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June 26, 2008

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

Today's sponsor is SunGard

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SunGard's Document Management Services

Do you have 500 or more defined contribution plans to restate for EGTRRA? Outsource them to us. SunGard’s expert Document Management Services (DMS) staff can work as your "invisible" back office resource to help you through the restatement process. Let us focus on your plan documents, so you can focus on growing your business. Contact Ellen Nasrallah at 800-326-7235, ext. 5968.

[Guidance Overview] IRS, DOL and PBGC Propose Guidance on PPA Changes for Multiemployer Plans (PDF)
7 pages. Excerpt: "The Pension Protection Act of 2006 included many provisions that significantly impact multiemployer pension funds. Three federal agencies have recently released guidance to help these funds comply with some of the PPA provisions as well as clarify other issues." (Buck Consultants)

[Guidance Overview] 403(b) Plan Terminations: FAQs
Excerpt: "[The] questions and answers address several of the more important issues regarding 403(b) plan termination." (SunGard)

[Guidance Overview] Supreme Court's Final Employment Decisions of the 2007 Term Are a Mixed Bag for Employers
Two of the Supreme Court Decisions dealt with ADEA issues: Meacham v. Knolls Atomic Power Laboratory (affirmative defense under ADEA) and Kentucky Retirement Systems v. EEOC (standard for discrimination claim under ADEA). (Winston & Strawn LLP)

DC DB-ification Picking Up Steam
Excerpt: "As [an] article from Investment News points out, several of the country's largest insurance companies have rolled out income products within 401(k) plans, and more are sure to follow. While the jury may still be out on how well these particular products fare, one thing seems clear to us: the trend to embrace the 'DB-ification' of defined contribution plans is accelerating." (Baker & Daniels)

IRS Benefits Tax Counsel Reeder Testimony on Individual Retirement Arrangements
Excerpt: "[W]e should not lose sight of the fact that IRAs generally are not as powerful of a retirement savings tool as other tax-qualified retirement plans, such as 401(k), 403(b) and other defined contribution plans and defined benefit plans. This is primarily because the restriction on pre-retirement distributions in such plans avoids much of the pre-retirement leakage that occurs in IRAs. We should not encourage employers to adopt IRA programs if they are instead willing and able to adopt these more sophisticated and flexible retirement plans to benefit their employees." (U.S. Department of the Treasury)

How Economic Conditions Affect Retirement Decisions
Excerpt: "[The] new trend toward later retirement is unlikely to reverse any time soon, as a recent survey showed a sharp drop in the share of workers confident they would be able to afford retirement, due to concerns about health care costs, the weakening economy, and declining home values." (Economic Policy Institute)

Study Shows Defined Contribution Plans Quickly Changing
Excerpt: "Once just a supplement to the pension system, defined-contribution plans such as 401(k)s are growing and changing fast as they evolve into a linchpin of Americans' retirement savings and offer increasingly innovative investment options, a new study indicates." (AP via The New York Times; free registration required)

Liability-Driven Investing Can Reduce Pension Plan Funding Volatility
Excerpt: "A new white paper from Vanguard Investment Counseling & Research -- Liability-Driven Investing: A Tool for Managing Pension Plan Funding Volatility -- uses a case-study approach to examine the benefits, risks, and practical implementation challenges of an unlevered, fixed income LDI strategy for pension plans." (The Vanguard Group, Inc.)

Are Pension Savings Sufficient? Perceptions and Expectations of American and Dutch Workers
Excerpt: "Despite marked differences in expected and needed pension replacement rates - where the Dutch replacement rates are systematically higher than the American rates - the perceived savings adequacy is more or less the same across Dutch and American workers. Moreover, individuals' perceived savings adequacy was found to be influenced by the three groups of factors: institutional forces, social forces and psychological dispositions." (Social Science Research Network)

Optimal Retirement Age
Excerpt: "This paper provides some background about demography, health, and retirement; summarizes how current pension laws influence the design of pension plans and the timing of retirement; and looks at the optimal retirement age from the perspective of employers, government, and workers." (New York University Review of Employee Benefits and Executive Compensation via Social Science Research Network)

