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June 30, 2008

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

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[Guidance Overview] Supreme Court OKs Employer Use of Age as a Factor In Pension Plans
Excerpt: "What does this decision mean for public and private employers going forward? Basically, it means that public workers in Kentucky and states with similar pension plans can continue to rely on the promise of disability retirement benefits if they become disabled. It also means that public and private employers who feared their plans were implicated by the Kentucky Retirements Systems case -- a number estimated at 2,700 employers and 25 million affected workers -- do not have to cut benefits, increase employer contributions, or otherwise restructure their plans to bring them into compliance with the ADEA." (Porter Wright Morris & Arthur LLP)

[Guidance Overview] High Court Allows Different Calculations for Disability and Age-Related Retirements
Excerpt: "A state retirement system did not violate the Age Discrimination in Employment Act (ADEA) by crediting young workers with additional years of service in calculating disability retirement benefits, according to a June 19 Supreme Court decision (Kentucky Retirement Systems et al. v. Equal Employment Opportunity Commission, No. 06–1037)." (Wolters Kluwer)

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated June 25, 2008, for Retirement Plans (PDF)
6 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)

[Guidance Overview] IRS Private Letter Ruling Allows IRA Beneficiary to Take Distributions Over Her Lifetime
Excerpt: "In the private letter ruling, the IRS stated that 'the issue to be addressed is whether the failure to timely take certain required distributions requires that distributions from either IRA X or IRA Y (or both) be made in accordance with the five-year rule of Code section 401(a)(9)(B)(ii).' IRS ruled that the answer was no." (Financial Planning)

[Guidance Overview] IRS Newsletter Identifies Common Electronic Record Retention Problems and Reviews Requirements
Excerpt: "Plan sponsors should routinely review their record retention policies, including service contract provisions, to ensure that they address record retention and retrieval. As the newsletter points out, changing service providers or failing to make adequate provision for IRS examination disclosures will not relieve taxpayers of their obligation to produce records." (Employee Benefits Institute of America)

Defined Benefit Plans May Make Comeback in Next Several Years As Recruitment and Retention Tool
Excerpt: "While many companies have frozen their defined-benefit retirement plans, they haven't terminated them, partly because they want the option of making them available again. Some companies see the plans as a way to attract and retain talent as baby boomers retire." (Workforce Management; free registration required)

2008 PLANSPONSOR Recordkeeping Survey
Excerpt: "[A] quick comparison of the providers in PLANSPONSOR's inaugural recordkeeping survey 10 years ago, with the listings that follow, attests. Most of those now 'missing,' like old soldiers, passed quietly (unless, of course, your plan had to find a new home in a hurry), and most that have chosen to do so, did so with grace." (; free registration required)

PLANSPONSOR 2008 Essential Guide to Asset Allocation Offerings
Excerpt: "As we did last year, both date-based and risk-based offerings are presented, along with their wrap fee and their underlying fund structure. We also have included total fund family assets as of December 31, 2006, and 2007. If nothing else, you will gain a quick sense of just how far -- and how fast -- these offerings have grown." (; free registration required)

New Jersey Budget Cut but Leaves 'Pink Elephant' of Pensions
Excerpt: "Gov. Jon S. Corzine and the Democratically controlled state legislature accomplished a legislative coup of sorts last week when they approved a $32.9 billion state budget that is actually $600 million lower than the current year's budget, and that for the first time cuts back on pension and health benefits for new state workers and public school teachers." (The New York Times; free registration required)

Keller Rohrback starts ERISA investigation against UBS
Excerpt: "Keller Rohrback has commenced an investigation against UBS for potential violations of the Employee Retirement Income Security Act, as amended. The investigation focuses on investments in UBS stock by the UBS Savings and Investment Plan." (Insurance Business Review)

Vanguard Determines Many 401(k) Portfolios Out of Whack
Excerpt: "A new study from the Vanguard Center for Retirement Research (CRR) found only 43% of the nearly three million 401(k) accounts examined had the proper amount of equity exposure." (; free registration required)

Study Finds UK Pension Accounting Does Not Capture All Risks
Excerpt: "Giving employers 20 years instead of 10 to bring their pension plans up to full funded status would allow U.K. companies to cut their annual pension contribution rate by 94%, a new study found." (; free registration required)

The Impact of PPA on Retirement Savings for 401(k) Participants (PDF)
24 pages. Excerpt: "Modeling of auto-enrollment results: This Issue Brief simulates (under several assumptions) the likely impact of 401(k) plan sponsors switching from voluntary enrollment systems to automatic enrollment designs with automatic escalation of contributions for a significant portion of workers (not just current 401(k) participants or those eligible to participate)." (Employee Benefit Research Institute)

Compromise Reached on San Diego, California, Pension System Overhaul
Excerpt: "Mayor Jerry Sanders and City Council President Scott Peters Wednesday reached a compromise on competing ballot initiatives aimed at overhauling San Diego's pension system. The compromise would create a hybrid pension plan for newly hired, nonpublic safety employees that combines a conventional retirement plan with a 401(k)-type savings plan." (City Wire via

Kentucky Governor Signs Pension Reform Bill
Excerpt: "[Governor] Beshear signed into law House Bill 1, the Pension Reform Act. Counties, cities and school districts are expected to receive immediate savings of about $56 million, and the state's unfunded pension liability is expected to decrease by billions of dollars, the governor's office said in a news release." (Business First of Louisville;; free registration required)

