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The BenefitsLink Newsletter -
Retirement Plans Edition
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July 24, 2002 - 11,391 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 Provision in Appropriations Bill Is Aimed at Cash Balance Plans
Excerpt: "The amendment-- tagged onto the Treasury-Postal Appropriations bill by U.S. Rep. Bernard Sanders (I-Vt.)-- would keep the Internal Revenue Service from undermining existing rules governing the calculation of certain corporate pension benefits. This bill is being debated this week in the House." (Los Angeles Times; free registration required)

Labor Department Probes WorldCom Pensions
Excerpt: "The Labor Department confirmed Tuesday it is investigating WorldCom Inc. to determine whether the company mishandled retirement savings plans of thousands of workers and retirees." (AP via Yahoo! News)

Lawsuits Against WorldCom, Tyco Say Executives To Blame For Gutting Workers' 401(k)s
Excerpt: "In nearly identical language, the three complaints allege that WorldCom and its officers and directors exerted 'undue influence' over employees to encourage them to invest in the company's stock. WorldCom also restricted the ability of participants to freely sell those shares, the complaints allege." (Miami Daily Business Review via Society for Human Resource Management)

Analysis: Top-Heavy Plans Create Extraordinary Opportunities For Additional Owner Allocations
Excerpt: "The top heavy contributions provide a significant planning opportunity to make additional contributions that benefit only the owner(s) and other individuals intended to be favored. The following examples demonstrate the operation of a top-heavy 401(k) plan to which a key employee has made elective deferrals ...' (Mand Marblestone & Danziger, P.C.)

Plunging Market Puts Public Pension Fund Managers in Pickle
Excerpt: "[T]he big state pension funds have had back-to-back annual losses of 8.6 percent and 10.4 percent. For officials of state and local governments, any need to put more money into a pension plan comes at a bad time. Budgets are already under severe pressure." (St. Louis Post-Dispatch via International Foundation of Employee Benefit Plans)

Social Security and the Private Pension System: the Significance of Integrated Plans
50 pages; by Pamela Perun. Excerpt: "Prior studies suggest that (1) integration [with Social Security retirement benefits] is declining among defined benefit plans and (2) integration among defined contribution plans is rare. This study contradicts those findings. Using Form 5500 data obtained from about 1,000,000 plans from 1993 to 1997, this research finds that integration is a persistent and stable feature of the private pension system." (Center for Retirement Research, Boston College)

Pension Reform in the Presence of Financial Market Risk
62 pages; working paper by Barry Bosworth and Gary Burtless. Excerpt: "We examine two alternative reforms ... The first policy expands the role of advance funding in the existing Social Security system by moving toward a policy of tax increases ... [Under the other policy] a new system of individual investment accounts is adopted ... [This papers shows] the implications of investing part of the pension fund accumulation in assets which are subject to significant financial market risk." (Center for Retirement Research, Boston College)

Links to Items on Executive Comp, Benefits in General
(These items appear in both editions of the BenefitsLink Newsletter)

Opinion: Reform Is the Only Option (For Stock Options, That Is)
Excerpt: "Treasury Secretary Lloyd Bentsen, the Big Six accounting firms, and investor groups applauded as a bipartisan Senate posse, with Democrat Joe Lieberman at its lead (and [Senator Barbara] Boxer not far behind), bullied FASB into allowing companies to shunt their options costs into a footnote in their annual reports instead of subtracting them from earnings. Why'd they do it? For the economy's sake, everyone said." (Fortune.com)

Tech Industry Fights Running Battle Against Stock Option Changes
Excerpt: "For now, the lobby has succeeded in keeping stock option accounting out of the business reform bill steam-rolling through Congress. But the issue could rise again -- Amazon.com announced Tuesday that it will count options as an expense, adding more momentum -- and the industry is keeping up its offensive." (SiliconValley.com)

Investment Adviser Neuberger Berman to Expense Stock Options
Press release. Excerpt: "Neuberger Berman Inc. ... announced it will expense the cost of all stock options the Company grants beginning January 2003. In 2003, the Company will adopt the expense recognition provisions of recording the fair value of stock options under the guidance of SFAS No. 123, Accounting for Stock-Based Compensation." (Business Wire via Yahoo! News)

TIAA-CREF Asks 1,754 Publicly Traded Corporations to Expense Stock Options
Excerpt: "Voluntary expensing of options 'contributes to clear, straightforward and high-quality financial reporting, enhancing credibility that surely will be highly valued in the post-Enron market,' wrote John H. Biggs, TIAA-CREF chairman, president and chief executive, in his letter." (Dow Jones via Quicken.com)

Amazon to Expense Stock Options
Excerpt: "Amazon is one of the first tech companies to announce a switch, which it will make at the beginning of next year. The e-commerce giant is making the change in part because it will allow the company more flexibility in how it compensates workers, [chief executive Jeff] Bezos said in Amazon's earnings conference call." (ZDNet UK News)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Implementation Specialist for ExpertPlan, Inc.
in NJ
Account Management/ERISA Service Specialist for ExpertPlan, Inc.
in NJ
Retirement Plan Administration Specialist for Firm with Expanding Needs in Dayton OH
in OH
Pension Administrator for Ingham Group
in FL
Pension Plan Administrator for ERAS, LLC
in KY
Pension Administrator for Small Third-Party Pension Consulting/Actuarial Firm
in CT
Sr. Functional Analysts - Pension for Seurat Company
in FL
Defined Contribution Plan Administrator for Urbach Kahn & Werlin Advisors, Inc.
in NY
Compliance Specialist for Segal Company
in AZ

Newly Posted Webcasts (Post Yours!)
Insurance Coverage of Mental Health Benefits on July 23, 2002
presented by Kaiser Family Foundation

Newly Posted Conferences (Post Yours!)
Investment Management for Institutional Investorsin AZ on November 17, 2002
presented by Leonard N. Stern School of Business, New York University

Newly Posted Press Releases
SunGard Hosts Business Strategy Meeting for 401k Daily Recordkeepers (SunGard Corbel)

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Editor and Publisher: David Rhett Baker, J.D.