| BenefitsLink Retirement Plans Newsletter |   |
March 1, 2005
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Pension Time Bomb: Failure to Face Realities Haunts Los Angeles Unified School District
Excerpt: "After years of making unaffordable promises to public-employee unions, the LAUSD finds itself facing a future pension mess, with a liability from anywhere between $5 billion and $11 billion. To prepare for the shortfall, says the state's nonpartisan Legislative Analyst's Office, the district should start socking away $500 million -- or 8 percent of its straitened budget -- a year." (Los Angeles Daily News)
Testimony before a 3/1/05 Hearing of the U.S. Senate Finance Committee on America's Pension System (PDF)
Excerpt: "The best way to protect pensions for future retirees and working Americans is for Congress to enact permanent rules that lead to a fair and stable system. The unexpected termination of the 30-year Treasury bond in 2001, and the subsequent temporary fixes to the interest rate used for pension calculations have made it impossible for employers to project future pension contributions." (The Business Roundtable et al via The ERISA Industry Committee)
Testimony of the ERISA Industry Committee for the Hearing on America's Pension System, March 1, 2005 (PDF)
12 pages. Excerpt: "[T]he views of The ERISA Industry Committee (ERIC) on the Bush Administration's proposals to reform voluntary single-employer defined benefit pension plans." (The ERISA Industry Committee)
ERIC's Principles Governing Pension Funding and Financial Disclosure to Participants (PDF)
3 pages. Excerpt: "At a time when members of the Baby Boom cohort are entering their retirement years, the government should assist employers who voluntarily sponsor retirement plans for their employees. Meeting the nation's retirement income needs is an important public policy objective that cannot be met by reliance on government, employers, or individuals alone." (The ERISA Industry Committee)
EBRI Notes: Retirement Annuity and Employment-Based Pensions: Impact of Demographic Variables (PDF)
Pages 7-14 of 20. Excerpt: "Recent data from the March 2004 Current Population Survey ... confirm earlier findings that gender, marital status, age, education, and other demographic variables have a significant impact on the likelihood of a worker receiving a retirement annuity and/or employment-based pension income in retirement. There may also be a strong correlation between these same variables and the amount of pension income received from employment-based retirement plans." (Employee Benefit Research Institute)
Text of Ice Miller's Comments on Proposed IRS Regulation on Phased Retirement Distributions (PDF)
4 pages; submitted to IRS on February 8, 2005. (Ice Miller)
Financing ESOP Transactions
Excerpt: "Financing an ESOP transaction is similar in many ways to borrowing for any other corporate purpose. Lenders base their decisions on a borrower's ability to repay the loan, as well as the value of collateral backing up the loan. There are, however, certain issues that are unique to ESOPs and need special attention and added explanation." (Leading Companies Online Magazine via Beyster Institute)
Connecticut State Pension Restructuring to Save $10 Million a Year
Excerpt: "State Comptroller Nancy Wyman said Monday that a major restructuring of three state pension funds could save the 44,000 participants about $10 million in annual fees." (NY Newsday)
PwC and Partners Hit with Class-Action Pension Suit
Excerpt: "A former PricewaterhouseCoopers LLC employee has instigated a class-action suit against the Big Four firm claiming unfair pension practices, Pension and Investments reported." (AccountingWEB.com)
Fees Take a Bite from 401(k)s - Reducing the Return and the Tax Advantage
Excerpt: "Employees fortunate enough to have an employer-sponsored retirement savings plan now know (or should know) not to fill it up with too much stock in the company they work for. Many have also learned, some the hard way, about the benefits of diversifying where they stow their money. But the investing industry has one more curve ball to throw at workers: the fees they pay for their retirement plans." (The Washington Post; one-time registration required)
Requests for 401(k) Loans: How to Help Employees Understand Disadvantages without Offering Advice
Excerpt: "Offering a loan provision in your retirement plan is an important feature that provides employees access to their money when they need it. We have found that by providing employees with a summary of the advantages and disadvantages prior to processing loan requests reduces the number of questions HR needs to answer and in some cases has led people to rethink their original decision - it's not 'easy money.'" (Financial Finesse via WorkIndex.com)
A Fix For Market Timing Raises Cost Issues
Excerpt: "To stem rapid trading in their funds, mutual fund companies are adding redemption fees. And 401(k) plan providers now have to keep track of the different redemption fees and communicate that to employees." (Workforce Management)
Overview: 401(k) Plan Fiduciary Best Practices: A Case Study (PDF)
3 pages. Excerpt: "Aon Consulting recently assisted a company in meeting these dual objectives. From this case study, a picture of best fiduciary practices can be gleaned. We reviewed the company's plan operations in light of prevailing fiduciary best practices in each of the following areas: identification of fiduciaries; conflicts of interest; documentation; fiduciary oversight; and investment advice. Our case study yielded the results presented in the boxes in this article." (Aon Consulting)
Text of Ice Miller's Comments on Proposed IRS Regulations Under Code Section 403(b) (PDF)
17 pages; submitted to IRS on February 8, 2005. (Ice Miller)
Links to Items on Executive Comp, Benefits in General
The New FASB Stock Plan Accounting Rules: How Will They Affect Stock Plan Design?
