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August 1, 2003 - 13,309 subscribers
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
Federal District Court Says IBM Cash Balance Plan Conversion Illegally Harmed Older Workers
Excerpt: "A federal court ruled yesterday that I.B.M. violated age discrimination laws in the way it changed its traditional pension plan in the 1990's. The decision could cast doubt over similar changes hundreds of companies have made in plans covering millions of workers, and I.B.M. said it would appeal." (New York Times; one-time registration required)

AP Coverage of Decision in IBM Cash Balance Plan Conversion Case
Excerpt: "IBM spokesman Bill Hughes denounced the ruling and said the Armonk, N.Y.-based technology company would appeal. 'IBM's pension plan does not discriminate on the basis of age,' he said. 'To call such a plan discriminatory makes no sense and ignores the fundamental principle of the time- value of money. Under the court's interpretation of the law, every cash balance plan in the country is illegal.'" (AP via the [San Jose] Mercury News)

PLANSPONSOR Coverage: IBM Loses Cash Balance Ruling
Excerpt: "Big Blue got a black eye from a federal judge [on July 31], who ruled that IBM's pension plan conversion and operating assumptions violated age discrimination laws." (PLANSPONSOR.com; one-time registration required)

Text of Judge's Order in IBM Cash Balance Plan Conversion Case (PDF)
24 pages. Entered July 31, 2003. (U.S. District Court for the Southern District of Illinois, courtesy of the American Benefits Council)

IBM To Appeal Lower Court Decision in Pension Case
Excerpt: "IBM disagrees with the district court's ruling and believes that it will prevail on appeal. IBM's pension plan does not discriminate on the basis of age.... Under the court's interpretation of the law, every cash balance plan in the country is illegal. Scores of Fortune 500 companies have such plans.... The court's reasoning also would invalidate pension equity plans, contributory defined benefit plans, indexed career pay plans and variable annuity plans." (IBM)

Pension Rights Center Hails IBM Decision as Victory for Employees
Press release. Excerpt: "'The court recognized what we've known all along, says Karen Ferguson, the Center's Director. 'Cash balance plans discriminate against older employees and do not fit within the framework of the law.'" (Pension Rights Center)

American Benefits Council's Statement on Cash Balance Plan Conversion Case Decision
Excerpt: "A decision like this sends one more negative signal to employers that ‘no good deed goes unpunished' since it penalizes employers trying to provide their workers with a pension that is funded by the employer and guaranteed by the government, as opposed to requiring workers to rely solely on employee-funded retirement alternatives." (American Benefits Council)

Testimony of U.S. Chamber of Commerce to ERISA Advisory Council on DB Plan Funding Issue (PDF)
10 pages. Excerpt: "A law must be enacted immediately to provide a rational and appropriate replacement to the 30-year Treasury rate. For the reasons outlined below, we believe that a composite corporate bond rate is the appropriate permanent replacement for the 30-year Treasury rate.... The yield curve is not an immediate fix and there are not enough details to determine if it is rational." (U.S. Chamber of Commerce)

Testimony of American Academy of Actuaries to ERISA Advisory Council on DB Plan Funding Issue (PDF)
14 pages. Excerpt: "The investment risks, coupled with complicated solvency rules after three years of low interest rates and market returns have created a funding crisis for DB plans. At the same time, plan participants are starting to appreciate the value of being covered by a DB plan. Employees are beginning to recognize the value of the commitment and insurance element of pooling both investment risk and mortality risk through a company-sponsored plan." (American Academy of Actuaries)

FASB Passes on Pension Assumption Change Reporting
Excerpt: "The Financial Accounting Standards Board (FASB) says that employers will not have to disclose the impact of actuarial assumption changes." (PLANSPONSOR.com; one-time registration required)

PBGC Provides Relief from Deadlines In Response to Natural Disasters
Excerpt: "The natural disasters covered by these technical updates are: storms in American Samoa during the period of May 19-21, 2003 ... storms, tornadoes and flooding in Arkansas during the period of May 2, 2003 to June 10, 2003 ... recent storms, tornadoes and flooding in Kentucky ... and storms, flooding and landslides in West Virginia beginning June 11, 2003 ..." (hr.cch.com)

Philadelphia Mayor Hopes to End Early Retirement Program
Excerpt: "Mayor Street wants to end an experimental early-retirement program that is draining sorely needed money from the city's coffers. Under a worst-case scenario, it could cost the city as much as $715 million, according to a city actuary report." (The Philadelphia Inquirer)

Pension Funds' Report Harshly Criticizes NYSE's Corporate Governance
Excerpt: "The Council of Institutional Investors, a powerful pension-fund group, will release a report today harshly criticizing the [New York Stock Exchange, the nation's biggest securities market,] for shortcomings in governing itself and disciplining the brokerage industry." (Dow Jones Business News via Yahoo! News)

Social Security: Whose Trust Will Be Broken?
Links to prepared testimony. Witnesses at the July 29, 2003 hearing were David Walker, U.S. General Accounting Office; James Lockhart III, Social Security Administration; Dr. Thomas Saving, Social Security and Medicare Trust Funds; Brad Smith, Social Good Through Politics (Harvard University). (U.S. Senate Special Committee on Aging)


Links to Items on Executive Comp, Benefits in General

Text of Final Regulations on Golden Parachute Payments Under Code Section 280G (PDF)
106 pages. Excerpt: "Effective Date: August 4, 2003. These regulations apply to any payment that is contingent on a change in ownership or control if the change in ownership or control occurs on or after January 1, 2004.... Under the 2002 proposed regulations, taxpayers are permitted to rely on the 2002 proposed regulations until the effective date of the final regulations." (Internal Revenue Service)

Rev. Proc. 2003-68 on Valuation of Stock Options for Purposes of Code Sections 280G, 4999 (PDF)
13 pages. Excerpt: "This revenue procedure restates and modifies Revenue Procedure 2002-13 ... Section 280G denies a deduction for any excess parachute payment. Section 4999 imposes a nondeductible 20-percent excise tax on the recipient of any excess parachute payment, within the meaning of § 280G(b)." (Internal Revenue Service)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Pension/ 401k Administrator
for Karr Barth Pension Administration, Inc.
in PA

Director of Plan Administration
for MidAmerica Administrative & Retirement Solutions, Inc.
in FL

Manager Activations & Operations, HR-Benefit Services
for Intuit, Inc.
in CT
Newly Posted Press Releases
(Post Yours!)

Pension Rights Center Hails IBM Decision as Victory for Employees
(Pension Rights Center)

Most Employers Favor Health Promotion Programs to Contain Health Care Costs
(Hewitt Associates)

IBM To Appeal Lower Court Decision in Pension Case
(IBM)


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