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October 16, 2008

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

Today's sponsor is ASPPA

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Banner ad for ASPPA

The ASPPA 401(k) SUMMIT, March 22- 24, 2009

Register now and be a part of this unique forum for retirement sales and investment professionals in the 401(k) arena. Hear Arthur Laffer discuss the condition of our new global economy, participate in interactive networking activities and specialized education tracks, and listen to our industry’s leaders discuss where the trends are taking us and how to be prepared. Don’t miss out on the longest running event dedicated solely to the sales and investment segment of our industry, register now.

[Official Guidance] U.S. Department of Labor Updates Fiduciary Guidance On Exercising Shareholder Rights And Investing In Economically Targeted Investments
Excerpt: "The U.S. Department of Labor [on Friday will issue] new guidance under [ERISA] clarifying the obligations of plan fiduciaries when considering shareholder rights and investments in economically targeted investments. The guidance [will be] issued in the form of two interpretive bulletins . . . to be published in the Oct. 17 edition of the Federal Register." (U.S. Department of Labor)

An Assessment of the U.K. Government's Reforms to Public Sector Pensions (PDF)
79 pages. Excerpt: "This report analyses the impact of the Government's public sector pension reforms for public sector employees, for the sustainability of the public sector schemes and for the comparison between pay and pensions in the public and private sectors." (Pensions Policy Institute)

Preparation for Retirement, Financial Literacy and Cognitive Resources
Excerpt: "Traditional economic models assume that individuals have full information and act perfectly rationally. However, we show that there is considerable variation in financial literacy in the population and propose modeling the acquisition of financial knowledge in a human capital production framework." (University of Michigan Retirement Research Center)

Are All Americans Saving 'Optimally' for Retirement?
Excerpt: "In this paper we briefly discuss evidence on the adequacy of retirement wealth accumulation. We conclude that existing descriptive evidence does not seem consistent with dire assessments of poor financial preparation. We then extend the straightforward, but computationally complex dynamic programming approach used in our earlier work to assess the adequacy of retirement wealth preparation of Americans born before 1954." (University of Michigan Retirement Research Center)

Early Retirement, Labor Supply, and Benefit Withholding: The Role of the Social Security Earnings Test
Excerpt: "The labor supply and benefit claiming incentives provided by the early retirement rules of the Social Security Old Age benefits program are of growing importance as the Normal Retirement Age (NRA) increases to 67, the labor force participation of Older Americans rises, and a variety of reforms to the Social Security system are considered. Any reform needs to take into account the effects and rationale of the Social Security Earnings Test and the Actuarial Adjustment Factor." (University of Michigan Retirement Research Center)

Market Turmoil Creates Anxiety Among DB Plan Sponsors; Some Brief Observations (PDF)
2 pages. (BDS Actuarial Services, Inc.)

Quarterly Pension Funding Update
6 pages. Excerpt: "The funded status of plans sponsored by S&P 1500 companies, as measured by US financial reporting standards, was 97 percent on September 30, 2008, which represents a deficit of $35bn. This compares to a funded status of 104 percent and a surplus of $60bn at December 31, 2007." (Mercer LLC)

Small Business Owners Want Control of their Social Security Accounts
Excerpt: "A news release about the survey commissioned by ING DIRECT's ShareBuilder 401k said the limited retirement plan availability makes small business workers even more reliant on Social Security benefits than their peers at larger companies. When it comes to Social Security, the poll found, two-thirds of small business owners want the opportunity to manage their own accounts. Some 67% of small business owners want their Social Security dollars automatically placed into a personal account while 33% would rather have an account that's managed and distributed by the government." (; free registration required)

Sponsors Not Yet Switching Vendors over Provider Fees
Excerpt: "While plan fees remain a red-hot issue for plan sponsors, a relatively small number of sponsors say they are likely to switch to cheaper fund alternatives or move their recordkeeper business. That was a key result of a new plan sponsor fee survey, according to a news release from Callan Investments Institute Research. Noting that most sponsors have at least calculated and benchmarked their fees in the last year, the Callan researchers reported that 34.8% of sponsors say they intend to renegotiate their recordkeeping fees and 27.7% are likely to further study the issue." (planadvisor)

[Opinion] TARP and ERISA Litigation
Excerpt: "Here's an interesting looking and timely webinar from West next week on the stock market meltdown, the bank bailout, and their effect on ERISA governed plans. The short version of their pitch for the webinar, which ought to be in 20 point type spread across a banner headline, is 'here come the breach of fiduciary duty lawsuits.' Overhyped? I doubt it. If the markets are down 40%, so are gazillions of dollars in 401(k) assets." (Stephen Rosenberg of The McCormack Firm, LLC)

[Opinion] Pension Aftershocks from the Market-Quake
Excerpt: "Some of the potential fallout from this bear market was first outlined in my January outlook for 2008, which discussed the likely impact on funding ratios and the actuarial debate around Financial Economics. With the market plunging even deeper than the historical averages I cited at that time, it's now necessary to think through the likely impacts on retirement-plan strategy and operations." (Girard Miller via Congressional Quarterly Inc.)

