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September 17, 2002 - 11,860 subscribers
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Plan Amendment Expanding Suspension-of-Benefit Rules Created ERISA Violation, 7th Circuit Rules (PDF)
31 pages; Heinz V. Central Laborers' Pension Fund, No. 00-3314 (7th Cir. Sept. 13, 2002). Excerpt: "We are asked to decide whether a pension plan amendment which expands the types of post-retirement employment that trigger mandatory suspension of early retirement benefits violates ERISA's 'anti-cutback' rule, 29 U.S.C. section 1054(g), when applied to suspend the benefits of the plaintiffs, who retired before the amendment." (U.S. Court of Appeals for the Seventh Circuit, via

FDNY Firefighters Want Pensions Locked In Using Overtime-Enhanced Comp Paid During Past Year
Excerpt: "Currently, firefighters seeking to take advantage of the higher pensions, which are based on salary in the last year of employment, would have to retire now." (Newsday)

$25 Million Benefits Settlement Was Not Covered By Liability Insurance: Seventh Circuit
A settlement of more than $25 million in benefits that a pension plan agreed to pay to resolve two class action lawsuits under ERISA was not covered by liability insurance policies. This was the ruling of the Seventh Circuit U.S. Court of Appeals in The May Department Stores Company and The May Department Stores Company Retirement Plan v. Federal Insurance Company and National Union Fire Insurance Company of Pittsburgh, Pa. (No. 01-3861). (Spencernet)

Opinion: 401(k)s Beat Defined Benefit Pension Plans
Excerpt: "If you believe recent news reports, 401(k)s are just the latest in a series of financial disasters, along with Enron, shady accountants and greedy CEOs. Some media reports clamor for the return of your father's defined-benefit plan ... The reports have it wrong. Our research, funded by the National Institute on Aging, found that even when the stock market is troubled, 401(k)s remain better retirement-saving tools than defined-benefit plans." (USA Today via Yahoo! News)

Projecting Poverty Rates in 2020 for the 62 and Older Population: What and Why
Excerpt: "[T]here have been a number of economic and demographic changes that are expected to impact the economic well-being of the future aged population.... We examine the impact of four specific trends on future poverty rates: 1) the scheduled rise in the Social Security normal retirement age, 2) the changes in marital composition, 3) the change in the relative earnings of men and women, and 4) the rise in earnings inequality." (Boston College, Center for Retirement Research)

Analysis: IRS Changes the Rules for Transfers of Surplus Assets from Terminated DB Plans to DC Plans
Excerpt: "The IRS has changed its position on transfers of surplus assets from terminated defined benefit plans to qualified defined contribution replacement plans. Under Private Letter Rulings (PLRs) 200227040 and 200227041, issued July 5, 2002, plan sponsors ... must transfer exactly 25 percent of the surplus.... [Two 1998 PLRs had] allowed the plan sponsors to transfer 100 percent of the surplus to a qualified defined contribution plan." (Watson Wyatt)

Analysis: Cash Balance Returns to Congress' Radar Screen
Excerpt: "The House of Representatives approved legislation that could hinder the IRS from issuing guidance on cash balance plans-- at least in fiscal year 2003. In addition, Senator Ted Kennedy (D-Massachusetts) and Representative George Miller (D-California) wrote a letter asking President Bush to step up enforcement of cash balance plan rules and take action on other retirement-related issues." (Watson Wyatt)

Domestic Relations Order Was QDRO Even Though Entered After Participant's Death (PDF)
Hogan V. Raytheon, Co., No. 01-2932/3709 (8th Cir. Sept. 12, 2002). 5 pages. Excerpt: "Raytheon argues that the district court erred in finding that a domestic relations order can be qualified posthumously. We disagree.... Raytheon was put on notice that the Decree had issued and may be a QDRO, and the ... Order was filed during the eighteen-month period permitted under ERISA to secure a QDRO.... The fact that Mr. Hogan died prior to the entry of the March 9, 1998 Order is irrelevant." (U.S. Court of Appeals for the Eighth Circuit, via

A Needs-Based Approach to Post-Retirement Withdrawals from Savings (PDF)
7 pages. Excerpt: "Assuming that a retiree does in fact possess retirement savings ... there are three main factors ... (1) How much needs to be withdrawn, and how will that change over time? (2) How long will withdrawals need to go on? [and] (3) How much money ... will be available for withdrawal? Both traditional and more recent approaches have tended to focus mainly on the third question.... But what would happen if we focused on the other two questions, instead?" (Still River Retirement Planning Software, Inc.)

