| BenefitsLink Retirement Plans Newsletter |   |
February 7, 2005
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Sponsors Said to be Taking Defined Benefit Plan Approach In Choosing DC Plan Providers
Excerpt: "More benefits managers are becoming concerned with fund family transparency, fees and disclosure and less concerned with name recognition when scouting out managers for their defined contribution plans. Christopher Mullahy, ..., said plan sponsors are increasingly applying defined benefit-type search criteria to the DC market. 'We do in fact see more large plan sponsors taking the same approach when selecting a DC manager as they have when selecting a DB manager,' Mullahy said." (Defined Contribution News)
401(k) Lawsuits Bring More Biz to Independent Stock Plan Fiduciaries
Excerpt: "Sponsors are showing a greater interest in independent fiduciaries to oversee company stock in 401(k)s, as lawsuits make their way through the court systems in various jurisdictions. Michael Barry, president of Chicago-based Plan Advisory Services, said before the Enron scandal, it was usually those companies in financial distress facing shareholder lawsuits that wanted independent fiduciaries--basically firms hired to help relieve the sponsor of some liability. That has changed." (Defined Contribution News)
The Young Worker and a 401(k)
Excerpt: "Guest host Sheilah Kast speaks with Brigitte Madrian, a professor of business at the Wharton School, about the value of 401(k) retirement savings accounts for young workers and retirees. Despite many reports that young people don't believe Social Security will help them retire, a large number of them don't take advantage of the plans." (Weekend Edition via National Public Radio)
Overview: IRS Proposes Changing Effective Date of 2003 Regs on Qualified J & S Annuity Explanations
Excerpt: "Many 401(k) plans do not offer the QJSA form of distribution. And some 401(k) plans that do offer the QJSA form may take advantage of the regulations under Code Section 411(d)(6) that allow defined contribution plans (including 401(k) plans) to eliminate some forms of distribution, such as the QJSA form, if certain requirements are met--particularly now that the regulations have been revised to remove the 90-day notice requirement." (Employee Benefits Institute of America, Inc.)
Opinion: 403(b) Participants Set to Lose Under New IRS Regs
Excerpt: "The IRS recently proposed new 403(b) regulations set to take effect in 2006. One of the proposals would eliminate the 90-24 transfer to outside-of-plan vendors. Currently, the 90-24 allows participants, with a few caveats, to transfer 403(b) money from an employer 403(b) plan to any provider who will accept the money. This rule has been an enormous boon to the thousands of participants stuck with 403(b) plans offering only high-fee products." (bWise Guys, LLC)
Overview: Bush Administration Proposal Expected to Radically Change Pension Funding (PDF)
2 pages. Excerpt: "Recently, the Bush Administration has circulated the highlights of a proposal to overhaul the funding rules for single employer defined benefit plans. On February 7, as part of its 2005/2006 budget submission to Congress, the Bush Administration is expected to formally present the proposal with many of the details not previously disclosed. The stated goals of the proposal are to protect workers and avoid the need for a taxpayer bailout of the PBGC." (Mellon Financial Corporation)
GAO Report: Airline Plans' Underfunding Illustrates Broader Problems with DB Pension System (PDF)
13 pages. Statement of David M. Walker, U.S. Comptroller General before the Committee on Commerce, Science, and Transportation, U.S. Senate, October 7, 2004 (U.S. Government Accountability Office)
Failing Pension Plans Push Union to Review Retirement Age for Pilots
Excerpt: "The airline industry's financial crisis and the collapse of some pension plans are leading the nation's biggest pilot union and some aviation experts to question a federal rule requiring that airline pilots retire at the age of 60." (The New York Times; one-time registration required)
S. 219 Could Do More than Shore Up Pensions
Excerpt: "Senators have included provisions that could affect life insurers in a bill better known for sections dealing with federal retirement benefit guarantee insurance. You may not be able to read S. 219 on the Web right now, because, at press time, the Library of Congress bill posting system had not yet received the text from the Government Printing Office, but the core is a section that is supposed to improve the financial stability of the Pension Benefit Guaranty Corp." (National Underwriter)
NCTR and NASRA February 4, 2005, Letter to IRS on the Phased Retirement Issue (PDF)
2 pages. Excerpt: "We would now like to summarize comments we received from a number of our members. Several thought that the proposed regulations, if implemented, would offer another tool for retaining older workers. They stressed, however, that any phased retirement program would be a supplement, not a replacement, for existing programs such as return to work." (National Association of State Retirement Administrators and National Council on Teacher Retirement)
American Benefits Council Phased Retirement Proposed Regulations Comment Letter to IRS (PDF)
Excerpt: "Re: Proposed regulations concerning distributions from a pension plan under a phased retirement program" (American Benefits Council)
Retirement Plan Fiduciaries Who Don't Know Cash-Flow Requirements Risk Costly Court Decisions
Excerpt: "Reps working with company retirement plans may be fiduciaries, and, as such, they are held to the highest standards of care under ERISA. In this article we will examine one of the ERISA diversification requirements that can be a trap for the unwary fiduciary." (On Wall Street)
Overview: Directed Trustee Not Liable for Continued Investment of Worldcom Plan Assets in Co. Stock
Excerpt: "This opinion is a must-read for plan trustees (and for their advisors). It provides a detailed look at the governing documents and at the actions of WorldCom and the trustee that established and preserved this relationship as one in which the trustee's responsibilities and attendant liabilities were limited to those of a directed trustee." (Employee Benefits Institute of America, Inc.)
