Retirement Plans
To BenefitsLink home page Fill your job openings fast by advertising on BenefitsLink

August 8, 2006
Today's sponsor: ASC & The ASC Institute

(Click on company name or banner to learn more.)
Banner ad for ASC & The ASC Institute


ASC helps retirement plan professionals increase efficiency and profitability through its software systems, documents and education. Software includes DC 401(k) administration & valuation, Defined Benefit, Compliance Testing, DV Direct daily valuation, AIM case management and more. With ASCi plan documents you can quickly and easily create customized prototype/volume submitter plan documents, efficiently maintain historical plan information, create complete amendment packages for all your clients at one time and more. Click to learn more or email

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Text of Rev. Rul. 2006-43: Actions Required by Governmental Employers for 'Pick Up' Contributions
Modifies three earlier revenue rulings that provided rules for the 'pick up' of employee contributions to a governmental employer's qualified plan that are to be treated as employer contributions. Includes transition rules until 2009 for pick ups implemented before August 28, 2006; private letter rulings issued before August 28, 2006 are not modified or revoked. (Internal Revenue Service)

IBM Wins; Text of 7th Circuit Decision in Cooper v. IBM Cash Balance Plan Age Discrimination Case (PDF)
Excerpt: "Like a defined contribution plan, a cash-balance plan removes the backloading of the pension formula; older workers (accurately) perceive that they are worse off under a cash-balance approach than under a traditional years-of-service-times-final-salary plan. But removing a feature that gave extra benefits to the old differs from discriminating against them. Replacing a plan that discriminates against the young with one that is age-neutral does not discriminate against the old." (U.S. Court of Appeals for the Seventh Circuit via BenefitsLink)

Court Favors IBM in Cash Balance Pension Case
Excerpt: "IBM Corp. did not commit age discrimination by changing its pension coverage in 1999, a federal appeals court ruled today, according to published reports. When IBM, based in Armonk, N.Y., adopted a 'cash-balance' pension plan, which awards employees with a lump sum after departing a company, 140,000 older employees filed suit to obtain money they say they lost." (Investment News; registration or subscription required)

Notable Quotes from 7th Circuit Opinion on IBM's Cash Balance Plan Not Being Age Discriminatory
Excerpt: "A victory for IBM and cash balance plans in general: 'Kathi Cooper v. IBM Personal Pension Plan and IBM Corporation.' Some readers may enjoy the more casual tone of this opinion written by Circuit Judge Frank Easterbrook." (Attorney B. Janell Grenier via

Pension Reform Bill on Its Way to the President
Excerpt: "The bill would wholly re-write the funding rules for single-employer defined benefit plans. Essentially, plans would be subject to a 100 percent of current liability funding target, and more funding would be required of 'at-risk' plans. All funding shortfalls would be amortized over seven years, and the ability to use credit balances to offset minimum required contributions would be curtailed." (Deloitte's Washington Bulletin via

New Act Allows Private Equity Funds to Accept More Foreign and Governmental Plan Contributions (PDF)
3 pages. Excerpt: "The Pension Protection Act of 2006 (H.R. 4), which was passed by the House of Representatives on July 28 and the Senate on August 3 and has been sent to the President for his signature, will significantly change how hedge funds and other private equity funds determine whether the assets they manage are subject to ERISA." (Pillsbury Winthrop Shaw Pittman LLP)

PPA Of 2006, Part I: Changes In Minimum Funding, Interest Rates Outlined In 2006 Pension Law
Excerpt: "The Pension Protection Act of 2006 (H.R. 4) (PPA) passed by Congress last week covers a wide range of topics in more than 900 pages of statutory language. The following explanation of PPA of 2006 is Part 1 of a multipart series on this wide-ranging bill, based on an explanation recently issued by the Senate Finance Committee. In the weeks to come, more detailed analysis will be provided in Spencer's permanent reports." (Spencer's Benefits Reports)

Overview: Congress Approves Pension Protection Act of 2006 (PDF)
5 pages. (Dechert LLP)

Overview: Defined Contribution Provisions Included in the Pension Protection Act
Excerpt: "While the Pension Protection Act began life as defined benefit funding reform legislation, along the way it picked up a number of provisions that address DC plan issues. Here [CCA Strategies reviews] key PPA provisions applicable to single employer DC plans." (CCA Strategies LLC)

