Retirement Plans

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January 2, 2008

Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy.

Today's sponsor is DATAIR Employee Benefit Systems, Inc.

(Click on company name or banner to learn more.)
Banner ad for DATAIR Employee Benefit Systems, Inc.

Software for 401(k), Pension and Flex Administration

Pick and choose the software modules you need: DC/401(k) Proposals & Administration -- DB Proposals & Administration - Retirement Plan Documents (Prototype and Volume Submitters) - Government Forms (5500s, 1099-Rs, 5300s) - Cafeteria Plan Administration & Documents - Participant Termination Calculations - FAS 132 Reporting

Contact or call 1-888-328-2474.

(a) New Guidance Documents

Advisory Opinion 2007-07A: Fiduciaries Have No Business Using Proxy Power to Further Political or Policy Issues
Excerpt: "[T]he use of pension plan assets by plan fiduciaries to further policy or political issues through proxy resolutions that have no connection to enhancing the value of the plan’s investment in a corporation would, in the view of the Department, violate the prudence and exclusive purpose requirements of section 404(a)(1)(A) and (B)." (U.S. Employee Benefits Security Administration)

(b) News

Court Dismisses WaMu Cash Balance Plan Discrimination Claim
Excerpt: "The U.S. District Court for the Western District of Washington has dismissed claims by a group of Washington Mutual employees that the company's cash balance plan benefit formula discriminates against participants based on age." (; free registration required)

Court Approves Suspension of Retirement Benefits for Employed Participant
Excerpt: "The U.S. District Court for the Western District of Wisconsin has approved a pension fund's suspension of retirement benefits for a former participant whom it discovered was engaged in 'plan-related employment.'" (; free registration required)

United Kingdom Pension Schemes Likely to Have to Pay Increased General and Pension Protection Fund Levies, Effective April 1, 2008
Excerpt: "Draft regulations recently released by the Department for Work and Pensions (DWP) propose increasing the general levy for most funds by around 35 percent for the period 2008-2009. This would be the first general levy increase since 2005." (Watson Wyatt Worldwide)

Australian Government to Hold Superannuation Accounts of Temporary Residents
Excerpt: "Beginning on July 1, 2008, the government will collect superannuation contributions for temporary residents and hold the proceeds in accounts on behalf of those workers. The policy change sparked questions about whether temporary residents will be eligible for superannuation-related insurance policies in the future." (Watson Wyatt Worldwide)

In United Kingdom, New Personal Retirement Accounts, Automatic Enrollment Requirements Proposed
Excerpt: "Yet another phase in the United Kingdom's seemingly continuous program of pension reform was introduced in Parliament on December 5, 2007. Among other efforts to improve retirement security, the Pensions Bill would create new personal retirement accounts and require employers to enroll workers automatically in retirement plans." (Watson Wyatt Worldwide)

(c) Summaries of Guidance; Filed Comments

Chart: 401(k) Fee Litigation Status
Excerpt: "[A look at] where cases involving alleged unreasonable fees and other ERISA violations stood as of November 2007." (Workforce Management; free registration required)

(d) Trends, Surveys, Research

Which QDIA Is Best Depends on the Type of Plan, Its Participants, and What the Advisor Prefers
Excerpt: "[W]hich QDIA is best? It depends on the type of plan being managed. For instance, with a 'clustered' plan that includes participants of about the same age and risk tolerance, [Lou] Harvey says a balanced fund would be the easiest to administer. For a 'grossly segmented' plan, in which there are participants of different age groups working for a small firm, a target date fund fits best, he says. Managed accounts are most suitable for large plans with thousands of diverse and unclustered participants. This type of plan is the most difficult to administer, Harvey says, but the advisor can collect the most fees from it." (investment Advisor)

