| BenefitsLink Retirement Plans Newsletter |   |
November 1, 2004
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More Employers Opt to Offer Managed 401(k) Plans for Employees -- For a Fee
Excerpt: "When it comes to managing their 401(k) plans, a good 40 to 50 percent of employees are couch potatoes. They don't enroll at all or they park their money in the most conservative option and forget about it. After trying, mostly in vain, to get these reluctant investors to take a more active role in their retirement plans, 401(k) providers are taking a new approach: Manage it for them. Some small and medium-size employers have been offering managed 401(k) accounts for years, ...." (San Francisco Chronicle)
Class Action Suit Filed Against Aon Corporation on Behalf of 401(k) Plan Participants/Beneficiaries
Excerpt: "On October 29, 2004, Wolf Haldenstein Adler Freeman & Herz LLP filed a class action lawsuit in the United States District Court for the Northern District of Illinois, on behalf of all participants and beneficiaries of the 401(k) Savings Plan (the 'Plan') of Aon Corporation ('Aon' or the 'Company') [NYSE:AOC], between November 1, 1998 and the present, inclusive (the 'Class Period'), against defendant Aon and certain officers and directors of the Company." (Wolf Haldenstein Adler Freeman & Herz LLP)
Pension Plan at United Airlines in Jeopardy, Executive Says
Excerpt: "United Airlines, which is under bankrup.tcy protection, is almost certain to terminate its employee pension plans and replace them with less-expensive retirement benefits, the airline's chief financial officer said ..., blaming an 'extraordinarily bad' industry environment. The United executive ... said ... that the airline ... would have to cut 'substantially more' than $1 billion in spending. That would be in addition to nearly $4 billion that it would save [on the] pension issue." (The New York Times; one-time registration required)
Plan Administrator's Declaration of Special Valuation Date After Plan Investment Losses Reasonable
Excerpt: "The trial court found that the plan document gave the plan administrator the discretion to declare a special valuation date 'to avoid prejudice to any Participant under the Plan.' Although the special valuation date had reduced the amount of the participant's distribution, the court concluded that the plan administrator had acted reasonably.' [Jasper v. M.H. & B.L. Jasper D.D.S., P.C. Profit Sharing Plan, 2004 U.S. Dist. LEXIS 20745 (E.D. Mo. 2004)] (Employee Benefits Institute of America Inc.)
Opinion: U.S. Pension Consultants Can't Serve Two Masters
Excerpt: "Can you serve two masters when you are brokering services for a pension fund? Commissioned pension consultants, who are gatekeepers between pension funds, 401(k)s, brokers and money managers, receive less government scrutiny than mutual funds. Though they are middlemen advising funds on some $2.4 trillion in assets, they are poorly policed. A legal though troubling practice allows these consultants to pocket several fees from clients and managers." (John Wasik via Bloomberg News)
DOL Enforcement Statistics Increase in EBSA's Monetary Recoveries and VFC Program Submissions
Excerpt: "According to statistics released last week, the DOL's Employee Benefits Security Administration (EBSA) obtained record monetary recoveries in its enforcement activities and saw a significant increase in the use of its Voluntary Fiduciary Correction (VFC) Program during fiscal year 2004. The DOL reports 'a record-breaking 121% increase in enforcement results that protected $3.1 billion in retirement, health and other benefits.'" (Employee Benefits Institute of America Inc.)
