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May 16, 2005
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SEC Staff May 16, 2005, Report Concerning Examinations of Select Pension Consultants (PDF)
8 pages. Excerpt: "To explore the risk areas relating to pension consulting, the Office of Compliance Inspections and Examinations ('OCIE') conducted focused examinations of 24 pension consultants who are registered investment advisers. The pension consultants examined represented a cross-section of the pension consultant community, and ranged in size (measured in terms of the number and size of their pension plan clients), and the type of products and services they offer." (U.S. Securities and Exchange Commission via Fiduciary360)
Conflicts Seen for Advisors to Pension Plans -- Expected Findings of SEC Report
Excerpt: "A yearlong investigation by the Securities and Exchange Commission has found that many pension and 401(k) consultants receive large hidden payments from the investment firms they recommend to retirement-plan clients, according to people familiar with the matter." (Los Angeles Times; one-time registration required)
Opinion: Guaranteed Collisions –- The PBGC and the GASB and America's Taxpayers
Excerpt: "Eyes glaze over at the mere mention of entities such as the Pension Benefit Guaranty Corp. or the Governmental Accounting Standards Board. But the PBGC's sudden prominence is symptomatic of the increasingly troubled relationship between America's welfare state and American capitalism, or those portions of capitalism that are appendages of the welfare state. And the GASB is pertinent to the parallel crisis of state and municipal welfare states." (George F. Will via The Washington Post; one-time registration required)
Pension Funding Problems Grow Along with PBGC Deficit
Excerpt: "The PBGC, funded through corporate premiums, has moved from about a $10 billion surplus in the late 1990s to a $23 billion deficit in its single-employer insurance program. The agency had $39 billion in assets and $62 billion in long-term liabilities. At the same time, the PBGC estimates underfunding in the pension system has reached a record $450 billion, with auto, airline and retail industries at most risk." (USA TODAY)
PBGC Semi-Annual Regulatory Agenda, Published on May 16, 2005
Excerpt: "The agenda lists regulations that are currently under development or review or that PBGC expects to have under development or review during the next 12 months. The effect of this agenda is to advise the public of PBGC's current and future regulatory activities." (Pension Benefit Guaranty Corporation (PBGC))
Opinion: The Vanishing Pension
Excerpt: "The fundamental problem lies in the nature of traditional corporate pensions, also known as 'defined-benefit' plans. Although these have been largely supplanted by 'defined-contribution' plans, such as 401(k)s, they are still major issues for big employers in industries such as autos, steel and airlines. These defined-benefit pensions often represent promises made in a different business world, by managers who never imagined how globalization, deregulation and technology would ...." (NorthJersey.com)
Congressmen Move to Slow Pension Shifts to PBGC with a Six-Month Moratorium on Transfers
Excerpt: "Two US House Democrats have introduced legislation putting a six-month moratorium on bankrupt companies transferring their pension plans to the US private pension insurer after a controversial $6.6-billion pension transfer by United Airlines. HR 2327, introduced late last week by Representatives George Miller (D-California) and Jan Schakowsky (D-Illinois) temporarily bars the transfers from companies in US Bankrup.tcy Court to the Pension Benefit Guaranty Corporation (PBGC) ...." (PLANSPONSOR.com; one-time registration required)
The PBGC and United Airlines: How Does United's Termination Affect the PBGC Deficit? (PDF)
1 page. Excerpt: "The American Academy of Actuaries Pension Practice Council provides this educational fact sheet to discuss recent statements regarding the termination of United Airlines' pension plans and the impact that termination will have on the financial situation of the Pension Benefit Guaranty Corp (PBGC)." (American Academy of Actuaries)
Opinion: The Retirement You Weren't Banking on May Be the One You Get
