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| November 15, 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
(None today.)
(b) News
Pension Agency Has $13.1 Billion Deficit
Excerpt: "The federal agency that insures private pension plans for millions of people in the U.S. ran a deficit of $13.1 billion this year, a four-year low and a big improvement from last year. The deficit reported by the Pension Benefit Guaranty Corp. [yesterday] for the 2007 budget year compared with a shortfall of 18.1 billion in 2006." (The Washington Post; free registration required)
Bank of America/Fleet Cash Balance Suit in Settlement Talks
Excerpt: "Bank of America has worked out a preliminary agreement with lawyers representing a class of employees in a lawsuit against predecessor, FleetBoston Financial Corp., over its cash balance plan conversion." (PLANSPONSOR.com; free registration required)
PGBC's Annual Management Report, Fiscal Year 2007 (PDF)
81 pages. Excerpt: "This report includes the PBGC's financial statements, the transmittal letter of its Inspector General, and the independent auditor's combined report on the Corporation's financial statements, internal controls, and compliance with laws and regulations. Also included is the Corporation's Annual Performance Report as required under the Government Performance and Results Act." (Pension Benefit Guaranty Corporation)
(c) Summaries of Guidance; Filed Comments
IRS Official Provides Guidance on Determination Letter, Interim Amendment Processes
Excerpt: "Martin Pippins, IRS Manager of Employee Plans (EP) Technical Guidance and Quality Assurance, speaking at an October 29, 2007, District of Columbia Bar luncheon, encouraged early submission of determination letter applications and indicated that the IRS is working on updating the interim amendment list throughout the year." (Wolters Kluwer Financial Services)
Overview: IRS Proposed 401(k) Automatic Enrollment Regulations
Excerpt: "The IRS recently released proposed 401(k) automatic enrollment regulations that cover two major changes to 401(k) rules made by the PPA. It also includes rules implementing certain other 401(k)-related PPA provisions." (JPMorgan)
Overview: Proposed Regulations on Automatic Enrollment
Excerpt: "Comment. The extended period for distributing excess amounts applies to distributions for excess contributions and excess aggregate contributions for the 2008 plan year." (Ballard Spahr Andrews & Ingersoll, LLP)
Overview: 2008 Mortality Table, Guidance on Interest Rates to Determine Present Value Under PPA
Excerpt: "In the ruling, the IRS clarified that, although Code Sec. 411(d)(6) generally prohibits a plan amendment that decreases a participant's accrued benefit, an amendment that implements the new interest rates and mortality table under Code Sec. 417(e) (3) and, thereby, causes a reduction in accrued benefits, will not violate the anti-cutback rule 'if the cause of such reduction is the substitution of the modified segment rates for the 30-year Treasury rate for the same period.'" (Wolters Kluwer Financial Services)
(d) Trends, Surveys, Research
Merrill Lynch Defends Itself Against ERISA Claims
Excerpt: "Merrill Lynch is now defending itself against claims that the company violated ERISA laws by breaching its fiduciary duty to the company's 401(k) plan participants." (Online Legal Marketing Ltd.)
401(k)s Boost Mutual Fund Ownership
Excerpt: "Nearly 51 million Americans currently households own mutual funds, representing 44% of all households and 88.2 million individual shareholders, reported the Investment Company Institute . . . ." (Investment News; free registration required)
GASB Statement 45 Does Not Require Liabilities Actually Be Reduced; Offers Some Discount-Rate Incentive to Do It
Excerpt: "Many governments have figured out their OPEB (other post-employment benefit) liability under the new accounting standards that require them to disclose that number. Far fewer have a plan firmly in place for dealing with that liability." (PLANSPONSOR.com; free registration required)
Pension Extension: FAQs on Strategies for Extending Duration
20 pages. Excerpt: "Pension Extension -- FAQs on Strategies for Extending Duration is the latest in our Insights for Pension Decision-Makers series, and is a response to the many questions we have received from plan sponsors who are actively exploring long-duration strategies in order to hedge the interest rate risks of their pension plans." (JPMorgan)
Overview: IRS Lump Sum Guidance
Excerpt: "The IRS recently provided guidance concerning the calculation of lump sums in defined benefit plans. Additionally, separate guidance was released regarding '204(h) notice' requirements. Here we review the guidance and discuss its implications." (JPMorgan)
Strikes Against Pension Reform Hit France
Excerpt: "The strike wave is a reaction to the reform of the pension system planned by French President Nicolas Sarkozy. If Sarkozy has his way, the majority of employees will henceforth pay into the public pension fund for 40 years as opposed to 37.5 years, as is currently the case. Train conductors, public sector employees, workers at the public gas company and artists at the Paris opera house would all be affected." (BusinessWeek)
Overview of Davis on 'Age Discrimination Issues for Cash Balance Plans Are Predominantly Resolved'
Excerpt: "As a result of the Pension Protection Act of 2006 and several recent court cases, many of the long lasting age discrimination issues associated with cash balance plans have been resolved. The IRS has even indicated that it will resume issuing favorable determination letters on cash balance plans. As a result, many employers will feel comfortable about their cash balance plans again. [A link to the Davis article is provided on the target page.]" (Workplace Prof Blog)
In Columbia, Pension Plan Changes Prohibited for Those Nearing Retirement
Excerpt: "Switching pension plans is now prohibited for all contributors that are 10 years or less from their retirement age, according to a recent ruling by the Colombian Constitutional Court." (Watson Wyatt Worldwide)
