Retirement Plans
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September 22, 2006
Today's sponsor: DATAIR Employee Benefit Systems, Inc.

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Software for DC/401(k) Plan Administration

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Training and support included. For free demo versions and pricing, contact or call 1-888-328-2474.

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

Excessive Fee Suits Not Organized Anti-Plan Campaign, According to Attorney Jerome Schlichter
Excerpt: "Schlichter asserted in an interview with that the suits, filed in Illinois, Missouri and California, by Schlichter, Bogard & Denton, were the results of investigations into the specifics of each plan. 'No one should read any conclusion into that,' Schlichter declared." (; one-time registration required)

ICI Statement to ERISA Advisory Council Working Group on a Procedurally Prudent Investment Process
Excerpt: "As the Advisory Council is well aware, Americans increasingly will rely on defined contribution plans for retirement income. These plans have enormous potential to provide plan participants with a solid retirement. The challenge now is to empower participants with the tools they need to succeed. Improving the disclosure participants receive about their investment options is an important part of this effort." (Investment Company Institute)

Custom Lifecycle Funds -- The Next Generation of Lifecycle Products
Excerpt: "At its most basic, a custom lifecycle fund involves a plan sponsor using its existing core offerings to construct a target maturity portfolio for participants. Outside advisers such as record keepers or investment consultants assist plan sponsors in constructing and managing this portfolio." (Employee Benefit News)

Investment Company Institute Asks DOL to Improve Level of 401(k) Investment Options Information
Excerpt: "Participants need to receive consistent and concise information about the investment choices and the department's rules about electronic delivery should be updated given the frequent use of the Internet, ICI general counsel Elizabeth Krentzman testified to the Employee Retirement Income Security Act Advisory Council Working Group . . . ." (Investment News; registration or subscription required)

PPA Requires Significant DOL Guidance By 2008
Excerpt: "The Pension Protection Act of 2006 (PPA) requires the Department of Labor to complete 25 regulatory projects by 2008, but Ann Combs, assistant secretary of the Employee Benefits Security Administration (EBSA), cautioned that the EBSA cannot add words to the statute to fix the problems in the PPA. The remedy must come from a technical corrections bill, she told the 59th annual national conference of the Profit Sharing/401(k) Council of America." (Spencer's Benefits Reports)

Pension Protection Act of 2006: Impact on Tax-Exempt Employers' Retirement Plans (PDF)
4 pages. Excerpt: "[C]ertain sections of the Internal Revenue Code [i.e., 403(b) and 457] apply only to tax-exempt employers. Any employer tax-exempt under 501(c) can sponsor a 457(b) plan. An employer that is a tax-exempt charitable or similar organization under 501(c)(3) can also sponsor a 403(b) plan." (Aon Consulting)

Impact of Pension Funding Reform on Multiemployer Funds (PDF)
3 pages. Excerpt: "General Funding Rules are Unchanged for Multiemployer Plans: The law retains the current basic funding rules for multiemployer plans." (Aon Consulting)

Pension Protection Act of 2006: Impact on Governmental Employers (PDF)
4 pages. Excerpt: "Background: Governmental plans are generally exempt from ERISA. However, governmental plans are subject to many of the tax-qualification and other requirements in the Internal Revenue Code. Because of the structure of the Code, each provision must be separately examined to determine whether or not it applies to a governmental plan." (Aon Consulting)

Global Survey of Retirement Plan Accounting Assumptions (PDF)
6 pages. Excerpt: "The survey examines four economic assumptions--discount rate, expected long-term rate of return, salary increase, and pension increase. Companies may find this information useful in discussions about the selection of accounting assumptions for their own plans for year-end 2006. Others may want to refer to the findings and forecasts to set budgets for 2007." (Hewitt Associates)

Overview: EBSA Seeks Information on Interpretive Bulletin 75-9 Regarding Accountant Independence
Excerpt: "The Employee Benefits Security Administration (EBSA) has issued a notice requesting information from the public concerning the advisability of amending Interpretive Bulletin 75-9 (CCH Pension Plan Guide 14,370) relating to guidelines on independence of accountants retained by employee benefit plans under ERISA 103(a)(3)(A)." (CCH Pension and Benefits)

CRS Report: Income and Poverty Among Older Americans in 2005 (PDF)
23 pages; updated Sept. 21, 2006. Excerpt: "Older persons receive income from a variety of sources, including earnings, pensions, personal savings, and public programs such as Social Security . . . . Using data from the March 2006 Current Population Survey, this report describes the number of elderly receiving income from each of these sources and the extent to which income from each source is either concentrated at the high end or low end of the income distribution or is evenly distributed." (Congressional Research Service of the U.S. Library of Congress)

The Pension Protection Act: What Business Owners Need To Know
Excerpt: "The newly-enacted Pension Protection Act of 2006 is the culmination of years of efforts to shore up unsound defined benefit plans and provide greater personal savings options for employees. But the new law goes much farther by also including several changes for charitable donations and college savings plans. Here are some select measures to note for this year, and for years to come." (

Oregon's Public Employees Retirement System Cost Expected to Drop in 2007
Excerpt: "Starting next July, the pension system will cost government employers an average of 14.8 percent of workers' salaries, down from the current 15.4 percent, said Bill Hallmark, an actuary for the Public Employees Retirement System. That is a relatively modest drop of $40 million per year for a system that costs taxpayers more than $1 billion per year." (