Excerpt: "Even if you don't work for an airline, last week's ruling by federal bankrup.tcy judge Eugene Wedoff -- permitting United Airlines to default on its pension plans, which cover more than 130,000 people -- should send shivers up your spine. .... While reducing the maximum United pension benefit from more than $100,000 a year to around $46,000 may not seem like a social disaster, the court's action may well mark the beginning of the end of the system of retirement planning as we know it." (The Washington Post; one-time registration required)
Annuitization: What Individuals Say, What Individuals Do with Retirement Savings Accumulations (PDF)
7 pages. Excerpt: "This article synthesizes previous research to examine the attitudes of workers and retirees regarding the receipt of income from their retirement plans, the reasons behind low annuitization rates, annuitization options available to workers, the value of annuitization, and satisfaction levels among those who have annuitized assets." (TIAA-CREF Institute)
Overview: The New Automatic Rollover Requirements -- Compliance Guidance for Plan Sponsors (PDF)
3 pages. Excerpt: "Technically, automatic rollovers have been required since March 28, 2005. However, earlier this year, the IRS granted plan administrators until December 31, 2005 to make the automatic rollovers required for mandatory cash-outs payable on or after March 28, 2005, for which participants have failed to provide distribution instructions." (The Hay Group)
Congress Giveth and Congress Taketh Away: The Slow Death of the SESOP (PDF)
25 pages. Excerpt: "In 1996, Congress passed the Small Business Job Protection Act ('SBJPA') that, in part, allowed an Employee Stock Ownership Plan ('ESOP') to own a Subchapter S3 corporation. The SBJPA amended Section 13615 of the Internal Revenue Code to permit an S Corp to be owned by an ESOP and thereafter be a shareholder in an S Corp." (Akron Law Review)
Fiduciary Responsibility Linked to Increased Plan Sponsor Insomnia
Excerpt: "This is the first in a series of three articles. Class action lawsuits against plan fiduciaries and government lawsuits exposing a variety of improprieties in the investment industry have increased concern about the proper execution of fiduciary responsibilities. The issue of investment management fees charged to plan participants is getting increased attention as well." (Employee Benefit News)
Retirement's Unraveling Safety Net: Social Security Is Least of Newer Generations' Worries
Excerpt: "[The retirement security] vision is being supplanted by one President Bush calls the Ownership Society, in which the burdens of economic security -- and ... the rewards--shift back to individuals. Social Security is only one aspect of the shift. The safety net big companies wove ...--long-term employment, pension security, retiree health insurance--has been giving way for so long that its unraveling is mere background accompaniment to Washington's noisy debate over Social Security." (The Washington Post; one-time registration required)
United Kingdom Pension Regulator Taking Equity Stake in Faltering Companies
Excerpt: "The UK's equivalent of the Pension Benefit Guaranty Corporation (PBGC) is accepting responsibility for pension plans from companies on the edge of bankrup.tcy if the companies give the agency an ongoing operations equity stake." (PLANSPONSOR.com; one-time registration required)
Payouts in Social Security Individual Accounts Pose New Questions (PDF)
16 pages. Excerpt: "Key design issues must be addressed if individual accounts are added to Social Security or are created outside of Social Security. Many of the issues in payout policies also have implications for private retirement plans which increasingly are in the form of personal accounts." (TIAA-CREF Institute)
Opinion: Economic View -- Beware the Easy Fix for Social Security
Excerpt: "To hear White House officials tell it, the ideas he has outlined would save trillions of dollars and leave everyone a winner. .... To hear Democratic critics tell it, Mr. Bush would eventually cut benefits for most people by thousands of dollars a year - even though he would allow today's benefits to rise at least as fast as inflation." (The New York Times; one-time registration required)
Opinion: A Tale of Two Trust Funds
Excerpt: "You might keep this history [of the highway trust fund] in mind during the debate about another trust fund's problem, the $11 trillion long-term deficit facing Social Security. Democrats are counting on the program's popularity to force Congress to raise taxes to preserve it, but if politicians were too afraid of voters' wrath to add a few pennies to the gasoline tax, should you count on them to vote for far more painful increases?" (The New York Times; one-time registration required)
