| BenefitsLink Retirement Plans Newsletter |   |
March 3, 2005
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
IRS Posts Employee Plans Examination Process Guide on Website
Excerpt: "In response to the results of the Customer Satisfaction Surveys, the Employee Plans Examination function has developed the EP Examination Process Guide to help our customers through the examination process. The guide will clarify the various steps in the examination process and introduces to our customers resources that are available on the Retirement Plans web site." (U.S. Internal Revenue Service)
Bank of America to Pay $460.5 Million to End WorldCom Suit
Excerpt: "Bank of America Corp. said it agreed to pay $460.5 million to settle allegations that it helped sell $15.4 billion in WorldCom Inc. bonds when it should have known the long-distance company was lying about its financial health. .... Lawsuits over WorldCom losses have followed two primary tracks: the investor case and another class action by former employees whose 401(k) retirement funds were wiped out." (Bloomberg.com)
Labor Department Says Theft from 401(k)s Is on the Rise
Excerpt: "Retirement plans are facing a growing threat: theft. Labor Department investigators found 1,269 instances of missing 401(k) money in the fiscal year ended Sept. 30. That is a 37-fold increase from 34 violations found in 1995." (Wall Street Journal via azcentral.com)
Excessive 401(k) Plan Fees and Costs: The Coming Storm in ERISA Litigation?
Excerpt: "[W]hat is the next ERISA litigation trap for corporate officers and directors that preside over their companies' retirement plans? The answer may be claims relating to payment of excessive fees and expenses. One of the fundamental responsibilities of ERISA fiduciaries is 'defraying reasonable expenses of administering the plan.' .... The typical types of expenses incurred by a plan are administrative expenses such as fees paid to accountants, attorneys, consultants and third ...." (Reish Luftman Reicher & Cohen)
Five Key Contractual Issues to Consider When Switching Section 403(b) Vendors (PDF)
5 pages. Excerpt: "So why has switching 403(b) vendors been viewed as painful? The primary reason has been that the annuity contracts that employers have entered into with large 403(b) vendors include provisions that effectively tie up plan assets in long-term annuity contracts. And, understandably, these vendors do not see any benefit to eliminating these restrictions and losing large amounts of assets to a competitor." (Gardner Carton & Douglas LLP)
Comments on Financial Status of PBGC and the Administration's Defined Benefit Plan Funding Proposal
Excerpt: "ASPPA applauds the Committee's leadership in exploring defined benefit funding reform. The Senate Finance Committee's consistent focus on pension issues over the years has advanced improvements in the employer-sponsored pension system, as well as led to an increased awareness of the need to focus attention on the retirement security of our nation's workers. ASPPA looks forward to working with Congress and the Administration on strengthening the defined benefit system." (American Society of Pension Professionals & Actuaries)
Analysis: Pension Funding Reform for Single Employer Plans (PDF)
51 pages. It would probably be best to print this out in order to read it. (American Academy of Actuaries)
Testimony on Pension Funding Reform before the House Committee on Education and the Workforce (PDF)
12 pages. Excerpt: "We agree that reforms are needed to revitalize and support the defined benefit pension system. It is critical that these reforms focus on our ultimate goal: retirement security." (American Benefits Council)
Retirement Security for U.S. Workers: Six Principles for Long-Term Reforms to Fix Pension Laws (PDF)
1 page. Fact sheet outlining principles to guide Congress in modernizing America's pension laws (Representative John Boehner via American Benefits Council)
A Return to Actuarial Solvency: 'Financial Engineering' for Public Sector Pension Plans (PDF)
4 pages. Excerpt: "This Public Sector Letter mentions asset-liability modeling (ALM). ALM can help public sector pension plan sponsors answer the following questions: What is the range of possible and probable funding requirements over the next 10 years? To what extent can future investment returns be expected to improve/jeopardize the plan's funded position? Is the plan likely to experience a funding deficiency and, if so, when is it expected? What are the plan's future annual liquidity ...?" (The Segal Company)
New Tug of War Over Excess Pension Cash -- A Return to 'Reversions'?
Excerpt: "These are lean times for pension funds, and few companies report having more pension money than they need. But some business advocates have nevertheless begun urging Congress to let companies tap any surplus that appears in their pension funds, if and when the good times return." (The New York Times; one-time registration required)
Text of Testimony: PBGC: Structural Problems Limit Agency's Ability to Protect Itself from Risk
21 pages. Testimony by David M. Walker, comptroller general of the United States, before the Subcommittee on Government Management, Finance, and Accountability, House Committee on Government Reform, House of Representatives, March 2, 2005. Highlights: http://www.gao.gov/highlights/d05360thigh.pdf" (U.S. Government Accountability Office)
Enron Tentatively OKs Accord for Pension Fund Settlement
Excerpt: "Enron Corp. has tentatively agreed to settle suits over employees pension fund claims, according to a published report Wednesday, citing lawyers for the bankrupt energy company and its workers." (MarketWatch)
Bush Social Security Proposal Differs Greatly from Federal Thrift Savings Plan Model
Excerpt: "The federal Thrift Savings Plan is to individual Social Security accounts what fashion runway attire is to personal wardrobe: an attractive model, but in the wider world things just don't fit quite the same way. In his drive to restructure Social Security, President Bush has trotted out the 401(k)-like retirement perk for federal employees as a model for his idea of allowing younger workers to invest some of their Social Security tax contributions in the stock or bond markets." (The Washington Post; one-time registration required)
Public Pension Funds May Be Feeling Political Pressure to Invest Locally
Excerpt: "Public pension fund's home-state private equity investments tend to underperform, a sign that political pressure can lead some funds to make poor investment choices. This is one of the findings from a new study from the Harvard Business School and the Massachusetts Institute of Technology that tried to discover why some investors fare better than others with their private equity holdings." (PLANSPONSOR.com; one-time registration required)
Schwarzenegger Administration Backing Away from Demand for Private Retirement Accounts
Excerpt: "Finance Director Tom Campbell said Wednesday at a legislative hearing that the governor is open to changing the pension system in other ways, provided there are savings for taxpayers and predictable costs for the state." (Los Angeles Times; one-time registration required)
Increased Investment Flexibility for Pension Funds Proposed in India
Excerpt: "The Government of India has proposed financial sector reforms designed to increase investment flexibility. A statement, issued by the Ministry of Finance, proposed employer-sponsored retirement benefit funds should be permitted to invest up to 5 percent of their assets in equities and up to 10 percent in corporate bonds. It is expected that such investments would be channeled via government-approved mutual funds rather than by direct investment." (Watson Wyatt Worldwide)
Happy Birthday, Fred Reish!