In Re Worldcom, Inc. ERISA Litigation; Document Relating to All Actions (PDF)
50 pages. Opinion and Order (U.S. District Court, Southern District of New York via American Benefits Council)
Small Companies, Big Rewards: Rich Retirement Packages Are Offered to Employees
Excerpt: "Over 99% of all U.S. businesses are small and medium sized, meaning they have five to 1,000 employees, so it is especially critical that these companies are able to offer worthwhile retirement plans. It is equally impressive that they are able to do so in a fiscally responsible manner. The Principal Financial Group recently recognized 10 of these companies as providing exceptional benefits programs that ensure long-term financial security for their employees.' (Employee Benefit News)
Towers Perrin Legislative Tracking Chart on Retirement Issues Updated February 4, 2005 (PDF)
3 pages. Excerpt: "This chart summarizes selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)
The Definition of Retirement Is Changing, According to Survey of Workers
Excerpt: "Don't tell American workers that a job ends at a certain age. In fact, don't even think of telling them when it's time to retire, because they're not ready. According to a new national survey of 7,718 employees over 18, 34 percent of workers say they never plan to retire. The survey was conducted by Harris Interactive for Age Wave and The Concours Group." (The Salt Lake Tribune)
Wall Street Optimistic Yet Pragmatic on Social Security Privatization
Excerpt: "Not surprisingly, the president can count on the pinstriped set. Wall Street generally thinks it's a good idea, in good measure because it means more money going into the stock market. 'Almost everyone on Wall Street feels you have to do something,' says David Wyss, chief economist at Standard & Poor's. 'They believe in this idea of private accounts, and it puts a lot more money into stocks.'" (The Christian Science Monitor)
Who Would Manage the Money under the Bush Social Security Private Accounts Plan?
Excerpt: "Because President Bush wants to keep costs low, the firms likely would need experience at managing huge sums of money at low prices. That would narrow the field to firms specializing in investment strategies that track, as closely as possible, broad-based market indexes such as the Standard & Poor's 500-stock index, rather than managers who charge more for putting together portfolios of hand-picked stocks and bonds." (Wall Street Journal via SFGate.com)
House Conservatives Want Bush's Social Security Plan to Go Further
Excerpt: "Conservatives in the House of Representatives put down their marker in the battle over changing Social Security on Friday, calling for larger individual accounts than President Bush has proposed and promising to fight any tax increases to pay for the benefits to the growing number of retirees." (The New York Times; one-time registration required)
Bush Says Many Options Are on Table to Solve Social Security Problem
Excerpt: "President Bush said Friday that he is willing to do anything except raise payroll taxes to shore up the Social Security system, as the White House moved to overcome strong bipartisan resistance to the president's new plan for individual accounts." (The Washington Post; one-time registration required)
Cheney Sees More U.S. Borrowing for Private Social Security Accounts
Excerpt: "Vice President Dick Cheney on Sunday acknowledged trillions of dollars in future borrowing may be needed to cover the cost of private retirement accounts under President Bush's plan to retool the Social Security system. Cheney brushed aside charges that the administration has proposed phasing in the accounts gradually in order to minimize the costs, which will increase more sharply in later years." (Reuters via The New York Times; one-time registration required)
Figuring a Social Security Benefit under Bush's Plan for Private Accounts
Excerpt: "If the account were to earn an average 4.9 percent a year after inflation, minus 0.3 percent in fees--the figure often cited by White House officials based on estimates by the Social Security actuaries of the expected returns of a mixed portfolio of stocks and bonds--the worker's piggy bank would grow to more than $188,000 in today's dollars if he invested the maximum allowed, .... Taken as an annuity payment that would last the rest of his life, that money would generate $11,270 ...." (The New York Times; one-time registration required)
Memo Gives New Details on Workings of Bush's Social Security Plan
Excerpt: "Under the plan President Bush outlined Wednesday night in his State of the Union Message, retirees' traditional Social Security benefits would be reduced if they had diverted some of their tax money into private investment accounts, according to a memorandum that the chief actuary of the Social Security system sent to the White House on the day of the president's address." (The New York Times; one-time registration required)
Opinion: Use Best Part of Every Social Security Reform Plan
Excerpt: "If we were starting from scratch, we would likely design a Social Security system that builds individual savings for retirement. Making such saving compulsory, as in the current system, would avoid the cost of supporting individuals other-wise unprepared for retirement. Incorporating a minimum benefit would allow the system to be progressive." (BusinessWeek Online)