Sponsored by: National Institute of Pension Administrators (NIPA)

(Click on company name or banner to learn more.)
Banner ad for National Institute of Pension Administrators (NIPA)

Announcing NIPA’s Distribution Administrator Certificate Program

NIPA’s Distribution Administrator Certificate Program is designed to help fill the industry’s need for training entry-level staff who typically handle distributions. This program is also comprehensive enough to help pension administrators with more experience to broaden their understanding of the ever-expanding rules, practices and procedures affecting qualified retirement plan distributions. Visit to learn more.

(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] Compensation and Benefits Provisions of the Financial Bailout Act (PDF)
5 pages. Excerpt: "The financial bailout bill signed into law . . . contains several provisions affecting executive compensation and employee benefits. These provisions include a requirement that health plans provide the same coverage for mental illnesses and substance abuse as for other conditions, limits on the amount of compensation that can be paid to the executives of companies that sell troubled assets to the Treasury, and a number of miscellaneous provisions." (Seyfarth Shaw LLP)

[Guidance Overview] Deferred Compensation Paid by Offshore Funds Limited by the Emergency Economic Stabilization Act (PDF)
3 pages. Excerpt: "In addition to its many other provisions, Section 801 of the Act adds Section 457A to the Internal Revenue Code which is intended to generally curtail the ability of investment fund managers to defer income recognition of management and incentive fees due from offshore funds organized in tax havens. The measure was included as a revenue-offset for the extension of a package of various tax incentives and tax credits, and is effective for fees for services performed after December 31, 2008. Existing deferrals for services provided before January 1, 2009 may continue to be deferred but must generally be included in gross income before 2018." (Paul, Hastings, Janofsky & Walker LLP)

[Guidance Overview] Congress Bailout Bill Shuts Down Deferred Compensation Tax Haven (PDF)
2 pages. Excerpt: "The Emergency Economic Stabilization Act of 2008 enacted two weeks ago added Section 457A to the U.S. Internal Revenue Code. Section 457A provides in general that US taxpayers cannot defer US income tax on compensation earned after December 31, 2008 for services performed for non-US employers located in certain tax haven jurisdictions. This marks the death knell of certain long-standing practices of offshore entities permitting US employees to defer compensation. Moreover, absent transition relief from the IRS, if existing deferred compensation arrangements subject to Section 457A are not amended by December 31, 2008 to accelerate payments to the year of income inclusion, subsequent discretionary accelerated payments could be subject to an additional 20 percent income tax." (Dewey & LeBoeuf LLP)

More Executive Compensation Guidance Under EESA
Summaries of four recent Notices and the Interim Final Rule on Treasury's Capital Purchase Program. (Attorney B. Janell Grenier via

Employee Ownership Update for October 15, 2008
NCEO Executive Director Corey Rosen discusses NCEO research for Innovest and the Herron Foundation finding that at least 29% of S&P 500 companies have some kind of broad-based employee ownership plan; a spate of stock-drop lawsuits following the financial sector's woes; 5 of the 15 winners of the Wall Street Journal/Winning Workplace Top Small Workplaces are ESOP companies; an AMT provision in the bailout bill that will affect stock option holders; and more. (National Center for Employee Ownership)

[Opinion] Is the Bailout Package a Template for Future Executive Compensation Regulation?
Excerpt: "We take a closer look at these new rules and forecast where we might be heading. But despite the possibility of new restrictions, we do not believe compensation committees need to overhaul their core pay-for-performance programs for the coming year. Rather, we advise our clients to take a good look at their existing severance and change-in-control provisions and reconsider their necessity in light of other compensation elements." (Watson Wyatt Worldwide)

Newly Posted Events
(Post Yours!)

Florida Police, Fire & Public Pension Forum
in Florida on March 9, 2009
presented by Opal Financial Group

Public Funds Summit
in Arizona on January 7, 2009
presented by Opal Financial Group

Newly Posted Press Releases
(Post Yours!)

Poll Finds Most People Did Not See or Use Comparative Health Care Quality Information Last Year
Kaiser Family Foundation

U.S. Department of Labor Updates Fiduciary Guidance On Exercising Shareholder Rights And Investing In Economically Targeted Investments
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Report Shows Small Business Owners Losing Confidence in Social Security, Seek More Control of Their Own Accounts
ING Group

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Pension Administrator/TPA
for Block Consulting Actuaries, Inc.
in CA

401(k) Administrator
for Iron Administration, LLC
in IL

Business Development Education Consultant for Retirement Plans
for Charles Schwab
in TX

ERISA Senior Consultant
for Charles Schwab
in TX

Defined Contribution Relationship Consultant
for The Douglas Group

Retirement Communications Officer
for San Diego County Employees Retirement Association
in CA

Institutional Services Employee Benefit Operations Administration Analyst II
for BB&T
in SC

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