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September 24, 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.

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[Guidance Overview] DOL Proposed Regulations on Investment Advice and Proposed Class Exemption from the ERISA Prohibited Transaction Rules (PDF)
6 pages. Excerpt: "These regulations are proposed to be effective 60 days after publication of the final regulations in the Federal Register. To be considered, written comments on the proposed regulations must be submitted to the DOL by October 6, 2008." (Transamerica Center for Retirement Studies)


[Guidance Overview] Beware of the Prototype Plan Amendment (PDF)
1 page. Excerpt: "Employers should carefully review any amendment to their adoption agreements to make certain any default and elective provisions are consistent with the plans' operations. Often there are legal implications associated with plan amendments and employers are encouraged to consult with legal counsel and other advisors regarding the significance of the amendments." (Seyfarth Shaw LLP)


[Guidance Overview] 2008 Presidential Election: Candidates' Retirement and Select Tax Policies, Updated 9/22/2008 (PDF)
6 pages. Excerpt: "A number of proposals already included in candidates' campaigns have the potential to affect employer-provided health benefits, hiring practices, leave of absence policies, payroll, and employer-sponsored retirement plans." (Hewitt Associates)


[Guidance Overview] Interoffice Memo on IRS Final Regulation on Definition of Normal Retirement Age (PDF)
6 pages. Excerpt: "This is a briefing paper describing the IRS's final regulation to amend the definition of normal retirement age, which significantly affects Nevada's Public Employees' Retirement System (PERS). I've written this to be basic and easy to digest; it does not contain all of the nuances such a regulation evokes." (City of Henderson, Nevada, via Web Commanders)


[Guidance Overview] Do You Have a Pension Funding Policy . . . and Is It Working?
Excerpt: "In this Perspective we look at why plan sponsors must take a more strategic and proactive approach to pension funding and why contributing just the minimum may not be a viable funding policy." (Mercer LLC)


[Guidance Overview] Long-Awaited Update to Employee Plans Compliance Resolution System
Excerpt: "Rev. Proc. 2008-50 retains the basic structure and operation of [the Employee Plans Compliance Resolution System], but adds several new correction methods for common plan qualification failures and makes numerous, mostly liberalizing, technical and procedural changes." (Deloitte via BenefitsLink.com)


Present Law and Background Relating to the Pension Benefit Guaranty Corporation (PDF)
42 pages. Excerpt: "The Subcommittee on Oversight of the Committee on Ways and Means of the House of Representatives has scheduled a [September 24, 2008] public hearing on the Pension Benefit Guaranty Corporation ('PBGC'). This document, prepared by the staff of the Joint Committee on Taxation, provides a description of present law regarding the PBGC." (U.S. Joint Committee on Taxation)


Chart: The Benefits of Delaying Retirement (PDF)
1 page. Excerpt: "You may start receiving Social Security benefits as early as age 62. But for full benefits, you have to wait until full retirement age. Work beyond that age, and there is a benefit increase." (Women’s Institute for a Secure Retirement)


An Examination of Retirement Income Adequacy Measures and Factors Affecting Retirement Preparedness
Excerpt: "This article uses a consistent methodology to estimate several retirement income adequacy measures for households that participate in two national surveys. In addition, we examine the impact of a variety of factors on retirement preparedness. We find that Survey of Consumer Finances households have higher income replacement rates, but lower consumption replacement rates, than Health and Retirement Survey households. We also find that replacement rate estimates are sensitive to the treatment of home equity and assumed retirement age." (Social Science Research Network)


Employers Balk at Proposed International Pension Accounting Rules, Survey Finds
Excerpt: "[A] recent survey by Watson Wyatt Worldwide revealed that many companies are not familiar with the IASB's proposed changes to IAS19, its standard for accounting for employee benefits, and the majority of those that are do not support its proposal. However, employers do believe that changes to current pension accounting standards are necessary." (Wolters Kluwer)


Texas and Louisiana Plans Get More Form 5500 Filing Time
Excerpt: "Federal regulators are giving plan sponsors in states along the Gulf of Mexico hit hard by Hurricane Ike more time to file their annual Form 5500 report. The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) announced a new January 5, 2009, deadline for: plans in Texas required to file their Form 5500 between September 7, 2008 and January 5, 2009; and plans in Louisiana due between September 11, 2008, and January 5, 2009." (PLANSPONSOR.com; free registration required)


Delphi Wins Court Nod to Freeze Pension Contributions, According to Wall Street Journal
Excerpt: "The company will provide workers with replacement plans based on defined contributions by Delphi, the paper said. Judge Robert Drain of the U.S. bankrup.tcy court in Manhattan approved the request over an objection from the committee representing unsecured creditors, the paper said. Delphi is also planning to ask Judge Drain to shift $3.4 billion in pension liabilities to General Motors Corp . . ., according to the report." (Reuters)


