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Retirement Plans
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November 13, 2002 - 12,842 subscribers
Today's sponsor: Actuarial Systems Corporation

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(Help BenefitsLink to provide this newsletter at no charge to you -- our sponsors pay your way. Remember to visit them periodically; we try to make sure their products and services will be of interest to you. Thanks! --Editor)
Retired Partner at Andersen Sues Three Rival Firms Over Unfunded Benefits
Excerpt: "A retired partner of Arthur Andersen, who lost $2.2 million in benefits when the firm collapsed, is suing three accounting firms, saying they unjustly enriched themselves at the expense of about 1,000 retired Andersen partners and their spouses.... The issues raised in the lawsuit illustrate the risks for highly paid partners and accountants, whose primary retirement benefit is often in a plan that is not shielded from creditors ..." (New York Times; free registration required)

Port Talks to Resume on Key Pension Issue
Excerpt: "West Coast longshoremen and port employers head back to the bargaining table on Wednesday after a week-long break to try to tackle the remaining key issue of pension benefits for workers on the docks that handle more than half of U.S. trade." (New York Times; free registration required)

Tools for Successful Asset Allocation in a Defined Contribution Plan (PDF)
Pages 4 through 8 of a 12-page document. Excerpt: "Lifestyle funds, model portfolios, and individual advisors can help participants identify their risk tolerance and time horizon, and provide asset allocation assistance that maximizes the participants' investment returns consistent with their risk tolerance. Defined contribution plan participants are more likely to reach their long-term retirement goals if they can understand and are more comfortable with the possible investment outcomes." (Milliman USA)

Can 401(k) Accumulations Generate Significant Income for Future Retirees? (PDF)
28 pages. Nov. 2002. Excerpt: "This Issue Brief develops a model that projects the proportion of an individual's preretirement income that might be replaced by 401(k) plan accumulations at retirement, under several different projected scenarios.... Even if equity returns in the future are projected to replicate the worst 50-year segment in the [S&P 500] history (1929 to 1978), 401(k) accumulations are still projected to replace significant proportions of projected pre-retirement income." (Employee Benefit Research Institute)

2002 Defined Contribution Survey from PLANSPONSOR Magazine
Especially useful: the link to 'Provider Listings.' Excerpt: "A record 2,852 plan sponsors representing more than 7 million participants responded to our survey this year, running the gamut of plan sizes." (PLANSPONSOR.com; free registration required)

With Pension Accounting, Many Companies Are Upside Down
Excerpt: "Broadly measured, pensions aren't a gigantic problem.... That's the good news. Measured by industry, it's another story. Of the 355 companies in the S&P 500 index that provide defined-benefit pensions, the report names 118 with 'false assets'-- that is, reported pension surpluses when the plan is actually in deficit." (Scott Burns in The Dallas Morning News)

Chevron Might Take Half-Billion Charge to Equity Due to Pension Fund Decline
Excerpt: "ChevronTexaco warned Tuesday that it may take a $500 million charge to stockholder equity at the end of the year because of the declining value of its employee pension fund. The pension fund has been hurt by the stock market's nose-dive and $100 million in payouts to laid-off workers, according to a regulatory filing." (San Francisco Chronicle)

Pension Funds Leaning Heavily on PBGC
Excerpt: "Widespread pension woes combined with a high corporate bankruptcy rate are putting financial stress on the Pension Benefit Guaranty Corp., a federal agency set up in 1974 to take over defined-benefit plans that have failed or are in danger of failing." (The [Philadelphia] Inquirer)

Nonqualified "401(k) Mirror" Plans for Taxable Plan Sponsors (PDF)
Pages 9 through 11 of a 12-page document. Excerpt: "[Nonqualified deferred compensation plan, or 'NDCP'] sponsors should be mindful that, because of the lack of clear-cut DOL and IRS guidance, some of the more aggressive plan designs might invite legal challenge. Accordingly, corporate sponsors of NDCPs should seek to balance a desire for a particular provision with their risk tolerance and ensure appropriate professional review when considering plan design." (Milliman USA)

