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September 18, 2006
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The Pro-Fiduciary Trial Ruling in Difelice v. US Airways & What It Means for ERISA Stock Litigation (PDF)
3 pages. Excerpt: "ERISA practitioners are already debating the significance and correctness of the court's legal rulings and the plaintiff class has appealed. Regardless of the case's ultimate place in ERISA jurisprudence, this was a major victory for US Airways and its fiduciaries." (Professional Liability Underwriting Society Journal via Morgan Lewis)

Can 401(k)s Replace Pensions?
Excerpt: "Many employees can earn as much retirement income with a 401(k) as they can with a traditional defined-benefit plan, a pro-employer advocate asserts." (

As Traditional Pension Plans Decline, Workers Face a Less Certain Future
Excerpt: "[F]inancial experts say workers fortunate enough to still have traditional pensions should not rely on them too much for retirement, as the long-term prospects of such plans are increasingly in doubt." (The Washington Post; one-time registration required)

Law Firm Launches Lawsuits over 401(k) Fees
Excerpt: "Last week Schlichter, Bogard & Denton, a plaintiffs' law firm, filed a wave of complaints involving 401(k) plan fees. These lawsuits all target large 401(k) plans sponsored by large employers, name the employer as defendant, and in some cases, plan fiduciary committees and their various individual members." (; one-time registration required)

Employee Ownership Update for September 15, 2006
NCEO Executive Director Corey Rosen discusses the status of the final 409A deferred compensation regulations, affecting discounted stock options, phantom stock, SARs, and more; the settlement of the Sprint 401(k) stock-drop lawsuit; the trend toward derivative actions in stock option backdating lawsuits; and a company that is now 100% employee-owned through its ESOP. (National Center for Employee Ownership)

Companies Offering Flexibility and Options for Those Nearing Retirement
Excerpt: "Such arrangements are far from the norm, but they're expected to become more common as larger numbers of the 76-million member Baby Boom generation reach retirement age, placing more pressure on the nation's strained private and public pension systems and prompting a sea change in public policy." (Chicago Tribune via Monterey Herald)

Gauging the Gap in Retiree Benefits
Excerpt: "Which retirement vehicle provides the better results for workers -- a pension or a 401(k)? The question is an important one right now, as the country's corporate pension structure continues to be dismantled in favor of worker retirement accounts like 401(k)s." (The Dallas Morning News via, Inc.)

Opinion: Visions of the Golden Years in Retirement Dim As Pension Promises Fade
Excerpt: "[H]undreds of thousands of [workers'] dreams of long, comfortable retirements are getting upended as US corporations shed both the costs and responsibilities of traditional pensions. Faced with intense competition in a global economy, and huge obligations as baby boomers retire, many of the nation's biggest companies are rewriting the social contract that for 60 or more years has bound them to workers." (The Boston Globe)

Firms Try New Ways to Replace Frozen Defined-Benefit Plans
Excerpt: "Tenneco announced it was freezing its defined-benefit plans. But instead of enhancing its existing 401(k) plan, Tenneco is creating a new defined-contribution retirement account." (Workforce Management; one-time registration required)

Overview: IRS Issues Guidance on Airline Alternative Funding Schedule (PDF)
1 page. Excerpt: "The IRS has just issued Announcement 2006-70, [] which provides procedures for eligible commercial airlines (or businesses providing catering services to commercial airlines) to elect the alternative funding schedule provided under the recently enacted Pension Protection Act of 2006 (PPA)." (Buck Consultants)

Pension Law Changes Require Deliberate Response from Plan Sponsors
Excerpt: "[E]mployers must not miss the forest for the trees as they formulate their responses to changes in the regulatory landscape. That 'forest' is the 'employee value proposition' - the elements of work that will deliver the highest value to employers and motivate employees to provide their highest level of commitment and effort to the organization - and where their retirement plans in general and DB plan in particular fit in." (Employee Benefit News)

The Increasing Charms of the Roth Approach
Excerpt: "If you participate in an employer-sponsored plan, your income will determine whether you qualify for a deduction on your contribution. A single person earning $60,000 or more a year won't qualify, for example. But you can still contribute nondeductible money into a traditional I.R.A. Then, in 2010, you can convert your traditional I.R.A. into a Roth." (The New York Times; one-time registration required)

