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July 12, 2005
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Central & Mountain States Benefits Conference

September 12-13, 2005 - Denver, CO Discuss employee benefits issues with colleagues and local, regional and national government representatives from the Internal Revenue Service, Department of Labor and PBGC.

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Uptick in Auto-Enrollment and Lifecycle Fund Options for 401(k) Plans
Excerpt: "To increase retirement plan enrollment, plan sponsors have tried retirement planning fairs, employee education meetings, even 401(k) Day. Despite employers' best efforts, statistics show that less than three-quarters of U.S. workers who are offered a retirement plan actually enroll." (Employee Benefit News)

Shell Will Pay $90 Million to Settle U.S. Lawsuit
Excerpt: "Royal Dutch/Shell Group, Europe's second-largest oil company, agreed to pay about $90 million to settle a lawsuit brought by its U.S. employees after the company overstated its oil and gas reserves by 41 percent. .... The lawsuit was brought by employees enrolled in savings plans covered by the Employee Retirement Income Security Act, ...." (Bloomberg.com)

Text of Summary of Pension Protection Act of 2005, Prepared by Congressional Research Service (PDF)
6 pages. Excerpt: "The bill would: Reform the funding rules for both single-employer and multiemployer defined benefit pensions, Require plan sponsors to disclose more information about pension plan finances, Restrict benefit payments and accruals of new benefits in underfunded plans, and Increase the premiums ... to the [PBGC]. A companion bill, H.R. 2831, would clarify that cash balance pension plans do not ordinarily violate the legal prohibition on age discrimination in employee benefits." (Congressional Research Service, U.S. Library of Congress)

ERIC Side-by-Side Comparison of Significant Pension Reform Proposals Updated as of July 7, 2005 (PDF)
19 pages. Excerpt: "The side-by-side summary of pension reform proposals ... includes the Administration's original proposal, ERIC's proposal for comparison, and HR 2830." (The ERISA Industry Committee)

ERIC Explanation of Credit Balances in Defined Benefit Plans (PDF)
4 pages. Excerpt: "The ERISA Industry Committee (ERIC) has developed [this] short paper ... for the use of press as well as Capitol Hill staff explaining credit balances with regard to the current debate in Congress on defined benefit pension plans. Part 1 of the document explains how credit balances work. Part II of the document discusses issues in the current debate." (The ERISA Industry Committee)

Pension Markets in Focus-- June 2005-- Issue 1 (PDF)
12 pages. Excerpt: "Recent years have witnessed intense pension reform efforts in countries around the globe, which have often involved an increased use of funded pension programs managed by the private sector. There is a growing need among policy makers and the regulatory community, as well as among private sector participants, to compare program developments and experiences to those of other countries." (Organization for Economic Co-operation and Development)

Two Years Ago, GM Launched Risky Strategy to Shore Up Its Huge Pension Fund -- Inside Project Alpha
Excerpt: "GM launched Alpha in 2003 with an enormous gamble. It borrowed a staggering $13.5 billion with the biggest bond offering ever by a U.S. company. It put all that money (and an additional $5 billion from selling its stake in Hughes Electronics) into its U.S. pension fund, raising it to about $80 billion. Suddenly, the nation's biggest corporate pension fund went from way under water to reasonably sound." (Newsweek via MSNBC.com)

Participant Loan Alert Under Bankrup.tcy Abuse Prevention and Consumer Protection Act of 2005
Excerpt: "The new rules [of the Bankrup.tcy Abuse Prevention and Consumer Protection Act of 2005] provide a better outcome by exempting plan loans from the bankrup.tcy process. Payroll deduction authorizations remain in effect during the bankrup.tcy process, meaning that in most cases defaults will be avoided. Also, plan loans survive bankrup.tcy intact ..." (Oppenheimer Wolff & Donnelly LLP)

Enron Agrees to Settle Pension Claims
Excerpt: "The Enron Corporation agreed to settle government and employee claims against its retirement plans for $356.25 million, the Labor Department said on Monday. But the department stressed that since pending bankrup.tcy court claims against the company exceed its assets, the actual payouts would be in the 'tens of millions of dollars.'" (The New York Times; one-time registration required)