Excerpt: "Accounting (and tax) considerations should follow, not lead, the decision to establish and maintain an employee ownership program. Employee stock programs are implemented for many sound reasons other than the provision of compensation with advantageous accounting impact." (Leading Companies Online Magazine via Beyster Institute)
The New FASB Stock Option Expensing Rules -- What Do They Mean for Privately Held Companies?
Excerpt: "The Financial Accounting Standards Board (FASB) released its controversial pronouncement on accounting standards for employee stock programs, FASB Statement No. 123 (revised 2004) ('SFAS 123(R)'), on December 16, 2004. SFAS 123(R) applies to all compensatory employee stock programs, other than qualified ESOPs." (Leading Companies Online Magazine via Beyster Institute)
Corporate America Prepares for Graying Shoppers and Employees
Excerpt: "Amid all the talk about changing Social Security, an equally important retirement issue is being overlooked. Millions of Americans are nearing retirement age, and there won't be enough younger workers to fill their shoes. By 2010, one-third of the U.S. workforce will be older than 50, and American businesses will be depending on older workers not only to buy their products, but also to sell them." (Knight Ridder Newspapers via Myrtlebeachonline.com)
Fact Sheet: Finances of Employee Benefits, 1960 - 2003 (PDF)
Pages 14-17 of 20. Excerpt: "This fact sheet uses the latest data (for 2003) from the Bureau of Economic Analysis' (BEA) 'National Income and Product Accounts of the United States,' as published in the Survey of Current Business. These benefit programs provide substantial financial support for individuals during their working lives (i.e., health insurance and unemployment insurance) and during retirement (i.e., Social Security, pension plans, and Medicare)." (Employee Benefit Research Institute)
Text: Broad-Based Stock Option Plan Transparency Act: H.R. 913 (PDF)
6 pages. Excerpt: "To direct the Securities and Exchange Commission to require enhanced disclosures of employee stock options, and to require a study on the economic impact of broad-based employee stock option plans, and for other purposes." (U.S. Representatives Dreier and Eshoo via American Benefits Council)
Study of Employee Benefits Trends: Findings from the 2004 National Survey of Employers and Employees (PDF)
44 pages. Excerpt: "The results of this study demonstrate a number of significant trends. An unsteady job market and uncertain economy have made employees worry about having enough money to pay bills during a period of income loss, cited as the most important benefits-related concern by 71% of all full-time employees. Yet, while employees are very concerned about big issues such as income protection (71%), healthcare (59%) and outliving their retirement savings (49%), they value immediate-...." (MetLife)
Newly Posted Events
Critical Issues in Employee Benefits Law
in District of Columbia on March 9, 2005
presented by ERISA Industry Committee
Consumer-Driven Health Care - Winning Communication Strategies
in New Jersey on March 16, 2005
presented by International Society of CEBS - Northern New Jersey Chapter
Electronic Records Management and Digital Discovery
in Illinois on May 12, 2005
presented by ALI-ABA (American Law Institute-American Bar Association)
Qualified Plan Seminar
in Wisconsin on April 26, 2005
presented by Actuarial Systems Corporation (ASC) and Global Benefit Advisors (GBA)
Qualified Plan Seminar
in Colorado on May 11, 2005
presented by Actuarial Systems Corporation (ASC) and Global Benefit Advisors (GBA)
Qualified Plan Seminar
in North Carolina on May 13, 2005
presented by Actuarial Systems Corporation (ASC) and Global Benefit Advisors (GBA)
Qualified Plan Seminar
in Texas on May 20, 2005
presented by Actuarial Systems Corporation (ASC) and Global Benefit Advisors (GBA)
Qualified Plan Seminar
in Massachusetts on May 25, 2005
presented by Actuarial Systems Corporation (ASC) and Global Benefit Advisors (GBA)
Self-Funded Workshop
in Ohio on May 10, 2005
presented by SunGard Corbel
Self-Funded Workshop
in Arizona on May 12, 2005
presented by SunGard Corbel
Self-Funded Workshop
in Texas on May 16, 2005
presented by SunGard Corbel
Self-Funded Workshop
in District of Columbia on May 18, 2005
presented by SunGard Corbel
Self-Funded Workshop
in Georgia on May 20, 2005
presented by SunGard Corbel
Newly Posted Press Releases
High-Income Uninsured Families Not As Prevalent As Data Indicate
(Employee Benefit Research Institute (EBRI))
Gender Differences in Annuity Income
(Employee Benefit Research Institute (EBRI))
ERIC Calls On Senate Finance Committee To Protect Robust Voluntary Pension System
(ERIC (ERISA Industry Committee))
MetLife Discusses How to Create a Standout Retirement Plan During Webcast on Economist.com
(MetLife)
Newkirk Launches Redesigned Website
(Newkirk Products, Inc.)
Five Retirement Rules of Thumb
(National Association for Variable Annuities (NAVA))
Newly Posted or Renewed Job Openings
Account Executive - Columbia, Maryland Washington D.C.
for Transamerica
in DC
Pension Consultant – Special Projects
for Primark Benefits Primark Benefits
in CA
Retirement Benefits Operations Manager
for JELD-WEN
in OR
Client Services Manager - Detroit, MI
for American United Life Insurance Company
in MI
Trust Assistant
for Regions Bank
in AR
Paralegal Junior Administrator
for WESPAC
in CA
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