Market Gyrations Last Week Trigger Shift of Retirement Savings Into Fixed-Income Funds
Excerpt: "It takes a lot to scare workers into making sudden changes to their 401(k) plans, yet droves of participants moved their retirement assets around last week as the volatile equity markets became too much for many to stomach. Participants in 401(k) plans fled from equity funds and moved investments into safer fixed-income investments last week as manic market conditions and an uncertain economy rattled many workers, said Pam Hess, director of retirement research at Hewitt Associates." (Financial Week; free registration required)


[Opinion] NCPERS Responds to Editorial Attack on Public Employee Defined Benefit Plans
Excerpt: "The Las Vegas Review-Journal [on September 23, 2008] wrote an editorial calling for the elimination of defined benefits for future public employees and increasing the age at which public employees may retire. To view NCPERS' response, [see http://ncpers.org/News/PageText/documents/LVRJ_Response092308.pdf]." (National Conference on Public Employee Retirement Systems)


[Opinion] Letter from Congressmen to Treasury on End-of-Year Valuation Pension Plans (PDF)
3 pages. Excerpt: "In a September 23, 2008 letter, Chairmen Rangel and Baucus, and Ranking Members McCrery and Grassley asked Treasury to permit end-of-year valuation pension plans to determine final 2008 AFTAPs based on December 31, 2007 valuation results." (American Society of Pension Professionals & Actuaries)


[Opinion] Plan Sponsors and the Effort to Meet New Obligations Concerning 401(k) Fees
Excerpt: "The U.S. Department of Labor is working on three significant regulatory projects regarding 401(k) fees . . . . These involve the Form 5500 (Annual Report), especially Schedule C; the ERISA section 408(b)(2) regulations; and the recently released amendments to the participant disclosure requirements in the ERISA section 404(a) and 404(c) regulations. All of these involve extraordinarily complex issues. However, the biggest issue plan sponsors and service providers are facing is time (or the lack thereof)." (PLANSPONSOR.com; free registration required)


[Opinion] Are State Officials Risking Public Employee Retirement Benefits by Playing Global Warming Politics?
Excerpt: "We conclude that state and local pension fund administrators who promote or ignore global warming regulation may be contributing to undesirable economic conditions that will adversely impact the portfolios they manage. Moreover, pension administrators who are promoting global warming regulation appear to be doing so for partisan political purposes. This could be considered a breach of their fiduciary responsibility. We recommend that, unless global warming regulation can be justified as a significant benefit to the broad economy and stock market, state and local pension fund administrators actively oppose it." (The National Center for Public Policy Research)


[Opinion] A Lesson from the Crash of 2008: The Misguided Paternalism of the Qualified Default Investment Alternative
Excerpt: "In this article, [Edward] Zelinsky discusses the federal government's promotion of common stock investments for 401(k) participants. He suggests that, in light of the Crash of 2008, that promotion constitutes misguided paternalism." (Oxford University Press USA)



Sponsored by: SPARK and The SPARK Institute

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Banner ad for SPARK and The SPARK Institute

Register Now for the 2008 SPARK Forum, Nov. 2-4 at The Breakers

The 2008 SPARK Forum is the retirement plan industry’s premier event for executives, managers, and professionals to increase their knowledge, network with peers and enjoy golf, fishing and other events at the beautiful Breakers Resort in Palm Beach, Florida. In more than a dozen sessions, you’ll gain insights into the latest business, marketing and sales strategies, market trends, and legal issues. Special sessions have been planned for TPAs and financial advisors. You’ll also hear from TV finance commentator and author Terry Savage, and learn valuable selling techniques from author Paul Karasik.

(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

[Official Guidance] Correction to Final IRS Regs on Application of Section 409A to Nonqualified Deferred Compensation Plans
The correction is effective September 24, 2008 and applicable on April 17, 2007. Concerns the amount of compensation deferred before January 1, 2005 under a nonqualified deferred compensation plan that is a nonaccount balance plan as defined in Sec. 1.409A-1(c)(2)(i)(C). (Internal Revenue Service)


[Guidance Overview] San Francisco Mandates Employers to Provide Transportation Benefits (PDF)
2 pages. Excerpt: "On August 22, 2008, San Francisco Mayor Gavin Newsom signed into law Ordinance No. 199-08, which requires covered employers to offer their San Francisco employees at least one of three transportation benefit options. The law is the first of its kind in the United States. It was added as Section 421 of the San Francisco Environment Code, and is effective September 22, 2008. Employers are required to have an appropriate transportation benefit program in place within 120 days of the effective date, that is on or before January 19, 2009." (Seyfarth Shaw LLP)


[Guidance Overview] Administrative Law Analogies After MetLife v. Glenn
Excerpt: "Thus far, . . . administrative law analogies have all been focused on efficiency goals, such as, for example, the exhaustion of administrative remedies requirement. After Glenn, one might expect to see other applications where the concern is the integrity of the administrative record." (Health Plan Law blog by Attorney Roy F. Harmon III)