ABA Tax Section Provides Comments to IRS on Proposed 4980F Regs (ERISA 204(h) Notices) (PDF)
16 pages. Excerpt: "Final regulations should define the scope of the terms 'early retirement benefits' and 'retirement-type subsidies,' both for purposes of section 204(h) of ERISA and section 411(d)(6) of the Code.... Final regulations should affirmatively state that section 204(h) notice requirements do not apply to plan amendments adding minimum benefits, even if such amendments may result in 'wear-aways' for some participants ..." (American Bar Association, Section of Taxation)

Interest-Rate Cut Puts Damper on Many Seniors' Retirement Plans
Excerpt: "[M]any older Americans ... have seen their interest incomes diminished by the government's effort to jump-start the economy by cutting rates a dozen times since January 2001. Rates on CDs and money-market accounts-- the 'safe' investments in which retirees often are encouraged to put their money-- have dropped so low that many seniors have seen a big decrease in the income they count on to pay their living expenses." (Chicago Tribune via AARP Bulletin Online)

Links to Items on Executive Comp, Benefits in General

Period for Responding to Document Request Does Not Start Until Administrator Receives Request
Romero v. SmithKline Beecham, 2002 U.S. App. LEXIS 22576 (3d Cir. 2002). Excerpt: "Recall that the plan SPD must identify the plan administrator, and therefore the procedure for responding to requests for documents should be consistent with the SPD language.... Plans may wish to include a more specific procedure for making requests (e.g., require that requests be made to an identified person acting for the plan administrator)." (EBIA Weekly)

Double Benefits For Veterans Deal Reached
Excerpt: "Veterans who hoped to receive both pensions and disability benefits were disappointed when the House adopted a scaled-down version of the defense authorization bill in a voice vote Tuesday. Congressional negotiators who have tried to iron out the details of the bill since September finally agreed to allow veterans who have served at least 20 years to receive both benefits without the current dollar-for-dollar offset." (The [Biloxi, Miss.] Sun Herald)

Pressure to Expense Options Mounts, Even in Silicon Valley
Editorial. Excerpt: "The tech industry should give up the fight on expensing. It could make better use of its clout by working with the international and American accounting panels on the rules for expensing options. In the process, it would restore credibility with investors ..." (San Jose Mercury News)

Welcome to new BenefitsLink advertiser Corporate Benefit Services of America, Inc.
Excerpt: "CBSA is a national Benefits Administration and Medical Care Manager of employee benefits, providing an extensive array of services to both self-funded and fully insured companies. Competitive programs backed by superior service and enhanced by technological advancements that allow immediate access to data that is important to clients and their employees. CBSA has over 25 years of benefits administration experience and is committed to client service and satisfaction."

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Extraordinary & Fun Defined Benefit Consulting Opportunities in So. Calif.
for Louis Kravitz & Associates, Inc.
in CA

Associate - Insurance Services - Deerfield, IL
for Mullin Consulting, Inc.
in IL

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

Qualified Retirement Plan Administration Specialist
for RSM McGladrey, Inc.
in MN

Retirement Plan Business Development Sales Professional
for RSM McGladrey, Inc.
in IL

Benefits Administrator/Admin Assistant
for Sound Benefit Solutions
in CA

Administrative Assistant-CCI
for Transamerica
in CA

Newly Posted Webcasts
(Post Yours!)

on October 29, 2002
presented by EBIA

Newly Posted Conferences
(Post Yours!)

An Afternoon with Brian Graff
in PA
December 12, 2002
ASPA Benefits Council of Western PA

HIPAA and Other Health Laws: Compliance Assistance Seminar
in NE
November 21, 2002
U.S. Department of Labor, Pension and Welfare Benefits Administration

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