Pension Reform Bill to Result in Diluted Guidance: Interest Conflicts Still Expected to Be Problem
Excerpt: "The bill, introduced by U.S. Rep. John A. Boehner (R-OH) and championed by the fund industry, shifts most liability from plan providers to the sponsors, instead. For plan providers, who were looking for legal protection against the threat of lawsuits from every investor whose portfolio stumbled, the bill allows a 'get-out-of-jail-free card,' . . . ." (

Some Lesser DC Provisions of the Pension Protection Act of 2006
Excerpt: "The media reporting around the defined contribution provisions in the Pension Protection Act of 2006 has focused on just a few key issues: advice, automatic enrollment and EGTRRA permanence. But there are over 30 other provisions. Here are a few highlights on other sections of the bill . . . ." (

Pension Bill Seen As Good for Advisers
Excerpt: "It . . . will be easier for mutual fund companies and brokerage firms that manage 401(k)s to provide investment advice to plan participants. Companies such as those, which manage the plans as well as sell investments, can provide advice using computer models as long as the model is approved by an independent third party." (; one-time registration or subscription required)

Description: Private Sector Defined Contribution Provisions in HR 4, Pension Protection Act of 2006 (PDF)
13 pages. Full title: Description of Private Sector Defined Contribution Provisions in HR 4, the Pension Protection Act of 2006, as Passed by the House of Representatives on July 28, 2006, and by the Senate on August 3, 2006 (Profit Sharing/401k Council of America)

With PPA, Saving for Retirement to Require More Work from Employees
Excerpt: "Among the changes are measures that encourage employers to automatically enroll workers in 401(k) plans - a provision meant to nudge the 11 million to 12 million workers who are eligible but haven't signed up - and provide investment advice." (The Baltimore Sun; one-time registration required)

Fact Sheet on the Retirement Savings Tax Credit to be Made Permanent If Pension Bill Signed (PDF)
2 pages. Excerpt: "[EGTRRA] authorized a non-refundable tax credit of up to $1,000 for eligible individuals who contribute to an IRA or an employer-sponsored retirement plan. The maximum credit is 50% of retirement contributions up to $2,000. . . . H.R. 4 of the 109th Congress, as passed by the [House and Senate], would make the retirement savings tax credit permanent." (Congressional Research Service of the U.S. Library of Congress)

GM Trims Future Pension Obligation
Excerpt: "General Motors Corp. . . . [yesterday] said it had trimmed its future pension obligations by $3.9 billion and lowered its expectations of health care spending for retired workers by $19.3 billion." (Reuters via The New York Times; one-time registration required)

Private Pension Plan Bulletin: Abstract of 2002 Form 5500 Annual Reports (PDF)
59 pages. Excerpt: "Beginning with this 2002 Private Pension Plan Bulletin, the data for a given calendar year reflects filings for plan years that in general end, rather than begin, in that calendar year." (U.S. Department of Labor, Employee Benefits Security Administration)

Public Pension Plans Face Billions in Shortages
Excerpt: "Taxpayers at Risk: This is the first article in a series that will examine actions of state and local governments that have left taxpayers with large unpaid bills for public employee pensions. The series will focus on ways in which pension funds have been shortchanged by government officials even as they have sought to enhance benefits for groups of politically influential workers." (The New York Times; one-time registration required)

Courts Want Evidence of Valuation Expertise
Excerpt: "As pension funds increase their exposure to private company stock, the valuation issues are profound. The last thing pension fiduciaries should want is to pay someone to render an opinion of value and have the court toss it out for lack of substance." (Pension Risk Matters)

Working Paper:Optimizing the Retirement Decision: Asset Allocation, Annuitization, and Risk Aversion (PDF)
30 pages. Excerpt: "Retirees must draw down their accumulated assets in an orderly fashion so as not to exhaust their funds too soon. [The authors] derive the optimal retirement portfolio from a menu that includes payout annuities as well as an investment allocation and a withdrawal strategy, assuming risk aversion, stochastic capital markets, and uncertain lifetimes." (University of Michigan Retirement Research Center)

ERISA Fiduciary: New 'Plan Asset' Rules for Unregistered Funds (PDF)
5 pages. Excerpt: "The 'Pension Protection Act of 2006' . . . makes the most significant changes to standards governing the conduct of employee benefit plan investment managers and other fiduciaries since the enactment of the Employee Retirement Income Security Act of 1974 . . . over three decades ago. This Alert focuses on the impact the Act will have on unregistered investment funds . . . and their sponsors, advisers, and managers." (Kirkpatrick & Lockhart Nicholson Graham LLP)

