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September 16, 2003 - 13,400 subscribers
Today's sponsor: Actuarial Systems Corporation

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ASC - QUALITY SOFTWARE FOR THE PENSION INDUSTRY FOR OVER 20 YEARS

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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)
Congressmen Hear Opposition to Administration Proposal on Pension Interest Rates
Excerpt: "Pension plan administrators and consumers spoke up Monday against a White House proposal to rewrite the formula that companies use to measure future pension liabilities.... The Treasury Department wants to replace the 30-year Treasury bond with a yield curve, a rate that is based on high-grade corporate bonds and then adjusted to reflect characteristics of a company's work force and its pension responsibilities over future years." (New York Times; one-time registration required)

Fixing the Pension Problem
Excerpt: "Will your pension be there when you need it? Probably, but changes are needed to fix the nation's troubled pension system before more plans turn to the government for help. At the core of the issue is the Pension Benefit Guarantee Corporation [sic] ..." (Kiplinger.com)

Text of American Benefits Council Testimony at Senate Hearing on Pension Interest Rates (PDF)
18 pages. Excerpt: "[W]hat has led to the decline of the defined benefit system? We see several factors. First, we see a less than friendly statutory and regulatory environment for defined benefit plans and the companies that sponsor them.... In our view, the need to replace the obsolete 30-year Treasury bond interest rate used for pension calculations is the most pressing issue facing the defined benefit pension system today." (American Benefits Council)

Actuaries Urge Congress to Protect Defined Benefit Pension Plans (PDF)
Press release. Excerpt: "John Parks ... called on Congress to 'simplify the rules' for defined benefit pension plans. He asked Congress to act quickly to replace the 30-year Treasury bond discount rate with a benchmark using high-grade, long-term corporate bonds for pension funding. He also asked that if Congress enacts a temporary rate, that it be for five years to ensure a greater degree of certainty for plan sponsors." (American Academy of Actuaries)

Text of American Academy of Actuaries Testimony at Hearing on DB Plans (PDF)
17 pages, 9/15/2003. Testimony of John P. Parks, EA, FCA, MAAA, MSPA. (!) (American Academy of Actuaries)

Text of PBGC Director's Testimony at Hearing on DB Plans
Excerpt: "Pension liabilities represent financial obligations of plan sponsors to their workers and retirees. Thus, any pension underfunding is a matter of concern and may pose risks to plan participants and the PBGC.... Well-funded plans represent the best solution for participants and premium payers. However, PBGC's premiums should be re-examined to see whether they can better reflect the risk posed by various plans to the pension system as a whole." (Pension Benefit Guaranty Corporation)

Senate Finance Committee Expected to Vote on Pension Funding Bill
Excerpt: "The Senate Finance Committee is expected to vote tomorrow on a bill that would offer relief to severely troubled pension plans-- including those at airlines-- and would radically change the way companies calculate their pensions." (New York Times; one-time registration required)

JCT Explains Finance Chairman's Mark of 'National Employee Savings and Trust Equity Guarantee Act' (PDF)
Excerpt: "The Senate Committee on Finance has scheduled a markup on September 17, 2003, of the 'National Employee Savings and Trust Equity Guarantee Act' .... Under the proposal, in order to satisfy the plan qualification requirements of the Code and the vesting requirements of ERISA, certain defined contribution plans are required to provide diversification rights with respect to amounts invested in employer securities or employer real property." (U.S. Congress, Joint Committee on Taxation)

Company President Heads to the Slammer for Stealing 401(k) Trust Funds
Excerpt: "A federal judge has sentenced to prison the former president of a Fort Worth aviation services company for stealing $107,122 from the firm's 401(k) plan by diverting employees' payroll deductions for his personal and business expenses." (PLANSPONSOR.com; one-time registration required)

Overview: IRS Issues Letter Ruling on Service Purchases Using Transfers from 401(k) Plans (PDF)
Discussion of Private Letter Ruling 200330535 at page 2 of this 2-page document. (Gabriel, Roeder, Smith & Company)

Overview: PSCA's 46th Annual Survey of Profit Sharing and 401(k) Plans
Excerpt: "80.3% of eligible employees held balances in their 401(k) plans. Pre-tax deferrals averaged 5.2% of pay for lower-paid and 6.3% of pay for higher-paid employees.... The average company contribution was 4.1% of payroll. Company contributions were highest in profit sharing plans (8.8% of payroll) and lowest in 401(k) plans (2.8% of payroll). Company contributions averaged 25.6% of total net profit for profit sharing plans and 11.3% of total net profit for 401(k) plans." (Profit Sharing/401(k) Council of America)

Federal Thrift Savings Plan Ponders Investment Option Providing Built-In Diversification
Excerpt: "The Thrift Savings Plan, which offers five retirement savings funds for federal employees, will consider adding a 'lifestyle fund' geared to helping participants take a diversified approach to investing." (Washington Post)

