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December 17, 2002 - 12,880 subscribers
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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)
PBGC Takes On Bethlehem Steel Pension Plan; Largest Case to Date
Excerpt: "The Pension Benefit Guaranty Corp. (PBGC) said it plans to take responsibility for paying pension benefits to 95,000 workers and retirees of Bethlehem Steel, the nation's second largest integrated steel maker." (PLANSPONSOR.com; free registration required)

PBGC Press Release on Proposed Termination of Bethlehem Steel DB Plan
Excerpt: "The PBGC proposes to terminate the Pension Plan of Bethlehem Steel Corp. & Subsidiary Companies effective December 18, 2002 and to assume responsibility for benefits earned to that date, subject to legal limits." (Pension Benefit Guaranty Corporation)

PBGC's Special Q&A Page About Proposed Termination of Bethlehem Steel DB Plan
Excerpt: "Although PBGC will become trustee of the pension plan, Bethlehem Steel will continue to maintain and administer the plan for a transition period of several months. The following frequently asked questions about PBGC and its insurance program are directed to current, former, and retired Bethlehem employees." (Pension Benefit Guaranty Corporation)

Bethlehem Steel Says PBGC Takeover Harms Its Employees
Press release. Excerpt: "[Bethlehem's CEO said] 'The federal program of safety nets for workers who have been devastated by unfair imports was meant to protect the very workers who will be adversely affected by this early termination of our pension plan. Not only will many now be ineligible for special early pensions, they will also be ineligible to obtain health care insurance tax credits available under the Trade Adjustment Assistance Program, which was part of the Trade Act of 2002.'" (Business Wire via Yahoo! Finance)

Steelworkers Say Federal Government is a 'Grinch' for Taking Over Bethlehem Steel DB Plan
Press release. Excerpt: "'Once again, we are disappointed, but not surprised, that the PBGC has acted to limit its own liability rather than fulfill its mandate to protect the pension benefits of workers and retirees like those at Bethlehem Steel,' said Leo W. Gerard, USWA international president.... 'Just as the Grinch dressed up like Santa and stole Christmas, the Administration masqueraded as a friend to workers and then snatched our pensions,' Gerard concluded." (Business Wire via Yahoo! Finance)

Bethlehem Steel Executives, Unions Complain About PBGC Takeover
Excerpt: "'This premature termination deals a serious blow to the potential recovery by the creditors of Bethlehem Steel Corp., one of the most important of which is the PBGC,' Bethlehem Chairman and Chief Executive Robert S. 'Steve' Miller said ... 'The PBGC's action denied us the opportunity of granting shutdown pensions to workers who are reduced from the workforce as a result of the restructuring,' [said Tom Conway, the chief United Steelworkers of America negotiator]." (Reuters via Yahoo! News)

Analysis: Treasury, IRS Issue Long-Anticipated Proposed Cash Balance Guidance
Excerpt: "The preamble to the proposed regulations clearly states [they] cannot be relied upon until adopted in final form.... [I]t is far from certain that will happen.... Even if the proposed regulations are issued in final form, the preamble indicates they will apply on a prospective basis only. That means conversions that take place before final regulations are issued technically will not be affected by those rules." (Deloitte & Touche Human Capital Advisory Services)

DB-K Plus: a Defined Benefit Plan with 401(k) Features (PDF)
At page 6. Excerpt: "The following is the draft executive summary of a new issue brief due to be published this winter by the Pension Committee of the Academy's Pension Practice Council.... DB plans need a level playing field to survive. [Here's] a way to greatly level this playing field with one change-- allow DB plans to have 401(k) features. This 'DB-K Plus' plan could have many of the advantages of DB and DC plans in one plan." (Enrolled Actuaries Report, published by the American Academy of Actuaries)

State Street Presses to Sell UAL Stock, Despite Protests
Excerpt: "State Street Bank and Trust Co., trustee for the employee stock ownership plan of 75,000 United Airlines workers, is fighting a Bankruptcy Court's suspension of its right to sell the plan's UAL Corp. shares, arguing the ban could cost employees as much as $39 million." (The Boston Globe)

Another Question is Answered in the ERISA Q&A Column
Our company has a 401(k) plan that allows participants to direct the investment of their accounts. We forgot to give one of our participants the notice required by ERISA section 404(c), but we provided the notice as soon as we realized our mistake. The fiduciaries of the plan are concerned about their liability for the participant's investment choices. How much liability do they have for the investment choices made by the participant before he got the notice? (BenefitsLink.com)