District Court Rejects Claim for Fiduciary Breach Related to Employer Stock Fund
Excerpt: "Earlier this year, in In re Reliant Energy ERISA Litigation ('Reliant'), the district court for the Southern District of Texas held that an employer did not breach its fiduciary duty by offering an employer stock fund as an investment option when the benefits committee had no discretion to eliminate the offering." (The ERISA Industry Committee)

Modifications to Chairman's Mark of 'National Employee Savings & Trust Equity Guarantee Act of 2005' (PDF)
8 pages. Full title: Modifications to the Senate Finance Committee Chairman's Mark of the 'National Employee Savings and Trust Equity Guarantee Act of 2005' [July 26, 2006] (Joint Committee on Taxation via The ERISA Industry Committee)

Working Paper: The Role of Conventional Retirement Age in Retirement Decisions (PDF)
24 pages. Excerpt: "Following Wave I HRS respondents for six waves (12 years) so that their actual retirement can be observed shows that the actual retirement hazard is substantially higher at (and around) the age that workers identified in Wave I as the 'usual' retirement age for workers like them. This is true even when we control for actual age at each wave, and for baseline values of earnings, wealth, health, and marital status." (University of Michigan Retirement Research Center)

Working Paper: Social Security and Retirement Dynamics (PDF)
47 pages. Excerpt: "This paper is based on a structural model of retirement and saving, estimated with data for a sample of married men in the Health and Retirement Study. It explains the relation of specific features of Social Security . . . to the full range of retirement outcomes -- continued work on the main job, full time work outside the main job after a period of partial or full retirement, as well as partial retirement and full retirement." (University of Michigan Retirement Research Center)

Working Paper: Savings Between Cohorts -- The Role of Planning (PDF)
46 pages. Excerpt: "[The authors] compare the saving behavior of two cohorts: the Early Baby Boomers (EBB, age 51-56 in 2004) and the HRS cohort (age 51-56 in 1992). [The authors] find that EBB have accumulated more wealth than the previous cohort . . . . [However], for both the EBB and the HRS cohort, lack of planning is tantamount to lack of saving irrespective of the many changes in the economy between 1992 and 2004." (University of Michigan Retirement Research Center)

Working Paper: The Excess Burden of Government Indecision (PDF)
42 pages. Excerpt: "This paper posits, calibrates, and simulates a life cycle model with earnings, lifespan, investment return, and future policy uncertainty. It then measures the excess burden from delayed resolution of policy uncertainty. The first uncertain policy we consider concerns the level of future Social Security benefits." (University of Michigan Retirement Research Center)

Retirement Horizon Looking Better -- Research on Plan Design and Other Trends (PDF)
3 pages. Excerpt: "A national investment advisory firm specializing in retirement plans surveyed some of the nation's leading authorities on employer- and trustee-sponsored retirement benefits. Survey results showed an optimistic view of the future on a range of topics, including plan design and communication trends as well as fiduciary and regulatory issues. Results run contrary to much recent research, which painted a largely dismal retirement savings forecast." (Benefits & Compensation Digest via International Foundation of Employee Benefit Plans)

The Actuary's New Clothes-- A Canadian Perspective on the Financial Economics Debate
Excerpt: "The debate between financial economics and the traditional actuarial approach to pension funding has been divisive. But there may be some pieces from the financial economists' wardrobe that will fit traditional actuaries just fine." (American Academy of Actuaries)

Pension Risk Highest for German Companies, According to Study
Excerpt: "Research from Mercer Human Resource Consulting (MercerHR) revealed the largest German-owned companies have almost 20% more exposure to pension risk than top UK and Dutch firms." (; one-time registration required)

Links to Items on Executive Comp, Benefits in General

Overview: SEC Requires More Disclosure Concerning Executive Compensation
Excerpt: "The rules refine the currently required tabular disclosure and combines it with improved narrative disclosure to result in a clearer and more complete disclosure of the compensation of the chief executive officer, chief financial officer, and the three other highest paid executive officers (the 'named' executive officers), as well as the directors." (CCH Pension and Benefits)

Overview: SEC Adopts New Executive Compensation Rules (PDF)
6 pages. Excerpt: "On July 26, 2006, the Securities and Exchange Commission approved changes to its rules governing disclosure of (i) executive compensation, (ii) related person transactions, director independence and other corporate governance matters, and (iii) security ownership of officers and directors." (Winston & Strawn, LLP)

