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January 13, 2009

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


Today's sponsor is SunGard's Relius Education

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Banner ad for SunGard's Relius Education

2009 Orlando Advanced Pension Conference

Disney’s Contemporary Resort, February 9-11. Many changes are happening with the new administration. Hear the latest from our experts who have been involved in recent discussions. Our agenda will reflect the latest updates, including: EGTRRA update, 403(b) plans, fee and expense issues in 401(k) plans, engagement contracts after the Final DOL regulations, new participant disclosure requirements, EPCRS and Rev. Proc. 2008-50. Plus, "Ask the Experts" workshop, concurrent sessions, and over 900 minutes of CE credits. The early fee deadline has been extended to January 16. Register now and save $150.

[Guidance Overview]
PBGC's Final Regs on Reallocation Liability Upon Mass Withdrawal

Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) has issued final regulations implementing provisions of the Pension Protection Act of 2006 (P.L. 109-280; PPA) to change the allocation of unfunded vested benefits to withdrawing employers from a multiemployer pension plan and make adjustments in determining an employer's withdrawal liability when a multiemployer plan is in critical status. The final regulations are substantially the same as proposed rules issued in March 2008." (Wolters Kluwer)


[Guidance Overview]
A Q&A on 2009 Required Minimum Distribution Rule Changes

Excerpt: "The purpose of this Q&A is to explain the effect of the law change to the required minimum distribution ('RMD') rules, passed as part of the Worker, Retiree, and Employer Recovery Act of 2008 ('WRERA'). In particular, this Q&A discusses issues employers will face in administering plans that are making RMDs." (SunGard)


Research Details: Market-based Guarantees in Investment-linked Decumulation Pension Programs: Pricing, Risk Management, and Financial Well-being for Retirees
Excerpt: "Some policy analysts have voiced concerns that financially inexperienced individuals may fare poorly in personal retirement accounts, to the extent that they do not fully understand the risks associated with investments as well as spending options. One way to possibly overcome such potential risks would be to incorporate income or rate of return guarantees into defined contribution private-account type plans. Such guarantees could be provided by the government or by private markets, during the accumulation as well the decumulation phase. This project will study various ways of designing such guarantees and evaluate their economic consequences in terms of pricing, risk management, and consumption and saving patterns within a lifetime utility framework." (University of Michigan Retirement Research Center)


Edward Zelinsky: Abolish Minimum Distribution Requirements
Excerpt: "Edward Zelinsky (Cardozo) suggests, in the OUP Blog of Oxford University Press, that Congress should immediately abolish the minimum required distribution which the IRS imposes on retirement savings accounts. The MRD rules provide that individuals over 70.5 years old must annually receive and pay taxes on minimum payments from their retirement plans." (Workplace Prof Blog)


Plunge in Interest Rates Brings New Stresses to Pension Plans
Excerpt: "Before the financial crisis began, a combination of moderate equity losses and a rise in long-term high-quality corporate bond yields had already reduced funding ratios of many defined benefit plans. Since then, the funded position of U.S. pension plans has worsened each month. The funded ratio for Towers Perrin's benchmark plan (with a presumed investment mix of 60% stocks and 40% bonds) ended the year 2008 at 60.0%, a record low. The decline was fueled by the crash in equity values." (Towers Perrin)


Global Economic Crisis 'Shocked the Retirement System,' says Prudential
Excerpt: "The growing number of plan sponsors that are suspending employee 401(k) matches or freezing defined benefit plans is a disturbing trend that could dissuade new employees from participating in their company's retirement programs in the future. This assessment was made by James Cornell, vice president, Prudential Retirement, at a press briefing held in New York on Tuesday by Prudential Retirement and Quantitative Management Associates (QMA) to discuss the economic outlook. Cornell, who said the economic crisis has 'shocked the retirement system,' is afraid the dissuasion could be especially harmful to those whose participation in company retirement programs is vitally important, such as young employees and minorities." (Retirement Income Reporter via On Wall Street and SourceMedia, Inc.)


Podcast: Interview with Mike Alfred of BrightScope on 401(k) Plans
Excerpt: "Alfred has his sights set on making the world of 401(k) plan comparisons easy -- easy on the worker, the employer and even the broker. Listen in as he talks about how he's going to do it and why it needs to be done, now more than ever." (Employee Benefit Adviser; free registration required)


Think Fannie Mae and Freddie Mac Were a Politicized Financial Disaster? Just Wait Until Pension Funds Implode
Excerpt: "State, local, and private pension plans covering millions of government employees and union workers with 'defined benefit' accounts are teetering on the brink of implosion, victims of both a sinking stock market and investment strategies influenced by political considerations. From January to October 2008, defined benefit funds -- those promising a predetermined amount of retirement money to the payee -- averaged losses of 26 percent, according to Northern Trust Investment Risk and Analytical Services, making it the worst year on record for corporate and public pension funds." (Reason Magazine)


PBGC Moves to Take Over Underfunded Pension Plan of Lehman Brothers
Excerpt: "According to PBGC estimates, the Lehman Brothers Holdings, Inc., Retirement Plan is 95% funded, with $898.2 million in assets to cover $940.8 million in benefit liabilities. If the plan is terminated, the PBGC expects to be responsible for $17.9 million of the $42.6 million shortfall. The PBGC has said that assumption of the plan's unfunded liabilities will have no material effect on the PBGC's financial statements, according to generally accepted accounting principles." (Wolters Kluwer)