[Guidance Overview] IRS's Priority Guidance Plan for 2008-2009 Guidance Year
Excerpt: "The [target page] discussion highlights some of the more significant pieces of guidance in the PGP and provides insights beyond the brief descriptions in the PGP. The complete employee benefits section of the PGP is reproduced at the end of this article." (Deloitte via BenefitsLink.com)


[Guidance Overview] Update on Automatic Changes in Accounting for Employee Bonuses under Revenue Procedure 2008-52
Excerpt: "IRS Revenue Procedure 2008-52 created a new automatic accounting method change for certain employee bonuses effective for change requests filed on or after August 18, 2008 for a year of change ending on or after December 31, 2007. At the time, it was not clear whether the IRS would allow automatic changes under the revenue procedure when an employer had been taking deductions under an impermissible accounting method. IRS officials have now indicated that they will allow automatic changes under Revenue Procedure 2008-52 in certain common situations." (Deloitte via BenefitsLink.com)


World Economic Forum and Mercer Report on an Ageing Population and the Impact on Business
Excerpt: "The ratio of elderly persons to the working age population will dramatically increase in coming years in many parts of the world. With a declining labor force, an ageing population and looming health care and pension benefits, employers will play a critical role in shaping public policy and addressing these concerns. The World Economic Forum, in partnership with Mercer, has just published 'The Future of Pensions and Healthcare in a Rapidly Ageing World: Scenarios to 2030'. The report addresses important questions such as: What will the state of pensions and health care look like in the year 2030, taking key drivers and critical uncertainties into account? What might be the role of governments, the private sector and individuals in the year 2030?" (Mercer LLC)


The Future of Pensions and Healthcare in a Rapidly Ageing World – Scenarios to 2030 (PDF)
115 pages. Excerpt: "The World Economic Forum's report The Future of Pensions and Healthcare in a Rapidly Ageing World – Scenarios to 2030, indicates that new forms of collaboration between key stakeholders – individuals, financial institutions, healthcare providers, employers, and governments - will be critical to finance the ongoing well-being of current and future generations in a sustainable manner." (World Economic Forum)


[Opinion] British Reaction to Crash of 2008 and Bonus Pool for Lehman Executives
Excerpt: "Up to 10,000 staff at the New York office of the bankrupt investment bank Lehman Brothers will share a bonus pool set aside for them that is worth $2.5bn (£1.4bn), Barclays Bank, which is buying the business, confirmed last night. The revelation sparked fury among the workers' former colleagues, Lehman's 5,000 staff based in London, who currently have no idea how long they will go on receiving even their basic salaries, let alone any bonus payments. It also prompted a renewed backlash over the compensation culture in global finance, with critics claiming that many bankers receive pay and rewards that bore no relation to the job they had done." (Workplace Prof Blog)


[Opinion] American Benefits Council Letter to Senate Banking Committee Regarding Executive Compensation and the Financial Relief Program (PDF)
2 pages. Excerpt: "I am writing to express the concerns of the American Benefits Council (the Council) regarding unknown and potentially unforeseen negative implications of the executive compensation restrictions under consideration for inclusion in legislation responding to the current crisis in our financial markets. . . . We appreciate that policymakers are concerned about the executive compensation practices at certain distressed financial institutions that are the focus of the current legislation. Yet we urge you not to add broad restrictions on executive compensation to the legislation, at this time, due to the potential to undermine the effectiveness of the critically important asset purchase program that the legislation would establish." (American Benefits Council)




Newly Posted Press Releases
(Post Yours!)

Congressional Leaders Urge Paulson to Adopt ASPPA Pension Measures
ASPPA (American Society of Pension Professionals & Actuaries)

Annual Benchmark Employer Survey Finds Family Premiums Rose to $12,680 This Year, With Many Workers Facing Higher Deductibles
Kaiser Family Foundation

AARP: Cornell University Tops 2008 List Of Best Employers For Workers Over 50
AARP

AARP International Innovative Employer Award Debuts With Ten Winners From Four Countries
AARP

Council Applauds Mental Health Parity Agreement
American Benefits Council

Republican Presidential Candidate Senator John McCain Releases Statement on ESOPs
ESOP Association

OppenheimerFunds, Inc.'s Retirement Services Enhances Pinnacle and Record(k)eeper Pro(SM) Programs
OppenheimerFunds, Inc.

Public Employee Pensions Endangered by State Officials Playing Global Warming Politics, New Report Says
National Center for Public Policy Research



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Pension Administrator
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for Retirement Alliance
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Benefits Account Manager
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Client Relationship Administrator - Defined Benefits
for Vanguard
in PA

Sr Calc/Complex Spec
for Prudential Financial
in CT

NCHS/AcademyHealth Health Policy Fellowship
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in MD

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in NY

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