Retirement Plans
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May 2, 2006
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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)

Late Trading and Market-Timing Mutual Fund Settlements-- What's a Plan Fiduciary to Do?
Excerpt: "The Securities and Exchange Commission ('SEC') has entered into settlement agreements with certain mutual funds relating to alleged late trading and market timing activities. .... Since qualified retirement plans may have invested in mutual funds involved in the settlements, the Department of Labor issued Field Assistance Bulletin No. 2006-01 to address the fiduciary issues involved with allocation of the settlement proceeds among retirement plan participants." (Poyner & Spruill LLP)

Defined Contribution Fee Disclosure Best Practices (PDF)
7 pages. Excerpt: "Section I of this primer outlines CIEBA's views on the important issue of defined contribution fee disclosure to participants. Section II of the primer discusses general guidelines for plan sponsors to consider, and the exhibits provide specific disclosure examples." (The Committee on Investment of Employee Benefit Assets via Association for Financial Professionals)

Social Security's Financial Outlook: The 2006 Update in Perspective (PDF)
7 pages. Excerpt: "The Social Security Trustees have just issued their 2006 Report on the financial outlook for the system. The Report uses three sets of cost assumptions -- high, low, and intermediate. This brief focuses on the intermediate assumptions and puts this year's numbers in perspective." (Center for Retirement Research at Boston College)

Overview: Final Regulations Allow for Termination of Abandoned Individual Account Plans
Excerpt: "The purpose of the regulations is to provide guidance to custodians of 401(k) or other individual account pension plans after their sponsors abandon the plans due to employer bankruptcies, mergers and the like." (CCH Pension & Benefits)

More Retirement Fund Options: Treasury & Risk Management's Bundled 401(k) Buyers' Guide for 2006 (PDF)
5 pages. Excerpt: "This year's annual listing of bundled providers of 401(k)s shows the dramatic growth during the last 12 months in terms of number of plans and dollars. Twenty of the 35 respondents offer managed accounts and all but one provide time-targeted funds." (Treasury & Risk Management)

Opinion: Special Problem Areas for Pensions
The Alert addresses possible problems with 457/403(b) plans, Custodial Services, and Minority/Emerging Managers. (Benchmark Advisory Services, Inc., and Benchmark Financial Services, Inc.)

New York State Teachers Union Criticized for Pushing Retirement Plan
Excerpt: "The state's largest teachers union gets $3 million a year from an investment company for recommending its members enroll in retirement plans with high fees that often eat into returns.... according to the Los Angeles Times." (AP via Newsday)

Opinion: One Educator's Take on the NEA and the 403(b)
Excerpt: "The NEA endorses a product called the NEA Valuebuilder through Security Benefit. This company has a list of mutual fund families available. In order to show how expensive their commissioned products are, my husband and I compared the results of investing in a mutual fund outside of Security Benefit, and investing in the exact same mutual fund through Security Benefit." (Judy Schneider via 403bwise)

U.S. Companies Can't Afford to Provide Pensions, According to Survey
Excerpt: "According to a survey of 3,000 accountants serving as corporate CEOs, CFOs, Controllers and in other executive positions by the American Institute of Certified Public Accountants (AICPA), almost three-quarters don't believe that companies will be able to continue to provide adequate pensions for their employees in the future." (Management-Issues)

Pensions in Peril Over Church Exemptions
Excerpt: "As long as there has been a pension law-- more than three decades-- there has been a legal exemption for church plans. Congress, in general, is reluctant to do anything that regulates religious activities. Churches can elect to abide by the law if they want, and if they do, their employees' pensions are insured by the federal government, just as company pensions are. But most churches opt out." (The New York Times; one-time registration required)

Lack of Notes Not Proof of Fiduciary Violation
Excerpt: "The 2nd Circuit US Court of Appeals vacated a district court's judgment that a trustee failed to satisfy its fiduciary obligation to make sure an employee stock ownership plan (ESOP) did not pay more than the fair market value for company stock." ( one-time registration required)

Court Blocks West Virginia Public Employee Pension Merger
Excerpt: "A West Virginia state judge ... temporarily blocked the state's plan to merge its two teachers' retirement funds, pending a participant legal challenge to the move." ( one-time registration required)