Overview: Minimum Distribution Rules - Final and Temporary Regulations for DB Plans (PDF)
Excerpt: "To comply with the 2002 final regulations, plans must be amended by the last day of the first plan year beginning on or after January 1, 2003. The extent to which a given plan must be amended depends on the plan's current terms. Plan administrators should seek legal guidance regarding which plan provisions should be amended. Plan sponsors must use the 2002 final regulations to determine minimum distributions paid on or after January 1, 2003." (Paul Zorn of Gabriel, Roeder, Smith & Company)

ESOP Works Well at Wharton, N.J. Packaging Company
Excerpt: "[T]he bankruptcy of United Airlines, blamed in part on the huge raises that employees received after being granted 55 percent ownership and two seats on the board of directors, has stripped away much of the idealism and romance that has graced employee ownership for more than two decades. It also has put proponents on the defensive." (The [Parsippany, NJ] Daily Record)

The Governance and Oversight of Retirement Plans (PDF)
3 pages. Excerpt: "Without a company focus on proper plan governance, plan administration may fall by the wayside, which could create substantial fiduciary liabilities. This article discusses structures and procedures companies should consider to ensure proper governance of their retirement plans and to reduce the liability of members of the board of directors and retirement plan committee." (Gardner, Carton & Douglas)

Many Putting Off Retirement Due to Stock Losses, Poll Finds
Excerpt: "Stock market losses have dampened the lifestyle of two-thirds of investors ages 50 to 70, with some saying they are postponing retirement or looking to go back to work, according to an AARP survey released [Monday, December 16, 2002]." (The Baltimore Sun)

Text of PSCA Comments on SEC's Proposed Rules for Insider Trading During Blackout Periods (PDF)
3 pages. Excerpt: "The proposed definition of securities acquired in connection with service or employment includes securities ... that he or she must hold to meet an issuer's minimum ownership requirements for directors ... These securities could be securities that were acquired years before becoming a director. PSCA believes that treating securities that were purchased prior to becoming a director as acquired in connection with service as a director is inconsistent the Act's intent ..." (Profit Sharing/401(k) Council of America)

Text of ERIC Comments on Proposed SEC Rules on Insider Trading During Blackout Periods (PDF)
Excerpt: "The Commission should not define the term 'blackout period' ... to be shorter than the three consecutive business days specified by [the Sarbanes-Oxley Act].... The Commission should (a) permit an issuer to apply the 50% test ... on the basis of any reasonably representative measurement date selected by the issuer and (b) prescribe a safe harbor ... to rely on the data reported on the most recently filed Forms 5500 ..." (ERISA Industry Committee)

Record Shareowner Vote, Including NYC Pension Fund, Prompts Cracker Barrel to Change Policies
Excerpt: "The infamous shareowner resolution calling on Cracker Barrel Old Country Stores' parent company CBRL Group ... to bar sexual orientation discrimination, first filed more than a decade ago, has finally achieved its objective. The resolution received 58 percent support from voting shareowners at CBRL Group's November 26 annual meeting, the highest shareowner vote ever on a social policy resolution." (SocialFunds.com)

Without Employee Knowledge, 401(k) Retirement Plans Don't Work
Excerpt: "Ask your retirement educators what measures they use to ensure that every employee is gaining the knowledge to master the following skills: Setting the estimated price their personal retirement income target; Contributing at a rate predicted to attain that target; Investing with a strategy intended to attain that target; [and] Receiving payments that are planned to last throughout retirement." (BenefitNews.com)

Overview: DOL Issues Interim Final Rules On Blackout Period Notice Requirements (PDF)
5 pages. Excerpt: "These rules apply to qualified defined contribution plans that are subject to the ERISA Title I requirements. They do not apply to governmental plans or non-electing church plans or to section 403(b) programs.... Sponsors of defined contribution plans should carefully review their procedures to ensure they will comply with the notice requirements, which apply to blackout periods beginning on or after January 26, 2003." (CIGNA's Pension Analyst)


Links to Items on Executive Comp, Benefits in General

Tapes and CDs Available for Hewitt Associates Teleconferences
Tapes and CDs of recent teleconferences available for ordering online from Hewitt Associates-- at no charge-- include 'Six Decisions To Take Control of Future Health Care,' 'Employers Blaze New Trails With Consumer-Driven Health Care,' 'Considerations and Implications of Expensing Stock Options,' and 'How to Maximize Retirement Returns by Monitoring Total Plan Cost.' (Hewitt Associates)


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