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January 19, 2005
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One in Five Companies Will Consider Providing Defined Contribution Plans Only, According to Study
Excerpt: "Even as the Bush Administration discusses strengthening the Pension Benefit Guaranty Corp., a growing number of companies are backing away from traditional defined benefit plans. In a study by Hewitt Associates of nearly 200 large companies, 27 percent said they will consider amending their defined benefit plan to exclude new employees from participation, and 20 percent will consider providing defined contribution plans only." (CFO.com)
Overview: IRS Issues Guidance on EGTRRA Automatic Rollovers (PDF)
2 pages. Excerpt: "The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) amended the automatic rollover rules to require that qualified plans roll over involuntary distributions greater than $1,000, but less than $5,000 into an IRA (in the absence of a participant election to do otherwise). The IRS and DOL issued guidance on these requirements last year and the IRS has now issued additional guidance on automatic rollovers." (Mellon Financial Corporation)
Habits of Highly Effective Defined Contribution Plans -- Generous Employer Match Not Main Factor
Excerpt: "While the overall participation rate in the nearly 4,000 plan sponsor responses to our 2004 Defined Contribution Survey continues to hover around the 75% mark, in this year's responses, we found a remarkable number of plans that currently have a participation rate of 100%. Even adjusting for factors such as mandatory participation, or profit-sharing plans that provide the same result, nearly 300 of the respondents to this year's defined contribution survey reported the ...." (PLANSPONSOR.com; one-time registration required)
Teachers and School Officials Say California Pension Shift Will Hurt Schools
Excerpt: "Gov. Arnold Schwarzenegger's plan to shift nearly $500 million of pension fund payments to local school districts has some teachers worried they could face a choice between a cut in their pay or their future retirement benefits. School administrators say the plan would add another burden to their strained budgets and also hurt their efforts to recruit future teachers as the state is facing a looming teacher retirement wave." (AP via centredaily.com)
Employee Ownership Update for January 18, 2005
NCEO Executive Director Corey Rosen discusses new Department of Labor enforcement efforts focusing on ESOP valuation; new 401(k) rules allowing an ESOP and a 401(k) plan to be treated as single plan for anti-discrimination testing in spin-offs and mergers; and a new rule that will force public companies to disclose how much money they intend to spend in the following year buying back shares to satisfy stock option exercises. (National Center for Employee Ownership)
NY State Comptroller Wants Investment Restrictions Lifted for State's Public Employee Pension Fund
Excerpt: "New York State Comptroller Alan Hevesi has sent a proposal to state Legislators and Governor George Pataki that would loosen the current investment restrictions for the state's pension fund. Hevesi wants to alter the Empire State's 'legal list' - a document that outlines what can be invested in and the allowable quantity of certain holdings - and replace it with a 'prudent investor' standard, according to the Associated Press (AP)." (PLANSPONSOR.com; one-time registration required)
U.S. Births and Immigration Boost Social Security System
Excerpt: "'I can't think of any developed country that has a state pension system in better shape than the U.S.,' says Monika Queisser, administrator of the social policy division of the Paris- based OECD. 'Social Security makes relatively generous payments at low cost. It's solvent until the middle of the century, and can be for much longer with some tweaking. And the U.S. has a growing population.'" (Bloomberg News)
Plan Sponsor Magazine Cover Article: United Methodist Church Starts Defined Benefit Pension Plan
Excerpt: "In May 2004, the United Methodist Church made a decision that is downright radical these days: to start a new defined benefit plan. The 25,000-plus active US clergy of the UMC who participate in the current plan will participate in the new combined defined benefit/defined contribution program starting January 1, 2007. The 1,000 lay employees will be eligible to participate in a similar plan.' (PLANSPONSOR.com; one-time registration required)
There Are Several Ways to Create and Manage Pension Plans -- Here's the Basic Breakdown
Excerpt: "To ensure the best possible pension coverage in a country, the World Bank advocates for creation of a multi-pillar system, where each pillar relies on a different method to accrue and manage money in a pension plan. The pillars complement each other and help ensure that most people in a given country will have secured a pension provision for their old age." (The World Bank Group)
Opinion: More Sand(ers) In the Pension Machinery
