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April 27, 2004 - 13498 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)
NASD Seeks Rules on Variable Annuities
Excerpt: "The National Association of Securities Dealers, the brokerage industry's self-policing organization, announced Monday that it has proposed a series of new requirements, including clear disclosure to investors of the potential risks of particular variable annuities and standards for determining whether they are suitable for a specific customer." (AP via Washington Post; one-time registration required)

Mutual Fund Family Fiduciary Rankings (tm) as of March 31, 2004 (PDF)
21 pages. Excerpt: "Fiduciary Analytics has completed its third consecutive quarterly research report on mutual fund families that ranks them by the percentage of their individual funds that pass fiduciary due-diligence screens.... [T]he research shows a high correlation between the mutual fund family's shareholder governance policies and its ranking." (Fiduciary Analytics)

SEC Probes Potential Fair-Value Pricing Problems
Excerpt: "The U.S. Securities and Exchange Commission (SEC) for the first time is considering disciplinary charges against mutual-fund companies that aren't using fair-value pricing for portfolio holdings with out-of-date market prices." (PLANSPONSOR.com; one-time registration required)

T. Rowe Price Imposes Fee on Redemptions
Excerpt: "Mutual-fund company T. Rowe Price is moving to combat market timing by imposing a mandatory 2 percent fee on international fund shares redeemed within 90 days." (AP via New York Times; one-time registration required)

Another Appeals Court Affirms the Right of Individual Account Plans to Hold Employer Stock (PDF)
At pp. 5-6 of 8-page document. Excerpt: "[T]he opinion hints that the Ninth Circuit may be even less inclined than the other courts to require plans to diversify out of employer stock, given ERISA's clear statutory exemption." (Jenkens & Gilchrist)

ESOP Trustee Exonerated in Foster & Gallagher Case (PDF)
At pp. 1-4 of 8-page document. Excerpt: "The plaintiffs were two participants in F&G's ESOP, who alleged that the ESOP trustee had breached its fiduciary duties to the ESOP by paying too much for the company's stock in 1995. The court found that no breach of fiduciary duty had been proven, and its extensive and well-reasoned opinion provides important guidance for ESOP fiduciaries and their advisors." (Jenkens & Gilchrist)

Overview: Prepayment of an Exempt Loan Did Not Violate Primary Benefit Requirement (PDF)
At pp. 4-5 of 8-page document. Excerpt: "The IRS recently ruled that the prepayment of an exempt loan did not cause the loan to violate the exempt loan rules where (a) the prepayment was made in connection with the termination of an ESOP, and (b) the prepayment was made with the proceeds from the sale of the shares of stock held in the ESOP suspense account." (Jenkens & Gilchrist)

Chattanooga Probing Pension Consultants for Possible Conflict of Interest
Excerpt: "Chattanooga, Tennessee officials are investigating the performance of UBS Financial Services and Morgan Stanley as consultants to its $180-million pension fund amid a larger federal probe into possible pension consulting conflicts of interest.... Alleged conflicts by consultants can take several forms, but they all center on the powerful influence consultants wield over investment officials at pension funds." (PLANSPONSOR.com; one-time registration required)

Pension Hike Wallops Schools in Michigan
Excerpt: "As local school districts grapple with tight budgets by laying off teachers and mulling program cuts, they face a whopping, mandatory increase in state pension expenses." (Detroit News)

CalPERS Takes Aim at 11 Firms Over Governance
Excerpt: "California's largest public pension fund said Monday that it would withhold proxy votes involving 11 more companies, continuing its campaign largely directed against boards that let auditors perform outside services such as consulting." (Los Angeles Times; one-time registration required)

Opinion: Activist Pension Fund Trustees Raise Bar On Accountability
Excerpt: "The increased activism by pension funds that represent millions of employees from California to North Carolina, illustrates how small investors who band together can have a powerful impact." (USA Today)

Opinion: Government Pension Fund Trustees Abuse Power
Excerpt: "The American economy has been a wonder because we have constrained capricious government intervention into private enterprise. State pension funds are messing with our formula for success." (Kevin Hassett in USA Today)

Some Public Pensions in Oregon Near 100% of Preretirement Pay
Excerpt: "When a record number of Oregon's public employees retired last year, one in four longtime workers got a pension equaling or bettering their salary. On average, employees with 30 or more years on the job retired at age 56 with 87 percent of their pay, according to an analysis by The Oregonian, the first detailed examination of 2003's retirement surge." (OregonLive.com)

Overview: IRS Announces Plans to Implement Staggered Remedial Amendment Periods
Excerpt: "In general, the staggered remedial amendment period system will be designed along the lines of a proposal the IRS set out in a white paper last year. The Service also is thinking about establishing regular six-year amendment/approval cycles for all pre-approved plans (M&P and volume submitter plans), beginning with the submission of these plans for EGTRRA opinion and advisory letters." (The Human Capital practice of Deloitte Consulting LLP)

