considerations for employers. The number one priority in 2002 for benefit specialists from the employer's perspective is controlling health and welfare costs (84%). This year's results emphasize the challenge of reining in health care costs, as this priority tops the list for the third consecutive year - unparalleled in the survey's history." (Deloitte & Touche)

Stock Plan Software - Administration Made Easy
Excerpt: "Isn't there a basic software product available - we're thinking something that comes on a CD here - that is designed specifically for stock option plan record keeping, and that won't cost a smaller company an arm and a leg? ... We are excited, relieved, and above all, very, very happy to be able to report that we have found not just one, but several excellent alternatives." (Foundation for Enterprise Development)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Compensation Manager for Ricoh Electronics, Inc.
Benefits Manager for Ricoh Electronics, Inc.
Benefits Manager, Personnel Services for Virginia Polytechnic Institute and State University
Pension Representative for Third-Party Administrator
Compensation Consultant for Grant Thornton

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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.