Retirement Plans Newsletter |
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| June 26, 2009 \ Compliance \ Costs \ Administration \ Design \ Policy | ||
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[Guidance Overview]
Smith Barney Fails to Get Florida Pension Case Moved Out of Court
Excerpt: "The U.S. District Court for the Southern District of Florida has declined to enforce arbitration clauses contained in account agreements between the City of Delray Beach Police and Firefighters Retirement System and Smith Barney. According to the court's decision, chairman of the retirement system's board William Adams signed Pension Consulting Agreements and other documents for Smith Barney. The agreements have an arbitration clause that says contract disputes must be resolved by arbitration. Smith Barney moved to remove the case from court and have the court direct the board to proceed through arbitration. However, the board argued that Adams lacked authority to execute the account agreements, and the court agreed." (PLANSPONSOR.com; free registration required)
[Guidance Overview]
Circuit Court Denies Rehearing on Dismissal of ERISA Revenue Sharing/Excess Fee Complaint in Hecker v. Deere (PDF)
3 pages. Excerpt: "Earlier this year, the U.S. Court of Appeals for the Seventh Circuit affirmed the dismissal of claimed ERISA violations for alleged revenue sharing and excessive fees against a retirement plan sponsor and the mutual fund complex that provided investment options and trust and other services for the plan. Yesterday, the Seventh Circuit denied plaintiffs' petition for rehearing but issued a short opinion addressing certain issues raised by the U.S. Department of Labor (DOL) in an amicus brief and emphasizing that its ruling was based on the particular facts alleged in this case. Hecker v. Deere & Co., Nos. 07-3605 and 08-1224 (June 24, 2009)." (Sutherland)
[Guidance Overview]
ESOP Plan Sponsor Held Liable for Issuance of 10-Year Note to Satisfy Repurchase Obligation (PDF)
3 pages. Excerpt: "In a case recently decided by a federal district court in Indiana, Craig v. Smith, 2009 WL 438635 (S.D. Ind. Feb. 20, 2009), Ontario Corporation was held to have violated ERISA by issuing a 10-year promissory note in payment for shares that had been credited to the account of a former employee, Charles A. Craig, under the company's employee stock ownership plan (ESOP), as it violated the requirement that the term of any note issued in satisfaction of a terminated ESOP participant's put right could not exceed five years." (Morgan, Lewis & Bockius LLP)
[Guidance Overview]
Federal Court Denies ESOP Participant Claims for Breach of Fiduciary Duty (PDF)
3 pages. Excerpt: "In Blankenship v. Chamberlain, 2009 WL 1421201 (E.D. Mo. May 20, 2009), the court considered a complaint with five counts, including two claims for breach of fiduciary duty under ERISA (one for injunctive relief and one for monetary relief), a common law claim for breach of fiduciary duty, a claim under Missouri state law to remove the defendant as an officer of the company and a trustee of the ESOP, and a claim for an accounting." (Morgan, Lewis & Bockius LLP)
Benefit Cuts Possible for Future Iowa Public Employee Retirees
Excerpt: "Iowa's largest public employee pension fund could be forced to reduce benefits for future retirees because of the global recession, which has worsened the fund's existing financial troubles, state officials said Thursday. The Iowa Public Employees' Retirement System has 312,000 members who include current and former employees and retirees of state government, cities and counties, public schools and other agencies. . . . A study is under way to examine such factors as retirement ages, cutting early retirement subsidies, requiring new and current employees to earn pensions more slowly, and increasing the number of years used to calculate final average salaries for pension purposes. The research will also explore additional increases in contributions by taxpayers and employees, coupled with benefit reductions. Recommendations are expected in September. They could include benefit changes, said Donna Mueller, IPERS's chief executive." (The Des Moines Register)
Public Pension Finance Symposium: The Rationale for Traditional Actuarial Models (PDF)
35 pages. Excerpt: "This paper examines the degree to which certain actuarial methods satisfy public pension plan funding objectives. It compares the funding patterns that result from a conventional actuarial approach used by the majority of public plans with patterns that result from the 'market value of liability' (MVL) approach. The comparison is made by applying these approaches to a modeled public plan based on historical demographic, economic, and investment data over the period from 1978 to 2008. The paper finds that funding under the MVL approach would likely result in rapid and erratic changes to a public plan's normal costs, accrued liabilities, and funded levels, largely due to changes in the MVL discount rate. By contrast, conventional funding results in measures that are more stable and predictable over time. Consequently, the paper concludes that the conventional approach is more effective in meeting the funding objectives of public pension plans. The serious instabilities in the MVL measures would most likely lead either to erratic demands on government resources or plan terminations. If the MVL approach were applied, we believe it would ultimately be abandoned as being too unstable for state and local governments." (Society of Actuaries)
Capital Income Taxes With Heterogeneous Discount Rates
Excerpt: "With heterogeneity in both skills and preferences for the future, the Atkinson-Stiglitz result that savings should not be taxed with optimal taxation of earnings does not hold. Empirical evidence shows that on average people with higher skills save at higher rates. Saez (2002) suggests that with such positive correlation taxing savings can increase welfare. This paper analyzes this issue in a model with less than perfect correlation between ability and preference for the future." (Center for Retirement Research at Boston College)
IRS Shoots Down New Roth Ploy: Recent Ruling Finds That Transactions Moving Income Were Similar to Those Outlawed Earlier
Excerpt: "[T]he Internal Revenue Service repeatedly has taken steps to minimize Roth IRA scams. A recent IRS ruling took another step in that direction, determining that transactions entered into by a husband and wife were substantially similar to transactions outlined in IRS Notice 2004-8. An error in reporting the couple's transactions, along with the transactions themselves, has left the two exposed to severe and potentially devastating penalties.' (Investment News; free registration required)
What's Your Number? How Much Money Do You Need to Retire?
