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August 4, 2003 - 13,309 subscribers
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Court Backs Workers In Xerox Cash Balance Pension Fight Over Lump Sum Calculations
Excerpt: "[A] three-judge panel of the U.S. Court of Appeals for the 7th Circuit ruled that a lower court was correct when it held last October that Xerox was required to use a much more generous formula in calculating lump sums for some 25,000 employees than the one it did use." (Washington Post)
Text of 7th Circuit Opinion in which Judge Posner Explains Why Xerox Loses Cash Balance Case (PDF)
15 pages; Berger v. Xerox Corporation Retirement Income Guarantee Plan, No. 02-3674 (7th Cir. 8/1/2003). Excerpt: "We conclude, in agreement with the Second Circuit which considered a materially identical plan in the Esden case, that the Xerox plan's method of computing the plaintiffs' lump-sum entitlements violates ERISA." (U.S. Court of Appeals for the Seventh Circuit, via the ERISA Industry Council)
Court Decision in IBM Age Discrimination Case Is Big Blow to Cash-Balance Plans
Excerpt: "[P]ension experts say the ruling by the federal court could severely undermine the U.S. pension system. 'This ruling has the potential to cause great harm to the U.S. private pension system,' claims Eric Lofgren, global director of the benefit consulting group at consultancy Watson Wyatt Worldwide. 'Moreover, two other district courts and the U.S. Treasury Department have previously reached the opposite conclusion concerning the validity of cash balance plans.'" (CFO.com)
IBM Ruling Creates Headache Over Cash Balance Pension Plans
Excerpt: "[O]n Thursday ... a federal judge in Illinois ruled that International Business Machines Corp.'s switch to [a cash balance] pension plan in the 1990s discriminated against older employees. That is in direct contrast to proposed rules by the Internal Revenue Service that argue that cash balance plans do not discriminate against older employees, said Dallas Salisbury, president of the Employee Benefits Research Institute." (AP via New York Times; one-time registration required)
Watson Wyatt: Cash Balance Court Ruling Could Harm U.S. Pension System
Press release. Excerpt: "According to Watson Wyatt, the court's 24-page decision was based on surprising and partly contradictory conclusions." (Watson Wyatt)
Emerging Developments for Cash Balance Plans (PDF)
2 pages. Excerpt: "Major judicial, regulatory, and accounting policies are being established for cash balance plans, pension equity plans, and other hybrid retirement vehicles. Although some of the developments could significantly affect the design, operation, and reporting of a cash balance plan, sponsors should avoid making irreversible decisions before reviewing all of the emerging developments." (Milliman USA)
Public Pension Plans Facing Underfunding Problems
Excerpt: "State taxpayers are having to spend billions of dollars to prop up public pension plans hit hard by stock market losses, which squeezes state budgets at a time when tax collections are growing slowly." (USA TODAY)
West Virginia In Deepest Pension Peril
Excerpt: "Today, the West Virginia teachers retirement system is the worst-funded public pension fund in the nation. It has only 19% of the assets needed to pay current and future benefits." (USA TODAY)
Pension Plan Underfunding: the Next Scrambled Nest Egg?
Excerpt: "Pensions, the steady stream of income granted in return for years of faithful service, were once supposed to offer a dependable security blanket for millions of older Americans. Lately, though, pension-fund values have been devastated by stock market losses and historically low interest rates on fixed-income securities." (Time.com)
Opinion: Herbert Hoover Pension Rules
Excerpt: "The end result of this regulatory bird's nest is a government structure that encourages excessive benefits, prohibits prudent funding and requires punitive payments during recessions.... Proposals in this area must specifically preempt collective bargaining contracts that allow pension benefits to rise automatically, even though the plan is underfunded and the company is in trouble." (Lawrence B. Lindsey and Marc Sumerlin in the Washington Post)
Overview: Comprehensive Proposed Regulations on 401(k) Plans
Excerpt: "Here are some highlights in the proposed regulations." (TRI Pension Services)
Firms Look To Raise 401(k) Participation By Limiting Investment Choices
Excerpt: "[L]arge retirement-plan administrators such as Vanguard Group, Merrill Lynch's Retirement Group and Manulife Financial all say companies are streamlining investment choices. Some clients have trimmed their offerings from several dozen funds to 15 or fewer." (Wall Street Journal via Arkansas Democrat-Gazette)
Can ESOP Save Paper Mill in Mississippi?
Excerpt: "Organizers of an effort toward an employee buyout of the International Paper mill are encouraged workers from the now closed plant to come to an informational meeting this week." (The Natchez Democrat)
Employee Ownership Update for August 1, 2003
NCEO Executive Director Corey Rosen discusses the IRS's crackdown on S corporation ESOP tax-avoidance schemes that use non-qualified deferred compensation and/or management company arrangements; simplified Section 1042 filings; FAS 150 and ESOPs; and dimming prospects for The Broad Based Stock Option Plan Transparency Act. (National Center for Employee Ownership)
Notice 2003-57 Provides Guidance for Reporting by Certain Canadian Retirement Trusts (PDF)
2 pages. Excerpt: "Treasury and the IRS have concluded ... that additional relief with respect to 2002 Form 3520 and Form 3520-A reporting requirements should be provided to RRSPs and RRIFs and their beneficiaries." (Internal Revenue Service)
Employer Throws Retirement Party To Boost 401(k) Participation
Excerpt: "[F]or employers with a significant number of Spanish-speaking employees, providing retirement planning and education in another language isn't as tough as they might think. As Minneapolis-based contracting firm M.A. Mortenson Company discovered, it just takes commitment, the right message and a little ingenuity." (BenefitNews.com)
Links to Items on Executive Comp, Benefits in General
4th Circuit: ERISA 510 Suit Doesn't Preempt State Wrongful Discharge Claim
King v. Marriott Int'l Corp., No. 02-2139 (4th Cir. 07/28/03). FindLaw.com excerpt: 'In an action for wrongful discharge under Maryland state law, asserting that plaintiff was discharged for complaining about and for refusing to violate ERISA, the district court erred by concluding that her claim was completely preempted by ERISA.'" (U.S. Court of Appeals for the Fourth Circuit, via FindLaw.com)
U.S. Steel Posts Loss on Pension, Healthcare Costs
Excerpt: "United States Steel Corp. on Monday reported a quarterly loss, compared to a profit last year, hurt by high pension and health care costs." (Reuters)
New Tax Laws May Change Stock Option Strategies
Excerpt: "[S]ome financial advisers say that many people fortunate enough to hold options that are above water should consider exercising them sooner rather than later because of recent changes in the tax law." (New York Times via SFGate.com)
Newly Posted or Renewed Job Openings
Retirement Plan Documentation Associate II
for Glens Falls National Bank & Trust Company
in NY
Compliance Specialist
for Intuit, Inc.
in CT
Marketing Coordinator
for Transamerica
in NJ
Pension Plan Administrator
for Beltz Consulting, LLC
in NV
Benefit Administrator
for ENERGI
in CA
Actuary/Consultant
for Pencor, Inc.
in FL
Newly Posted Conferences
(Post Yours!)
Fundamentals of Health & Welfare and Retirement Plans
in TX
August 19, 2003
Houston Chapter: International Society of Certified Employee Benefit Specialists
Newly Posted Press Releases
(Post Yours!)
Leadership Pulse Shows Sales, Net Profit and Employment to Improve
(eePulse, Inc.)
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