Employers Should Review Costs of 401(k) Plan Administration
In light of proposed legislation calling for better disclosure of fees charged by mutual funds, Hewitt Associates has urged employers to examine how these fees are impacting their 401(k) plans. If not managed effectively, companies' total 401(k) plan costs--which include investment management costs, administration costs, and trustee costs--could be costing millions more than they realize, affecting individual employees' retirement earnings by hundreds of thousands of dollars over time. (Spencer Benefits Reports)

Links to Items on Executive Comp, Benefits in General

Claimant Could File Suit Because Plan Failed to Decide Claim Within 90 Days
Linder v. BYK-Chemie USA Inc. (D. Conn. 2004). Excerpt: "This decision caught our eye because it highlights an important difference between the old and new ERISA claims regulations.... This case illustrates the consequences that can result from failure to comply with the new claims regulations. The new regulations do not retain the deemed denial rule, substituting instead the deemed exhaustion rule, and claims procedures should reflect the change." (Employee Benefits Institute of America Inc. (EBIA))

Romney Won't Let G.ay Outsiders Wed in Massachusetts
Excerpt: "Same-sex couples who live outside Massachusetts will not be able to marry in Massachusetts when g.ay marriage becomes legal here next month, Gov. Mitt Romney said." (New York Times; one-time registration required)

Mass. Governor: Marriages Won't Transfer
Excerpt: "Gov. Mitt Romney invokes a 90-year-old law barring marriages in Massachusetts if they are not legal in the couple's home state. Many say the move is meant to keep g.ay couples from flocking to Massachusetts when same-sex marriage becomes legal there on May 17. NPR's Tovia Smith reports." (National Public Radio)

Same-Sex Marriage: the Challenges Facing Employee Benefit Plan Sponsors (PDF)
5 pages. Excerpt: "While there are few definitive answers, employers should consider the following issues:" (The Law Office of Stella M. Edralin)

The Executive Perk Is Still Thriving
Excerpt: "The executive perk, much criticized during the corporate scandals of the past few years, is still thriving at many big companies, where top managers take personal trips on company jets, have their taxes paid or get free home security systems." (AP via FindLaw.com)

Delta Shareholders Approve Executive Pension Restrictions
Excerpt: "Under the proposal, Delta's board would have to seek shareholder approval for any 'extraordinary retirement benefits' given to senior executives, including credit for years of service not worked, accelerated vesting rights, or funding bankrup.tcy-proof pension accounts." (PLANSPONSOR.com; one-time registration required)

Welcome to new BenefitsLink advertiser Workplace Economics Inc.
Excerpt: "Workplace Economics Inc. is an economics research and consulting firm specializing in the application of economic and quantitative analysis to employment, compensation and benefits, healthcare, pension and retirement issues since 1988. Workplace Economics Inc. has special expertise with respect to public employee compensation and benefits issues and private transportation industry compensation and benefits issues."

Newly Posted Events

57th National Conference & Exhibition
in Louisiana on September 29, 2004
presented by Profit Sharing/401(k) Council of America (PSCA)

Annual Form 5500 Review - Breakfast Meeting
in Connecticut on May 11, 2004
presented by WEB (Worldwide Employee Benefits Network) Stamford Chapter

Rising Health Care Costs ... Strategies for Containment
in California on April 28, 2004
presented by No. Calif. Chapter of Certified Employee Benefits Specialists (ISCEBS)

Treasury Officials Discuss Health Savings Accounts Guidance
Nationwide on May 11, 2004
presented by Employers Council on Flexible Compensation (ECFC)
Newly Posted Press Releases

Union Central Adopts MasteryPOINT’S Guidance Plus®
(Newkirk)

Leaders Suggest Thinking Twice Before Outsourcing Jobs Overseas
(eePulse, Inc.)

Morgan Stanley’s Martin Leibowitz, Russell Investment Group’s Don Ezra To Be Honored With EBRI Lillywhite Award For Distinguished Service
(Employee Benefit Research Institute (EBRI))

Galen Institute on Joint Economic Committee Hearing
(Galen Institute)

Retirement Research Project Looking for Participants
(Matthew D. Hutcheson, LLC)

The Benefit Network Partners With NewsGator To Provide A Targeted HR Newsreader
(The Benefit Network)

NASD Proposes Specific Requirements For Deferred Variable Annuity Sales
(NASD (National Association of Securities Dealers))

NRLN Catches EEOC Discriminating
(National Retirees Legislative Network (NRLN))
Newly Posted or Renewed Job Openings
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