Czech Republic Lawmakers Move to Raise Retirement Age to 65
Excerpt: "The lower house of Parliament approved a bill that would eventually raise the retirement age to 65, a key step in the government's efforts to avoid a collapse of a pension system strained by an aging population." (Reuters via The New York Times; free registration required)

The Efficiency of Pension Plan Investment Menus: Investment Choices in Defined Contribution Pension Plans
Excerpt: "Few previous studies have explored whether defined contribution retirement saving plans offer sufficiently diversified investment menus, though it is likely that these menus significantly shape workers' accumulations of retirement wealth. This paper assesses the efficiency and performance of 401(k) investment options offered by a large group of US employers." (University of Michigan Retirement Research Center)

Social Security Reform: Strategies for Progressive Benefit Adjustments (PDF)
12 pages. Excerpt: "This is the fifth in a series of Treasury issue briefs on topics related to Social Security reform. . . . This brief discusses the possible role that progressive reductions in scheduled benefits would play in Social Security reform." (U.S. Department of the Treasury)

Weston, Connecticut Nears Agreement with Eligible Employees on Payment Plan for Retirement Fund
Excerpt: "Local leaders are willing to cover all upfront costs associated with making four town employees eligible for Municipal Employees Retirement Fund benefits from the date at which they should have originally become part of the plan. All the four need to do now is agree to the Board of Selectmen's proposed repayment plan, which would allow each employee a certain time period to repay their portion of the eligibility cost." (The Weston Forum)

Changes to San Diego Pension Plan Would Cut Back Benefits for New Hires
Excerpt: "San Diego voters may get the chance in November to ratchet down retirement benefits for new city hires starting next year. The changes would increase the minimum retirement age, reduce the maximum benefit payout and cut the taxpayer contribution to the retirements of city workers almost by half." (San Diego Union Tribune)

'Recalibrating Retirement Spending and Saving'
Estimated publication date: September 2008. Excerpt: "The book offers readers an invaluable study of emerging issues regarding assets and expectations on the verge of retirement, including uncertainty regarding life expectancy and morbidity. Chapter authors include prominent academics, policymakers, and legal, financial, and economic practitioners." (Pension Research Council)

Pre-Retirees Need More Retirement Income Knowledge
Excerpt: "Individuals within five years of retirement failed miserably MetLife's second Retirement Income IQ Test, a national poll to gauge pre-retirees' knowledge of retirement income issues, scoring 43 on a scale of 100." (; free registration required)

MetLife Retirement Income IQ Study - A Survey of Pre-Retiree Knowledge of Financial Retirement Issues (PDF)
16 pages. Excerpt: "The 2008 Retirement Income IQ Survey results demonstrate some very concerning retirement income misconceptions with the overall average score just a 43 on a 100 point scale. Some particularly important findings centered on incorrect assumptions that could put many respondents at risk for outliving their assets in retirement." (MetLife Mature Market Institute)

Financial Literacy: An Essential Tool for Informed Consumer Choice?
Excerpt: "This paper demonstrates widespread financial illiteracy among the U.S. population, particularly among specific demographic groups. Those with low education, women, African-Americans, and Hispanics display particularly low levels of literacy. Financial literacy impacts financial decision-making. Failure to plan for retirement, lack of participation in the stock market, and poor borrowing behavior can all be linked to ignorance of basic financial concepts." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

Life-Cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk
Excerpt: "By employing leverage to gain more exposure to stocks when young, individuals can achieve better diversification across time. Using stock data going back to 1871, we show that buying stock on margin when young combined with more conservative investments when older stochastically dominates standard investment strategies--both traditional life-cycle investments and 100%-stock investments." (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)

[Opinion] Let's Stop Pretending That Pensions Don't Matter
Excerpt: "If retirement income security and the health care crisis, which are joined at the hip, are not dealt with soon, our nation will experience severe economic consequences we have not seen in quite a while." (Cypen & Cypen)

