| BenefitsLink Retirement Plans Newsletter |   |
January 21, 2005
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Pension Funding Reform: An Analysis of the Bush Administration's Proposal (PDF)
4 pages. Excerpt: "The release of this proposal underscores the high level of interest that the Bush Administration has in preserving the DB pension system and improve its future solvency. But many of the implications of their proposal for plan sponsors will not be evident until the actual details are worked out in Congress and in the regulatory process. In the end, increased premiums, contribution requirements and the rising administrative burden on 'healthy' companies that might arise ...." (Employment Policy Foundation)
Overview: Administration Proposes Pension Funding Reform
Excerpt: "The Bush administration has unveiled a new proposal to reform the pension funding rules. .... The proposed reforms would require single-employer plans to meet funding targets that would be based on the plan sponsor's financial health. PBGC flat-rate premiums would be higher for all plan sponsors, and sponsors of underfunded pension plans would pay higher variable-rate premiums. [A]lso propose[d] [are] new benefit restrictions for underfunded plans and new disclosure requirements." (Watson Wyatt Worldwide)
Morgan Stanley Report Supports Private Defined Benefit Pension Plan and PBGC Reform
Excerpt: "A Morgan Stanley Equity Research paper has given support to the Bush Administration's proposed changes to the nation's corporate defined benefit pension system and its insurer, the Pension Benefit Guaranty Corporation (PBGC). Morgan Stanley said that the reforms, if put through effectively, would 'significantly improve the systems' chances for survival and would have important implications for financial markets.'" (PLANSPONSOR.com; one-time registration required)
Opinion: A Very Short 'To Do' List for the Pension Industry for 2005
Excerpt: "[A]s we embark on the new year, I'd like to offer a short list for our industry, in hopes that perhaps some of it will be attended to before we get to 2006." (PLANSPONSOR.com; one-time registration required)
Overview: IRS Issues Final 401(k) and 401(m) Regulations
Excerpt: "The IRS, on December 29, 2004, issued final regulations under Code Sections 401(k) and 401(m). The regulations finalize the proposed regulations issued in July 2003. The final regulations substantially follow the proposed regulations. The regulations incorporate statutory changes and other IRS guidance issued since the 1994 regulations." (SunGard Corbel)
Opinion: Five Trends in 401(k) Plans to Watch in 2005
Excerpt: "Over the past couple of weeks the chief question I've been asked goes something like, 'What trends do you see in 2005 related to 401k plans?' My usual off-handed response is 'More of the same.' Still, I do think there are some important trends to consider. Here are 'five in '05' for you to ponder." (Rick Meigs via 401khelpcenter.com)
Responses to PLAN SPONSOR Survey: 'Are You Ready for Automatic Rollover?'
Excerpt: "Come March 28, plans with mandatory distribution provisions will have to have something in place to deal with distributions of more than $1,000 for which distribution instructions aren't provided .... This week we asked readers if they were ready for automatic rollovers. First the good news - with a bit more than two months remaining before the implementation date, nearly 72% of this week's respondents were either ready (34%) or getting ready (37.5%) for the new requirements." (PLANSPONSOR.com; one-time registration required)
Overview: IRS Publishes Proposed Rules for 403(b) Programs (PDF)
4 pages. Excerpt: "While the proposed rules are helpful in understanding the IRS's current perception of 403(b) arrangements, it is important to remember that these regulations cannot be relied upon by taxpayers. That is, sponsors of 403(b) programs should not make any changes to their programs to comply with these rules. It is quite possible for the IRS position to change dramatically between now and the publication of final regulations. On the other hand, employers must comply with the ...." (Prudential Retirement)
BusinessWeek International Cover Story: Global Aging and Pensions -- There Are Solutions
Excerpt: "The rollback of pension promises is just one symptom of one of the greatest sociological shifts in history: The graying of the baby-boom generation. The ranks of 60-year-olds and older are growing 1.9% a year -- 60% faster than the overall world population. In 1950 there were 12 people aged 15 to 64 to support each one of retirement age. Now the global average is nine. It will be only four-to-one by mid-century, predicts the UN Population Div." (BusinessWeek)
Working Paper: Public Pension Governance, Funding, and Performance: A Longitudinal Appraisal (PDF)
40 pages. Excerpt: "This paper explores how public pension plan investment performance and funding is related to several structural and pension design features. Using a new longitudinal dataset on state and local public pension plans, we evaluate how investment performance is tied to stock funding ratios and how stock funding ratio in turn affects flow funding efforts. We find that particular governance structures can enhance public pension plan investment performance and funding status, ...." (The Pension Research Council)
Overview: Required Minimum Distribution Period Following Death of the Participant
Excerpt: "The determination of the required minimum distribution (RMD) following the death of the participant is dependent on three factors: whether the participant dies before or after the required beginning date (RBD), the participant's designated beneficiary (or, if there is a designated beneficiary), and the plan (or IRA) terms." (SunGard Corbel)
Opinion: The Retirement Crisis in America-- The Journey to Dignity or Despair (PDF)
