| BenefitsLink Retirement Plans Newsletter |   |
August 31, 2005
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ESOP Dividends Paid Proposed Rules Emphasizes IRS Opposition to Boise Cascade Case
Excerpt: "The proposed regulations reverse the IRS private letter ruling under which a corporation may take a deduction for the payment of 'applicable dividends' to ESOP participants; Prop. Treas. Reg. § 1.404(k)-2 explains that 'only the corporation paying the dividend is entitled to the deduction with respect to applicable employer securities held by an ESOP.'" (Deloitte's Washington Bulletin via BenefitsLink.com)
California Elected Officials Who Break Law Could Lose Pensions
Excerpt: "Elected officials convicted of bribery, embezzlement or certain other crimes could lose their government pensions under legislation sent to the governor's desk." (AP via SFGate.com)
Overview: Fair Market Value, Not Cash Surrender Value, Applies to IRA Annuity Converted to Roth IRA
Excerpt: "In temporary regs, which also serve as proposed regs, effective August 19, 2005, IRS has provided rules for the valuation of annuity contracts held in a traditional IRA (or a traditional IRA that is itself an annuity) that are converted to Roth IRAs. The regs clarify that fair market value, rather than cash surrender value, is the appropriate standard." (Pension & Benefits Week via RIA)
After Labor Day, Celebrate 401(k) Day with a Superhero Action Figure -- Captain 401(k)
Excerpt: "You may not have heard about it, but the day after Labor Day is another important event -- 401(k) Day. It's largely a symbolic holiday that can take place any time of the year, designed by the financial industry to raise our consciousness about retirement savings. In preparation for this event, the Profit Sharing/401(k) Council of America, or PSCA, created a superhero action figure -- Captain 401(k) -- whose mission is to combat his arch nemesis, the savings procrastinator." (Bankrate.com)
Preliminary Private Pension Plan Bulletin: Abstract of 2000 Form 5500 Annual Reports -- July 2005 (PDF)
26 pages. Excerpt: "In 2000, 60 percent of contributions to DC plans and 51 percent of contributions to all plans were made by participants. This is virtually unchanged from 1999." (U.S. Employee Benefits Security Administration)
Employees Still Eschewing 401(k) Plans, According to a Study by Hewitt Associates
Excerpt: "Hewitt's study, which examined the saving and investment behavior of more than 2.5 million employees eligible for 401(k) plans, shows that the rate of participation in 401(k) plans during 2004 increased 2.1% to 70.3% from 2002, and average 401(k) balances reached $69,000. However, nearly 30% of employees still did not participate in their 401(k) plans, with only 46% of workers under the age of 30 participating." (The Business Journal)
Make the Most of a Lousy 401(k): Five Tips for Maximizing Returns in a Subpar Retirement Plan
Excerpt: "[I]f you do determine that the tax-deferred nature of the company-retirement plan offsets its weaknesses, how can you make the most of that subpar plan? [The target article contains] some tips for doing just that." (Morningstar, Inc.)
Thailand Pension Fund to Take 3% of Worker Salaries
Excerpt: "A mandatory savings law will start with a minimum contribution requirement of 3 percent of employee salaries per month and potentially increasing to 6 percent in the near future, says Naris Chaiyasoot, the director-general of the Fiscal Policy Office. The law would not cap contributions, he said, with a new national fund patterned after the Government Pension Fund to be set up to manage assets on behalf of members." (Bangkok Post via blackenterprise.com)
San Diego Pension Board to Turn Over Subpoenaed Papers
Excerpt: "San Diego's employee pension board decided yesterday that it will turn over subpoenaed documents to the city as well as to law enforcement and securities agencies. The move ... could help the city re-enter the bond market and borrow money for numerous stalled projects-- something it has been unable to do at favorable rates for more than a year because of investigations and financial problems related to its massive pension deficit." (The San Diego Union-Tribune)
Why Are So Many Public Employee Pension Plans in Trouble?
Excerpt: "There has been lots of talk about how poor stock market returns and low interest rates led to problems for pension plans. However, there has been less light shed on another major contributor to the dilemmas faced by public plans: politicians. 'The funding mechanism is controlled by politics,' says Fred Nesbitt, executive director and legislative counsel at the National Conference on Public Employee Retirement Systems in Washington." (PLANSPONSOR.com: one-time registration required)
U.K. Should Raise Pension Rebates by 60%, Research Group Says
Excerpt: "Britons who chose to leave the state pension and invest their social security contributions privately could be worse off in retirement, and companies may end up funding the shortfall, according to a report .... Watson Wyatt, a Washington-based research group, said the government needs to raise refunds paid to company-run pension plans to more than 5 billion pounds ($8.9 billion) a year from 3.1 billion pounds to match the retirement benefits offered by the state pension." (Bloomberg L.P.)