(e) Policy, Opinion, Advocacy

A White Paper on the 401(k) Security Act (PDF)
29 pages. Excerpt: "When we do the math, it appears that the average American has saved less than one fifth of what he or she needs for a secure retirement. Here's why: to make a 401(k) account provide the same benefit as a defined benefit plan, pension actuaries say that the retiree needs a multiple of 10 to 12 times their annual salary (or average salary) right before retirement -- that is, 'final pay.' Currently, the average American head of household between age 62 and 65 only has about $110,000, if you add the median 401(k) account balance to the median rollover IRA balance -- or less than twice the median salary of $61,600 for that age group." (Jane White via

Opinion: My (John Edwards) Plan for Mandatory Retirement Accounts
Excerpt: "As president, I will create a new universal retirement account requiring every business to automatically enroll its workers in at least one plan: a traditional pension, a 401(k) or an IRA. Workers will be able to choose to have their contributions deducted automatically from their paychecks, and they will be able to carry these accounts with them from job to job." (John Edwards via The Wall Street Journal)

Hewitt Federal Legislation Quick Guide Updated as of December 26, 2007, for Retirement Plans (PDF)
12 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding retirement plans. (Hewitt Associates)

Retirement Income Technology Leaves Much to Be Desired
Excerpt: "Complaints about current retirement income technology range from a belief that the software is too simplistic to the products being thinly veiled sales tools. For the most part, the current crop of software programs aimed at helping financial advisors manage their clients' assets through retirement fall short of their goals." (Workforce Management; free registration required)

Links to Items on Executive Comp, Benefits in General

SEC Allows More Use of Simpler Options Expensing
Excerpt: "An SEC news release said its Staff Accounting Bulletin (SAB) 110 permits the simplified method of valuing stock option grants for income statement purposes if the company's historical experience is not enough to allow a more involved calculation. The agency said without the new SAB, eligible public companies would have lost the option to use the simplified method as of December 31, 2007.' (; free registration required)

Working Past Retirement Age Brings Benefits and Challenges
Excerpt: "Having a continuing income is a decided advantage of postponing retirement, whether you work in the same field as before retirement age or change roles altogether. Working longer increases lifetime earnings, Social Security payments - when those payment are deferred - and employer-sponsored pension credits. It also shortens the period over which lifetime savings must be spread." (Oregon Live LLC)

As Boomers Near Retirement, a Brain Drain Is Feared in Government
Excerpt: "Baby boomers -- usually defined as those born between 1946 and 1964 -- are top managers at many institutions in this country. If they retire in waves, observers warn, they could leave unprepared organizations scrambling to find qualified executives and middle managers. Some observers worry particularly about government." (The Austin American-Statesman)

SEC Tool Allows Investors to Compare Company Executive Compensation Data
Excerpt: "Securities and Exchange Commission (SEC) Chairman Christopher Cox has launched the first-ever online tool that enables investors to see what 500 of the largest American companies are paying their top executives. According to an SEC news release, the Executive Compensation Reader - available on the SEC's Web site at - builds on the Commission's new executive compensation disclosure requirements that went into effect earlier this year." (; free registration required)

Hewitt Federal Legislation Quick Guide for December 26, 2007, on Human Resources & Employment Law (PDF)
13 pages. This Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding human resources and employment law. (Hewitt Associates)

EBSA FY 2007 Enforcement Efforts Capped by 32% Increase in Indictments
Excerpt: "Examples Of ERISA Civil Violations[:] Failing to operate the plan prudently and for the exclusive benefit of participants. Using plan assets to benefit certain related parties to the plan, including the plan administrator, the plan sponsor, and parties related to these individuals. Failing to properly value plan assets at their current fair market value, or to hold plan assets in trust. Failing to follow the terms of the plan (unless inconsistent with ERISA). Failing to properly select and monitor service providers. Taking any adverse action against an individual for exercising his or her rights under the plan (e.g., being fired, fined, or otherwise being discriminated against)." (Health Plan Law blog by Attorney Roy F. Harmon III)

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for Great-West Retirement Services
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