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October 31, 2003 - 13,383 subscribers
Today's sponsor: APSCREEN, Employee Locator
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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)
ERSAs on Comeback Trail
Plan sponsors who thought the Bush Administration's retirement savings proposals were DOA are in for a surprise next year. Speaking at the annual American Society of Pension Actuaries Conference (ASPA) in Washington, D.C., Bill Sweetnam, Treasury Benefits Tax Counsel, confirmed that the Bush Administration plans to push for its new breed of retirement savings programs in next year's budget. (PLANSPONSOR; one-time free registration required)
Putnam Investments Faces Grave Crisis In Wake of Allegations
Excerpt: "The allegations by regulators that it allowed members of a New York union retirement plan to move quickly in and out of funds, against company policy, were expected. More troubling were the details of accusations that it turned a blind eye while its own fund managers did the same, for personal profit.... Several advisers interviewed Thursday said they are advising clients not to make any rash decisions to move away from Putnam." (AP via the Boston Globe)
Vermont Pulls Teachers' Fund from Putnam
Excerpt: "The Vermont State Teachers' Retirement System closed its $91 million account with Putnam Investments, becoming the first public pension fund to sever ties with the troubled Boston money-management firm, state Treasurer Jeb Spaulding said Thursday." (Rutland [Vt.] Herald)
AP Coverage: Putnam Investments Loses $1.7 Billion from Massachusetts
Excerpt: "'It's certainly a very sad day for the Boston financial community,' said Robert Brousseau, a member of the Massachusetts Pension Reserves Investment Management Board. 'What it comes down to ... is the issue of trust.' Putnam said it was disappointed in Massachusetts' decision but hoped to eventually manage the state's pension assets again." (AP via New York Times; one-time registration required)
Mutual Fund Reforms Would Add Fees, Delay Trades
Excerpt: "The [proposed new mutual fund] rule would be a disadvantage for many retirement plans and mutual fund supermarkets, which now have extra time to collect trades from investors and pass them on to fund companies. To make the deadline, they might have to require investors to post their trades earlier. It could take 24 hours for some 401(k) plans to process trades." (USA Today)
Mutual Fund Leaders Call For Fundamental Reforms to Address Trading Abuses
Press release. Excerpt: "[T]he Institute called for and will vigorously support a firm 4:00 pm deadline for all mutual fund trades to be reported to mutual fund companies.... [T]he Institute called for and will vigorously support a mandatory, industry-wide minimum two percent redemption fee on the sale of virtually all mutual funds (other than money market funds) for a minimum of five days following purchases." (Investment Company Institute)
Mutual Fund Association's Proposal to SEC is No 'Treat' for Plan Sponsors
Excerpt: "Plan sponsors and plan participants got tricks, not treats, from the mutual fund industry's chief lobbying group yesterday. The Investment Company Institute, while acknowledging that its recommendations would 'affect millions of fund shareholders, thousands of intermediaries, and hundreds of fund companies,' nonetheless called for industry reforms that, if enacted as described on their face, are certain to put retirement plan investors at a significant disadvantage." (PLANSPONSOR.com; one-time registration required)
PSCA Comments on Mutual Fund Trading Scandals in Letter to SEC
Excerpt: "PSCA is extremely concerned about the recent allegations and settlements in which market timing in violation of fund rules and illegal late trading occurred.... It is extremely unlikely that the alleged financial schemes involving late trading could be duplicated in the defined contribution plan setting. However, this system ... is the most likely to be heavily impacted by any rule requiring that trades be received by the fund by closing time." (Profit Sharing/401(k) Council of America)
Opinion: It'll Take More Than New Laws to Fix Mutual Funds
Excerpt: "Reform is in the air, and justifiably so. New rules are needed to deter people from exploiting a system where points of vulnerability have been exposed for all to see. New rules alone won't resolve the biggest issue raised by this scandal. The pure and simple question is, are the funds going to be run for the benefit of their 95 million owner-customers or not?" (Chet Currier on Bloomberg.com)
Heavy Trading in 401(k)s Being Watched by Some Plan Sponsors
Excerpt: "Most workers seldom trade in their retirement plans. But when frequent trading occurs, employers generally want to discourage it because it generates a lot of fees, which are shared by all plan members. And short-term traders siphon profits from other workers." (USA Today)
