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| November 6, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
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(a) New Guidance Documents
IRS 30 Year Treasury Securities Rate Updated for October 2007
30 Year Treasury Securities Rate for October 2007: 4.77% (Internal Revenue Service)
IRS Composite Corporate Bond Rate Table Updated for November 2007
Corporate Bond Weighted Average Interest Rate = 5.89 for November 2007 (Internal Revenue Service)
(b) News
Pension Group to Recoup Overpayments to Retired Steelworkers
Excerpt: "Bethlehem Steel retirees who took a cut in their benefits in 2003 will see their fixed incomes shrink again now that the government agency managing their pensions has calculated the amount of 'overpayments' made before the first cut. About 11,000 Bethlehem Steel retirees and beneficiaries received benefits greater than the Pension Benefit Guaranty Corp. was allowed by law to pay in 2003. It will take the 1,100 retirees, on average, about 12 years to repay the government agency." (The Examiner)
(c) Summaries of Guidance; Filed Comments
Kansas State Worker Loses Constitutional Fight over Pension Tax
Excerpt: "An employee of the Kansas Department of Revenue, who has been waging a constitutional fight against a $577 state tax bill based on pension income, has been dealt a legal setback." (PLANSPONSOR.com; free registration required)
Pass That Retirement Plan Money on to Heirs -- Several Red Flags to Watch For
Excerpt: "Practitioners need to be aware of some points that were overlooked or mischaracterized by many commentators. First, it is not really a rollover like a spouse can do. Rather, it is a transfer from one account to another that must remain titled in the name of the decedent. In January 2007, the IRS issued Notice 2007-07, stating that the account should be titled as 'Tom Smith as beneficiary of John Smith.' With a spousal rollover, title is in the name of the spouse, as if she had owned it all along." (Financial Advisor)
Minimizing Pension Risks
Excerpt: "Watson Wyatt explored six categories of pension risk: inflation, interest rate, investment, mortality, incentive and regulatory. With the exception of the last, plan sponsors can minimize these risks to acceptable levels. Regulatory risk refers to the prospect of pension laws' becoming so unstable or untenable that traditional pensions are no longer feasible." (Watson Wyatt Worldwide)
PPA Rules Affect 2007 Form 5500
Excerpt: "Practitioners are particularly interested in how the agencies addressed the new rules in PPA §1103 which were intended to make reporting easier for small employers. If the Instructions for 2007 Form 5500 are any indication, a 'simplified report' is defined by folks in Washington much differently than it is elsewhere." (form5500help.com)
(d) Trends, Surveys, Research
Accounting Rules May Put Pensions on Ice
Excerpt: "New FASB guidelines could accelerate freezing of defined-benefit plans, but employers are warned not to act rashly." (Workforce Management; free registration required)
(e) Policy, Opinion, Advocacy
Towers Perrin U.S. Legislative Tracking Charts -- Retirement -- Updated November 1, 2007 (PDF)
10 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)
Fee-Disclosure Bills Cause Concern
Excerpt: "The proposed legislation would trump the fee disclosure rules being considered by the Department of Labor. HR and pension organizations say the bills would increase liability, unnecessarily hike costs and could damage retirement security." (Human Resource Executive Online; free registration required)
At Hearing, DOL Focuses on Its Initiatives to Expand 401(k) Fee Disclosure
Excerpt: "At an October 24, 2007 hearing before the Senate Special Committee on Aging, Bradford P. Campbell, Assistant Secretary of Labor for employee benefits security, focused on three Labor Department regulatory initiatives designed to improve disclosure of 401(k) fees and expenses." (Wolters Kluwer Financial Services)
Opinion: Time for Employers to Cut Cord to 401(k) Plans
Excerpt: "Employees can benefit from having 401(k)-style plans cleft from their employers because the programs would cease to be a black box of excessive middlemen and management expenses." (Bloomberg News)
Statement on behalf of ASPPA and CIKR at Hearing on the Appropriateness of Retirement Plan Fees (PDF)
10 pages. Excerpt: "ASPPA and CIKR strongly believe that any disclosures required of service provider fees to a plan fiduciary must be provided in a uniform manner, regardless of how plan services are delivered. There are generally two main methods for delivering retirement plan services -- 'bundled' and 'unbundled.'" (American Society of Pension Professionals & Actuaries)
Testimony Before the House Committee on Ways and Means, October 30, 2007, on Fees
Excerpt: "In the end, trying to define what 'reasonable' fees are may ultimately be a plan by plan and a 'local' decision." (National Association of Government Defined Contribution Administrators)
Text of Defined Contribution Plan Fee Transparency Act of 2007, H. R. 3765 (PDF)
20 pages. Excerpt: "To amend the Internal Revenue Code of 1986 to provide transparency with respect to fees and expenses charged to participant-directed defined contribution plans." (U.S. House of Representatives via American Benefits Council)
Statement of Investment Company Institute at the Appropriateness of Retirement Plan Fees Hearing
Excerpt: "Extensive research on investor behavior indicates that workers should receive a clear, concise summary of five items for each of the investment options available under a 401(k) plan. These items include: the investment's objectives, its historical performance, its risks, information about the investment manager, and fees." (Investment Company Institute)
Working Paper: Alternative Ways of Measuring Age, Their Relationship to Labor Force Participation, Government Policies and GDP