Wisconsin Will Cut Pension Benefits - Public Employee Retirees to Face Cut of 2.5 to 3 Percent
Excerpt: "Retired Wisconsin public employees are in for a cut in their pension checks this year - for the first time - thanks to the stock market's dismal performance in 2008. The Core Fund, a diversified portfolio that holds most of the Wisconsin Retirement System's funds, ended 2008 with a preliminary return of minus-26.2 percent and a market value of $57.8 billion - its lowest level in five years, the state Investment Board said Thursday. Because of the drop, 146,000 public employee retirees are likely to see their pension benefits shrink 2.5 percent to 3 percent, according to initial estimates from the Department of Employee Trust Funds." (Wisconsin State Journal)


Q&A with Fred Reish on Impact of Mandated Fee Disclosure, Otherwise Known as ERISA Section 408(b)(2)
Excerpt: "Here's an email interview with Fred Reish, one of the country's leading ERISA attorneys and an expert on fiduciary responsibility. . . . Fred has graciously agreed to provide his thoughts on the upcoming 408(b)(2) regulation which mandates the disclosure of compensation and conflicts of interest by retirement plan service providers to plan fiduciaries. The regulation was first proposed by the Department of Labor (DOL) in late 2007 as a way to increase the transparency of retirement plans and to shift the burden of disclosure to service providers. ERISA requires that fiduciaries determine whether plan expenses are 'reasonable' in light of the services being provided." (Fixing the 401 (k))


5 Ways to Protect Your 401(k) if You're Laid Off
Excerpt: "Unexpected job loss can derail retirement plans in an instant. American employers shed 524,000 jobs in December, and 31 percent of employed adults ages 45 and up think it's likely that their job will be eliminated this year, according to a recent AARP survey. The good news is that if you do get laid off, you can still keep your retirement plan intact. Here's how to handle your 401(k) if you lose your job or your company goes under . . . ." (U.S. News & World Report)



ASPPA (Sponsor)

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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.


Links to Items on Executive Comp, Benefits in General

Barney Frank Targets Executive Compensation in TARP Reform Legislation
Excerpt: "On Friday, January 9, 2009 House Financial Services Committee Chairman Barney Frank (D-MA) introduced H.R. 384, the TARP Reform and Accountability Act, to amend the TARP provisions of the EESA. The new legislation would amend the executive compensation provisions of TARP to clarify some requirements and add others. Importantly, H.R. 384 makes it clear that the Treasury may apply the new requirements to any institution that received TARP assistance since the date TARP was established." (Michael S. Melbinger via Winston & Strawn LLP)


What's New for Executive Compensation in the 2009 Proxy Season
Excerpt: "Although the SEC did not do a targeted review of executive compensation disclosures in 2008 as it did in 2007, the SEC did review executive compensation disclosures in connection with the Division of Corporation Finance's traditional review program. In his speech entitled, 'Executive Compensation Disclosure: Observations on Year Two and a Look Forward to the Changing Landscape for 2009,' Mr. White discussed his observations regarding the 2008 executive compensation disclosures and his suggested approach to compensation disclosures in 2009." (Dorsey & Whitney LLP)


The Executive Compensation Dilemma: What Should the Board and Compensation Committee Be Doing
Excerpt: "This article analyzes what the board of directors and members of its compensation committee should be doing when addressing compensation decisions. With appropriate analyses, thoughtful questioning and a careful process, a board of directors and its compensation committee can potentially build corporate value by creating appropriate incentives for key employees, effectively protect itself, avoid excessive risk to the organization, provide adequate disclosure to its shareholders and avoid problems such as the departure of valuable executives and embarrassing and expensive litigation." (Employee Benefit Plan Review via Blank Rome LLP)


America Becoming a Nation of Savers?
Excerpt: "After hovering near zero for much of the decade, savings as a portion of disposable income rose from 2.4 percent in October to 2.8 percent in November, according to the Bureau of Labor Statistics. Also in November, auto loans, credit cards and other forms of consumer borrowing fell by $7.9 billion, the largest dollar amount since recordkeeping began, more than 50 years ago." (The Washington Post; free registration required)


The Problem with HR Pitching Voluntary Benefits
Excerpt: "Topic - 'Voluntary Benefits', defined as benefits in which the employee pays all of the cost, provide employees with options for benefits and insurance coverage they might not otherwise be able to afford. The affordability of such benefits is usually enhanced by the face that employees can often pay for voluntary benefits with pre-tax dollars. Sounds noble, right? Here's are a few problems that are often overlooked . . . ." (Benefits Buzz)


[Opinion]
Legislating Executive Compensation: Unintended Consequences Ahead?

Excerpt: "As a new administration prepares to take office in January, companies are preparing for what is anticipated to be a lively congressional debate on perceived inequities between compensation paid to corporate executives versus that paid to rank-and-file employees. While many new ideas are certain to emerge between now and then, we've seen a number of proposals, some of which have become part of the recent bank bailout legislation. In addition, shareholder activists have enjoyed some success in winning approval for 'say on pay' shareholder votes." (Watson Wyatt Worldwide)




Newly Posted Events

The Restructuring of the 401(k): Fiduciary Insights on the Third Major Watershed in ERISA
in Pennsylvania on February 4, 2009
presented by ASPPA Benefits Council of Delaware Valley



Newly Posted Press Releases

PSCA Says Inadequate Regulation, Reckless Conduct and Unethical Behavior Are The Problem, Not 401(k), Its Sponsors and Providers
Profit Sharing/401(k) Council of America (PSCA)



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Pension Administrator
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Plan Administration Department Supervisor
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in FL

Manager, Complex Recordkeeping - Retirement Division
for Prudential Financial
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Manager, Client Transition - Retirement Division
for Prudential Financial
in IA

Attorney: ERISA and Employee Benefit Funds
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