August 28, 2006

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Today's sponsor: ASPPA ? Working for America's Retirement?

(Click on company name or banner to learn more.)

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Pension Finance Information Resources for Actuaries
Excerpt: "Financial economics is influencing the way financial professionals view shareholder risk, including the risk from pension plans. Actuaries and others have been examining what place financial economics might have in the pension actuarial paradigm. The Task Force on Financial Economics and the Actuarial Model has compiled the following resources as an informational tool only to aid actuaries in learning more about the issues." (Society of Actuaries)

Pension Protection Act of 2006: Miscellaneous Highlights
Excerpt: "This alert focuses on a variety of provisions in the legislation that will impact 401(k) plans, cash balance and pension equity plans, rabbi trusts, and other pension benefit arrangements." (Paul, Hastings, Janofsky & Walker LLP)

Middlemen May Be Raiding 401(k) Plans and Hiding Fees
Excerpt: "While the new U.S. pension-reform law gives a few savings plums to employees, it still hides the pitfalls of 401(k) plans in the form of excessive expenses. Middlemen in 401(k)s who provide administrative support and line up mutual funds for employers may conceal their compensation in individual fund expense ratios, an annual percentage deducted from your plan assets." (Asbury Park Press)

Overview: New Pension Law Significantly Modifies ERISA's Fiduciary Responsibility Provisions
Excerpt: "[T]he new law contains several changes in the ERISA fiduciary responsibility and prohibited transaction provisions that will have an impact on the management of pension plan assets." (Paul, Hastings, Janofsky & Walker LLP)

New Pension Plan Legislation Benefits Hedge Funds (PDF)
2 pages. Excerpt: "[T]he Act modifies the 'look through' rule under which a hedge fund determines how much of a fund-of-funds' investment counts towards its own 25% limit." (Gardner Carton & Douglas LLP)

Compilation of Info on FASB's Proposed Statement on Accounting for Future Pension Liabilities
The target page has links to the Proposed Statement of Financial Accounting Standards, Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans -- an amendment of FASB Statements No. 87, 88, 106, and 132(R), Project Updates, and Board Meeting Minutes. (International Foundation of Employee Benefit Plans)

Overview: New Surcharge on Underfunded Pension Plan Terminations May Sink Distressed Companies
Excerpt: "On February 8, 2006, the Deficit Reduction Act of 2005 took effect, with one pension-related provision that should cause lenders to take notice. [Originally published March 30, 2006]" (Paul, Hastings, Janofsky & Walker LLP)

Overview: Moody's Rating Methodology for Considering Multiemployer Pension Plans
Excerpt: "In January 2006, Moody's Investor Service proposed a new rating methodology that would consider the underfunding level of multiemployer defined benefit plans when rating the employers contributing to those plans. In August 2006, Moody's issued a revised rating methodology." (International Foundation of Employee Benefit Plans)

PPA Brings New Risks and Liabilities for Multiemployer Plans and Contributing Employers (PDF)
2 pages. Excerpt: "The new multiemployer plan funding rules provide for, the assignment of all plans into one of several categories, based on the percentage of funding level and other factors, such as the value of plan assets and expected future employer contributions compared with expected benefit payments." (Winston & Strawn)

On the Tracking of Pensions -- No Consensus
Excerpt: "The disclosure that New York City uses two different methods to gauge its pension funds -- one showing they are fully funded, and another showing a $49 billion deficit -- has heaped fuel on a long-running debate over how to value pensions." (The New York Times; one-time registration required)

The Growing Cost of City Pensions -- Six Letters to the Editor of the NYT
Excerpt: "The Aug. 20 front-page article in the 'Costly Promises' series focused on some very important, yet complex issues. But I take issue with many of the statements made about the city's pension systems. As the chief actuary since 1990, I believe that the New York City Retirement Systems and the City of New York are fully complying with accounting rules. I strongly disagree with the comments to the contrary . . . . [Robert C. North Jr.]" (The New York Times; one-time registration required)

SEC May Soon OK Distribution of Fund Trading Scandal Settlement Money
Excerpt: "The Department of Labor released guidelines in April saying that a retirement plan service provider becomes a fiduciary upon receipt of settlement funds, meaning that the provider is held to a much higher standard, even if it is not otherwise a fiduciary with respect to the plan it services. The guidance provides a 'safe harbor' for retirement plan service providers, but only if the service provider uses the particular allocation methodology set by the distribution plan." (Investment News; registration or subscription required)

State Pension Shift Is Key to Far-Off Savings for California
Excerpt: "While most attempts to control state pension costs have failed, employees have made one concession likely to save money down the road. Most state worker unions agreed in recent weeks that newly hired workers will get pensions based on their three highest years' salary, instead of just one year." (The Sacramento Bee; one-time registration required)