Chart Showing the Pension Plan Limitations for 2001-2005 Along With an Analysis of the Numbers (PDF)
2 pages. Excerpt: "The IRS issued the 2005 benefit and contribution limits and cost of living adjustments ('COLAs') for qualified plans and IRAs. [T]he table prepared by TRS' Plan Compliance Department reflecting the 2005 increases [includes the years 2001-2004 for comparison purposes]." (Transamerica Center for Retirement Studies)
Issue Brief: Assessing the Notional Defined Contribution Pension Model (PDF)
8 pages. Excerpt: "One alternative [to defined benefit pension plans] that has received a great deal of attention since the early 1980s is the funded defined contribution model of individual accounts. Another alternative emerged in the mid-1990s: the notional defined contribution (NDC) model. It also features individual accounts, but they are financed on a pay-as-you-go basis." (Center for Retirement Research at Boston College)
Touching the Third Rail: a Critical Consideration of Two Books on Social Security Reform (PDF)
4 pages. Excerpt: "From the structural point of view, the debate [on Social Security reform] over the past several years has focused on basically two approaches, each of which has a sizeable camp of partisans. .... We are fortunate, then, to have had two books very recently published that, between them, clearly articulate most, if not all, of the choices we have before us. The first of these, Saving Social Security: A Balanced Approach .... The second, Social Security and Its Discontents ...." (American Academy of Actuaries)
Links to Items on Executive Comp, Benefits in General
Working Paper: Minimum Hours Constraints, Job Requirements and Retirement
Excerpt: "A structural retirement model estimated with data from the Health and Retirement Study is used to simulate the effects of policies firms might adopt to improve employment conditions for older workers and thereby encourage delayed retirement. Firm policies that effectively abolished minimum hours constraints would strongly increase the number partially retired, while reducing full time work and full retirement, resulting in only a small net increase in full-time equivalent employment." (National Bureau of Economic Research)
Framework to Evaluate Exceptions/Deficiencies in implementing Section 404 of the Sarbanes-Oxley Act (PDF)
13 pages. Excerpt: "This paper outlines a suggested framework for evaluating manual and automated process/transaction-level exceptions and deficiencies resulting from the evaluation of a company's internal control over financial reporting. This paper should be read in conjunction with Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements (AS2), ...." (Financial Executives International)
Recent Company Stock Litigation: An Emerging Trend and One Bright Spot for Employers (PDF)
4 pages. Excerpt: "This Bulletin tries to put into context the ERISA company stock cases reported since [the] last [ERISA Fiduciary and Company Stock] Bulletin (June 2004), reports on the DOL's settlement with Global Crossing and WordCom's Bernie Ebbers, and features a short article on the DOL's Prohibited Transaction Class Exemption for plans involved in lawsuits against sponsoring companies." (Jenner & Block LLP)
Full Text of Benefits Report, October 2004 Edition Published by Trucker Huss (PDF)
8 pages. The October edition contains articles on The Automatic Rollover of Mandatory Cash-Outs: The Department of Labor's Safe Harbor Final Regulations; The Working Families Tax Relief Act of 2004: Changes to Tax Rules for Health Plans and Accident Insurance and to Other Employee Benefits; The Working Families Tax Relief Act of 2004 Changes to Dependent Care Flexible Spending Accounts; and, Pension Plan Limitations for 2005. (Trucker Huss)
Overview: Accounting Treatment of Stock-Based Compensation Arrangements Due to Change in 2005 (PDF)
1 page. Excerpt: "As you are probably aware, on March 25, 2004, the Financial Standard Accounting Board ('FASB') issued an Exposure Draft of a proposed Statement of Financial Accounting Standards related to Share-Based Payments ('Exposure Draft'). The Exposure Draft relates to the accounting treatment of stock-based compensation arrangements, including employee stock purchase plans." (Snell & Wilmer LLP)
Bureau of Labor Statistics' Measure of Benefit Costs Shows 1.1% Quarterly Rise
Excerpt: "Employers' cost for providing benefits to their employees rose 1.1% in the third quarter ended Sept. 30, the smallest quarterly increase in two years, according to the Employment Cost Index, produced by the U.S. Bureau of Labor Statistics. The benefits portion of the index had risen 1.7% in the second quarter and 2.6% in the first quarter." (Modernhealthcare.com)
Newly Posted Events
Automatic Rollovers: DOL Guidance - The Final Word?
Nationwide on November 19, 2004
presented by ABA Joint Committee on Employee Benefits
Newly Posted Press Releases
Employers Seek Consultants Without Conflicts of Interests, PLANSPONSOR Survey Shows
(PLANSPONSOR)
Big "I" Addresses Agency Compensation
(Independent Insurance Agents & Brokers of America)
Newly Posted or Renewed Job Openings
Communications Consultant - Retirement Services
for MassMutual Financial Group
in MA
Retirement Plan Manager
for Benetrends Inc.
in CA
Document Design Specialist
for Kidder Benefits Consultants, Inc.
in IA
Customer Service Representative in Qualified Plans
for First Trust
in CO
AVP of Retirement Programs
for UnumProvident Corporation
in ME
System Director Healthcare Plans
for Covenant Healthcare
in WI
Senior Employee Benefits Attorney
for The Esquire Group
in MN
Employee Benefits Call Center Specialists
for Constantin Control Associates
in NJ
Compliance and Document Specialist
for Alliance Benefit Group
in MN
Plan Administrator
for Independent Pension Consultants, Ltd.
in MN
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