Starting Point Anchors Participant Focus: Vanguard
Participants are finding better news in their 401(k) statements, but new participants may be getting the wrong message. During the first six months of 2003 this group allocated just 48% of their contributions to equities, during a period when existing participants in these same programs continued to direct about 70% of their new contributions into stocks. (PLANSPONSOR.com; one-time free registration required)

403bWise.com Picks First K-12 'Model' 403(b) Program
Excerpt: "Employers who offer attractive plans recognize the necessity of the 403(b) for both recruitment and retention. And even more importantly, they recognize the value of their employees. We hope the following list serves as a benchmark that all employers will strive to meet and even surpass." (403bWise.com)

Influential Institutional Investors to Form National Coalition for Corporate Reform
Excerpt: "The National Coalition for Corporate Reform, championed by state treasurers and pension funds, seeks to restore investor confidence through better corporate governance." (SocialFunds.com)

Overview: IRS Extends Plan Amendment and Filing Deadlines (PDF)
2 pages, very nicely done; target document also includes helpful hypertext links to other CIGNA explanatory publications. (CIGNA's Pension Analyst)


Links to Items on Executive Comp, Benefits in General

IRS Executive Compensation Audit Initiative to Include Fringe Benefit Issues
Excerpt: "The IRS has begun an audit initiative focusing on compensation arrangements for corporate officers, directors and other senior executives. The Large and Mid-Size Business Division (LMSB) will target the following issues for executive compensation audits: 1. corporate air travel; 2. housing; 3. retirement contracts; 4. nonqualified deferred compensation plans; and 5. executive loans." (Thompson Publishing Group)

Exposure Draft: Employers' Disclosures About Pensions and Other Postretirement Benefits (PDF)
Excerpt: "It would require disclosures about defined benefit pension plan and other postretirement benefit plan assets, obligations, cash flows, and net cost and retain a number of disclosures required by FASB Statement No. 132, Employers' Disclosures about Pensions and Other Postretirement Benefits. This proposed Statement would eliminate Statement 132 requirements to provide reconciliations of beginning and ending balances of the fair value of plan assets and benefit obligations." (Financial Accounting Standards Board)

Opinion: It's Time to Solve the Pension and Retiree Healthcare Funding Mess
Excerpt: "Every carmaker--foreign ones, too-- would collect a $500 levy on the sale of each new vehicle here. The money would pay benefits for the Big 3's retirees." (Jerry Flint on Forbes.com)

Text of IRS Freedom of Information Act Handbook (PDF)
33 pages, 8/20/2003. Excerpt: "The Department of Treasury and the IRS policy is to implement the FOIA uniformly and consistently and to provide maximum allowable disclosure of records. Therefore, if a record is requested by a member of the public, and the requester follows the rules for making a FOIA request, that record will be disclosed unless it is appropriately protected from disclosure by one or more of the nine exemptions or by one of the three law enforcement record exclusions." (Internal Revenue Service)

Analysis: Court Imposes ERISA Liability on M&A Practices
Excerpt: "A surprise decision by the 9th Circuit has created a new risk of liability for those involved in corporate transactions.... In Lessard v. Applied Risk Management, the 9th Circuit took a new approach to analyzing a business transaction in a way that has installed new teeth into section 510." (BenefitNews.com)

Commentary: How Green Was My Envy
Excerpt: "Dick Grasso, who is the head of the New York Stock Exchange, is taking home $140 million in cash. That's cash, not checks. Not performance incentives to be named later. Not stock. Not even livestock. Cash. One hundred and forty million simoleons for his retirement. Even if simoleons don't go as far as they used to, that's a tremendous number of them." (Stanley Bing on Fortune.com)

Is Employee Benefit Cost-Cutting Too Damaging to the Social Contract?
Excerpt: "[Employee benefits attorney Brooks Hamilton says,] 'We shouldn't be talking about making the profit plan by cannibalizing benefits. You have to make your profit plan while honoring your obligation to employees. If you make your profit plan by cannibalizing benefits, you're not a very good businessman.'" (Scott Burns in the Houston Chronicle)


Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Client Services Specialist
for ExpertPlan, Inc.
in NJ

Pension Administrators
for Alliance Benefit Group of Illinois, Inc.
in IL

Senior Client Services Consultant
for Charles Schwab & Co., Inc.
in OH

Senior Customer Support Representative – Employee Benefits Software
for AMS Benefits - a new benefits software division of AMS Services, Inc.
in FL
Newly Posted Press Releases
(Post Yours!)

IRS Reminds Businesses of Retirement Plan Deadline
(Internal Revenue Service)

Gilsbar, Inc. Expert Speaks on HIPAA Compliance at National SPBA Conference
(Gilsbar, Inc.)

OnQue Technologies Releases Latest Version of COBRA OnQue -- The Intelligent COBRA Administration Software
(OnQue Technologies, Inc.)

Identity Theft Protection
(Pre-Paid Legal Services, Inc.)


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