Overview: Pension Protection Act of 2006 Impacts ESOPs (PDF)
4 pages. Excerpt: "Although certain components of the Act will require ESOP plan amendments and modifications in plan operations, none of the provisions represents a cutback in the important tax incentives that exist for ESOPs. This Client Advisory summarizes the ESOP-related components of the Act." (Katten Muchin Rosenman LLP)

Attorney Files Comment on 'Specified Employees' Under Proposed 409A Regs
5 pages. Excerpt: "I recommend that regulations under Section 409A, as finalized . . . provide that a 'specified employee' is only a key employee who, at the time of termination of his or her employment, is an employee of a corporation, any stock in which is publicly traded on an established securities market or otherwise." (Locke Liddell & Sapp LLP)

DuPont Changing Primary Defined Benefit Pension Plan
Excerpt: "In a statement, the company said the changes are 'consistent with market trends in employee benefits.' The changes will not effect DuPont's current U.S. retirees, former employees with vested benefits or current employees who retire or leave the company prior to Jan. 1, 2008." (AP via Worcester Telegram & Gazette)

ERIC Letter to the Wall Street Journal in Response to Cash Balance Article of August 15, 2006
Excerpt: "ERIC submitted the . . . letter to the Wall Street Journal for inclusion on August 15. The Journal subsequently declined to publish the letter." (The ERISA Industry Committee)

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Links to Items on Executive Comp, Benefits in General

What Items Should Be Included in an Employee Benefit/Compensation Statement?
Excerpt: "First, worry about whether this practice even makes sense for your organization. Total compensation statements should fit into long-term human resources objectives." (Pathfinder?s Group via Workforce Management; one-time registration required)

Overview: Milofsky v. American Airlines Inc. -- A Breach of Fiduciary Duty Class Action Lawsuit
Excerpt: "On March 2, 2006, the Fifth Circuit en banc rejected an extremely employer-friendly and short-lived opinion holding that a breach of fiduciary duty lawsuit must benefit the entire plan, not just a subset of plan participants." (Paul, Hastings, Janofsky & Walker LLP)

Suits in Tennessee May Be Benefit Plan Red Flag
Excerpt: "Although none of the suits spelled out how many payments had been missed or what amount of money was owed, the suits could be significant early warnings of possible trouble with a health or pension plan, benefit experts say." (The Tennessean)

Who Signed Off on All Those Stock Options at Mercury?
Excerpt: "Mercury . . . appears to have had years of practice backdating options it awarded employees. From 1994 to March 2005, there were 54 options grants -- including 24 grants approved by Mercury's board or compensation committee -- that were backdated, according to the company's earnings restatement in early July. In almost every instance, the company concluded, backdating the grants made the options more valuable. The maneuvers also let Mercury bolster its earnings and lower its taxes." (The New York Times; one-time registration required)

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Newly Posted Events

ASPPA's DC-1, DC-2, DC-3, DB, PFC-1 and PFC-2 Fall 2006 Webinar Courses - Registration Closes September 8 so register today!
Nationwide on August 28, 2006
presented by ASPPA (American Society of Pension Professionals & Actuaries)

ASPPA's Fall PFC-1 & PFC-2 Webinars
Nationwide on September 11, 2006
presented by ASPPA (American Society of Pension Professionals & Actuaries)

IRA and Qualified Plan Distributions After the Pension Protection Act of 2006
Nationwide on September 5, 2006
presented by CCH Incorporated

Roundtable: Leadership - New SEC Rules on Executive Compensation
in Illinois on September 20, 2006
presented by University of Illinois at Urbana-Champaign

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Newly Posted Press Releases

The Todd Organization Appoints Ward Russell President
(Todd Organization)

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Newly Posted or Renewed Job Openings


Employee Benefit Consulting Champion
for Clifton Gunderson LLP
in IL

Pension Assistant
for R.J.L. Pension Services, Inc.
in FL

Benefits Project Manager
for The Paragon Consulting Group
in IN

Sr HR Specialist
for Amtrak
in DC

OMNIPLUS Recordkeeping Professionals
for SunGard OMNI
in ANY STATE

Benefits Manager
for Resources Global Professionals
in CA

Primary Administrator for Qualified Retirement Plans
for Kidder Benefits Consultants, Inc.
in IA

Retirement Plan Administrator / Consultant
for The MandMarblestone Group llc
in PA

Retirement Plan Administrator
for FM International
in NY

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Handy Links:

• View Today's Active Message Threads
• Using the Web for Employee Benefits Research (hypertext article)
• Employee Benefits Library

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