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November 15, 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)
Federal Update: House Ways and Means Passes Pension Bill (PDF)
3 pages. Excerpt: "The House Ways and Means Committee on November 9, approved H.R. 2830, the Pension Protection Act of 2005, as amended, by a vote of 23-17. The bill contains provisions on the funding of private pension plans as well as many items of interest to NCTR members." (National Council on Teacher Retirement)

CBO Letter Regarding Administration's Pension Reform Proposal and the Pension Protection Act of 2005 (PDF)
Excerpt: "[T]he Congressional Budget Office (CBO) has estimated the effect on the 10-year net costs of the Pension Benefit Guaranty Corporation (PBGC) of enacting the Administration's pension reform proposal and H.R. 2830, the Pension Protection Act of 2005. [October 17, 2005, letter to the Honorable Michael B. Enzi]" (U.S. Congressional Budget Office)

Official Chart Comparing Pension Security and Transparency Act, S. 1783, with Current Law (PDF)
6 pages. (American Benefits Council)

Text: Pension Security and Transparency Act, S. 1783, Floor Substitute (PDF)
730 pages. (U.S. Senate via American Benefits Council)

Federal Update 2005-35 of Interest to NCTR Membership (PDF)
3 pages. This update covers the Federal Tax Panel Proposal; Re-Opening of 401(k)s to Governments; and, 2006 Social Security Information. (National Council on Teacher Retirement)

Deadline Near for EGTRRA Amendments to Governmental Section 457(b) Plans (PDF)
1 page. Excerpt: "Sponsors of governmental section 457 plans may need to take action before December 31, 2005." (Prudential Retirement)

Letter to the Editor from Lucent on Lucent's Pension Fund
Excerpt: Re 'A Pension Rule, Sometimes Murky, Is Under Pressure' (Business Day, Nov. 8): We disagree with the portrayal of Lucent's pension accounting. We take our responsibility to investors very seriously and consistently report our financial results in accordance with generally accepted accounting principles." (The New York Times; one-time registration required)

United Kingdom: Pension Scheme Funding Issues
Excerpt: "On 6 October 2005, the Department for Work and Pensions announced that the new scheme funding requirements arising from the European Pensions Directive and the Pensions Act 2004 will come into force slightly later than expected, on 30 December 2005." (Watson Wyatt Worldwide)

'Broken' Pension System in 'Crying Need' of a Fix
Excerpt: "David Walker, chief of Congress' non-partisan Government Accountability Office, describes the pension system as 'fundamentally broken.' He's frustrated that policymakers so far have been unable to solve a problem that's been documented over and over." (USA TODAY)

In the Netherlands: Practical Aspects of the Life Cycle Savings Plan
Excerpt: "On 1 January 2006, the new savings plan, 'Levensloopregeling', will become available. This new Life Cycle Plan is a means whereby employees may save, on a pre-tax basis, up to 12% of gross salary each year into a special savings account (these accounts will be offered by banks and insurance companies). The maximum amount that can be saved will be 210% of salary." (Watson Wyatt Worldwide)

Working Paper Abstract: Socially Responsible Investment in Japanese Pensions
Excerpt: "This study evaluates whether SRI indexes would alter portfolio risk and return patterns for the new defined contribution pension plans currently on offer in Japan. We conclude that SRI funds can be included as an option, albeit with some cost; consequently, mandatory investment in SRI portfolios cannot reasonably be justified." (National Bureau of Economic Research)

Third Quarter 2005 Performance Results for Defined Benefit Pension Plans in Selected Countries (PDF)
8 pages. Excerpt: "This Update reviews how global capital market performance in the third quarter of 2005 affected pension plans in major retirement markets worldwide. We cover defined benefit pension plans in Australia, Brazil, Can.ada, the Euro-zone, Japan, the U.K. and the U.S." (Towers Perrin)

Windfall Profits Tax Would Hurt Retirement Accounts the Most
Excerpt: "A study from the Investors Action Foundation (IAF) shows that if a windfall profits tax on oil companies is approved, retirement accounts could be hurt the most." (PLANSPONSOR.com: one-time registration required)

Working Paper Abstract: Precautionary Savings and the Importance of Business Owners
Excerpt: "In this paper, [the authors] show the pivotal role business owners play in estimating the importance of the precautionary saving motive. Since business owners hold larger amounts of wealth than other households for non-precautionary reasons and also face highly volatile income, they induce a correlation between wealth and income risk regardless of whether or not a precautionary saving motive exists." (National Bureau of Economic Research)

WP Abstract: A Cost-of-Living Dynamic Price Index, with an Application to Indexing Retirement Accts
Excerpt: "If a consumer wishes to protect her retirement account from the risk of price changes in order to sustain a stable standard of living, then what price index should the account be indexed to? This paper constructs a dynamic price index (DPI) that answers this question." (National Bureau of Economic Research)