More Investors Tapping Retirement Funds Putting their Long-Term Financial Health at Risk
Excerpt: "The number of investors hitting up their retirement accounts appears to be on the rise. The Transamerica Center for Retirement Studies reports that the number of workers with loans outstanding on retirement accounts, such as 401(k) plans, rose to 18 percent in 2007 from 11 percent a year earlier. Anecdotal reports from financial advisers have also shown increases." (AP via The Washington Post; free registration required)

[Opinion] It's Good to See Some Florida Cities Scrapping Costly Pension Systems
Excerpt: "Leesburg is the latest Central Florida city to recognize its pension plan -- which grew during the boom years -- is getting harder and harder to support as retirees live longer and investments take a dive. Leesburg commissioners wisely decided to cap pensions and begin providing employees the government's equivalent of a 401(k) plan that most businesses adopted years ago." (Orlando Sentinel)

[Opinion] Legislative Pension Mandates Drain Florida's Municipal Budgets
Excerpt: "[A] bill passed by the 2006 Legislature expanded worker's compensation and pension-disability benefits for law enforcement, firefighters and emergency medical technicians. Everyone values the service provided by these public employees. They put their lives on the line everyday. I appreciate their valor and commitment to serve. But ultimately the question becomes: Who is going to pay for these state-mandated benefits? The answer is, your city government and residents." (Miami Herald)

[Opinion] Yes, A Public Pension Can Be Forfeited
Excerpt: "As Upton Sinclair might have said: It is difficult to get a man to understand something when their pensions depend on not understanding it. So it is when government lawyers study whether public pensions are secure. They really want to believe they are. Based on my reading of the New Jersey state constitution, I don't. Here's how I see it playing out." (

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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

[Guidance Overview] Hewitt Federal Legislation Quick Guide Updated June 25, 2008, on Human Resources & Employment Law (PDF)
9 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)

New Jersey High Court Approves Forfeiture of Executive Incentive
Excerpt: "New Jersey's Supreme Court gave its stamp of approval to employee stock-purchase compensation plans that carry forfeiture provisions if participants quit before fully vesting." (; free registration required)

Is It Worth Ramping Up Relocation Packages to Entice People to Move?
Excerpt: "In the Weichert study, 27 percent of companies said they are increasing relocation benefits in 2008 to entice new hires into new locations. In a similar study of 50 companies surveyed by Valhalla, N.Y.-based Prudential Relocation's Global Consulting Group, 58 percent said they have made changes or plan to change their relocation policies to address today's market." (Human Resource Executive Online)

Employers Try to Ease Workers' Commuting Costs (PDF)
4 pages. Excerpt: "[A] growing number of companies have undertaken a variety of initiatives to ease the commuting burden for employees." (Hewitt Associates)

[Opinion] Susan Mangiero Asks: Will Tubbies Get Fewer Benefits?
Excerpt: "While I'm the last to make a value judgement about weight, some disturbing thoughts come to mind. How are longevity patterns (and the related cost of offering healthcare benefits and a traditional pension) impacted when plan participants are officially deemed overweight? Do employers experience lower costs if their pension plan covers mostly unhealthy participants? For employers that offer both health insurance and a defined benefit plan, do they deem an 'optimal' mix of healthy versus not so healthy plan participants? (This assumes that healthier individuals who live longer push pension costs up but keep a lid on healthcare benefit expenses.) Should employers figuratively serve 'in loco parentis' or does this expose them to allegations of discrimination?" (Pension Risk Matters)

Newly Posted Events
(Post Yours!)

403(b) Plan Workshop
in Texas on July 22, 2008
presented by SunGard Relius

403(b) Plan Workshop
in Illinois on July 23, 2008
presented by SunGard Relius

Cash Balance Plans Workshop
Nationwide on August 22, 2008
presented by SunGard Relius

Cross-Tested Plans Workshop
Nationwide on August 21, 2008
presented by SunGard Relius

EGTRRA Pre-approved Plan Workshop
in California on July 11, 2008
presented by SunGard Relius

EGTRRA Pre-approved Plan Workshop
in Virginia on July 14, 2008
presented by SunGard Relius

EGTRRA Pre-approved Plan Workshop
in Massachusetts on July 16, 2008
presented by SunGard Relius

HIPAA Privacy Refresher - Team Training Webcast
Nationwide on July 10, 2008
presented by International Foundation of Employee Benefit Plans

Preparing for FSA and COBRA Open Enrollment
Nationwide on July 24, 2008
presented by TRI-AD

Newly Posted Press Releases
(Post Yours!)

U.S. Labor Department Obtains Court Approval of Settlement Restoring $2.2 Million to Delphi Corp. Retirement Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Company Celebrates 75th Anniversary - And Shares the Secret behind their Success
McCready & Keene, Inc.

Unum Expands ''Simply Unum'' Offering to 41 States

TRS Named “Public Pension Fund Investor of the Year”
Teacher Retirement System of Texas (TRS)

OpenSRI to Launch the First Collaborative Web Platform on Socially Responsible Investments

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Retirement Plan Consultant
for Weaver and Tidwell, LLP
in TX

Retirement Plan Sales Consultant
for Charles Schwab
in TX

Retirement Plan Compliance Specialist
for Alliance Benefit Group-Mid Atlantic, LLC
in MD

Benefits Analyst
for Catholic Healthcare Partners
in OH

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