Retirement Plans
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August 15, 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)

PPA Cap on Variable Premiums for Small Plans: Geometric Growth!
Excerpt: "Most of the online published summaries of PPA that I have seen to date describe this section as being simply a $5 cap per participant, but that is not correct. Upon closer inspection, one finds that the cap grows geometrically with plan size, because you are multiplying twice by the number of participants." (Jeffrey F. Hartmann, FSA, MSPA of Louis Kravitz & Associates, Inc.)

Updated 8/11: ASPPA Explanation of Key Provisions of HR 4, the Pension Protection Act of 2006
Excerpt: "Age discrimination: The law would clarify that all defined benefit plans (including cash balance and pension equity plans) are not inherently age discriminatory as long as benefits are fully vested after three years of service and interest credits do not exceed a market rate of return. The bill further provides that the age discrimination test is met if a participant's accrued benefit is not less than the accrued benefit of any similarly situated younger employee." (ASPPA)

PPA Of 2006 Part VI: Diversification And Pension Participation, Spousal Protection, And More
Excerpt: "This sixth and final article in a series examines provisions of the Pension Protection Act (PPA) of 2006 relating to diversification of pension plan assets, automatic 401(k) arrangements, spousal protections, and administrative provisions. Unless indicated otherwise, these provisions are effective for plan years beginning in 2008." (Spencer's Benefits Reports)

Overview: Pension Protection Act of 2006
Excerpt: "[The target page] is an overview of the changes to qualified plans and IRAs included in the Pension Protection Act." (McKay Hochman Co., Inc.)

Pension Bill Adds Automatic Enrollment Safe Harbor, Other Provisions Affecting 401(k) Plans
Excerpt: "This safe harbor is welcome news for employers wishing to increase 401(k) participation rates through automatic enrollment. And the preemption provision provides much-needed certainty regarding the impact of state laws on automatic enrollment arrangements, especially because it can apply not just to 'qualified automatic contribution arrangements,' but also to the larger universe of automatic enrollment plan designs, so long as the plan meets the specific notice and other requirements." (Employee Benefits Institute of America Inc.)

Harry & David's Pension Plan Replaced by 401(k)
Excerpt: "The Medford-based company, whose Harry & David Direct Marketing catalog and Internet unit sells gourmet foods globally, informed its employees in a memo dated July 31 that pension plans will be frozen on July 1, 2007. In a filing with the Securities and Exchange Commission this week, Harry & David Operations said no employee enrolled in the defined benefit plan will accrue additional benefits after June 30, 2007." (Mail Tribune, Inc.)

How Much May Be Taken As a Hardship Distribution?
Excerpt: "The final 401(k) regulations contain the limit on maximum distributable amount for a hardship in section 1.401(k)-1(d)(3)(ii)." (McKay Hochman Co., Inc.)

Standard & Poor's Survey on Pension Debt Shows Pension Funding Levels Dip for 20 Largest Cities
Excerpt: "The report attributes the dip in overall pension funding to several factors. On the asset side, poor investment performance seriously depressed equity prices, while on the liability side demographic changes, such as greater longevity, and benefit enhancements served to boost liabilities . . . ." (; one-time registration required)

Employee Ownership Update for August 14, 2006
NCEO Executive Director Corey Rosen discusses the latest developments in the stock option backdating scandal; the effects of the new pension law on employee stock ownership plans (ESOPs); and a study finding that employees in ESOP companies appear to be more engaged than employees in general. (National Center for Employee Ownership)

OPM Survey Shows Half of Federal Employees Have Not Calculated Retirement Needs
Excerpt: "The OPM survey also found that fewer than half of the respondents had calculated how much they need to save for a comfortable retirement and that almost four in 10 said they were not confident in their ability to make investment decisions." (The Washington Post: one-time registration required)

One Wonders If the Rashomon Effect Pervades in Pensionland
Excerpt: "Whether a pension crisis is upon us is an excellent question. Solving a problem is impossible without acknowledging its existence. These thoughts arose a few days ago when a blog reader sent the following anonymous note: 'Government plans are not covered by ERISA for sound constitutional reasons, state sovereignty, the 10th Amendment, etc. Take a closer look and you will see that most plans are soundly managed. They are also subject to multiple levels of state oversight.'" (Pension Risk Matters; posted by Susan Mangiero)

Web Site: Pension Preservation Network
Excerpt: "The Pension Preservation Network provides timely information and fosters improved communication among retired and working individuals concerning pension plans and issues, motivating them to proactively safeguard promised pension benefits." (Pension Preservation Network, Inc)

Overview: Final IRS Regulation under Anti-Cutback Provisions of Code Section 411(d)(6)
Excerpt: "EBIA Comment: The IRS received comments requesting that the portion of the proposed regulations dealing with vesting changes be narrowed to address only the specific issues raised by the Supreme Court's decision in Central Laborers' Pension Fund v. Heinz (that is, a suspension of benefits under a multiemployer pension plan). The IRS declined to make the change." (Employee Benefits Institute of America Inc.)

