| BenefitsLink Retirement Plans Newsletter |   |
March 20, 2007
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Supreme Court Declines to Hear Appeal of Xerox Pension Case
Excerpt: "The Supreme Court has declined to consider a dispute centered on whether Xerox Corp. improperly calculated pension benefits for several employees who left the company and were later rehired The decision lets stand a ruling by the 9th Circuit Court of Appeals that determined the company's formula for calculating certain pension benefits violated . . . ERISA." (SignOnSanDiego.com)
Study Finds Life-Cycle 401(k)s Are Overly Optimistic
Excerpt: "Fund companies designing life-cycle or target-date 401(k) funds are using overly optimistic assumptions such as how much participants contribute over time and how many of them make withdrawals, according to a study released today by JPMorgan Asset Management. The study also examines the returns associated with the different asset-allocation approaches and suggests that using alternative investments in target-date funds can help retirees improve their 401(k) returns." (Workforce Management)
Federal Court Squashes 401(k) Fee Loss Claim
Excerpt: "In a ruling that could limit corporate liability related to employee retirement benefits, a federal judge has rejected a claim for investment losses in a lawsuit alleging that Exelon Corp.'s 401(k) plan included excessive fees." (Insurance NewsNet)
Overview: House Hearing Highlights 'Hidden' 401(k) Fees
Excerpt: "Introducing a hearing on March 6, 2007 to determine whether hidden 401(k) fees are undermining the retirement security of American workers, Chairman of the House Education and Labor Committee, George Miller (D-CA), challenged the financial services industry with the threshold question of whether the numerous fees assessed 401(k) plan participants are 'necessary.'" (Wolters Kluwer Law & Business)
Overview: 401(k) Fee Disclosure
Excerpt: "Fiduciaries shouldn't lose sight of the fact that the key is the return participants are getting net of fees, so fees shouldn't be the only consideration. However, compared on a net basis, lower fees will often result in better performance." (Pension & Benefits Blog)
Young Taxpayers in the Dark on FSAs, 401(k)s, and Other Tax-Related Benefits
Excerpt: "from Spencer's Benefits Reports: Young taxpayers are significantly less likely to take advantage of tax-related benefits, are more likely not to know whether they are eligible to participate, and nearly one in five rate their employers as 'terrible' in providing information about tax-advantaged planning, according to findings from a nationwide CCH CompleteTax survey." (Wolters Kluwer Law & Business)
Michigan Democrats Pitch 401(k) Plan
Excerpt: "A plan to help small businesses participate in 401(k) programs with the help of the state was outlined Monday by House Democrats. The legislation would put into place a proposal pitched by Gov. Jennifer Granholm in early 2006, aimed at increasing the number of Michigan residents saving for their retirement." (BusinessWeek Online)
Opinion: 401(k) Reform on High and Hidden Fees is Sorely Needed
Excerpt: "It is difficult for company decisionmakers to turn down the offer of 'free administration' when they don't fully understand that it is a bill paid by their fellow employees. It's also a bill paid with money that could otherwise be compounding tax-free." (Steve Butler in the Contra Costa Times)
Federal Thrift Savings Plan Survey Shows Younger Workers Missing Out on Benefits
Excerpt: "Federal employees are investing more in the Thrift Savings Plan, but the amount varies by age and income. . . . Among employees in the Federal Employees Retirement program, 83.8 percent of those under age 30 participated in 2005, compared with 91.7 percent of those ages 60-69. The under-30 FERS employees in 2005 invested an average of 6.4 percent of their pay, while the average was more than 11 percent among employees age 60 and older." (Washington Post; free registration required)
The Recent Trend Towards Later Retirement
Excerpt: "A dramatic decline in work at older ages persisted over most of the twentieth century. Recently, however, retirement ages stabilized, prompting debate as to whether the early retirement trend had stopped or simply paused." (Center for Retirement Research at Boston College)
Kentucky Pension Crisis Has Been Years in the Making
Excerpt: "The state's looming pension crisis -- which created an end-of-session impasse between the House and Senate -- is one that didn't happen overnight and that the legislature itself had a significant role in causing. After sweetening retirement benefits during the strong economic times of the 1990s, a succession of legislative sessions have compounded the problem in recent years by not fully funding the system when the economy slowed and state revenue lagged." (The Courier-Journal)
Overview: IRS Releases New Mortality Tables for 2007 Plan Years
Excerpt: "The regulations change the assumption used for non-disabled participant mortality when determining a pension plan's current liability. Overall, the new tables are expected to increase plans' current liability for 2007 and funding targets for 2008 and later." (Watson Wyatt)
Overview: New Benefit Statement Requirements for Retirement Plans
March 16, 2007. (Utz Miller & Kuhn LLC)
HR Policy Testimony Urges Removal of Obstacles to Phased Retirement While Ensuring Flexibility
Excerpt: "The law generally precludes payments under retirement plans to most current employees, effectively causing some older employees to retire completely or go to work for another company while receiving retirement plan payments from their first employer. Our testimony cautioned that any changes should 'provide maximum flexibility to employers and employees' . . . ." (HR Policy Association)
Overview: DOL Attempts to Clarify Treatment of Post-Death QDROs
Excerpt: "One of the thorniest issues retirement plan administrators face in dealing with Qualified Domestic Relations Orders (QDROs) is the situation in which a participant dies after getting divorced but before entry of a QDRO. . . . Now, the U.S. Department of Labor (DOL) has weighed in to help resolve some of the issues raised, although most plan administrators and their advisors will probably find the guidance of only limited value." (Mitchell Silberberg & Knupp LLP)