Mutual Fund Proposal No “Treat” for Retirement Plans
Plan sponsors and plan participants got tricks, not treats, from the mutual fund industry's chief lobbying group yesterday. The Investment Company Institute, while acknowledging that its recommendations would 'affect millions of fund shareholders, thousands of intermediaries, and hundreds of fund companies,' nonetheless has called for industry reforms that, if enacted as described on their face, are certain to put retirement plan investors at a significant disadvantage. (PLANSPONSOR; one-time free registration required)
Hypertext List of ERISA Industry Committee Briefs on Pension Funding Issue
Excerpt: "ERIC's position on yield curves ... a 'plain English' explanation on pension funding rules ... ERIC Talking Points on the Administration's Proposal Regarding Disclosure & Benefits Cutoff ... ERIC brief on Corporate bond rate." (ERISA Industry Committee)
PBGC Assumes Responsibility for Pillowtex Pensions
Press release. Excerpt: "The Pension Benefit Guaranty Corporation [on Oct. 30, 2003] announced that it will assume responsibility for the pensions of nearly 23,000 workers and retirees of Pillowtex Corp., Kannapolis, N.C., a manufacturer of household textiles that is liquidating in bankruptcy." (Pension Benefit Guaranty Corporation)
Overview: Enron and the Fiduciary Responsibilities of Persons Who Appoint Benefit Plan Fiduciaries
Excerpt: "The issue ... is much broader than the facts in Enron, and should be considered by ANY company that sponsors an employee benefit plan governed by ERISA. A number of cases currently pending against other companies raise the same issue, and the U.S. Department of Labor has filed 'friend of the court' briefs supporting the plaintiffs in those cases, as it did in Enron." (Faegre & Benson LLP)
Minimum Gateway Questions and Answers
Excerpt: "Although the basic rule as to when an employer needs to provide the minimum gateway contribution does not change, the application of the top heavy requirements, the addition of a 401(k) and matching features, or the addition of a safe harbor 401(k) feature makes more challenging the determination as to whether a participant must receive the minimum gateway contribution. The following questions identify a few of the most common situations." (SunGard Corbel)
About the Annual Cross-Tested Plans Contribution Notice
Excerpt: "The notice does not need to specify the amount the plan will allocate to individual participants. Rather, the notice need only specify the amount apportioned to each allocation group. The IRS does not require the notice to be signed by a corporate officer or that it be in the form of a resolution. However, the notice must be in some form of writing." (SunGard Corbel)
IRS To Make EPCRS Work for Unintended Failures, Says IRS Plans Compliance Chief
Excerpt: "Loans that employees didn't want; overlooked plan provisions that were not consistent with legitimate plan operations: Such 'unintended' failures are among the most vexing problems arising in the months since the IRS issued a revised Employee Plans Compliance Resolution System (EPCRS), according to Joyce Kahn ..." (Thompson Publishing Group)
Massachusetts Fund Trustees Fire Putnam
Excerpt: "Trustees for the Massachusetts state pension fund Thursday voted to fire Putnam Investments, the embattled fund company which currently manages $1.7 billion in domestic and international equities for the $29 billion fund." (Reuters via New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Tax Court: Golden Parachute Payments Found In Post-Acquisition Employment Agreements
Excerpt: "Payments made to senior managers under employment agreements were contingent upon a change of company ownership and thus considered parachute payments even though the agreements had been entered into after the company acquisition occurred, according to the U.S. Tax Court ..." (CCH News & Information Library)
Accounting Board To Finalize FASB Disclosure Exposure Draft; Revisions In Measurement
The cost of complying with the new Exposure Draft is considered to be modest in relation to the benefits derived by financial statement users. The FASB 'believes that most, if not all, of the information should be available through the plan sponsor's investment management systems, internal processes, and actuarial valuations. (SpencerNet)
Newly Posted or Renewed Job Openings
Defined Contribution Plan Administrator
for Columbus Retirement Administrators, Inc.
in OH
Newly Posted Conferences
(Post Yours!)
Penalty-Free Ways to Fix Your Pension Plan Problems (Hear IRS Officials Tell You How)
in ALL STATES
November 13, 2003
Thompson Publishing Group, Inc.
Newly Posted Press Releases
(Post Yours!)
A Strictly Enforced Trading Deadline Will Not Threaten Retirement Plans
(401kHelpCenter.com, LLC)
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