SEC Semi-Annual Regulatory Agenda, Published on May 16, 2005
Excerpt: "Information in the agenda was accurate on March 29, 2005 ... To the extent possible, rulemaking actions by the Commission since that date have been reflected in the agenda. The Commission invites questions and public comment on the agenda and on the individual agenda entries ... on or before July 30, 2005." (Securities and Exchange Commission (SEC))
Retirement Plan Success: A Tale of Participants at Three Hospitals (PDF)
3 pages. Excerpt: "A recent study by Dr. Thomas Garman, a researcher from Virginia Tech, found that 25% of employees across the country are so stressed about their financial situation that they spend 30-80% of their time at work focusing on their own personal finance issues -- a productivity drain that can cost their employers tens or hundreds of millions of dollars each year." (Financial Finesse)
Florida Democrat to Break Ranks and Unveil Social Security Financing Bill
Excerpt: "A Florida Democratic congressman plans to unveil ... a proposal to bolster Social Security finances, in a break with his party's rejection of a White House push to revamp the retirement system. The proposal by Florida U.S. Rep. Robert Wexler would raise taxes on those making more than $90,000 a year, with a goal of relieving expected financial strains on Social Security as the baby-boom generation retires, .... Wexler is to unveil the plan on Monday at a luncheon in his district." (Reuters via The New York Times; one-time registration required)
Links to Items on Executive Comp, Benefits in General
Employee Communication Vital to Success of New Benefit Plan Designs
Excerpt: "Whether new or restructured employer-paid benefit plans pay off in the long run will depend on how willing employers are to commit the time and resources needed for a long-term, comprehensive communications strategy. Employers must be willing to try new techniques and continuously monitor the effectiveness of their communications in order to see a return on their investment. Employers who are willing to make this commitment will find that effective benefits communication can pay ...." (Employee Benefit News)
News on Laws Impacting Marriage and Domestic Partner Benefits
Excerpt: "A federal district judge in Nebraska yesterday struck down an amendment to Nebraska's State Constitution which provides that '[o]nly marriage between a man and a woman shall be valid or recognized in Nebraska.' .... [A] New York Times article ... states that the 'Nebraska ruling is the first in which a federal court has struck down a state ban on same-[gender] marriage' and noted that congressional leaders are pointing to the decision 'as evidence of the need for a federal ....'" (Attorney B. Janell Grenier via BenefitsBlog.com)
Overview of SEC Staff's Views on Share-Based Payments that Are Retained Upon Retirement (PDF)
3 pages. Excerpt: "Many companies grant share-based payments with terms that are affected by retirement or other events. For example, it is not uncommon for companies to provide that vesting of share-based payments accelerates upon an employee's retirement. Alternatively, an award may 'continue to vest' after retirement, even though the employee no longer is providing services to the employer (essentially, the award is vested at retirement but delivery of shares or exercisability of the ...)." (Ernst & Young via Financial Executives International)
Newly Posted Events
Plan Design Workshop
in Washington on June 17, 2005
presented by SunGard Corbel
Plan Design Workshop - Exploring New Directions
in Louisiana on June 16, 2005
presented by SunGard Corbel
Plan Design Workshop - Exploring New Directions
in Texas on June 17, 2005
presented by SunGard Corbel
Plan Design Workshop - Exploring New Directions
in Colorado on June 21, 2005
presented by SunGard Corbel
Newly Posted Press Releases
Labor Department Official Commends SEC for Report On Pension Consultant Conflicts of Interest
(U.S. Department of Labor, Employee Benefits Security Administration (EBSA))
Newly Posted or Renewed Job Openings
Multi-Employer Pension Plan Employment
for GCC/IBT-SRDF
in IL
401(k) Enroller/Contractor - Bilingual
for Transamerica
in ANY STATE
401(k) Enroller/Contractor
for Transamerica
in ANY STATE
Client Relations Consultant
for Invesmart, Inc.
in PA
Team Leader, Trust Officer
for City National Bank
in CA
Retirement Plan Sales Director
for Brandywine Benefits Company, LLC
in MD
Handy Links:
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