Fred, you are THE MAN. --Editor (BenefitsLink.com)
Recent Federal Developments in Pension and Social Security Areas (PDF)
4 pages. Excerpt: "In addition to the ongoing discussions about Social Security, several bills of interest to NCTR members have been recently introduced." (National Council on Teacher Retirement (NCTR))
Audio: Weighing the Impact of Fees on Private Social Security Accounts
Excerpt: "One of the primary arguments for private accounts is that savings invested in a mix of stock and bonds normally yield solid returns. But critics fear that management fees on the accounts could erode those gains." (All Things Considered via National Public Radio)
Book: The Changing Mix of Social Insurance, Employee Benefits, and Individual Responsibility
Excerpt: "Based on papers delivered at the 16th annual conference of the National Academy of Social Insurance, In Search of Retirement Security presents a variety of views on and approaches to Social Security reform. In the collected chapters, thirteen experts examine the changing face of retirement in America; .... Click on the links [provided at target page] to download individual chapters ...." (The Century Foundation)
EBRI Publishes Supplemental Material on Their New Social Security Research (PDF)
26 pages. Target page consists of charts on projected Social Security benefits based on Employee Benefit Research Institute estimates using GEMINI from the Policy Simulation Group. (Employee Benefit Research Institute)
White House May Accept Benefits Shift to Personal Accounts that Would Supplement Social Security
Excerpt: "Treasury Secretary John W. Snow said Wednesday that the Bush administration would not rule out consideration of a very different approach to private investment accounts for Social Security from the one advocated so far by the White House." (The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
DOL Information Letter: Guidance under ERISA on Campaign Contributions made by Service Providers
Excerpt: "Whether a plan fiduciary engages in a breach by accepting, and then returning, contributions to his political campaign from current and prospective service providers to the plan, and recusing himself from decisions relating to those service providers." (U.S. Department of Labor)
New Jersey Governor Proposes Public Employee Benefit Hike Halt
Excerpt: "Faced with what he described as a 'fiscal crisis' in the Garden State, Acting New Jersey Governor Richard Codey has called for a moratorium on public employee benefit increases." (PLANSPONSOR.com; one-time registration required)
Hewitt Federal Legislation Quick Guide Updated as of March 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)
Mergers and Retiree Questions: Benefits Changes, Usually for the Worse, Often Follow M&A
Excerpt: "Mergers and acquisitions may be great for shareholders. But they don't seem so great so for retirees and future retirees whose pension, health and life-insurance benefits change, often for the worse.' (MarketWatch)
Newly Posted Events
401(k) Plan Workshop
Nationwide on April 21, 2005
presented by SunGard Corbel
Back to Basics: 401(k) Plans
in Georgia on March 17, 2005
presented by Worldwide Employee Benefits Network (WEB) - Atlanta Chapter
Doing "Good," While Doing Well - Inside Socially Responsible Investing
Nationwide on March 10, 2005
presented by PLANSPONSOR
Health Savings Accounts 2005: Market Adoption, Acceptance, Growth, and Regulatory Refinements
Nationwide on March 10, 2005
presented by Health Resources Online
Newly Posted Press Releases
BAN Educational Conference Termed Outstanding
(Benefit Advisors Network)
Lifting Wage Cap Would Aid Greatest Portion of Workers
(Employee Benefit Research Institute (EBRI))
Council Submits Pension Funding Proposals to House Government Reform Subcommittee
(American Benefits Council)
The Standard Ranked Number One Retirement Plan Provider in Boston Research Group Survey
(Standard Insurance Company)
Treasury and IRS Issue Proposed rules for Roth Contributions to 401(k) Plans
(U.S. Treasury Department and Internal Revenue Service)
Metrics Partners Rolls Out Sales and Marketing Interactive Blog
(Metrics Partners)
MetLife Retirement & Savings Delivers New Way of Educating 401k Plan Participants Through Macromedia Breeze Technology
(MetLife)
Testimony of Assistant Secretary of Treasury Mark J. Warshawsky before the United States House Education and the Workforce Committee
(U.S. Department of Treasury)
Newly Posted or Renewed Job Openings
Health & Welfare Associate
for Towers Perrin
in CA, CO, DC, NJ
Pension Manager
for Growing Major Midtown Union Health Plan
in NY
401(k) Client Service Representative
for ADP TotalSource
in FL
Pension Analyst
for REPTECH
in CO
Retirement Administrator
for Suburban Philadelphia financial service and administrative firm
in PA
Trust Accounting Administrator
for Associated Pension Consultants
in CA
Administrative Associate
for Tegra Financial Partners, a subsidiary of Habif, Arogeti & Wynne, LLP
in GA
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Copyright 2005 BenefitsLink.com, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.
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