4 pages. Excerpt: "[I]f employees won't or can't do it for themselves, employers and retirement professionals must do it for them! We need to develop a simple program and an easy way to implement its structure to accomplish the goal of providing each employee a reasonable opportunity to retire with dignity." (Richard A. Campbell, CFA of Dover Consulting Group)
Opinion: International Lessons on Social Security Reform
Excerpt: "Backers of President Bush's plan to partially privatize Social Security say skeptical Americans should look at the experience of other countries that have pursued similar approaches. That, it turns out, is a very good idea." (San Francisco Chronicle)
Retirement Crisis in America: The Journey to Dignity or Despair -- Twenty Easy Steps to Retirement
Excerpt: "Simply put, if employees won't or can't do it for themselves, employers and retirement professionals must do it for them! We need to develop a simple program and an easy way to implement its structure to accomplish the goal of providing each employee a reasonable opportunity to retire with dignity. This part really isn't hard since the retirement industry after many years of experience with 401k plans is reasonably certain what doesn't work." (401khelpcenter.com)
Commentary: One Thing We Can All Agree on -- Social Security Is Important Part of American Life
Excerpt: "Before discussing any possible solutions, we should agree upon the problem. A point on which we can all agree: Social Security is a critically important part of American life. The system has served us well and needs to be sustained and strengthened. Furthermore, we can agree that the fundamental problem is basic arithmetic, not ideology. It is the arithmetic of the demographic shift where people are living longer and having fewer children." (John W. Snow via The Wall Street Journal Online)
Opinion: Social Security for a Savings Society -- Promote Savings and Keep Our Social Insurance Plan
Excerpt: "It's a good bet that if you analyze a problem incorrectly, you'll come up with the wrong solution. Case in point: George Bush and Social Security. The first problem is one of semantics. Social Security is not running out of money. If nothing is done, inflation-adjusted benefits might wind up being 27 percent less in 2050 than they are scheduled to be, but still wind up higher than they are today. Undesirable, maybe, but hardly economic calamity." (The Washington Post; one-time registration required)
Opinion: The Free Lunch Bunch Pushes the 'Ownership Society,' and Social Security Reform
Excerpt: "That, once you cut through all the fine phrases about an 'ownership society,' is how the Bush privatization plan works. Payroll taxes would be diverted into private accounts, forcing the government to borrow to replace the lost revenue. The government would make up for this borrowing by reducing future benefits; yet workers would supposedly end up better off, in spite of reduced benefits, through the returns on their accounts." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Chart: Comparison of New Major Nonqualified Deferred Compensation Plan Changes to Old Law (PDF)
4 pages. The chart provides the nonqualified deferred compensation plans' provisions contained in the American Jobs Creation Act of 2004 with a comparison of major changes, including initial IRS guidance, to old law. (Prudential Retirement)
Overview: IRS Publishes Initial Nonqualified Deferred Compensation Plan Guidance (PDF)
3 pages. Excerpt: "On December 20, 2004, the IRS issued Notice 2005-1, providing initial guidance on the new rules that apply to nonqualified deferred compensation plans as a result of the American Jobs Creation Act of 2004. In general, the new rules are effective January 1, 2005. However, due to the short timeframe between enactment of the law and this effective date, the IRS has provided a number of helpful transition rules for 2005: ...." (Prudential Retirement)
News Summaries of Benefit Industry Developments as of January 2005 (PDF)
4 pages. Articles include: GASB Publishes Exposure Draft on Accounting for Termination Benefits; U.S. Supreme Court Declines to Rule on Suit Regarding Retiree Health Benefits; Form SSA-1945 Available Online for Non-Social Security Covered Positions; CMS Announces Medicare Advantage and Pres.cription Drug Plan Regions; Kaiser Studies Medicare Out-of-Pocket Drug Spending; Survey Indicates Retiree Health Coverage May Be Reduced; and, CMS Publishes Draft Medicare Drug Benefit Documents. (Gabriel, Roeder, Smith & Company)
Newly Posted Events
New Strategies In The Growth of Consumer Driven Healthcare
Nationwide on February 3, 2005
presented by Health Resources Online
Taming the Tiger: Conquering Rising Pharmacy Benefit Costs to Lower Your Overall Healthcare Expenditures
in Georgia on February 8, 2005
presented by NMHC
Taming the Tiger: Conquering Rising Pharmacy Benefit Costs to Lower Your Overall Healthcare Expenditures
in Maryland on February 10, 2005
presented by NMHC
Taming the Tiger: Conquering Rising Pharmacy Benefit Costs to Lower Your Overall Healthcare Expenditures
in Illinois on February 22, 2005
presented by NMHC
Taming the Tiger: Conquering Rising Pharmacy Benefit Costs to Lower Your Overall Healthcare Expenditures
in Texas on February 24, 2005
presented by NMHC
Newly Posted or Renewed Job Openings
Chief Compliance Officer - Employee Benefits
for CitiStreet
in FL, MA
Employee Benefits Participant Service Rep II
for Union Bank of California
in CA
Actuarial Analyst
for USI Consulting Group
in CT, NY
Team Leader - Defined Pension
for The Rosen Group
in MA
Client Service Analyst
for The Rosen Group
in MA
Enrolled Actuary
for American Express Tax & Business Services
in IL
Product Implementation Project Manager
for Transamerica
in CA
Individual Consultant Manager
for TIAA-CREF
in IN, MN, OH, PA
Retirement Plan Specialist
for Diversified Investment Advisors
in IN
Plan Compliance Manager
for Union Bank of California
in CA
Institutional Sales Officer
for Fifth Third Bank
in MO
Retirement Plan Sales Representative
for Ceridian
in IN, KY, MI, OH
Paralegal/ERISA
for The ANGELL Pension Group, Inc.
in RI
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