| BenefitsLink Retirement Plans Newsletter |   |
February 4, 2005
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Overview: New Automatic Rollover Requirement— What to Do Now (PDF)
4 pages. Excerpt: "In this Alert, we describe a short-term fix and alternative long-term responses to the automatic rollover rules. Whatever the choice, immediate action is necessary for dealing with benefit distribution packages being mailed currently to plan participants because the subsequent benefit distributions to them may occur after March 27." (Aon Corporation)
Judge Orders Payment of Workers' Retirement Funds
Excerpt: "U.S. District Court Judge Clarence Brimmer has ordered a Casper businessman to pay more than $10,000 that he mishandled and withheld from the retirement funds of seven of his employees." (Casper Star-Tribune)
Multiemployer Pension Plan Funding Notice Proposed
Excerpt: "Newly proposed U.S. Department of Labor regulations would require multiemployer pension plan administrators to send an annual notice to participants, contributing employers and the Pension Benefit Guaranty Corp. on the plans' funding status." (Business Insurance)
Washington Regulatory Proposals of Interest to NCTR Members Wrap Up (PDF)
2 pages. Federal Regulatory Proposals of Interest Current as of January 31, 2005 (National Council on Teacher Retirement)
Opinion: California Pension War: Public Employees' Unions Will Use Misinformation to Defend Gains
Excerpt: "Recent revelations have exposed that some government entities are approaching the abyss of bankrup.tcy because of their inability to fund their pension obligations. These horror stories have awakened Californians to the threat to taxpayers and to public services. When Gov. Arnold Schwarzenegger announced in his State of the State address that he would fight the unions on this issue, union headquarters around the state went to DefCon 3." (Los Angeles Daily News)
Text of CRS Report: Social Security Individual Accounts and Employer-Sponsored Pensions (PDF)
20 pages. Excerpt: "Pension analysts generally agree that designing individual accounts would require trade-offs between individual choice and efficient management. A relatively 'high-cost' approach would create a system of IAs in which contributions to the accounts are deposited quickly, participants have substantial control over their accounts and have many investment choices, but in which employers must take on substantial new administrative duties." (Congressional Research Service of the Library of Congress)
What Does Price Indexing Mean for Social Security Benefits? (PDF)
Excerpt: "A potential component of the administration's Social Security proposal is to shift from 'wage indexing' of benefits to 'price indexing' ... This [report] discusses the reasons for keeping benefits up-to-date with either prices or wages. Then it describes the mechanics of both wage and price indexing, and the impact of shifting from wages to prices. Finally, it explores the implications of price indexing in terms of ... periodic adjustments or increased reliance on welfare programs." (Center for Retirement Research at Boston College)
Survey Results: Public Attitudes toward Social Security and Private Accounts
Excerpt: "'This summary contains data from AARP's late January 2005 survey of Americans age 18 and up about Social Security and Private Accounts, the second in a series of AARP surveys on this subject. (AARP)
Under Social Security Reform Plan, Early 50's Is Age Group Caught in Middle
Excerpt: "The great middle band of the Social Security debate agrees perhaps only on that point, that the president's plan, for better or worse, has put them on the cusp - too old to see much benefit through the miracle of compounding in a private retirement account, too young to have any guarantees. But their numbers, and the role they might play in the debate, are enormous. People born in the peak year of the baby boom, 1957, turn 48 this year, and millions of those who came immediately ...." (The New York Times; one-time registration required)
Social Security Alternative Already Working in Texas
Excerpt: "The personal retirement plan sketched out in President Bush's State of the Union Address has been universally derided by Democrats as an unworkable privatization of the retirement program. .... But privatized Social Security has been a fact of life for municipal employees in Galveston County, Texas, for nearly a quarter century. Local government workers voted overwhelmingly in 1981 to opt-out of Social Security in favor of a locally controlled system that has since been ...." (CNSNews.com)
Social Security Private Account Details Seep Out
Excerpt: "Annuities could play an important role in the proposed private Social Security account program. Officials who insisted on anonymity discussed that program detail Wednesday during a background briefing that took place before President Bush delivered his State of the Union speech." (National Underwriter)
Some Lessons from Nations that Have Tried Social Insurance Pensions Similar to Bush Reform Plan
Excerpt: "Lessons from 20 countries that have embraced private accounts will play a role in what's shaping up as the first big domestic issue of the second Bush term. Each side is looking to them for ammunition. A review of seven nations' experience illuminates some of the major issues that must be resolved." (Wall Street Journal via SFGate.com)
Social Security Reform with Private Accounts Could Set Back 401(k) Participation and Contributions
Excerpt: "This issue may pose a challenge for employers, particularly with regards to the Employee Retirement Income Security Act non-discrimination rules, notes Mark Ugoretz, president of the ERISA Industry Committee, a Washington, D.C.-based lobbyist group representing U.S. employers. Non-discrimination rules, which are designed to prevent top executives from being able to save substantially more than lower-paid employees, limit what the top-earners can contribute to their 401(k) plans ...." (Workforce Management)