Excerpt: "I've been asked this many, many times in my years as a personal-finance columnist. I used to take a deep breath, then begin a discourse on pensions, Social Security, life expectancy, plans to pass assets to children, business succession, expected rates of return, inflation . . . . Then, finding that people really wanted a simple, easy answer, I came up with one: 'three million dollars.' That's what you need to retire. No matter who you are, where you live, what your expectations. Trust me. I like this figure because it's high enough to force most people to tighten their belts and take investing seriously. But it's not so out of reach as to make them give up." (The New York Times; free registration required)
The Knowledge Congress Webcast Series (Advert.)
The Knowledge Congress’ Live Webcast on 401(k) Plans on 07/23/09 401(k)s have long been considered as a rock solid way to plan for retirement. In the wake of the recent economic tsunami, personal wealth has plunged leaving many employees form the executive suite to the mail room scrambling to reassess their 401(k) next egg. A key panel of thought leaders and experts will cover many of the most critical issues surrounding the 401(k) crisis with the goal to help you navigate through the pitfalls in the wake of these turbulent economic times. |
Links to Items on Executive Comp, Benefits in General
Good News in Hard Times: Indianapolis Company Shares $2M in Bonuses with All EmployeesExcerpt: "The good news for AIT employees likely will keep on coming. If the company remains profitable, as expected, employees will see another bonus at the end of the year. . . . Employees won't know the precise amount of their bonuses until they receive their next paychecks. Under the profit-sharing plan, the average production laboratory employee will earn an additional 40 percent of the first six months' salary. Those employees who have been with the company less than six months will receive a pro-rated amount." (IndyStar.com)
FASB Announces New Codification Structure, Superseding All Existing Statements
Excerpt: "The Financial Accounting Standards Board (FASB) has announced that its single source of authoritative nongovernmental U.S. Generally Accepted Accounting Principles (GAAP), the FASB Accounting Standards Codification, will be effective for interim and annual periods ending after September 15, 2009. The FASB expects that the new system will reduce the amount of time and effort required to research an accounting issue and will provide accurate information with real-time updates as new standards are released." (Wolters Kluwer)
Webcasts and Conferences
Jammed Access: Widening the Front Door to HealthcareNationwide on July 29, 2009
presented by MCOL
(Click to post your webcast or conference)
Press Releases
CWA Applauds House Tri-Committee Health Care BillCommunications Workers of America
RIIA Announces Award for Achievement in Applied Retirement Research
Retirement Income Industry Association
Micro-Businesses Offer Strong Opinions On Health Reform Proposals
National Association for the Self-Employed (NASE)
GM Retirees Call for Congressional Protection of Benefits
General Motors Retirees Association
CDC Introduces New Website to Help Employers Combat Obesity and Reduce Health-Related Costs
Centers for Disease Control and Prevention
Business, Health Care Leaders Call on Texas Employers to Cover Smoking Cessation Benefits for an Additional 100,000 People by 2010
Texas Coalition for Worksite Wellness
Many Business Leaders Don't Think Employer-based Coverage is Sustainable
HealthLeaders Media
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Employee Benefits Jobs
Pension Administratorfor Pension Administration Firm located in Westchester, NY
in NY
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in DC
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in OR
Account Manager I - SRS
for The Standard
in OR
401(k) Plan Administrator
for Capital Retirement Plan Services
in FL
Defined Contribution Retirement Plan Administrator
for Loren D. Stark Company, Inc.
in TX
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