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December 6, 2004
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)
Fund Firms May Have to Learn Hard Way: Analysts Say Enforcement Cases Are Just Months Away
Excerpt: "About eight weeks after stricter mutual fund regulations took effect, PricewaterhouseCoopers is predicting a new wave of sanctions, within months not years, that will define the boundaries of industry practice. 'Everyone in the industry is waiting for the first SEC enforcement case to be brought against a chief compliance officer or a board member because, quite frankly, that is going to set a practice and set the standard in the industry,' ...." (Financial Planning)
PLANSPONSOR's Eighth Annual Defined Contribution Services Survey
Excerpt: "This year, of course, has been more than usually trying for plan sponsors but, for the industry overall, the heightened awareness and attention paid to fiduciary concerns is seen by most as a good, if stressful, turn of events. That heightened awareness also is borne out in a telling statistic among the participants in PLANSPONSOR's eighth annual defined contribution services survey." (PLANSPONSOR.com; one-time registration required)
State of California Talks about Shifting Out of Pensions and Setting Up 401(k) Type Plan
Excerpt: "On [December 6, 2004], Dr. Keith S. Richman, a Republican member of the California Legislature, plans to introduce a bill that would begin the process of closing California's giant public pension funds to new employees, and giving public workers the 401(k) type of benefit in the future. The bill is certain to run into resistance from the unions that represent various public employees in California and from Democratic politicians, who control both houses of the Legislature." (The New York Times; one-time registration required)
Selection and Use of Asset Valuation Methods for Pension Valuations (PDF)
5 pages. October 4, 2004. Excerpt: "We welcome the 2nd Exposure Draft's added emphasis on disclosures and suggest a number of situations below in which the imposition of further disclosure requirements should be considered by the ASB. We also commend the ASB for providing criteria for identifying 'significant systematic bias' in §3.3 of the 2nd Exposure Draft." (American Academy of Actuaries)
Analysis: Inherent Inequities in Valuing Defined Benefit Pensions for Inclusion in Divorces
Excerpt: "This month we are a going to discuss the aspect of retirement asset inclusion in divorces that I find the most troubling. What I am referring to is something we have looked at before but never in such depth. The issue is how some state legislatures and appellate courts have hamstrung attorneys who are trying to reach an equitable distribution of the marital portion of a defined benefit pension plan." (Divorce, Pensions and Retirement Benefits)
Phased Retirement -- An Examination of the Pros and Cons
Excerpt: "To hear some people speak of it, phased retirement has become the new Golden Years. But by maintaining one foot in the work force and one in retirement, people in phased retirement, it is said, can experience the best of both worlds. The truth is that phased retirement isn't a panacea. If you're interested in a partial retirement, you need to take a hard look at whether you're truly prepared to take this major step." (AP via The New York Times; one-time registration required)
Opinion: New CalPERS Chief Should Refocus on Corporate Governance and Investor Returns
Excerpt: "It's one of the most powerful jobs in the world of finance. The president of the board of the California Public Employees' Retirement System oversees the nation's largest pension fund, with $177 billion in assets. But the position has also become a bully pulpit, letting the occupant rattle everyone from underperforming CEOs to the chairman of the New York Stock Exchange." (BusinessWeek Online)
Public Pension Funds Forced to Be on the Defensive -- Corporations Pushing Back
Excerpt: "Public employee pension funds had corporate America on the run for most of 2002 and 2003. As leading activist investors, the funds were among the most vocal large shareholders demanding that business clean up its act in the post-Enron world. But this year, it's the pension funds that increasingly find themselves on the defensive. Corporate lobbying groups are pushing aggressively to halt what they consider to be unwarranted meddling by the funds in business affairs." (Los Angeles Times; one-time registration required)
Overview: Airtime — Additional Retirement Service Credit (ARSC) for CalPERS Members
Excerpt: "'Airtime' or Additional Retirement Service Credit (ARSC) gives active CalPERS members with five years of earned service credit the opportunity to purchase from one to five years of additional service credit to increase their unmodified retirement allowance." (ICMA Retirement Corporation)
Overview: Department of Labor Issues Fiduciary Guidance on Market Timing and Late Trading (PDF)
Summer 2004. 3 pages. Excerpt: "In early September 2003, New York State Attorney General Eliot Spitzer charged Canary Capital, LLP with illegal trading practices. Thereafter, at a dizzying pace, Spitzer's office began publicly accusing household names in the mutual fund industry of engaging in abusive trading practices, rocking the industry and raising ERISA concerns for fiduciaries of employee benefit plans that hold mutual funds." (Journal of Pension Benefits via Kilpatrick Stockton LLP)
Bush Tax Reform Agenda May Include Lifetime Savings Accounts and Retirement Savings Accounts