401(k) Funds Performance Raises Concerns Over Returns for Private Social Security Accounts
Excerpt: "With the battle over Social Security individual accounts heating up during President Bush's second term, many are looking at how 401(k) investors have fared since the early 1990s as a rough guide to how well individual investors would potentially handle the responsibility of managing more of their own money." (MarketWatch)
Social Security: Long-Term Challenges Warrant Early Action
25 pages; testimony provided by David M. Walker, comptroller general of the United States, before the Senate Special Committee on Aging on February 3, 2005. (U.S. Government Accountability Office)
Statement of CBO Director on the Future of Social Security, February 3, 2005 (PDF)
13 pages. Excerpt: "Chairman Smith, Senator Kohl, and Members of the Committee, thank you for the opportunity to testify on the future of Social Security. In evaluating possible changes to the Social Security system, it is important to consider not only the implications for the program itself but also for the federal budget and the United States' economy." (U.S. Congressional Budget Office)
Opinion: Time for the Federal Budget Process to Include Unfunded Retirement Entitlement Obligations
Excerpt: "In the private sector, future obligations require regular payments or are at least disclosed on a company's annual balance sheet. However, because the federal budget process excludes any measure of entitlement obligations and does not require that money be set aside to finance them, lawmakers continue to ignore the harsh fiscal reality that entitlements impose. In fact, under the current budget process, Members of Congress and the President have every incentive to increase ...." (The Heritage Foundation)
Opinion: Why Social Security Privatization = Big Government
Excerpt: "President George W. Bush said that his plan for privatizing Social Security would be modeled after the Thrift Savings Plan for federal employees. But Francis X. Cavanaugh, who served as the first executive director of the Thrift Savings Plan from 1986 to 1994, has argued repeatedly that extending that system to Social Security would be an administrative nightmare for the government, businesses, and individuals." (The Century Foundation)
Opinion: Gambling with Your Retirement or 'It's Not a Nest Egg. It's a Loan.'
Excerpt: "[P]rivatizers ... have claimed that people would do better with private accounts than with traditional Social Security even if they played it safe and invested in U.S. government bonds (which yield 3 percent after inflation). But the official at the briefing made it clear that his boss was fibbing: if you invested your private account in government bonds, you would face benefit cuts equal in value to your investment, so you would be no better off than under the current system." (The New York Times; one-time registration required)
Corrected IRS Weighted Average Interest Rate for February 2005
Corrected Weighted average for February 2005: 5.08% (U.S. Internal Revenue Service)
Links to Items on Executive Comp, Benefits in General
Overview: USERRA Requirements for Employers
Excerpt: "On December 10, 2004, President Bush signed into law the Veterans Benefits Improvement Act of 2004. This legislation updates the Uniformed Services Employment and Reemployment Rights Act (USERRA). We want you to be aware of how it may impact your organization and your employees who leave for military service." (Ice Miller)
Welcome to new BenefitsLink advertiser Center for Tax Law and Employee Benefits at The John Marshall
Excerpt: "The John Marshall Law School offers an opportunity for human resource professionals, actuaries and accountants to become conversant in the law and policy affecting employee benefits through its new M.S. in employee benefits law. The program begins in fall 2005." (BenefitsLink.com)
Newly Posted Events
Distributions, Rollovers and Transfers from Qualified Plans
Nationwide on March 10, 2005
presented by McKay Hochman Co., Inc.
Introduction to Defined Benefit Plans
Nationwide on March 3, 2005
presented by McKay Hochman Co., Inc.
Introduction to Retirement Plans
Nationwide on March 29, 2005
presented by McKay Hochman Co., Inc.
IRS Correction Programs
Nationwide on March 16, 2005
presented by McKay Hochman Co., Inc.
New Directions in Disease Management Initiatives
Nationwide on February 23, 2005
presented by Health Resources Online
Participant Loans eSeminar
Nationwide on February 15, 2005
presented by McKay Hochman Co., Inc.
Required Minimum Distribution Rules eSeminar
Nationwide on March 8, 2005
presented by McKay Hochman Co., Inc.
Safe Harbor 401(k) and SIMPLE Plans
Nationwide on February 22, 2005
presented by McKay Hochman Co., Inc.
Newly Posted Press Releases
Principal Financial Group is Looking for a Few Great Companies; Launches Nationwide Search for the Best in Employee Benefits
(Principal Financial Group)
Teachers' Retirement Board Formally Opposes Legislation to Replace the Current Pension System
(CalPERS (California Public Employees' Retirement System))
Towers Perrin Transforms PBM Industry With Rx Collaborative; New Business Model Puts Employers in Control, Promises Transparency
(Towers Perrin)
BenefitsXML Provides Innovative Data Exchange Service To OnlineBenefits - Collaboration Provides HR-XML Data Exchange for Employee Benefits Administration Service Providers
(BenefitsXML)
Newly Posted or Renewed Job Openings
Corporate Benefits Administrator
for Western Massachusetts Employer
in MA
Benefits Service Mgr. Health & Welfare
for Hewitt Associates
in GA
Account Executive - Retirement Services
for Principal Financial Group
in MD
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