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February 25, 2004 - 13,655 subscribers
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San Diego's Credit Rating Lowered; Pension Funding Problem Cited
Excerpt: "A major Wall Street credit-rating agency lowered the city's bond rating and signaled more downgrades may come, potentially adding millions of dollars to the city's borrowing costs.... Investment losses, underfunding dating back to 1996, a pension fund deficit, court settlements and the addition of new employee benefits without the required funding were the key reasons for the downgrade, Standard & Poor's officials said." (North County Times)
Land Swap Surfaces As Possible Fix for Underfunded San Diego Governmental Pension Plan
Excerpt: "The Pension Reform Committee is considering moving city real estate assets into the city's employee retirement system or issuing bonds to cover the fund's debts, April Boling, the panel's chairwoman, said yesterday. Politicians and others have suggested that both proposals wouldn't address the underlying problem that the system is severely underfunded." (San Diego Union-Tribune)
ESOP Fiduciaries Not Liable for Continuing to Hold Company's Stock Despite Decline in Value (PDF)
At pp. 7 and 8 of 12-page document. Excerpt: "The Seventh Circuit Court of Appeals recently affirmed a lower court's ruling that the trustees of an ESOP did not breach their fiduciary duty by continuing to hold company stock in the plan, despite a steep decline in stock value pending the plan's termination." (Jenkens & Gilchrist)
Retirement Claims Pay Off for Detroit Law Firm
Excerpt: "Seven years of legal work by a Metro Detroit law firm came to a conclusion this month when Georgia-Pacific Corp. agreed to pay $67 million in a class-action suit over pension benefits." (The Detroit News)
Overview: Treasury Releases More Guidance on S Corporation ESOPs (PDF)
At pp. 1-5 of 12-page document. (Jenkens & Gilchrist)
Overview: Recent IRS Guidance for Professional Employer Organization Plans
Excerpt: "In Revenue Procedure 2003-86, the IRS provides further guidance on defined contribution plans maintained by professional employer organizations (employee leasing companies)." (Southern Employee Benefits Conference)
Fred Reish Receives IRS Commissioner's Award
Excerpt: "On January 29th at the Los Angeles Benefits Conference, Fred Reish, managing partner of Reish Luftman Reicher & Cohen, received the IRS Commissioner's Award for his 'dedication and outstanding personal contribution' to the country's retirement system. The award is the highest honor that can be bestowed by the Commissioner of the Tax Exempt & Government Entities Division of the IRS." (Reish Luftman Reicher & Cohen)
Overview: DOL Provides Fiduciary Guidance for Dealing with Mutual Fund Scandal (PDF)
Excerpt: "The new DOL guidance offers no clarification on whether common 'boilerplate' language permitting plan administrators to refuse investment directions is sufficient to allow fiduciaries to police trading abuses. Two recent court decisions may offer some comfort to plan administrators and fund managers, however." (Kirkpatrick & Lockhart LLP)
'Fund of Funds' Approach Not for Everybody
Excerpt: "[S]ome fund companies have launched targeted retirement funds -- combinations of stocks and bonds that automatically rebalance over time. The idea is to provide simple, one-stop shopping for people who want to make all their long-term investing decisions in a single step." (AP via New York Times; one-time registration required)
Investor Perceptions and Preferences on Stocks: An AARP Survey of Stock Owners Age 50 or More
Excerpt: "This nationwide online survey of investors ages 50 and older was conducted by AARP to examine their perceptions of selected securities industry practices, the stock market, and financial services professionals in light of the events of the past few years." (AARP Research)
Supply-Side Consequences of Social Security Reform: Impacts on Saving and Employment (PDF)
59 pages; working paper. Excerpt: "Pension reform can potentially increase saving and improve incentives for labor force participation later in life. We investigate whether these effects are likely to occur and the potential size of the effects on private and total saving and on employment past age 55.' 2-page executive summary is online at http://www.bc.edu/centers/crr/papers/summary/wp_2004-01.pdf (Center for Retirement Research at Boston College)
Social Security Choices for the 21st Century Woman
Excerpt: "Social Security reform not only must restore the system to solvency, it should also address the program's other inequities that disadvantage women. The best way to do this would be to allow younger workers, including younger women, to privately invest at least a portion of their Social Security taxes through individual accounts." (Leanne Abdnor, published by the Cato Institute)
Overview: New Guidance on Administrative Expenses and on Late Deposits (PDF)
2 pages. Excerpt: "Defined contribution plan sponsors recently have been given important new guidance from the IRS and the Department of Labor (DOL), concerning separately charging administrative expenses to terminated vested participants and the late deposit of participant contributions into a 401(k) plan." (Milliman USA)
Pension Management in Light of Recent Economic and Corporate Upheavals
Excerpt: "[S]ome companies have recently taken the drastic step to extricate as much risk as possible from their DB plans. For example, Boots, the large UK pharmacy, has eliminated all equities from its DB assets, investing solely in cash and bonds. Boots made this move to specifically address the concerns of shareholders about the rising risks of DB plans, showing how prevalent the crisis is in countries outside the U.S. as well." (Actuary Daniel Cassidy of Argus Consulting Ltd.)
