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The BenefitsLink Newsletter -
Retirement Plans Edition
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August 9, 2002 - 11,391 subscribers
Today's sponsor: WorldatWork

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   Our Bookstore now carries books published by WorldatWork!

   WorldatWork, the professional association for compensation, benefits and
   total rewards professionals, now has more than 30 select publications
   appearing for sale in the BenefitsLink.com bookstore. One featured 2002
   release is Long-Term Care: An Emerging Employer Benefit, a book described by
   the vice president of benefits for Time, Inc. as "the most readable
   comprehensive guide to long-term care."

(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)

State Pension Fund Trustees to Weigh Their Collective Influence on Wall Street Ethics
Excerpt: "On Monday, officials who control pension investments in 12 states and 3 cities will meet in New York to consider how they can force changes in the way Wall Street firms do business, H. Carl McCall, the New York State comptroller, said yesterday. Representatives of five additional states will participate by telephone, Mr. McCall said." (New York Times; free registration required)

Prudential Financial Phasing Out Recordkeeping For Retirement Plans Under $3 Million
Press release. Excerpt: "Prudential Financial announced [on August 8, 2002] that plans have been finalized to complete the transition of its small-defined contribution plans to BISYS. The transition is part of a continuing strategy of focusing on plans with at least three million dollars in assets." (Business Wire via Yahoo! News)

Web-Based Services Touted As Best 401(k) Cost Control Tools
Excerpt: "For the second year running, Web-based changes to 401(k) plans ranked as the most successful cost control tool, IOMA's 2002 Controlling 401(k) Plan Costs and Salary Survey reveals. Sponsors cited the Web 5 times out of the top 10 as their best method to keep a lid on costs." (IOMA's Report on Managing 401(k) Plans via International Foundation of Employee Benefit Plans)

Employee Ownership Update for August 8, 2002
NCEO executive director Corey Rosen reports on the 'Rank and File Stock Options Act' introduced by Senators Lieberman and Boxer; the 'Workplace Stock Option Act of 2002' introduced by Representatives John Boehner and Amo Houghton; a study showing that 401(k) plans are still heavily invested in employer stock; an exemption for brokers from certain stock option reporting requirements; and the IASB's approval of staff recommendations to require stock option expensing. (National Center for Employee Ownership)

For Plan Sponsors: Making the Most of a Defined Benefit Plan When Cash Is Tight (PDF)
Excerpt: "This Executive Letter discusses the role that defined benefit plans can play as part of a strategy to deal with the following financial challenges: Contributing an employer match to a Section 401(k) or 403(b) plan, paying merit increases (or, in extreme cases, meeting payroll), and providing severance benefits." (The Segal Company)

Analysis: Standard & Poor's Increases Scrutiny of Pension Plans
Excerpt: "Standard & Poor's (S&P) announced that they are asking U.S. corporate bond issuers who sponsor defined benefit pension plans to submit information concerning their plan assets as of June 30th, 2002, because S&P 'has grown increasingly concerned about the funding status of U.S. corporate [sic] with defined benefit pension plans.'" (Watson Wyatt)

Private Pension Funding Woes Might Mean Cutbacks in Corporate Spending
Excerpt: "Much of the commentary about the economic impact of the bear market has focused on the wealth effect on individual investors, who bear the market risk in defined contribution plans and may therefore decide to reduce their current spending ... [F]alling prices have also damaged companies with defined benefit plans. They, too, are poorer and may have to reduce their spending on other things as they come up with more cash to finance benefit plans. Call it a corporate wealth effect." (New York Times; free registration required)

Defined Benefit Plans in an Era of Phased Retirement (PDF)
Excerpt: "[M]any retirees are now considering 'phased retirement' in which a person does not withdraw completely from the workforce, but chooses to work in a reduced capacity, as a part-time or temporary employee. To retain and attract phased retirees, employers will need to offer different compensation options. One such option is to offer participation in a defined benefit plan.... This paper explores the advantages and disadvantages of a defined benefit plan option for phased retirees." (Attorney Aliya Wong, published by the Society of Actuaries)

Choosing Early or Normal-Age Social Security Benefits: Factors to Consider
Excerpt: "If you have been agonizing about this, the good news is that you can relax. For most people, the present value of the financial benefits they would receive under either scenario is very similar, meaning that other factors such as health or cash needs often should play a bigger role in the decision." (TIAA-CREF Institute)

Financial Planning and Wealth Accumulation: Identifying Individuals' Propensity to Plan
Excerpt: "This article discusses recent research indicating a strong correlation between financial planning and financial security in retirement.... In addition, results of new studies about gender differences in risk tolerance and the behavioral effects of financial seminars are discussed." (TIAA-CREF Institute)

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

Commentary: Expensing the Cost of Stock Options-- What's an Employer to Do?
Excerpt: "[O]ur research clearly and consistently documents that a company's executive pay levels are directly and positively correlated with its financial performance.... Companies need to regain investor confidence but if they overreact and cut way back on their stock option plans to save the accounting expense-- without replacing them with other stock incentives or forms of pay-- they could inflict real economic damage by lowering the motivation and performance of their key employees." (Watson Wyatt)

Sarbanes-Oxley Accelerates Deadline for Section 16 Reports, Starting August 29
Excerpt: "Although the SEC is still considering rules that may provide some exceptions to the two business day filing requirement, it is likely that most stock transactions, including stock-based compensation plan transactions such as option grants, cancellations and repricings, will be subject to the accelerated reporting deadline." (Faegre and Benson LLP)

Stock Options Pit Firms vs. Regulators
Excerpt: "With regulators and lawmakers torn on the issue, companies are making their own rules, and 43 have recently said they plan to count option expenses. But many of those companies aren't hurt very much by the accounting change." (USA Today)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Senior Sales Representative - Retirement Plan Services for Harris Bank, part of Bank of Montreal U.S. Group of Companies
in IL
Compliance Analyst for New York Life Benefit Services LLC
in MA
Retirement Plan Coordinator for American Funds
in IN
Employee Benefits Specialist for Pennsylvania Hospital
in PA
Public Sector Consultant for The Segal Company
in DC

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