Excerpt: "Not content to rest on his dubious laurels in having initiated last year's Congressional action resulting in the shackling of Treasury's attempt to promulgate its regulation proposed in 2002 to free cash balance plans from vulnerability to charges of age discrimination - by a bill barring Treasury from spending any of it 2004 appropriation to that end -- Rep. Bernard Sanders (I-VT) has renewed his tactics in connection with this year's appropriation bill." (Small Business Council of America)
Opinion: Bush's Social Security Plan Is Mixed on Possible Returns and Equity Investments
Excerpt: "If Congress approves partially privatizing Social Security, holders of personal investment accounts may, as a group, feel akin to a common definition for a statistician: Someone who can have his feet in a freezer and his head in an oven, yet says that, on average, he feels quite comfortable. In urging Congress to partially privatize Social Security, President George W. Bush is seeking a long-term solution that relies on the superior returns from investments in the private sector ...." (Graef Crystal via Bloomberg News)
Survey Shows that Employers Will Push Savings Plan Participation in 2005
Excerpt: "Concerned that too many of their workers won't have enough to live on when they retire, employers are greeting the New Year with stepped-up education efforts and steps to ease joining their savings plans. That's a key conclusion of a recent Hewitt Associates survey of 200 large companies, which found that a scant 18% are confident that their workers will reach the end of their work lives with sufficient assets, ...." (PLANSPONSOR.com; one-time registration required)
Labor Presses Case Against Privatizing Social Security
Excerpt: "The AFL-CIO on Tuesday stepped up its opposition to private Social Security accounts, accusing Wall Street's main trade group, the Securities Industry Association, of campaigning in favor of policy changes that would put workers' retirement at risk while showering billions of dollars in fees on SIA members." (The Washington Post; one-time registration required)
House Republican, Bill Thomas, Says Bush Social Security Plan Is Doomed, Seeks Review of System
Excerpt: "House Ways and Means Committee Chairman Bill Thomas (R-Calif.) predicted yesterday that partisan warfare over Social Security will quickly render President Bush's plan 'a dead horse' and called on Congress to undertake a broader review of the problems of an aging nation. Thomas, one of Capitol Hill's most powerful figures on tax policy, is the highest-ranking House Republican official to cast doubt on the president's plan for creating individual investment accounts." (The Washington Post; one-time registration required)
Lawmaker, Bill Thomas, Links Overhauls on Social Security and Taxes
Excerpt: "Speaking at a forum sponsored by The National Journal, Mr. Thomas suggested that Mr. Bush blend his plans for Social Security with his goal of overhauling the tax code. The congressman said he wanted to re-examine the 12.4 percent payroll tax that finances Social Security, noting that it tended to favor wealthier people while benefits, as a percentage of the wages the retiree once earned, tended to favor the poorer." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Avoiding Costly Benefits Bloopers in Mergers and Acquisitions
Excerpt: "Expensive mistakes can be avoided by including benefits personnel in the negotiations at the beginning. Deal negotiators can protect their companies by negotiating what will happen to employees affected by the transaction, the impact of the transaction on the benefit plans currently covering those employees, and what benefits will be provided to them following the closing." (Faegre & Benson LLP)
Employers May Boost Financial Incentives to Reduce Workers' Benefits Costs in 2005
Excerpt: "Facing continuing premium increases and a much broader array of product options, employers are likely to incorporate more financial incentives to encourage participation in disease management and other programs in 2005, predict employee benefits consultants interviewed by MCW. Firms also are showing greater interest in limited-benefit designs for health care as the country's labor force moves more toward independent and part-time workers." (MANAGED CARE WEEK via AISHealth.com)
Newly Posted Events
Defined Contribution Plans: Learn How Latest Regulations and Guidance Impacts Your Plans
in California on February 3, 2005
presented by International Society of Certified Employee Benefit Specialists, Northern California Chapter
Forecast: What's Ahead For Managed Care In 2005
Early Bird Registration: Sign up by Friday (January 21) and Save $50!
Nationwide on January 27, 2005
presented by Health Resources Online
The 2nd Annual Chronic Disease Management Strategies For Employers - West
in California on March 1, 2005
presented by International Quality & Productivity Center (IQPC)
Newly Posted Press Releases
PBGC To Protect Pensions At Murray Inc.
(Pension Benefit Guaranty Corporation (PBGC))
Newly Posted or Renewed Job Openings
Associate Director of Human Resources/Benefits Administrator
for St. Lawrence University
in NY
Pension Administrator
for Eide Bailly LLP
in MN
Sr. Group Health Underwriter
for National Health Insurance Carrier
in CA, FL, MI
Pension Administrator
for G.M. Pensions, Inc. in the San Diego Area
in CA
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