Excerpt: "The president is assembling a tax reform commission to study ideas, a process Norquist expects to take at least 18 months. .... 'While this is going on, we'll have the ability to abolish the death tax,' Norquist said. 'I think we'll see one tax cut each year for the next four years. Each cut moves us toward reform. I know we can get rid of the death tax and get LSAs [lifetime savings accounts] and RSAs [retirement savings accounts].'" (Budget & Tax News via The Heartland Institute)
Opinion: Social Security Reform As the Bush Administration Sees It
Excerpt: "The word leaking out of secret White House strategy meetings on Social Security reform is that President Bush is looking for a much larger privatization initiative than expected. 'They are really serious about doing this,' a key outside adviser who attended White House briefings on Mr. Bush's emerging plan told me. It's just sinking in to many of the president's supporters and foes that he intends to use his political capital to tackle what no other president has dared do before: ...." (The Washington Times)
Editorial: the Cost of Social Security Reform
Excerpt: "The debate over Social Security has begun with an argument that highlights the difference between idealized visions of reform and the imperfect real world. The argument concerns the transition costs associated with partial privatization. The administration and its allies say that these costs should not be counted; critics regard this as accounting trickery worthy of Enron. In theory, the administration has the better argument. In the real world, however, the critics may be right." (The Washington Post; one-time registration required)
Social Security in the Real World -- Five Letters to the Editor, the New York Times
Excerpt: "To the Editor: Re 'A False Start on Social Security' (editorial, Dec. 3): It seems that every program and initiative the president supports coincidentally ends up transferring large sums of money to special interests. Privatizing Social Security is no different. Privatization will significantly enrich the financial industry through investment fees. Privatization will bring trillions of dollars into the stock market. We can expect to see stock prices increase because of ...." (The New York Times; one-time registration required)
Opinion: Social Security Debate in Focus Here in Western Pennsylvania
Excerpt: "Western Pennsylvania reflects the tortured debate on what is expected to be the front-burner domestic issue of President Bush's second term: Social Security. Saving, reforming, preserving -- pick your description. Whatever you call it, the future of Social Security is destined for a showdown in Congress in the next year or so. On the surface, Bush's plan to overhaul the system by partly privatizing it should win the day. His party controls the Senate and House." (Pittsburgh Tribune-Review)
Opinion: Let's Try Real Social Security Reform
Excerpt: "[M]any of the wags with whom I regularly converse insist the appetite will be bigger than the belly in the 109th Congress to do anything substantive about Social Security. President Bush says reforming this long-running exercise in Rooseveltian socia.lism is one of his top priorities. And among the GOP leadership, the commitment to reform borders on the magniloquent. That said, Social Security reform is something not to be believed until seen." (Pittsburgh Tribune-Review)
Audio: Americans and 401(k)s on Weekend Edition, Saturday, December 4, 2004
Excerpt: "NPR's Scott Simon talks with Joe Nocera, editorial director of Fortune magazine, about why Americans aren't as good at investing their retirement money as the government is." (National Public Radio)
Opinion: Compromise and Coalitions Needed to Effect Social Security Reform
Excerpt: "Whether they like it or not, Republicans and Democrats are going to have to meet privately in rooms and negotiate with one another. They're going to have to develop some level of trust so they can make unpopular suggestions and know they won't read about it in the next day's papers. They are going to have to compromise, reach a deal and then stick together in the face of the special-interest onslaught. The Social Security issue changes the incentives. The rule is compromise or fail." (The New York Times; one-time registration required)
Information Source on Retirement Plans for Plan Participants and Employees
The target site links to information about ERISA employee plans in general, retirement plan distributions, and specific types of plans: IRAs, Payroll Deduction IRAs, SARSEPs, SEPs, SIMPLE IRAs, 401(k) Plans, and 403(b)/457 Plans. (Internal Revenue Service)
CBO's Recent Social Security Analyses
The target site contains a compilation of Congressional Budget Office publications and cost estimates on Social Security. (Congressional Budget Office)
Links to Items on Executive Comp, Benefits in General
US Airways Retirees Fighting Mad Over Plan to Cut Benefits
Excerpt: "[R]etirees are upset about the bankrupt airline's decision to seek termination of retiree medical and dental benefits on Jan. 1 and its pension-plan obligations in early 2005. The Virginia-based airline filed for Chapter 11 bankrup.tcy protection on Sept. 12, the second time that it has done so in two years. A bankrup.tcy court judge said Thursday that he doesn't expect to make a ruling on the benefits request until early January." (AP via The Miami Herald; one-time registration required)
Horizon Miners' Woes Show Problems with Contracts –- Bankrup.tcy Led to Loss of Benefits