Reporting Qualified Charitable Distributions from an IRA: Code 7, Not F
Excerpt: "One of the [PPA] provisions allows tax-free distributions of otherwise taxable individual retirement account (IRA) assets when given to charity. Surprisingly, the rules for taking advantage of this new provision are fairly straight forward. It's the IRS reporting of these distributions that is causing some tax-time confusion." (ComplianceHeadquarters)
Opinion: Pension Funds Perilously Binge on Hedge Funds, Funds of Funds, Funds of Funds of Funds
Excerpt: "As pensions load up on multi-tiered hedge fund products created and recommended by their so-called independent consultants, fiduciary principles fall by the wayside." (Benchmark Alert)
Opinion: Some Questions About Management of the Federal Thrift Savings Plan
Excerpt: "The Thrift Savings Plan has grown into a $200 billion retirement behemoth, but its nearly 4 million participants might be surprised to learn how their money is managed." (GovExec.com)
Retirement Plan Investments Grow with Age and Income, According to Federal Thrift Savings Plan Study
Excerpt: "Federal employees are investing more in the Thrift Savings Plan, but the amount varies by age and income. That was one of several broad conclusions in a study of TSP participants, the first of its kind in recent years, released yesterday at a meeting of the Federal Retirement Thrift Investment Board." (The Washington Post; free registration required)
New Haven, CT Considers Pension Restrictions in Wake of Officers' Arrests
Excerpt: "City officials are exploring whether New Haven can reduce or revoke pensions of employees who use their positions to commit crimes. " (Newsday.com)
NCPERS Files Amicus Curiae Brief Supporting State of Kentucky's Retirement Plan Formula
Excerpt: "The Petitioners have asked this court to grant a writ of certiorari to review the decision of the Sixth Circuit Court of Appeals, en banc, as to whether the use of 'age' as a factor in a state retirement plan renders the plan facially discriminatory under the Age Discrimination in Employment Act ('ADEA'), 29 U.S.C. § 621, et seq." (National Conference on Public Employee Retirement Systems)
A Portfolio on the British Pension System
The listing includes AARP Resources and external resources. (AARP)
Survey Finds Desire to Transfer Pension Liabilities
Excerpt: "Insurance companies could be in line for an increased proportion of the pension market if they can drive down the cost of transferring liabilities." (Business Insurance)
Overview: IRS Accepting Cycle B Applications for Determination Letters
Excerpt: "On February 1, 2007, the IRS began accepting Cycle B applications for determination letters that consider the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and other changes to tax law. Cycle B closes on January 31, 2008. All plan sponsors that want determination letter reliance on a new or amended plan's tax-qualified status must file a determination letter application within the determination letter cycle assigned to the plan." (Watson Wyatt)
Default Investment Options in Defined Contribution Plans: A Simple Comparison
Excerpt: "According to the simulations, the balanced fund is slightly more likely to outperform the lifecycle fund, but its more aggressive approach also leaves plan participants more vulnerable to losses when they are least likely to be able to afford them -- as retirement approaches. The lifecycle fund is better at safeguarding wealth in a downward market, while still doing a reasonable job of building wealth." (Watson Wyatt)
Commission on the Regulation of U.S. Capital Markets in the 21st Century: Report and Recommendations
Excerpt: "One year ago, the Commission set out to seriously reconsider some of the systems and institutions built over the past 70 years to protect investors and foster capital formation. The Commission started with the premise that its recommendations needed to strike the right balance between two statutory mandates: protecting investors and promoting capital formation." (U.S. Chamber of Commerce)
Merrill Adjusts Policy on Pension Fund Fees
Excerpt: "Facing pressure from rivals and regulators, Merrill Lynch & Co.'s pension-consulting arm is changing the way it handles some of its fees." (Wall Street Journal via benchmarkalert.com)
Pension Funds Argue in Washington for Climate Change Regulations
Excerpt: "The Connecticut pension fund joined dozens of retirement funds and other companies asking for Congress to place limits on emissions of carbon dioxide and other gases blamed for global warming." (WorldNow, WTNH, and Associated Press)
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Newly Posted Events
ERISA Litigation Forum: Recent Notable ERISA Decisions
Nationwide on April 10, 2007
presented by Paul, Hastings, Janofsky & Walker LLP
Newly Posted Press Releases
U.S. Labor Department Obtains Consent Judgment Restoring More Than $102,000 To Maitland, Fla., 401(k) Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
The Standard Opens New Retirement Plans Office in New York
Standard Insurance Company
American Consumer Institute Finds Consumers Are Not Helped by Redundant and Costly State Insurance Regulations
American Consumer Institute
Newly Posted or Renewed Job Openings
Pension Implementation Analyst
for Milliman, Inc.
in TX
Pension Analyst
for Milliman, Inc.
in TX
Client Service Manager
for Princeton Retirement Group, a Merrill Lynch Company
in NC
Retirement Plan Consultant
for Pacific Life
in ANY STATE
Sr. Financial Analyst - Pension & Benefits
for Sempra Energy
in CA
Defined Contribution Assistant
for Standard Insurance Company
in OR
Defined Contribution Analyst II
for Standard Insurance Company
in OR
National Sales Associate
for WESPAC, a BenefitStreet Company
in CA
Senior Disbursement Services Associate
for Administrative Systems, Inc.
in CA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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