Proposed 415 Regulations: Links and Overviews
Excerpt: "On May 25, 2005, the IRS published proposed regulations under Section 415 of the Internal Revenue Code dealing with limitations on benefits and contributions for qualified plans. Here are some helpful resources pertaining to the regulations: ...." (Attorney B. Janell Grenier via BenefitsBlog.com)

UK Firms Can Still Insist on Retirement at the Age of 65
Excerpt: "Companies will still be able to insist that workers retire at the age of 65 but will have to give employees six weeks' notice and inform them of their right to appeal, the government is suggesting." (Financial Times via newbusiness.co.uk)

Brief Analysis: Social Security and Progressive Indexing (PDF)
2 pages. Excerpt: "So far, the president has proposed two primary ideas [for Social Security reform]: 1) Allow younger workers to prefund a portion of their retirement benefits by creating personal retirement accounts equal to 4 percent of wages, and 2) Use 'progressive indexing' to reduce the growth in benefits for higher earners. These two measures combined, if structured and administered properly, can provide retirement benefits equal to what workers are scheduled to receive ...." (National Center for Policy Analysis)

Secret Deal Gave Former Director of Virginia State Pension Fund $263K
Excerpt: "A secret exit bonus of $263,000 to state public employee pension fund's former director was improperly put in place without consent or oversight by the Virginia Retirement System's governing board, a report by the Legislature's watchdog agency said Monday [July 11, 2005]." (AP via WTOP News)

IRS Weighted Average Interest Rate Table Updated for July 2005
Weighted average for July 2005: 4.97% (U.S. Internal Revenue Service)

IRS Composite Corporate Bond Rate Table Updated for July 2005
Corporate Bond Weighted Average Interest Rate = 5.90 for July 2005 (U.S. Internal Revenue Service)

Text: Retirement Savings and Security Act, S. 1359 (PDF)
60 pages. Excerpt: "To amend the Internal Revenue Code of 1986 to increase retirement savings and security, ...." (U.S. Senate via American Benefits Council)

Administrative Costs for Social Security Private Accounts
Excerpt: "This Fact Sheet compares the administrative costs that are charged to individuals in private account plans in the social security systems of Chile, Sweden, and the United Kingdom. It uses their experiences to make a rough estimate of what the administrative costs might be for a carve-out account system within the U.S. Social Security system." (AARP)

Links to Items on Executive Comp, Benefits in General

Monthly Benefit News & Developments, July 2005 Issue from Milliman (PDF)
2 pages. Contents: Social Security Study; Legislative Activity on the Benefits Front; Upcoming Key Dates; GAO Studies; Regulatory Roundup; and, Accounting Items. (Milliman)

Critical FewPoints -- First Installment of Series on Employee Plans Examinations' Priorities
Excerpt: "I think it is important to focus resources and attention on the Critical Few priorities. If we do this, we'll have a strong and vibrant Examinations program, which is vital in combating non-compliance. Because I believe we must focus on the Critical Few, I will give my viewpoint of the 'Critical FewPoints' that are vital to the success of EP Examinations and TE/GE as a whole." (Michael Julianelle of U.S. Internal Revenue Service)

Newly Posted Press Releases

Secretary of Labor Elaine L. Chao Announces $356.25 Million Bankruptcy Claim for Enron Retirement Plans
(U.S. Department of Labor, Employee Benefits Security Administration)

Newly Posted or Renewed Job Openings
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Retirement Plan Coordinator
for American Funds
in VA

401(k) Administrative Assistant
for 401(k) Advisors
in CA

401(k) Finance/HR/Compliance Coordinator
for 401(k) Advisors
in CA

Service Coordinator
for 401(k) Advisors
in CA

Retirement Actuarial Associate
for Towers Perrin
in CA, MI, WA

Human Resources Contact Center Team Leader
for CitiStreet
in FL

Senior Human Resources Support Specialist
for CitiStreet
in FL

Supervisor
for Benefit Consultants Group
in NJ

Pension Consultant / Manager
for Northern New Jersey Pension Consulting Firm
in NJ



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