Excerpt: "Cooper says he is not worried, but many miners who worked for Horizon Natural Resources Co. -- which was sold this fall -- are scared and angry. The health insurance they thought was a sure thing vanished when a bankrup.tcy judge recently released the company from having to pay the benefits for 3,800 active miners and retirees along with their families." (AP via The New York Times; one-time registration required)
Overview: New York City Requires Contractors to Provide Equal Domestic Partner Benefits
Excerpt: "Businesses that contract with the City of New York should be aware of the City's recently adopted 'Equal Benefits Law.' The law requires that businesses with contracts for $100,000 or more provide domestic partner benefits to their employees that are equal to the benefits the employer provides to married employees and their spouses." (Ballard Spahr Andrews & Ingersoll, LLP)
Opinion: Spin Over Same-Sex Benefits in Michigan Is Dizzying
Excerpt: "Let's start with a chronology. October 2004: New contracts negotiated between the administration of Gov. Jennifer Granholm and state employee unions include, for the first time, health care benefits for the domestic partners of g.ay and les.bian workers. Nov. 2: Michigan voters approve Proposal 2, a constitutional amendment defining marriage as the union of one man and one woman, and prohibiting government recognition of same-sex relationships. Dec. 1: The administration, under ...." (Detroit Free Press)
Preparing for Amendments to Nonqualified Deferred Compensation Plans
Excerpt: "The following article discussing new rules governing nonqualified deferred compensation plans will be published in the Greater Valley Forge Human Resource Association upcoming newsletter. (I serve as Legislative Chair for the association.) I am publishing the article here as well, since by the time it is published in the newsletter, it will likely need a rewrite due to soon-to-be-released IRS guidance expected in December." (Attorney B. Janell Grenier via BenefitsBlog.com)
In the Timing of Options, Many, Um, Coincidences -- Securities and Exchange Commission Notices
Excerpt: "Ever notice how huge stock option awards are often given to executives just ahead of bullish company news? The Securities and Exchange Commission apparently has. Last Tuesday, Analog Devices, a maker of integrated circuits, disclosed that the SEC had requested information about the timing of option grants given to company executives and directors during the last five years. In its disclosure, the company noted that its grants in some years 'occurred shortly before our issuance ...." (The New York Times; one-time registration required)
Text of Hay Benefits Advisor, Fall 2004 Edition (PDF)
12 pages. Excerpt: "In this issue our benefits experts provide practical advice and useful insight about the latest benefits developments and their impact on your organization, including: 1. New Rules for Deferred Compensation Arrangements Require Immediate Employer Action; 2. New COBRA Notice Rules Take Effect; 3. Proposed Medicare Part D Pres.cription Drug Benefit Rules Offer New Choices for Employers; 4. New Rules for Retirement Plans." (The Hay Group)
General Electric Plans Benefit Cuts for New Hires
Excerpt: "General Electric Co. is cutting benefits for new hires, a policy change that may eventually threaten all employees at one of the world's largest and most valuable companies, union officials say. The cuts, which affect salaried employees hired after Jan. 1, 2005, eliminates company-paid medical coverage for early retires and those older than 65. They also eliminate early retirement with a full pension at age 60, according to union and company officials. Other planned cuts will ...." (AP via The New York Times via The Boston Globe)
Full Text of McAdams v. Massachusetts Mutual Life Insurance Co. (1st Cir., 12/1/04)
The First Circuit Court of Appeals has ruled that Massachusetts law did not preclude Massachusetts Mutual Life Insurance Company from deducting a tax charge of approximately 30% from the accounts of general agents participating in its nonqualified deferred compensation plan. (FindLaw)
Newly Posted Press Releases
PBGC Announces Maximum Insurance Benefit For 2005
(Pension Benefit Guaranty Corporation (PBGC))
Repko Elected 2005 President of the International Society of Certified Employee Benefit Specialists
(International Society of Certified Employee Benefit Specialists (ISCEBS))
CalPERS Asks Drug Companies to Restore Market Confidence and Questions Health Partners about Prescription Drug Safety
(CalPERS (California Public Employees' Retirement System))
Mortgage Benefits Corp. and Unisource Information Services to offer Bundled Discounts on Settlement Services
(Mortgage Benefits Corporation)
HealthEquity Announces "The Complete HSA Guidebook"
(HealthEquity)
Newly Posted or Renewed Job Openings
Pension Analyst
for Long Island Employee Benefits Group, Ltd.
in NY
Defined Contribution Plan Administrator
for Midwest Benefit Consultants, Ltd.
in IL
Pension Administrator
for The Nolan Company
in KS
Pension Administrator
for PennRock Financial Advisors, N.A.
in PA
Institutional Trust System Analyst
for Branch Banking & Trust (BB&T)
in NC
Relationship Manager (Retirement Plans) - multiple positions
for Emjay Corporation, A Great-West Company in Milwaukee, WI
in WI
Executive Benefits Attorney
for Retirement Capital Group, Inc.
in CA
Senior Compensation and Benefits Analyst
for Main Street America Group
in FL
Benefits Administrator
for National company located in South Jersey
in NJ
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