Towers Perrin U.S. Legislative Tracking Charts -- Retirement -- Updated August 11, 2006 (PDF)
13 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

Is There Still Time for a GUST Preapproved Plan to Be Submitted for a Determination Letter?
Excerpt: "In Announcement 2005-36, released May 9, 2005, the IRS announced the closing of the GUST defined contribution pre-approved program as of June 15, 2005. Thus, Sponsors of pre-approved Prototype (both mass submitter identical adopters and non-mass submitters) and Volume Submitter Plans who desired a GUST an Opinion/Advisory letter had to submit the request for the Opinion/Advisory Letters by June 15." (McKay Hochman Co., Inc.)

Research Study: Spending and Investing in Retirement--Is There a Strategy?
Excerpt: "The SOA's Committee on Post Retirement Needs and Risks, and Pension Section Research Team are [making] available material from a new research study that examines how retirees approach key financial decisions about managing their money in retirement. The objective of the research . . . was to collect first hand accounts from six focus groups comprised of retirees in several locations nationwide." (Society of Actuaries)

Working Paper Abstract: Chilean Pension Reform Turns 25: Lessons from the Social Protection Survey
Excerpt: "This paper introduces a recently-developed longitudinal survey of individual respondents in Chile, the Social Protection Survey (or Encuesta de Previsión Social, EPS), and illustrates some uses of this survey for microeconomic analysis of key aspects of the Chilean system." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full-text)

Links to Items on Executive Comp, Benefits in General

Executive Compensation Disclosures: Pension Table
Excerpt: "Pension values should be determined as of the same pension plan measurement date used for the financial statements for the most recent fiscal year." (Pensions & Benefits Weblog)

Executive Pay Disclosure Rules: The Challenge of the Required Compensation Discussion and Analysis (PDF)
6 pages. Excerpt: "In a new report on the subject, Hay Group reviews the objectives of the CD&A and offers specific suggestions and actions to ease compliance with these disclosure standards." (Hay Group; one-time registration required)

Overview: Final SEC Rules on Proxy Disclosure of Executive and Director Compensation (PDF)
8 pages. Excerpt: "On August 11th, the SEC issued the text of final rules that make major revisions to the proxy disclosure of executive and director compensation. The rules are effective for proxy statements filed on or after December 15, 2006 for fiscal years ending on or after that date." (Frederic W. Cook & Co., Inc.)

SEC Posts Release Pertaining to New Executive Compensation Disclosure Requirements
Excerpt: "On [August 11], the SEC posted the 436-page adopting release for its executive compensation disclosure rules." (Attorney B. Janell Grenier via

SEC Executive Compensation Disclosures: Transition
Excerpt: "Disclosures under the new rules are not required to restate compensation or related party disclosures for prior fiscal years. For example, only the most recent fiscal year need be displayed in the revised Summary Compensation Table." (Pensions & Benefits Weblog)

IRS Updates List of Approved Nonbank Trustees and Custodians for HSAs and Other Tax-Exempt Trusts
Excerpt: "EBIA Comment: Extensive requirements must be met before an entity may be approved to serve as a trustee or custodian (such as minimum net worth, bonding, and annual audit requirements), which may explain why the list of approved nonbank trustees and custodians is so slow-growing. Note that in addition to HSAs, these entities are approved as trustees and custodians for Archer MSAs, a pilot project that expired on December 31, 2005." (Employee Benefits Institute of America Inc.)

Towers Perrin U.S. Legislative Tracking Charts -- Human Resources -- Updated August 11, 2006 (PDF)
11 pages. Excerpt: "These charts summarize selected federal legislation that would affect employee benefit programs. The bills included on the charts are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors." (Towers Perrin)

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

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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!)

ERISA Litigation Forum
Nationwide on September 12, 2006
presented by Paul, Hastings, Janofsky & Walker LLP

Meeting of the Citizens' Health Care Working Group
in District of Columbia on August 28, 2006
presented by Agency for Healthcare Research and Quality

Mid-Atlantic Area Benefits Conference
in Pennsylvania on April 25, 2007
presented by American Society of Pension Professionals & Actuaries (ASPPA)

Newly Posted Press Releases
(Post Yours!)

S&P Reports On How Largest U.S. Cities Are Faring With Pension Liabilities
(Standard & Poor's)

New Publication: "The Oxford Handbook of Pensions and Retirement Income"
(Center for Retirement Research at Boston College)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Employee Benefits Tax Senior or Manager
for Deloitte
in CA

Conversion Specialist
for ePlan Services, Inc.
in CO

Relationship Manager II
for AST Trust Company
in AZ

Operations Specialist II
for AST Trust Company
in AZ

Benefits Specialist
for Chugach Alaska Corporation
in NV

Compliance Specialist
for MassMutual Financial Group
in MA

Relationship Manager
for Vanguard
in PA

Daily Compliance Manager
for Great-West Retirement Services
in WI

Regional Director, Retirement Services
for Great-West Retirement Services
in CO

Enrollment Specialist
for National Automobile Dealers Association Retirement Administrators, Inc
in VA

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