In Taiwan, National Annuity Bill Aims to Provide Safety Net
Excerpt: "A new national annuity system that aims to improve retirement security was approved by the Legislative Yuan on July 20, 2007 and took effect on October 1, 2008." (Watson Wyatt Worldwide)
Structure of Pension Plans May Warp Teacher Market, Research Says
Excerpt: "At a time when millions of baby-boomer teachers are nearing retirement, their decisions on when to leave the classroom are guided more by the early retirement incentives built into state pension plans than by educational considerations, according to new research by a pair of economists. Those pension formulas devised by state legislatures encourage teachers to retire in their mid-50s, while penalizing them for teaching longer than that, states an article appearing in the Winter 2008 issue of the magazine Education Next." (Education Week; free registration required)
(e) Policy, Opinion, Advocacy
Opinion: The Peculiar Incentives of Teacher Pensions
Excerpt: "Pensions have long been an important part of compensation for teachers in public schools. However, the incentive structures of teacher pension systems are not widely understood, even though they can have powerful effects on the composition of our teaching force and on public finance. In our research, we have found that teacher pension systems have two strong incentives -- a pull and a push. Teachers typically earn relatively little in the way of pension benefits until they reach their early fifties, when much larger benefits start to accrue. The system therefore pulls teachers to 'put in their time' until then, whether or not they are well suited to the profession. Beyond that point, the pension system quickly begins to punish teachers for staying on the job too long, pushing them out the door at a relatively young age, often in their mid-fifties, even if they are still effective teachers." (Board of Trustees of Leland Stanford Junior University via Hoover Institution)
State and Local Pensions Are Different from Private Plans (PDF)
12 pages. Excerpt: "The Center for Retirement Research at Boston College is undertaking a multi-year in-depth study of state and local pension plans; the study is funded by the Center for State and Local Government Excellence. As a prelude to subsequent reports on various aspects of state and local plans, this brief identifies the key differences between employer-sponsored plans in the private and public sectors." (Center for State and Local Government Excellence)
Sponsored by: National Institute of Pension Administrators
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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) |
Links to Items on Executive Comp, Benefits in General
Leading Edge Solutions for Leveraging an Aging Workforce (PDF)
32 pages. Excerpt: "Following an introduction to the overriding concerns related to the changing workforce, each section includes a short case study of what an organization has done in this area. These cases are used as the starting point to identify lessons learned and insights from other companies that have tried programs in these areas. The last section draws overall conclusions and recommendations for action." (MetLife Inc.)
Milliman's Monthly Benefit News and Developments, November 2007 (PDF)
2 pages. The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee benefits. (Milliman)
Stock and Option Proportions in Executive Compensation
Excerpt: "There is controversy about the relative merits of stock and options in executive compensation in terms of their efficiency in providing incentives. Some observers contend that stock is the more efficient mechanism for providing the desired incentives, while others reach the opposite conclusion. There is currently no consensus on this point in the literature. This paper proposes a simple model to address this issue. We conclude that there is an important role for both stock and options in the optimal contract. The model indicates that firms with higher volatility should use more options in compensating their executives." (Social Science Research Network)
Newly Posted Events
Annual Legislative Update:Wait Watchers v. the Proposed Cafeteria Plan Regs and the Final Buzz on 403(b) Plans
in Illinois on December 6, 2007
presented by WEB - Chicago West
Hospitals and Convenient Care: The Financial, Legal and Marketplace Landscape
in California on December 6, 2007
presented by Healthcare Web Summit
Newly Posted Press Releases
"Savingsman" PSA Captures National Emmy Award
Employee Benefit Research Institute (EBRI)
NAVCP Member Medical Advisor Roundtable Consensus Paper Explores Challenge Of Education Consumers On The Value Of Vision Care Plans
National Association of Vision Care Plans (NAVCP)
Newly Posted or Renewed Job Openings
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Employee Benefits Associate Washington Office
for Morgan, Lewis and Bockius LLP
in DC
Employee Benefit Attorney With at Least 2 Years Experience
for Chang, Ruthenberg & Long PC
in CA
Employee Benefit Attorney With at Least 5 Years Experience
for Chang, Ruthenberg & Long PC
in CA
Employee Benefit Attorney With ESOP Experience
for Chang, Ruthenberg & Long PC
in CA
Plan Document Specialist
for Kravitz - Louis Kravitz & Associates
in ANY STATE, CA
OmniPlus Users
for Casco Bay Benefits Group
in ANY STATE
Regional Compliance Manager
for Transamerica Insurance and Investment Group
in CA
Product and Marketing Manager, TIIG International
for Transamerica Insurance and Investment Group
in CA
Benefits Product Manager - Bradenton - 989119
for Gevity
in FL
Plan Review and Enrollment/Communications Specialist
for Pension Specialists, Inc.
in CA
Defined Contribution Plan Administrator
for Alliance Benefit Group of Michigan, Inc.
in MI
Health and Welfare Analyst
for Affiliated Computer Services - Benefits Administration
in NJ
Data Project Administrator
for Vanguard
in PA
Retirement Compliance Testing Administrator
for Vanguard
in PA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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