Excerpt: "The current practice of measuring age as years-since-birth, both in common practice and in the law, rather than alternative measures reflecting a person's stage in the lifecycle distorts important behavior such as retirement, saving, and the discussion of dependency ratios. Two alternative measures of age are explored: mortality risk and remaining life expectancy. With these alternative measures, the huge wave of elderly forecast for the first half of this century doesn't look like a huge wave at all." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full text)
Opinion: United Airline's Faustian Bargain with the PBGC
Excerpt: "Apparently, I was too exuberant in suggesting the government give back to United the pension obligation it foisted on the PBGC. As part of its agreement with the airline, the PBGC imposed an extraordinary waiver of its powers and agreed not to seek to restore it to United -- ever." (The Motley Fool)
'Some No-Brainer Savings Ideas'
Excerpt: "Too many Americans are making poor choices -- or no choices at all -- to prepare financially for retirement, says Laura D'Andrea Tyson, professor of business and public policy and former dean of the Haas School of Business at the University of California, Berkeley." (National Center for Policy Analysis)
Working Paper: Choice Architecture and Retirement Saving Plans
Excerpt: "In this paper, we apply basic principles from the domain of design and architecture to choices made by employees saving for retirement. Three of the basic principles of design we apply are: (1) there is no neutral design, (2) design does matter, and (3) many of the seemingly minor design elements could matter as well. Applying these principles to the domain of retirement savings, we show that the design of retirement saving vehicles has a large effect on saving rates and investment elections, and that some of the minor details involved in the architecture of retirement plans could have dramatic effects on savings behavior. We conclude our paper by discussing how lessons learned from the design of objects could be applied to help people make better decisions, which we refer to as 'choice architecture.'" (Social Science Research Network)
Links to Items on Executive Comp, Benefits in General
Corporate Aircraft: Grounded by the IRS? (PDF)
14 pages. Excerpt: "Employers make corporate aircraft available for the sake of convenience, efficiency, security or simply to provide a perk. Some allow personal use of corporate aircraft. In this age of increased scrutiny of compensation -- especially executive compensation -- that may invite some extra attention from the IRS. Here's a look at how this benefit is regulated." (Thompson Publishing Group, Inc.)
Milliman's Benefits Perspectives, Fall 2007 (PDF)
8 pages. This issue covers prescription drug benefit design and defined benefit plan risk management. (Milliman)
Firms Fail to Plan for the Impact of Retiring Baby Boomers, According to Survey
Excerpt: "From Spencer's Benefits Reports: Although human resources executives at top Fortune 1,000 companies expressed concern about losing to retirement the talents and knowledge of their aging baby boomer work force, few have studied the actual impact on their businesses or developed a strategy to mitigate it, financial accounting and consulting firm Ernst & Young LLP concluded." (Wolters Kluwer Financial Services)
How to Handle Beneficiary Designations: Tips for Ensuring Your Assets Flow to the Right People
Excerpt: "The decision about how to designate beneficiaries for your company retirement plan, life insurance policies, and other assets might seem like a no-brainer. Chances are you would like those near and dear to you to inherit any money you've accumulated during your lifetime, so making sure that happens should be as simple as writing their names on the appropriate forms, right?" (Morningstar)
What the C-Suite Needs to Know About Benefits (PDF)
7 pages. Excerpt: "Benefit expenses have been a horrendous headache for American corporations, but some organizations are looking at benefits in a more positive light. Learn how benefits can be part of an integrated competitive strategy." (Workforce Management; free registration required)
Towers Perrin U.S. Legislative Tracking Charts -- Human Resources -- Updated November 1, 2007 (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)
Key Differences in U.S. and UK Stock Purchase Agreements (PDF)
3 pages. Excerpt: "Although market practice in the UK and US in respect of share/stock purchase agreements is becoming more closely aligned, there are still some important M&A distinctions of which lawyers working on transatlantic transactions, and their clients, should be aware." (Paul, Hastings, Janofsky & Walker LLP)
Newly Posted Events
Automatic Enrollment: QDIA, EACA, and QACA Web Seminar
Nationwide on November 28, 2007
presented by SunGard Relius
The Pension Protection Act of 2006 Update!
Nationwide on November 30, 2007
presented by Executive Benefits Design Group
Newly Posted Press Releases
Hewitt Associates Augments 401(k) Services with Rollover Resource
Hewitt Associates LLC
BusinessPlans, Inc. - myCafeteriaPlan Hires New Marketing and Sales Director
BusinessPlans, Inc. - myCafeteriaPlan.com
Tamarack Funds Added to CPI Retirement Platform
CPI Qualified Plan Consultants, Inc.
SEI Launches Distribution-Focused Strategies for Advisors to Fill Retirement Income Gap
SEI
Ingham Group Obtains The First ASPPA Certification
Roland|Criss Fiduciary Services
ACS and Wealth Management Systems Inc. to Offer Enhanced IRA and Annuity Services
ACS
Newly Posted or Renewed Job Openings
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Plan Administrator for Retirement Plans & ERISA Specialists
for Chicago Loop TPA firm
in IL
Retirement Consultant - SunTrust Investment Services Product Management Group
for SunTrust
in GA
Relationship Manager - Large Plan Team
for New York Life Retirement Plan Services
in MA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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