Faith-Based Funds Start Showing Impact
Excerpt: "In a way, trends in faith-based investing seem to run counter to religion's perceived influence on American life. In a recent survey by the Pew Forum on Religion and Public Life, 59 percent of respondents said religion is losing influence on American life, while 34 percent say that it is more influential." (St. Louis Post-Dispatch)

Pension Funds and Managers Disconnect on Best Products, According to Study
Excerpt: "Pension funds and asset managers worldwide are at odds over the type of products pension plans will want over the next five years, according to a study published [today] by CREATE, a U.K.-based think tank." (MarketWatch)

Links to Items on Executive Comp, Benefits in General

Court Rules on Requirement to Dismiss a Pending EEOC Charge in Exchange for Severance Payments
Excerpt: "A federal district court in Maryland held last month that an employer engaged in unlawful retaliation toward an employee in violation of Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act by conditioning the receipt of severance benefits upon the employee's withdrawal of her pending Equal Employment Opportunity Commission (EEOC) charge." (Seyfarth Shaw LLP)

Overview: New SEC Executive Compensation Rule 'Will Clearly Increase the Role of the CHRO'
Excerpt: "Executive Compensation Policy Roundtable Chairman Rich Floersch of McDonald's led a discussion of the implications of the new SEC proxy disclosure rules for company filings in 2007. He observed that management's heightened responsibility under the new rules 'will clearly increase the role of the CHRO' in explaining the disclosures to the compensation committee, the CEO and the CFO." (HR Policy Association)

Overview: Possible Interim Guidance on Code Section 409A: Extension of Transition Relief
Excerpt: "[The first full week of September], Daniel H. Hogans, attorney-adviser in the Office of Tax Policy for the Treasury Department, informally stated that the final regulations on 409A are expected to be released later this year--in the fall. In addition, he conceded that a January 1, 2007 effective date for the final regulations was 'increasingly unworkable.'" (Orrick, Herrington & Sutcliffe LLP)

Employers Differ in LTI Stock Option Replacement, According to Mercer
Excerpt: "Many companies around the world that had used stock options in their long-term incentive (LTI) compensation programs are now relying on them much less, but there is a difference in how much less for firms in different countries." (; one-time registration required)

CalPERS Appointed Lead Plaintiff in Lawsuits Against UnitedHealth Group over Stock Option Practices
Excerpt: "Known as an activist shareholder, [the California Public Employees' Retirement System (CalPERS)] will manage the case and monitor developments for other plaintiffs." (Star Tribune; one-time registration required)

Investigating Potential Allegations of Backdating Option Grants (PDF)
Excerpt: "Backdating can be inadvertent. It may happen because all of the approvals and authorizations that are necessary to grant an option have not been met so that when the option becomes legally binding, a period of time has elapsed between the date that the option exercise price was determined and the date the option was legally granted." (The Bureau of National Affairs, Inc. via Groom Law Group)

Newly Posted Events
(Post Yours!)

Pension Protection Act of 2006: What’s in It for 401(k) Plans?—Help for 401(k) Plan Employers, Advisors, and Administrators
Nationwide on September 14, 2006
presented by Employee Benefits Institute of America Inc. (EBIA)

Stock Option Pricing Practices: What You Need to Know
Nationwide on September 19, 2006
presented by West LegalEdcenter

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Plan Administrator
for Third Party Administration Firm
in FL

ERISA Consultant II
for BISYS Retirement Services
in PA

Senior Director, Compensation & Benefits
for Kennametal
in PA

Plan Services Consultant
for American United Life Insurance, a OneAmerica financial partner
in IN

Client Services Consultant
for American United Life, a OneAmerica financial partner
in AZ, DC, IN, KS, TX

TPA Defined Contribution Plans Specialist
for 401k Administrators, Inc.
in CA

Assistant General Counsel -- ERISA Experience Required
for Nationwide Insurance
in OH

Retirement New Business Consultant (Retirement Plans Sales Support)
for Mutual of Omaha
in NE

Benefits Planning & Communications Specialist
for The Guardian Life Insurance Company of America
in NY

Pension Specialist
for Diversified Investment Advisors
in OR

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