Knowing about USERRA Is Just the Beginning for HR Professionals
Excerpt: "In its regulations, DOL/VETS ominously reminds us that in interpreting USERRA . . . the U.S. Supreme Court has admonished that 'this legislation is to be liberally construed for the benefit of those who left private life to serve their country in its hour of great need . . . . And no practice of employers or agreements between employers and unions can cut down the service adjustment benefits which Congress has secured the veteran under the Act.'" (Human Resource Executive Online; one-time registration required)

How Employers Respond to Military Returnees Can Greatly Impact the Re-Integration Process
Excerpt: "Unprecedented mobilization of the National Guard and Reserve units has put increased demands on firms and their human resource professionals. . . . Even more challenging to HR is the process of transitioning these workers back into the workforce when their tour of duty has ended. Such a task is further complicated when the employees return from active military duty with either physical disabilities or emotional problems such as post traumatic stress disorder." (Human Resource Executive Online; one-time registration required)

Beyond Backdating: Stock Option Grant Self-Assessment Guide (PDF)
5 pages. The target page is a checklist for a company to use to perform a self-evaluation to identify issues that may require further analysis. (Pillsbury Winthrop Shaw Pittman LLP)

Why You'll Learn To Like Restricted Stock Grants (PDF)
6 pages. Excerpt: "Restricted stock or restricted stock units may not offer the same potentially life-altering, wealth-building upside as stock options, but Richard Friedman, vice president of compensation and benefits at Ayco Co., suggests they have benefits executives will grow to appreciate." ( via Human Resource Executive Online; one-time registration required)

We thank and invite your attention to our additional sponsor: Mid-Sized Pension Management Conference

(Click on company name or banner to learn more.)
Banner ad for Mid-Sized Pension Management Conference

Managing a Retirement Plan? Timing Is Everything!

Trying to play "beat the clock" when it comes to solving the many questions facing your retirement program? Automated features may be right for your 401(k) plan, but should you implement them right away? Perhaps your DB plan has seen better days. When will you take a closer look at alternatives? Setting a schedule for plan management strategy can be a challenge. Luckily, the countdown to management solutions has begun. Set your alarm for the 14th annual Mid-Sized Pension Management Conference in Chicago.

(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

Newly Posted Events
(Post Yours!)

2006 Retirement Plan Fundamentals (RPF) - Webcourses
Nationwide on August 8, 2006
presented by American Society of Pension Professionals & Actuaries (ASPPA)

Pharmacy Based Risk Adjustment
in California on September 7, 2006
presented by Healthcare Web Summit

Web/Telephone Seminar: Pension Protection Act of 2006
Nationwide on August 18, 2006
presented by BISYS Retirement Services

Web/Telephone Seminar: Pension Protection Act of 2006
Nationwide on August 24, 2006
presented by BISYS Retirement Services

Web/Telephone Seminar: Pension Protection Act of 2006
Nationwide on August 29, 2006
presented by BISYS Retirement Services

Newly Posted Press Releases
(Post Yours!)

Council Applauds Court's Validation of Hybrid Plans
(American Benefits Council)

LaSalle And ConnectYourCare Offer Consumer Directed Healthcare Account Administration Platform
(LaSalle Healthcare Administrative Services LLC)

Federal Appeals Court Rules for IBM in Major Pension Plan Case
(Covington & Burling LLP)

Forty-Six Percent of Workers Have Gained Weight at Their Current Jobs, According to's Annual Survey

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Skills Trainer - Defined Contributions
for CitiStreet
in MA

Benefits Specialist Retirement Plans
for Praxis Search LLC
in NJ

Pension Recordkeeper
for Guidant Financial Group
in WA

Client Data Management Administrator
for The Online 401(k) (Decimal, Inc.)
in CA

Communications Consultant
for Fidelity Investments
in MA

Defined Benefit Administrator
for Rosenfeld/Tortu Retirement Planning Co., Inc.
in NY

Handy Links:

NOTE TO AOL MEMBERS: PLEASE DO NOT REPORT THIS EMAIL AS SPAM. This email is not unsolicited. We do not send unsolicited email. This email is coming to you because you asked to receive it by entering your email address on our web page at

These emails are sent each workday except federal holidays.

This email has been published by:, Inc.
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151

David Rhett Baker, J.D., Editor

Copyright 2006, Inc.; except that you can forward this email in full (including this boilerplate part) or otherwise reprint this email in full (including this boilerplate part) without obtaining our permission.

Anyone can receive these emails; just have them sign up at this Web page: