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December 17, 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)
House Weighs Hybrid Retirement Plan: It Would Offer Best of Both DB, DC Worlds
Excerpt: "A bill introduced in the House of Representatives would permit employers to offer a hybrid defined benefit plan and defined contribution plan with employees receiving a single statement. The new type of investment vehicle, dubbed a 'DB(k),' was introduced by Rep. Rob Andrews (D-N.J.) as part of The Retirement Enhancement Revenue Act of 2004 on Nov. 19." (FinancialPlanning.com)
Nationwide Financial's Tip-Sheet Aims to Aid Employers in Combating Employee/Investor Emotions
Excerpt: "In addition to low enrollment and low deferral rates among retirement plan participants, financial advisers also must help employers fight 'behavioral finance,' a phenomenon in which employees allow their emotions to govern their investment behaviors, according to a Nationwide financial planner." (The Adviser)
Text of Report on ERISA Fiduciary Responsibility and Liability (PDF)
23 pages. Table of Contents: Who Is A Fiduciary? What Are Settlor Functions Versus Fiduciary Activity? What Is The Significance of Being A Fiduciary? What Is The Duty of Loyalty? What Is The Prudence Standard? What Is The Duty of Disclosure? What Is The Duty To Monitor? How To Select Plan Fiduciaries? What Special Issues Are Raised By Investing In Employer Stock? How Can You Limit Fiduciary Liability? (Dechert LLP)
Text of Tatum v. R.J. Reynolds Tobacco Co., No. 04-1082 (4th Cir. December 14, 2004) (PDF)
8 pages. Excerpt: "In sum, nothing in the language of the amendments prevents Tatum from stating a claim that the liquidation of the Nabisco funds in the Plan was a discretionary act subject to ERISA's fiduciary duty of prudence, see 29 U.S.C. § 1104(a)(1), and that the Plan fiduciaries violated the applicable standard of care in liquidating those funds. We therefore reverse the district court's order dismissing the amended complaint for failure to state a claim. The case is remanded for ...." (United States Court of Appeals for the Fourth Circuit)
Domestic Program's Big Goals: Bush Ready for Fights on Social Security, Tax Code, Tort Law
Excerpt: "President Bush, in closing a two-day White House economic conference Thursday that outlined an ambitious domestic policy agenda, declared: 'I like to confront problems.' And problems he will find as he swings for the bleachers with a plan for a fundamental overhaul of Social Security that promises a Washington brawl rivaling any domestic policy fight of the past two decades." (San Francisco Chronicle)
Wall Street Journal Reports that Pilots' Union Agrees to United Airlines' Scrapping Pension Plan
Excerpt: "Leaders of the United Airlines pilots' union have approved a tentative contract with the bankrupt No. 2 U.S. carrier and agreed not to fight UAL Corp.'s ... bid to scrap the group's pension plan, the Wall Street Journal reported on Friday." (Reuters)
Audio and Transcript: Fixing Social Security
Excerpt: "RAY SUAREZ: It was former Speaker of the House Tip O'Neil who called Social Security 'the third rail of American politics' because it meant certain death to any politician who touched it. But during the election campaign, President Bush vowed to do just that in his second term, arguing now was the time to reform the Social Security system before it became insolvent. Today the president repeated that pledge, and laid out some principles, during day two of his economic summit." (NewsHour via PBS)
Comments on The Wall Street Journal Editorial Titled 'The Social Security Crisis'
Excerpt: "Back in the 1930s, when the country was shaking off the Great Depression, it became apparent that the elderly were especially suffering -- not only had they lost income and assets but there was no time for them to recoup. And so was born FDR's greatest contribution to the welfare state. The notion was that Social Security would nick a little bit off everybody's paycheck with a payroll tax and then redistribute that money to anybody over retirement age." (Attorney B. Janell Grenier via BenefitsBlog.com)
Opinion: Privatization of U.S. Social Security System Would Be Buying Into Failure
Excerpt: "[A]side from giving the Cato Institute and other organizations promoting Social Security privatization the space to present upbeat tales from Chile, the U.S. news media have provided their readers and viewers with little information about international experience. In particular, the public hasn't been let in on two open secrets: Privatization dissipates a large fraction of workers' contributions on fees to investment companies. It leaves many retirees in poverty.'By PAUL KRUGMAN (The New York Times; one-time registration required)
New York Attorney General Spitzer Subpoenas Retirement Plan Consultant Morningstar
Excerpt: "New York Attorney General Eliot Spitzer has subpoenaed Morningstar Associates L.L.C., seeking information on the investment consulting services it provides to retirement plan sponsors. The Chicago-based company, which is a unit of investment research firm Morningstar Inc., provides investment consulting services to plan providers and sponsors." (Business Insurance)
Text of the 6th Annual Transamerica Small Business Retirement Survey Summary of Findings (PDF)
160 pages. Excerpt: "In August 2004 Transamerica commissioned Harris Interactive to conduct surveys among employers and workers in these companies. The surveys were designed to meet two of the Center's goals: –Monitor and report on emerging retirement trends, and –Analyze employer and worker-related retirement issues." (Transamerica Study for Retirement Studies)
Lobbying and Advocacy Groups Are Mobilizing on Both Sides in the Privatization Debate
Excerpt: "Support for overhauling Social Security also comes from numerous self-described grass-roots organizations: For Our Grandchildren, which employed Ms. Jaques as a director in Iowa; SocialSecurityChoice.org, backed by pro-business political groups like Club for Growth; and USANext, a Virginia-based group run by Charles Jarvis, a former Reagan administration official." (The New York Times; one-time registration required)
Bush Says A Social Security Reform Plan Would Reassure Financial Markets
Excerpt: "President Bush said on Thursday that addressing the long-term problems in Social Security would reassure the financial markets, offering a rationale to offset criticism that his plan to add personal investment accounts to the retirement system would require up to $2 trillion in new government borrowing." (The New York Times; one-time registration required)
Details of President's Social Security Plan Increase Critics' Actions Against It
Excerpt: "Unions ... have suggested that pension fund trustees stop doing business with investment firms that advocate individual retirement accounts for Social Security. In 2001, the AFL-CIO targeted State Street Corp. ... that had been leading the drive for individual retirement accounts. [S]tate Street reversed its position. In a letter to 46 financial firms this week, AFL-CIO President John Sweeney leveled a veiled threat: 'I encourage your firm to follow State Street's example,' he wrote." (Knight Ridder/Tribune Information Services via Philly.com)
Links to Items on Executive Comp, Benefits in General
Regulators Adopt Tighter Rules on Accounting for Stock Options at Public Companies
Excerpt: "Accounting regulators adopted rules yesterday requiring publicly traded companies to treat the stock options they give to employees as normal business expenses. The rule change is scheduled to take effect July 1, 2005, though a coalition led by technology companies, which often use stock-based compensation plans, has vowed to continue fighting it." (The New York Times; one-time registration required)
Financial Accounting Standards Board Tells Public Companies to Start Expensing Options
Excerpt: "The Financial Accounting Standards Board's decision Thursday calls for public companies to start expensing options beginning with their first fiscal reporting period after June 15, 2005. Private companies and companies that file as small business issuers are not required to comply until after Dec. 15, 2005." (AP via The New York Times; one-time registration required)
Text of Revised Statement of Financial Accounting Standards No. 123: Share-Based Payment (PDF)
Excerpt: "Over the last few years, approximately 750 public companies have voluntarily adopted or announced their intention to adopt Statement 123's fair-value-based method of accounting for share-based payment transactions with employees. Other companies continue to use Opinion 25's intrinsic value method.... By requiring the fair-value-based method for all public entities, this Statement eliminates an alternative accounting method ..." (Financial Accounting Standards Board)
Continental Airlines Moves to Cut Wages and Benefits for U.S. Managerial and Clerical Workers
Excerpt: "In a move meant to cut costs after four consecutives years of losses, Continental Airlines has decided to implement changes to US-based management and clerical workers' wages work rules and benefits. Nearly 5,200 American-based workers will see the company suspend its 401(k) matching contributions and launch an 'enhanced' profit-sharing plan to replace an older, terminated plan, ATWonline.com is reporting." (PLANSPONSOR.com; one-time registration required)
Most Large Employers Use Consultants for Benefit Plan Design, Actuarial Work and Vendor Selection
Excerpt: "Eighty percent of the 408 respondents say they use consultants, most often for their health plans, although 55% employ them for their disability plans as well. Surprisingly, fewer than half call in consulting companies for help with retirement plans, both defined benefit and defined contribution, while 30% use consulting services for flexible benefit plans and 22% for wellness programs." (The Adviser)
Text of Milliman's Fall 2004 Benefits Perspectives: Current Issues in Employee Benefits (PDF)
8 pages. This issue includes articles titled: Patient Safety First, The Retirement Equity Act: Still Crazy After All These Years, and True Group Long-Term Care Coverage: The Final Piece in a Comprehensive Safety Net. (Milliman)
Newly Posted Press Releases
Mental Health Parity Act Extended to December 31, 2005
(U.S. Department of Labor, Office of Public Affairs, Washington, D.C.)
Treasury, IRS Issue Section 409(p) Regulations
(U.S. Department of Treasury)
Newly Posted or Renewed Job Openings
Client Solutions Group Associate
for ICMA Retirement Corporation
in DC
Plan Analyst/Conversion Specialist
for Branch Banking & Trust Company (BB&T)
in NC, SC
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