Final Contract Offer from Boeing Raises Pension Payouts 10%
Excerpt: "Boeing Co. on Tuesday presented what it called its final contract proposal to its machinists union, offering members a 10 percent increase in pension payouts but otherwise changing little from its previous offer. In a statement posted late Tuesday on its Web site, the union said the Chicago-based aerospace giant was insisting on concessions and takeaways in a 'corporate strategy to break the workers who have built this company.'" (AP via Chicago Tribune; one-time registration required)
New Jersey Retirees with High Incomes Facing State Income Tax Shock
Excerpt: "Retirees who earn more than $100,000 may be in for a shock next year: A little-noticed law enacted in July could mean a state income tax increase of as much as 67 percent. The law, which is expected to generate $45 million, eliminates the 'pension exclusion' for taxpayers earning more than $100,000. And unlike other sections of the state's graduated income tax, this law does not provide any phase-in for those whose incomes are just over the $100,000 threshold." (NorthJersey.com)
Colorado State Auditors Issue Another PERA Report Detailing Gifts and Leave Pay
Excerpt: "The state's largest public pension program took another broadside from state auditors Tuesday when lawmakers were told that fund managers spent about $12,000 on gifts and benefits for employees. Auditors also reported staff members of the Public Employees Retirement Association violated rules by accepting tickets, a trip, a dinner and other gifts." (Daily Times-Call)
Overview: United Kingdom -- Regulations to Implement Cross-Border Aspects of Pensions Directive
Excerpt: "The United Kingdom is obliged to enter into its national law the requirements of the EU Directive 2003/41/EC, the Pensions Directive. Many of its requirements either existed already within UK pension legislation or were introduced by the Finance Act 2004 and the Pensions Act 2004. As regards the cross-border aspects which will create the potential for a pan-European pension plan, the UK's Department for Work and Pensions (DWP) published draft regulations for consultation on ...." (Watson Wyatt Worldwide)
Mercer Retirement Perspective: Retirement Education Is Not Enough
Excerpt: "This Perspective focuses on strategies employers can develop to help employees begin to plan early and achieve their retirement goals." (Mercer Human Resource Consulting LLC and Mercer Investment Consulting, Inc.; one-time registration required)
Commentary: Americans Need to Save More -- and the Government Needs to Make That Easier
Excerpt: "The middle class is in an economic bind. The savings rate reached zero percent in June 2005. This is not because many households don't want to save more, but because they often can't. Stagnant wages and rising prices have caused families to borrow record amounts of money to make ends meet. Many families' financial situation is actually worse than it appears on paper because the majority of their wealth is in the housing market, which is likely vastly overvalued." (Center for American Progress via Mother Jones)
Traditional Pension Plan Asset Allocation Dictates Equity Assets Be Split Between Growth and Value
Excerpt: "However, for the past five years, an even share has seemed unduly generous, as growth stocks have steadily underperformed value portfolios." (PLANSPONSOR.com: one-time registration required)
Commentary on and Excerpts from a Recent WSJ Article about Self-Employed Pension Plans
Excerpt: "Interesting article from the Wall Street Journal last week on how pension plans for the self-employed (the more well-to-do self-employed) are increasing in popularity: 'Self-Employed Embrace Pensions.'" (Attorney B. Janell Grenier via Benefitsblog.com)
Links to Items on Executive Comp, Benefits in General
August 18, 2005, Letter to FASB about Concerns that Should Be Addressed If It Reconsiders FAS 87 (PDF)
3 pages. Excerpt: "Pension accounting is governed by several related standards -- the most significant is SFAS 87, Employers' Accounting for Pensions. FASB is now engaged in three major projects that are likely to impact reconsideration of SFAS 87, because they impact FASB resources and because the conclusions of these projects have obvious relevance to pension accounting. These projects are-- the fair value measurement project; the financial performance reporting by business enterprises ...." (American Academy of Actuaries)
AARP's 50 Best Companies for Workers 50 and Older Offer Flexibility, Respect to Older Workers
Excerpt: "More than one-third of the companies on AARP's list offer phased retirement, and they tend to employ a fair percentage of older workers. On average, about one-third of workers at the top 10 firms on the list are 50 and older, said Deborah Russell, director of economic security at AARP." (MarketWatch, Inc.)
Newly Posted Events
2005 SPARK Forum
in Florida on November 6, 2005
presented by SPARK - the Society of Professional Administrators and Recordkeepers
Advisory Council on Employee Welfare and Pension Benefit Plans 131st Plenary Meeting; Notice of Meeting
in District of Columbia on September 21, 2005
presented by U.S. Department of Labor, Employee Benefits Security Administration
Advisory Council on Employee Welfare and Pension Benefit Plans Working Group on Communications to Retirement Plane Participants; Notice of Meeting
in District of Columbia on September 23, 2005
presented by U.S. Department of Labor, Employee Benefits Security Administration
Advisory Council on Employee Welfare and Pension Benefit Plans Working Group on Improving Plan Communications for Health and Welfare Plan Participants; Notice of Meeting
in District of Columbia on September 21, 2005
presented by U.S. Department of Labor, Employee Benefits Security Administration
Advisory Council on Employee Welfare and Pension Benefit Plans Working Group on Retirement Plan Distributions and Options; Notice of Meeting
in District of Columbia on September 22, 2005
presented by U.S. Department of Labor, Employee Benefits Security Administration
HRO World West
in California on February 8, 2006
presented by Unicomm, LLC
HRO World/NY HR Week
in New York on April 26, 2006
presented by Unicomm, LLC
News Conference: Income, Poverty, Health Insurance and American Community Survey
Nationwide on August 31, 2005
presented by Kaiser Family Foundation
Newly Posted Press Releases
U. S. Labor Department Extends Annual Reports Deadline After Tornado Hits Campbell County, Wyoming
(U.S. Department of Labor, Employee Benefits Security Administration)
Ted Rice Brings Substantial Trust and Fiduciary Experience to Kelly, Hannaford & Battles, P.A.
(Kelly, Hannaford & Battles, P.A.)
Newly Posted or Renewed Job Openings
Health & Welfare Associate
for Towers Perrin
in CA, CT, GA, MI, NJ, NY, PA
Annual Plan Reporting Administrator
for The Vanguard Group
in PA
Pension Compliance Administrator
for CBIZ Benefits & Insurance Services, Inc.
in MD, PA
Administrator, Retirement and Savings #0535
for Ball Corporation
in CO
Senior Benefits Analyst
for Revlon
in NY
Senior Sales Executive
for Health Administration Services
in TX
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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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