Opinion: Withholding on Social Security –- Information, that Is, Not Taxes
Excerpt: "There's one thing I think we can all agree on when it comes to President Bush's proposal to set up personal investment accounts as part of the Social Security program: As the saying goes, the devil is in the details, and the details are woefully lacking thus far." (The Washington Post; one-time registration required)
Opinion: Scrap Social Security Reform and Super-Size 401(k)s with Universal Savings Accounts
Excerpt: "A smorgasbord of private retirement programs can be replaced with one super-sized plan called a Universal Savings Account (USA), an amalgam of ideas put forward by several organizations. How It Works This personal, portable account would open up retirement savings to everyone by expanding 401(k)-like features, regardless of employer." (Bloomberg News)
Opinion: Details Reveal Drawbacks of Social Security Investment Plan
Excerpt: "As details of President Bush's plan for personal Social Security accounts dribble out, it appears they are neither entirely personal nor terribly secure. The accounts would resemble 401(k) plans in some ways, but with less freedom and flexibility for workers." (San Francisco Chronicle)
Opinion: Social Security's Future? First, Consider the Present
Excerpt: "[H]owever you choose to interpret the long-term predictions, Social Security's fiscal future is affecting the nation's economy today. .... Start with some facts. The bulk of the people who will be receiving benefits in 2042 will be 70 to 85 years old. Today, those people are 33 to 48 - in other words, they are the core of the nation's work force. Now say those people just found out that Social Security would pay 73 percent, not 100 percent, of their benefits in retirement." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
The New FASB Stock Option Expensing Rules - What Does It Mean for Privately Held Companies?
Excerpt: "SFAS 123(R) contains some minor differences from the earlier Exposure Draft ..., but the overall thrust of the proposed standard did not change significantly. Numerous lobby groups ... and legislators remain opposed to this change in accounting policy, and will undoubtedly endeavor to prevent or delay its application. However, many legislators believe that it is inappropriate for Congress to override FASB in the exercise of its standards-setting role, so a last-minute reversal ...." (Beyster Institute)
Hernandez v. Robles (PDF)
Full text of the NY Supreme Court decision striking down the ban on g.ay marriage. (Lambda Legal)
Towers Perrin U.S. Legislative Tracking Chart on Human Resource Issues Updated February 4, 2005 (PDF)
2 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)
Hewitt Federal Legislation Quick Guide Updated February 1, 2005
Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates)
Benefits Left Behind as Workers Are Spun Off from Abbott and Other Companies
Excerpt: "As workers at numerous companies have learned to their dismay, the federal law on employee benefits gives employers the right to make changes in their retirement plans at any time, provided those changes affect all workers without discriminating. But even in situations like the one at Abbott where benefits are reduced or eliminated, workers retain the right to pension benefits they have already earned." (Wilmington Star-News)
Newly Posted Events
Fiduciary - The Fine Line Between Responsibility & Liability
in Georgia on February 17, 2005
presented by Swerdlin & Company
Final Rules on Medicare Part D Benefits— Implications for Retiree Health Plan Sponsors
Nationwide on February 10, 2005
presented by International Foundation of Employee Benefit Plans
HIPAA Security Training & Certification Program
Nationwide on February 7, 2005
presented by HRcertification.com
Tenth National HIPAA Summit Features Advanced HIPAA Security Rule Compliance Strategies
in Maryland on April 6, 2008
presented by HIPAA Summit
Newly Posted Press Releases
The ERISA Fiduciary Guild and Mamorsky's Fiduciary Audit Program Reach Agreement
(ERISA Fiduciary Guild)
Newly Posted or Renewed Job Openings
Institutional Trust System Analyst
for Branch Banking & Trust (BB&T)
in NC
Investment Analyst
for Segal Advisors, Inc., the investment consulting affiliate of the Segal Company
in NY
Accounting Specialist IV-Employee Benefits Trust
for Regions Financial Corporation
in AL
Retirement Plan Sales Director - Northeast Region
for First Mercantile Trust Company
in CT, MA, ME, NH, NJ, NY, RI, VT
Participant Communications Strategist for Retirement Plans
for CitiStreet - A State Street and Citigroup company
in MA
Implementation Pension Analyst
for CitiStreet
in MA
Regional Retirement Plan Sales Consultant
for Waddell & Reed Financial
in AZ, CA, CO, TX
DC and 401(k) Plan Administrator
for Southern California Accounting Firm
in CA
Pension Administrator
for Long Island Pension Consulting Firm
in NY
Client Benefits Representative
for ADP TotalSource
in NH
VP, Executive Trading Plans
for Merrill Lynch
in NJ
Client Relationship Manager
for Merrill Lynch
in CO, NJ
Relationship Coordinator
for Merrill Lynch
in CA
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