Survey: IRA Ownership in 2002 (PDF)
8 pages. Excerpt: "An estimated 42.0 million, or 39.5 percent, of U.S. households owned Individual Retirement Accounts (IRAs) as of May 2002, nearly unchanged from one year earlier ..." (Investment Company Institute)

Streaming Video Available: Hearing on Retirement Security for American Workers
September 10, 2002; entitled 'Retirement Security for American Workers: Examining Pension Enforcement and Accountability.' Appearances by the Honorable Ann Combs, DOL Pension and Welfare Benefits Administration; Stephen J. Cossu, DOL Office of Labor Racketeering and Fraud Investigations; Kenneth Boehm, National Legal and Policy Center; and Karen Ferguson, Pension Rights Center. (U.S. House of Representatives, Committee on Education and the Workforce, Subcommittee on Employer-Employee Relations)

Links to Items on Executive Comp, Benefits in General

Overview: NYSE and Nasdaq Governance Rule Proposals Under Review At SEC (PDF)
5 pages. Excerpt: "These proposals address a wide variety of governance issues, many of which involve executive compensation. Most importantly, the proposals address the long disputed rules applicable to shareholder approval of equity compensation plans. This letter provides a summary of the compensation issues and their potential implications." (Frederic W. Cook & Co., Inc.)

Side-by-Side Comparison of NYSE and Nasdaq Corporate Accountability Standards
September 2002. (Watson Wyatt)

CEO Perks: From Tuition to Bodyguard
Excerpt: "It's not just corporate jets.... A look at some [CEO] perks that companies [reported] makes interesting reading." (New York Times; free registration required)

Commentary: Reigning in the Imperial CEO
Excerpt: "[B]oards are facing greater pressure to renege on severance deals when executives depart, knowing that unusually deluxe deals might draw the attention of investors or regulators." (New York Times; free registration required)

Another Question is Answered in the Stock Options, Restricted Stock and Other Long-Term Employment Incentives Q&A Column
How do I find out if the stock options I am being offered are legitimate? I have just a few days to accept a job offer that includes a stock option to buy 8,000 shares at 25% vesting per year for 4 years, but the company is still funded by private investors ... what's up with that? (

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad

Financial Analyst - Los Angeles, CA and Deerfield, IL
for Mullin Consulting, Inc.
in CA, IL

Plan Administrator
for Alliance Benefit Group of New England
in NH

Pension Administrator
for CNA Trust
in IL

Technical Specialist - Retirement Ops - Qualified Plan Service Team
for Edward Jones
in MO

Enrolled Actuary-Plan Administrator
for Local Accounting Firm-Atlanta
in GA

Benefits Outsourcing Program Manager
for Fidelity Investments - Marlborough, Massachusetts
in MA

401(k) Plan Administrator (JO#324)
for a Third Party Administration Firm in CA
in CA

Newly Posted Webcasts (Post Yours!)

The Latest in Plan Design
on September 18, 2002
presented by ASPA - the American Society of Pension Actuaries

Practical Tips on Participant Loans
on September 12, 2002
presented by ASPA - the American Society of Pension Actuaries

Newly Posted Conferences (Post Yours!)

Symposium on the Future of Employee Benefits Law
in IL
October 11, 2002
The Center for Tax Law and Employee Benefits at the John Marshall Law School, Chicago, Illinois

ERISA: A Practitioner's Guide
in MA
October 28, 2002
LexisNexis(tm) and the Mealey Publication & Conferences Group

HIPAA and Other Health Laws: Compliance Assistance Seminar
in VT
September 19, 2002
U.S. Department of Labor, Pension and Welfare Benefits Administration

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