Links to Items on Executive Comp, Benefits in General
High Court Backs Benefits Based on Age
Excerpt: "Citing the soaring costs of health insurance, many other companies nationwide also have changed their benefits policies to eliminate or restrict access to retiree health benefits." (Washington Post; one-time registration required)
Text of Supreme Court Opinion Rejecting 'Reverse Discrimination' Argument
General Dynamics Land Systems, Inc. v. Cline et al.; the target page is a syllabus prepared by the Reporter of Decisions; the page includes links to the official opinion, Justice Scalia's dissent and Justice Thomas's dissent. (Cornell's Legal Information Institute)
AP Coverage: Court Blocks Reverse Age Discrimination
Excerpt: "Age has its benefits, the Supreme Court said Tuesday, ruling that younger workers can't sue their employers when older colleagues get preferential treatment." (AP via Washington Post)
PLANSPONSOR.com Coverage: Favoring Older Workers Not ADEA Violation
Excerpt: "In throwing out a lower court ruling, the justices said in a split six to three decision that the Age Discrimination in Employment Act (ADEA) is meant to protect workers from companies favoring younger colleagues but not the reverse, the Associated Press reported.... Justice David Souter, writing for the majority, agreed with General Dynamics. 'The statute does not mean to stop an employer from favoring an older employee over a younger one,' he wrote." (PLANSPONSOR.com; one-time registration required)
IBM Changes Stock Option Rules for Top Execs
Excerpt: "In an unusual move, IBM Corp. is adding a wrinkle to stock option awards-- executives can cash out only if the company's shares gain more than 10 percent. IBM says the decision would make the technology giant's top 300 executives more accountable to investors. The change was approved at a board meeting Tuesday and was to take effect immediately." (AP via Washington Post)
Opinion: IBM's One-of-a-Kind Executive Pay Plan Adds Risk
Excerpt: "Fans of extreme pay risk may yawn at what IBM is doing. Not so fast. IBM may not be injecting that much more risk, but it's heroic when compared with what so many other companies are -- or aren't -- doing. As far as I know, no other major U.S. company has a plan like IBM's." (Graef Crystal on Bloomberg.com)
Report: Private Sector Entities Routinely Obtain and Use SSNs, and Laws Limit Their Disclosure
35 pages. Excerpt: "You asked that GAO examine the private sector use of SSNs by businesses most likely to obtain and use them including information resellers, consumer reporting agencies (CRAs), and health care organizations. Specifically, our objectives were to (1) describe how information resellers, CRAs, and some health care organizations obtain and use SSNs and (2) discuss the laws and practices relevant to safeguarding SSNs and consumers' privacy. GAO makes no recommendations." (U.S. General Accounting Office)
Courts of Appeals Case Law Update
Summary of three recent benefits law cases at the federal appellate level. Excerpt: "In another 'legal versus equitable' relief case involving restitution, the Sixth Circuit held that a health plan could not, in federal court, recover from a participant medical expenses paid to the participant." (Southern Employee Benefits Conference)
Overview: DOL Class Exemption for Settlements
Excerpt: "The Department of Labor recently issued Prohibited Transaction Exemption 2003-39 that exempts the release of claims and extensions of credit in connection with certain settlements of litigation from prohibited transaction restrictions.... For settlements entered into after January 30, 2004, additional conditions apply in order for the exemption to be available." (Southern Employee Benefits Conference)
Stock Option Accounting: a Modest Proposal
Excerpt: "Why not expense part of the cost at grant and the rest at expiration?" (BusinessWeek Online)
Newly Posted Events
Retirement Plan Basics
in Wisconsin on May 11, 2004
presented by International Foundation (of Employee Benefit Plans, or IFEBP)
Trustees Training Program
in Nevada on May 3, 2004
presented by International Foundation (of Employee Benefit Plans, or IFEBP)
Health Plans, HIPAA, And COBRA Update
Nationwide on April 21, 2004
presented by ALI-ABA (American Law Institute-American Bar Association)
ClearComp's Giant Seminar
in California on March 24, 2004
presented by !Trak-It Solutions
412(i) Bootcamp II
in Washington on July 29, 2004
presented by The 412(i) Company
Investment Basics
in Wisconsin on May 13, 2004
presented by International Foundation of Employee Benefit Plans
401(K) Plans
in Wisconsin on May 17, 2004
presented by International Foundation of Employee Benefit Plans
Certificate in Global Benefits Management
in Illinois on May 17, 2004
presented by International Foundation of Employee Benefit Plans
Washington Legislative Update
in California on May 17, 2004
presented by International Foundation of Employee Benefit Plans
Managed Accounts for 401(k) Plans: Avoid Inertia and Maximize Participant Earnings
Nationwide on March 3, 2004
presented by IOMA
ClearComp's Giant Seminar
in California on March 4, 2004
presented by ClearComp
ClearComp's Giant Seminar
in California on March 9, 2004
presented by ClearComp
Clearcomp's Giant Seminar
in California on March 2, 2004
presented by ClearComp
ClearComp's Giant Seminar
in California on March 11, 2004
presented by ClearComp
ClearComp's Giant Seminar
in California on March 16, 2004
presented by ClearComp
Newly Posted Press Releases
Treasury and IRS Issue Proposed Rules on Student Exception to FICA Employment Tax
(Internal Revenue Service (IRS))
Newly Posted or Renewed Job Openings
Consultant/Producer/Broker
for BP Benefits and HR Consulting/Outsourcing
in
Group Health Sales Representative
for Mutual of Omaha
in CO, GA, NC, OR, TX
Benefits Administrator (50-60K) No Relocation available
for Praxis Search LLC
in NJ
Internal Pension Consultant
for Ceridian
in FL
401(k) Professionals
for BeneTemps, Inc.
in CT, MA, NJ, NY
Assistant Plan Administrator
for ProPension, Inc.
in MI
Director of Marketing
for Charles Schwab & Co., Inc.
in CA
Relationship Manager
for AMVESCAP Retirement, Inc.
in CO, GA
Compliance Operations Unit Manager
for Hewitt Associates
in IL
Actuary
for Swerdlin & Company
in GA
Senior Rollover Consulting Group Associate
for New York Life Investment Management
in NJ
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