United Kingdom Pension Crisis Deepens for Millions As Pay-Outs Halved Over Past Decade
Excerpt: "Experts said falling interest and inflation rates, cuts in bonus payments and government fiscal policy were responsible for the fall in pay-outs which has affected millions of pension savers. The survey, by Moneyfacts, an independent provider of personal finance information, comes amid a burgeoning pensions crisis, with companies shutting their final salary schemes and experts warning that the government will have to substantially increase state pensions." (The Scotsman via Human Resource Executive Online)

Opinion: Massachusetts Turnpike Authority and MBTA Employee Benefits and Pensions Too Costly
Excerpt: "It's more of the same at the MBTA, one of the most expensive transit systems in America. MBTA bus drivers, for instance, make $53,778 a year (benefits extra), at or near the top nationally. The real outrage at the MBTA, however, is the pension system. If I had gone to work at the MBTA at 20, rather than to college, I could have been retired at 43. How many other places can you start collecting your pension after 23 years?" (The Boston Globe)

Overview: DOL Mandate of Electronic Filing of Form 5500 and Proposal for New Disclosures (PDF)
2 pages. (Milliman)

ICI Testimony Given at ERISA Advisory Council's Hearing on Actively Managed Cross-Trade Transactions
Excerpt: "We urge the Council to recommend to the Department that the need for such regulatory consistency is fundamental to any approach taken by the Department in proposing regulations regarding the content of policies and procedures to be adopted by investment managers who intend to make available cross-trade opportunities to ERISA-covered accounts." (Investment Company Institute)

Retirement Communication Package Based on Consumption & Budgeting Builds a Better 401(k) Participant
Excerpt: "[Dave Ramsey, a financial adviser, radio personality and author] recommends that employees get single-minded about reducing debt by scaling back retirement savings only to the point where they can take advantage of the employer match and then directing the rest of the money to paying off credit cards, student loans, equity lines and, eventually, mortgages. . . . Without debt . . . workers will be able to save aggressively for retirement." (Employee Benefit News)

Data Digest: Wealth Variation Among Boomers and Retirement Wealth Adequacy (PDF)
6 pages. Excerpt: "[N]umerous reports suggest that boomers or subsets of boomers . . . have accumulated an average (mean) of about $50,000 in their retirement accounts (DeVaney and Chiremba, 2005) or less (Goodman and Orszag, 2005). Medians -- the value at which half the population falls above and half below -- are generally used rather than means to characterize wealth distributions because wealth is so skewed toward the top." (AARP)

Under the PPA, the Tax Burden on 401(k) Heirs Will Get Lighter
Excerpt: "The problem with inherited 401(k) assets has been the tax code. The rules governing 401(k) plans are designed to encourage saving for retirement, not to give tax-favored legacies to heirs. Starting next year, the rules will be changed to ease the tax burden on a person who inherits a 401(k) or other employer-sponsored retirement account." (The Hartford Courant; one-time registration required)

Links to Items on Executive Comp, Benefits in General

National Compensation Survey: Employee Benefits in Private Industry in the United States, March 2006 (PDF)
Excerpt: "In addition to presenting data on access to and participation in benefit plans, the tables in this release include data on days of paid vacations and holidays; provisions of life insurance plans; and employee contributions to costs of medical care premiums, the allocation of medical plan costs between employees and employers, and employer premiums." (U.S. Bureau of Labor Statistics)

Military Financial Services and Products Sales Bill Heads to White House
Excerpt: "Members of the House [September 21] voted 418-13 to send President Bush the Senate version of a bill that would change the rules governing sales of life insurance and other products to military service members on military bases." (National Underwriter Life & Health; free one-time registration or paid subscription required)

Overview, Discussion, and Analysis on Executive Compensation and Related Person Disclosure (PDF)
10 pages. Excerpt: "To appropriately address the issues the SEC recommends addressing in the CD&A, companies should begin reviewing and analyzing their approach to compensation now. This process should begin by identifying all compensation programs, plans and arrangements currently in place. The company should review each element of compensation in each program, plan and arrangement, including both equity and non-equity awards . . . ." (Sutherland Asbill & Brennan LLP)

France to Curb Executive Stock Options
Excerpt: "French Finance Minister Thierry Breton outlined plans Wednesday to tighten restrictions on the exercise of employee stock options in the wake of a series of scandals over executive pay and questionable share deals. The new rules will require company bosses and staff to refrain from cashing in a proportion of their options for as long as they remain in their jobs, Breton said in a radio interview." (AP via Human Resource Executive Online)

Society of Actuaries Issues Request for Proposal--Experience Analysis on Exercising of Stock Options
Excerpt: "One of the key factors in determining the value of employee stock options is the early exercise behavior of each company's employees. Only limited academic research is currently available on the question of what motivating factors contribute to employee exercise behavior. Consequently, the Society of Actuaries' (SOA) Pension Section is initiating an experience analysis of the exercise of stock options to explore this question." (Society of Actuaries)

Newly Posted Events
(Post Yours!)

HIPPA and Health Laws Compliance Assistance Seminar
in South Dakota on October 18, 2006
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Pension Protection Act 2006
in Texas on October 2, 2006
presented by Executive Benefits Design Group

Newly Posted Press Releases
(Post Yours!)

IRS Announces New Leadership Positions in Tax Exempt and Government Entities Division
(Internal Revenue Service (IRS))

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

for Louis Kravitz & Associates
in CA

Human Resources-Generalist
for Capital Group Companies
in VA

Manager of Sales and Marketing
for Established Northern California Third-Party Administration Firm
in CA

Employee Benefits Attorney
for Chuhak & Tecson, P.C.
in IL

Project Manager - Human Resources and Retirement Outsourcing
for Fidelity Investments
in NC

Plan Administrator
for Retirement Planning Services, LLC
in FL

Director of Retirement Services
for McCamish Systems, LLC
in GA

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