Sponsored by: Prudential

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Links to Items on Executive Comp, Benefits in General

[Guidance Overview] New Reporting Requirements for Employers with Corporate Owned Life Insurance (PDF)
Page 8 of 8 pages. Excerpt: "Taxpayers who hold employer-owned life insurance contracts that are subject to the requirements of Section 101(j) are required to file Form 8925 with their income tax return for each tax year ending after November 13, 2007." (The Cochlan Group)

[Guidance Overview] Accounting for Financing Assets of Nonqualified Benefit Plans (PDF)
Pages 6-7 of 8 pages. Excerpt: "When financed, there are typically two methods: mutual funds and Corporate Owned Life Insurance ('COLI'). Financing nonqualified benefit liabilities enables the company to establish an asset that offsets the liability, providing a certain level of comfort to plan participants." (The Cochlan Group)

[Guidance Overview] Interim CEO Did Not Qualify As 'Outside Director' for Purposes of Performance-Based Pay Rules
Excerpt: "IRS Reg. §1.162-27(e)(3)(i) provides that an 'outside director' must not have been an officer of the publicly held corporation, among other requirements. Under the facts and circumstances presented, the interim CEO acted with the full authority of an officer and was, therefore, barred from participating on the compensation committee as an outside director, the IRS concluded." (Wolters Kluwer)

Federal Pay and Benefits Watch
Excerpt: "Here's a look at several pieces of current legislation that would affect the pay and benefits of feds . . . ." (

Fifth Report of Results from Sibson's 2006 Rewards of Work Study: Keys to Retaining and Engaging Employees in Different Age Groups (PDF)
4 pages. Excerpt: "For the last decade, Sibson Consulting has focused our Rewards of Work Study around gaining an understanding of how employees feel about their work. What motivates employees? What retains them? What attracts them? These questions have represented the core of what Sibson Consulting considers the 'Rewards of Work.'" (The Segal Group, Inc.)

[Opinion] A Retirement Income Solution - Create a Senior Class of Worker
Excerpt: "To get back to the real world, employers will need incentives to hire older workers. So here's my plan, inspired in part by this article in last Sunday's New York Times: create a 'senior class' of employee for those 62 and up. Employers would no longer have to contribute their share of Social Security taxes for such employees 62 and over -- although employees would continue contributing their share and continue to earn credit for paying into the system." (Investment News; free registration required)

Newly Posted Events
(Post Yours!)

AIF and AIFA Training Programs
in California on July 28, 2008
presented by Fiduciary360 (fi360)

Newly Posted Press Releases
(Post Yours!)

U.S. Labor Department Testifies Before House Ways and Means Subcommittee About Employer-Sponsored Individual Retirement Arrangements
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

CEFEX Advisor Certification Now Renders Legal Opinion on Compliance
Centre for Fiduciary Excellence (CEFEX)

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DC/401(k) Plan Administrator
for San Diego TPA
in CA

Administrator for Retirement Plan and ERISA Specialists
for Dana Consulting Group, Ltd.
in IL

Plan Administrator/Trust Accountant
for Thomas F. Barrett, Inc.
in DC, MD, VA

Employee Benefits Account Executive
for Van Gilder Insurance Corporation
in CO

Client Development Manager, Special Markets
for Transamerica Retirement Services
in CA

TRS Marketing Investment Manager
for Transamerica Retirement Services
in CA

Actuary/Pension Plan Consultant
for The Weiss Group, Inc.
in IL

Client Relationship Consultant
for Gallagher Retirement Services
in IL

Trust Administrator
for Comerica
in MI

Consultant, Non-Qualified Deferred Compensation
for National Rural Electric Cooperative Association (NRECA)
in VA

Compliance Analyst - Retirement Services
for Transamerica Retirement Services
in CA

Pension Plan Operations Representative
for Transamerica Retirement Services
in CA

DC Testing Specialist
for Kravitz - Louis Kravitz & Associates

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