Overview: IRS Rule Change Regarding Timing of Determination and Opinion Letter Applications (PDF)
6 pages. Excerpt: "The Internal Revenue Service recently published Revenue Procedure 2005-66, which substantially changes the deadlines for submitting tax-qualified retirement plans to the IRS for a review of their tax-qualified status. .... This article generally refers to master, prototype, and volume submitter plans collectively as pre-approved plans." (Employee Benefit Plan Review via Kirkpatrick & Lockhart Nicholson Graham LLP)

County in Michigan Will Make Pretax Donations to Individual Saving Accounts for Future Retirees
Excerpt: "Oakland County is moving forward with a plan to dramatically overhaul its approach to retiree health care. After a heated debate Thursday, the county Board of Commissioners approved a plan to create individual health saving accounts for employees hired after Dec. 31 to cover health expenses upon retirement, making it one of the first counties in Michigan to take such an approach." (The Detroit News)

Links to Items on Executive Comp, Benefits in General

Updated FASB Rules Would See Retiree Benefits and Obligations Spelled Out in Greater Detail
Excerpt: "On Nov. 10, the Financial Accounting Standards Board (FASB) unanimously voted to add pension and other postretirement benefits (OPEB) to its agenda. We at Standard & Poor's believe this project will have a significant impact on equity valuations as well as income and balance sheets, and will turn into the major issue in financial accounting over the next five years." (BusinessWeek)

Overview: FASB to Reconsider the Accounting for Pensions and Other Postretirement Benefits (PDF)
3 pages. Excerpt: "The Board unanimously decided to add a project to its agenda to reconsider the accounting for pensions and other postretirement benefits .... The project will be addressed in phases, with the first phase focused on cleaning up the balance sheet, and the second phase providing for a comprehensive reconsideration of the accounting for postretirement benefits." (Towers Perrin)

Section 409A Regulations: Last in a Series from Deloitte
Excerpt: "The IRS and Department of Treasury have issued the much-anticipated proposed regulations regarding the application of IRC section 409A to nonqualified deferred compensation plans. 70 Fed. Reg. 57930 (10/3/2005). The proposed regulations incorporate, change and expand upon the initial guidance the IRS provided under Notice 2005-1, 2005-2 I.R.B. 274." (Deloitte's Washington Bulletin via BenefitsLink.com)

Employees Need Financial Education: Firms Can Turn to Programs that Supply Training to Workers
Excerpt: "One of the perks of being a corporate executive is that the company often will pay for financial planning services to help you manage your money, stock options and other financial trappings that come with being a big boss. But the rank and file also sorely needs some help, given how the financial climate has changed." (Pamela Yip via The Dallas Morning News; one-time registration required)

Overview: Tax Reform Advisory Panel's Final Report
Excerpt: "The President's Advisory Panel on Federal Tax Reform on November 1, 2005 submitted its recommendations to Treasury Secretary John Snow. The final report recommends imposing a cap on the tax exemption for employer-provided health benefits and overhauling defined contribution plans and other tax-favored savings vehicles as part of a broader re-working of the federal tax code." (Deloitte's Washington Bulletin via BenefitsLink.com)

Overview: New DOL Guidance on Reporting Costs of Marketing to Taft-Hartley Plans on Form LM-10 (PDF)
5 pages. Excerpt: "On November 10, 2005 the U.S. Department of Labor ... issued question and answer guidance ... on reporting payments made to unions and union officers by banks, investment advisers and other firms that do business with unions and pension plans jointly sponsored by unions. This guidance follows Q&A guidance issued in June that surprised many service provides to such plans." (Kirkpatrick & Lockhart Nicholson Graham)

Newly Posted Events

"Wrap It Up" 2005 Tax Compliance Year End Wrap Up and Strategies for 2006
in District of Columbia on December 6, 2005
presented by Swidler Berlin LLP

Benefits Boot Camp
in Ohio on December 1, 2005
presented by WEB (Worldwide Employee Benefits Network) Cleveland Chapter

Newly Posted Press Releases

Fringe Facts ® Communicator 7.0 Streamlines Benefit Statement Projects
(Benefit Software Inc.)

Polycomp Names New Pension Plan Administration Manager to Oversee Consultant and Support Teams in San Diego
(Polycomp Administrative Services, Inc.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Technical Support Retirement Services Manager
for RSM McGladrey Retirement Resources
in NC

Retirement Plan Supervisor
for American Funds
in IN

401(k) Plan Administrator
for Tofias PC
in MA

Plan Administrator
for The Paragon Alliance Group
in PA

Supervisor, Employee Benefits
for Invesmart, Inc.
in PA

Employee Benefit Client Relationship Officer, Senior
for Union Bank of California
in CA

401k Administrator
for GF Pension Corp.
in PA



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