Opinion: Bush's Latest Assault on Retirement Security
Excerpt: "President Bush was routed in his attempt to privatize Social Security, but he's found a new battleground. His latest attack on retirement security: attempting to force Department of Energy (DOE) contractors to switch from a real pension to 401(k)-style retirement benefits." (Economic Policy Institute)

Department of Energy to End Reimbursement for Contractors' New DB Plan Expenses
Excerpt: "The Department of Energy (DOE) has announced a new policy discontinuing reimbursement to contractors for defined benefit pension costs for new employees hired after a date no later than March 1, 2007. DOE will continue to reimburse contractors for DB accruals for existing employees but only for amounts comparable to defined contribution plan market based allocations for future employees." (The ERISA Industry Committee)

Links to Items on Executive Comp, Benefits in General

Finances of Social Security and Medicare Deteriorate
Excerpt: "The financial condition of Medicare and Social Security deteriorated in the last year, the Bush administration reported Monday, and it warned again that the programs were unsustainable in their current form." (The New York Times; one-time registration required)

Opinion: Serving Up Social Security and Medicare, Without the Fixings
Excerpt: "Treasury Secretary John W. Snow [announced] the latest on Medicare's financial standing. The 'modernized,' cost-effective program is forecast to go belly-up in 2018 -- two years earlier than previously forecast. .... Snow also announced that Social Security -- reform of which the Bush administration abandoned last year -- will become insolvent in 2040, a year earlier than previously projected." (The Washington Post; one-time registration required)

The 2006 OASDI Trustees Report
Excerpt: "The 2006 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Disability Insurance Trust Funds, was issued on May 1, 2006. The report presents the current and projected future financial status of the trust funds. [The 226-page PDF is at]" (U.S. Social Security Administration)

Total Compensation: Greater Than the Sum of Its Parts
Excerpt: "Employees ranging from the lowest wage earners to seasoned CEOs are rising up and demanding the freedom and flexibility to tend to their family and personal lives. That means looking beyond the size of their paycheck to all the perks and privileges that help strike a happy medium between life and work. The good news for employers is that it all adds up. Virtually any benefit, tangible or intangible, can be assigned a dollar value and included in an employee's total compensation." (Employee Benefit News)

Newly Posted Events
(Post Yours!)

Discretionary Clauses in Disability Policies: Is California Starting Another Trend?
Nationwide on May 25, 2006
presented by ABA Joint Committee on Employee Benefits

Duty to Disclose: A New Frontier in Fiduciary Responsibility?
Nationwide on May 17, 2006
presented by ABA Joint Committee on Employee Benefits

Newly Posted Press Releases
(Post Yours!)

New Survey Finds 52% of Organizations Have a Disaster Plan
(International Foundation of Employee Benefit Plans)

Treasury Secretary John W. Snow Statement on the 2006 Social Security and Medicare Trust Fund Reports
(U.S. Department of Treasury)

National Business Coalition on Health's Community Coalitions Health Institute Launches First Value Based Purchasing Project
(National Business Coalition on Health)

CAHI Releases Poll Showing Health Care Consumers Want to Know Prices
(Council for Affordable Health Insurance)

Morningstar Announces Retirement Income Education Center for Financial Advisors, Part of Overall Strategy to Serve Investors Nearing Retirement
(Morningstar, Inc.)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Health And Welfare Analyst
for Constantin Control Associates
in NJ

Retirement Plan Administrator
for PensionOne Advisors
in CA

Advisor Relations Center Specialist (Product Penetration Team)
for Merrill Lynch
in NJ

Investment Consultant (Analyst)
for Merrill Lynch
in NJ

Benefits Clerk
for InfoNXX
in PA

Benefits Analyst
for Chugach Alaska Corporation
in VA

Group Employee Benefits Account Manager (Service)
for The Protector Group Insurance Agency, Inc.
in MA

Benefits Advisor (Outside Service)
for The Protector Group Insurance Agency, Inc.
in MA

Relius Administration System Coordinator
for Stephen Eldridge & Company, Inc.
in NH

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Copyright 2006, Inc.; except that you may reprint this newsletter in full (including this sentence) without obtaining our permission.

Published by:, Inc.
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(407) 644-4146
Fax: (407) 644-2151

Editor and Publisher: David Rhett Baker, J.D.