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The BenefitsLink Newsletter -
Retirement Plans Edition
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March 6, 2002 - 12,334 subscribers
Today's sponsor: Actuarial Systems Corporation

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   For over 20 years ASC has provided complete automation for the
   pension office, including DC/401(k) and DB administration and
   valuation systems, as well as sophisticated Compliance Testing
   and DV Direct, a revolutionary solution for daily valuation
   functions.   All ASC Technical Support Members had experience as
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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)

Democrats Push Pension Bill
Excerpt: "Senate Democrats today are set to unveil a compromise pension bill that would give workers more control over their 401(k) plans, but does not include a controversial proposal to directly cap the amount of corporate stock they can own." (Boston Globe)

Enron To Fuel 401(k) Litigation
Excerpt: "Employers that have to worry most about possible 401(k) lawsuits are those with poorly performing employer stock in their 401(k) plans, [attorney Fred] Reish says. Also, plan administrators who can't show they have done a good job monitoring the program face a greater risk of landing in court, he adds, particularly now, after two years of stock market losses." (Kiplinger Business Forecasts via International Foundation of Employee Benefit Plans)

IRS Publishes New Version of Form 8717, User Fee for Employee Plan Determination Letter Request (PDF)
2 pages; rev. February 2002. Includes a certification for use by plan sponsors who are eligible for an exemption from the usual user fee. (Internal Revenue Service)

Former 3M Workers Feel Betrayed When Early Retirement Program Eliminated
Excerpt: "[O]ne of the most attractive programs 3M and Imation offered was something known as pre-retirement leave, or PRL, which allowed some employees to retire as early as 55 and still retain certain benefits as if they were working. The elimination of that program, and the timing, is what has some of the former Imation employees angry." ([St. Paul, Minn.] Pioneer Press)

An Analysis of the Choice to Cash Out Pension Rights at Job Change or Retirement (PDF)
42 pages. Excerpt: "[W]e find that cash-out rates are far less severe than previously reported. The Wall Street Journal stated that '60 percent of departing employees' retirement money goes toward such things as credit-card bills, home purchases and other expenditures ...' (4 December 1997)-- such reporting is inaccurate and creates far more alarm than is warranted. That said, we find the highest cash-out rates among the lower incomes, who are particularly vulnerable to poverty in old age." (Michael Hurd, Lee Lillard, Constantijn Panis, prepared for the U.S. Department of Labor, published by RAND Center for Employer-Sponsored Health and Pension Benefits)

Pension Expert Analyzes Fiduciary Duties in Light of Enron
Excerpt: "According to [employee benefits attorney Mike] Melbinger, restricting participants from selling the company's stock until retirement or separation from service may diminish section 404(c)'s protection because the company could be viewed as exerting undue influence over participants' investment decisions.... To minimize risk, the employer must provide investment education that clearly advises employees that a large investment in a single security is risky." (Thompson Publishing Group)

Rebates to 401(k) Vendors Create Controversy
Excerpt: "If the fee rebate is disclosed to the plan sponsor and used to provide plan services, there is no problem. When the fees are not disclosed, plan sponsors may be in violation of their fiduciary duties, warns Ward Harris, managing director at McHenry Consulting Group in Berkeley, Calif." (BenefitNews.com)

Opinion: Where Companies Hide Their Money
Excerpt: "The 10-K report gives all kinds of juicy information about pensions and options, and the proxy statement gives you the full scoop on just how much compensation senior corporate managers are raking in.... [A] lot of the assumptions that companies are making right now about future pension-plan returns are patently unrealistic. Now that 10-Ks are out, you can check just how ridiculous they might be for the companies you own." (Morningstar via Yahoo! Finance)

Opinion: Social Security-- Fools on the Hill
Excerpt: "Democrats rant about Enron, while the GOP wants to issue certificates promising that retirees will be paid. Which bunch is worse?" (Business Week)

Opinion: 401(k) Participants Need More Knowledge, not More Limits
Excerpt: "Maybe it's time for employers to begin a new round of basic retirement savings education which will be needed in part just to maintain employees' trust and enthusiasm for the 401(k) plan concept.... [I]t is time to remind employees-- and Congress-- of the benefits of these plans that have helped millions of employees enhance their own retirement." (Martha Priddy Patterson, published by Thompson Publishing Group)

Texas S.B. 273, Standards for 403(b) Contracts Sold in Texas School Districts - Analysis
This is the Texas Senate Research Center's official analysis of the Texas legislation imposing stricter investment and disclosure standards on 403(b) products sold to employees of Texas school districts. (Texas Senate Research Center)

Texas S.B. 273, Setting Forth Standards for 403(b) Contracts Sold in Texas - Bill Text
Apparently responding to a class action lawsuit that a Laredo schoolteacher brought against the College Life Insurance Company of America and other plaintiffs for allegedly selling misleading 403(b) products, Texas passes legislation imposing stricter standards on 403(b) products sold to employees of Texas school districts. (Texas Senate)

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


Now Online: Andersen's 'Alert: U.S. Compensation and Benefits News Briefs' for February 18, 2002
Articles include: Administration's healthcare agenda includes expanded MSAs and FSAs; Class exemption for cross-trades of securities by index and model-driven funds; Benefit denial based on experimental treatment exclusion overturned; Detailed reasons for denying LTD claim must be in initial denial notice. (Andersen)

Executive Pay Down, Survey Shows
Excerpt: "On average, the chief executives of the companies surveyed received total compensation of $10.46 million in 2001, down 4 percent from 2000, as declines in bonuses and the value of stock option grants outweighed increases in salary and incentive payments other than stock options." (New York Times; free registration required)

New Data Confirm CEO Pay Declined in 2001
Excerpt: "[T]he CEOs' median total direct compensation fell 10.2% to $2.16 million. That includes salary, bonuses, gains from stock-option exercises, long-term incentive payouts and the value of restricted stock at the time of grant.... The Mercer analysis revealed no evidence of damped enthusiasm for so-called megagrants of options, however. An option megagrant has a face value of at least eight times an individual's salary and bonus." (CareerJournal.com)




Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Extraordinary DB-Pension Actuary Consulting Opportunities for Louis Kravitz & Associates, Inc.
in CA
DC/401(k) Plan Administrator for JCCS, PC
in MT



Newly Posted Webcasts (Post Yours!)
The Future of 401(k) Plans-- Session I-- What's in Store for 401(k) Plans on March 13, 2002
presented by Deloitte & Touche
The Private Health Insurance Market: Treatable or Terminal? on March 5, 2002
presented by KaiserNetwork.org



Newly Posted Press Releases (Post Yours!)
Bluefinch Corporation announces it is seeking beta-testers for a new automated mail-order prescription fulfillment solution (Bluefinch Corporation)
SunGard Corbel's Hoffman Appointed (SunGard Corbel)

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Copyright 2002 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.