Elder Law Prof Blog

GAO Report recommends stronger oversight of PBGC

Summary of the report: 

The Pension Benefit Guaranty Corporation (PBGC) insures the retirement future of over 44 million people. As a federal guarantor of private defined benefit plans, PBGC finances its operations through insurance premiums, investment income, and funds from terminated pension plans. PBGC is governed by a board of directors comprised of the Secretaries of Commerce, Labor, and Treasury, who are responsible for providing policy direction and oversight but often rely on board representatives. In 2004, PBGC began reviewing its investment policy biennially and recently decided to broaden the range of asset classes in which it invests.

GAO reviewed PBGC’s procedures for developing and implementing its investment policies, and examined PBGC’s most recent investment policy. To address these issues, GAO reviewed and analyzed PBGC policies and data, assessed the analysis informing the recent policy change, and interviewed agency officials and other experts.

What GAO Recommends

GAO recommends (1) improvements to the way that PBGC’s board monitors progress in achieving investment policy goals, and (2) additional analyses on the new investment policy. In response, PBGC’s board stated its informal guidance is appropriate oversight. GAO states this type of guidance is not strong enough for investing $68 billion. Further, PBGC is conducting additional analysis on the new policy.

Get the report.

Prof. Kaplan (IL) on planning for retirement

Dick Kaplan's article entitled “A Guide to Starting Social Security Benefits,” has just appeared in the Journal of Retirement Planning (July-Aug. 2008) and is available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1192902

Abstract:  When a person should begin taking Social Security retirement benefits is a critical question for planning one’s retirement. This article explains the various factors at play in determining the optimum starting point, including: longevity considerations; spousal implications, whether for a previously employed or a previously unemployed spouse; the impact of post-retirement employment; the availability of health insurance prior to Medicare eligibility for the worker and the worker’s spouse; alternative sources of retirement income, including distributions from retirement savings plan assets and lifetime liquidation of nonretirement assets (and the pertinent income tax ramifications); and anticipated investment strategies.

Dick rules!

 

Predicted costs of retirement are creeping higher

With medical care and other costs soaring, the portion of their pre-retirement pay that Americans will need in retirement to keep the same standard of living is rising, financial planners say.  For years, a common projection was that workers needed to replace 70 percent to 90 percent of their pre-retirement pay to maintain the same living standard in retirement. But now, as medical costs grow, life spans lengthen and fewer retirees receive pensions, financial planners say you'll need more. Hewitt Associates is more pessimistic than most. New research released by the consulting company projects that workers will need to replace, on average, 126 percent of their final pay in retirement.  The study, based on 1.8 million employees with 401(k) plans that Hewitt administers, says only 19 percent of participants are on track to meet their retirement needs. About 67 percent of workers are expected to have less than 80 percent of their projected needs.  Sheryl Garrett, founder of the Garrett Planning Network, agrees that typical retirement replacement guidelines "just don't go far enough when you factor in the huge health-care responsibility that is shifting from the employer's shoulders to ours at retirement.

Source/more:  Indianapolis Star, http://www.indystar.com/apps/pbcs.dll/article?AID=/20080713/BUSINESS/807130330

Korea is "least ready" for retirement as its boomers age

Koreans are the least prepared financially for retirement among countries worldwide. It is time to take this seriously and prepare by investing in a variety of assets, instead of relying solely on property, said Fidelity International, a global asset manager. Announcing the retirement readiness index Tuesday, Fidelity Korea noted that the country's retirement income replacement ratio stands at 41 percent of the average income before retirement, far below that of Taiwan, Japan, Britain and the United States. The ratio is a measure of the actual income after retirement to the income just before retirement.   Assuming that the annual income of a Korean household is 10 million won, the actual expected income after retirement would be 4.1 million won. However, the desirable ratio for post-retirement life should be 62 percent, or 6.2 million won under the assumption, said Fidelity.  The asset management firm and Seoul National University's retirement planning support center calculated the ratio, utilizing data from the statistical office and Koreans' indirect investment patterns. The measure of the index includes assessing expected pension, severance payment and savings.

Source/more:
Korea Times, http://www.koreatimes.co.kr/www/news/nation/2008/07/123_26858.html

Free economic stimulus webinar--sign up now!

There is still time to help our seniors who can really use the money file for their Economic Stimulus Payment. Join us for a Webinar that will give you the latest information from the IRS, National Women’s’ Law Center, Center on Budget and Policy Priorities and AARP Tax-Aide. We will also guide you through filling out a 1040A form online, printing it out and sending it directly to the IRS for an
Economic Stimulus Payment.

Hurry, sign up now. Space is limited. Call, 1-800-350-5423 to register.

More detailed information to follow.

*Tina Purser-Langley | Tax-Aide Assistant Nat'l Dir*
601 E St NW, Washington, DC, 20049
Office: (202) 434-2043 1-800-424-2277|
Web: http://www.aarp.org
<http://www.aarp.org/>

Urban Institue to host webcast on the retirement

The Urban Institute, Civic Ventures, and Public Agenda will host
RETHINKING RETIREMENT: OPINIONS, OBSTACLES, OPPORTUNITIES on
Wednesday, June 25, 2008
9:00-10:30 a.m. ET

To attend this event in Washington, D.C., RSVP at
http://www.urban.org/events/other/rsvp.cfm,
e-mail paffairs@urban.org, or call (202) 261-5709.

To listen to the live audio webcast, register at
http://www.visualwebcaster.com/event.asp?id=49091.

Panelists:
    * John Gomperts, president, Civic Ventures; CEO, Experience Corps
    * Eugene Steuerle, senior fellow, Urban Institute
    * Ruth Wooden, president, Public Agenda
    * Sheila Zedlewski, director, Income and Benefits Policy Center,  Urban Institute

At the Urban Institute, 2100 M Street N.W., 5th Floor, Washington, D.C.

GAO reports on incentives for small businesses to fund IRAs and related issues

Congress created individual retirement accounts (IRAs) with two goals: (1) to provide a retirement savings vehicle for workers without employer-sponsored retirement plans, and (2) to preserve individuals’ savings in employer-sponsored retirement plans. However, questions remain about IRAs’ effectiveness in facilitating new, or additional, retirement savings. GAO was asked to report on (1) how IRA assets compare to assets in other retirement plans, (2) what barriers may discourage small employers from offering IRAs to employees, and (3) the adequacy of the Internal Revenue Service’s (IRS) and the Department of Labor’s (Labor) oversight of and information on IRAs. GAO reviewed reports from government and financial industry sources and interviewed experts and federal agency officials.
What GAO Recommends.

GAO believes Congress should consider whether payroll-deduction IRAs should have some direct oversight in response to Labor’s comments that it does not have jurisdiction over these IRAs. GAO also recommends Labor examine ways to encourage employer sponsorship of IRAs, and evaluate ways to determine whether employers offering IRAs are in compliance with the law, and ways to collect additional information on IRAs. GAO recommends IRS routinely publish and give Labor data on IRAs. Neither IRS nor Labor agreed or disagreed with the recommendations.

To view the full product, including the scope
and methodology, visit http://gao.gov/docsearch/abstract.php?rptno=GAO-08-590
For more information, contact Barbara Bovbjerg at (202) 512-7215 or bovbjergb@gao.gov.

Dateline show to expose annuity scams aimed at seniors

Here's the promo for the show, which airs Sunday evening Sunday, April 13 (7:00 PM/ET)

"With an estimated 15 trillion dollars under their control American seniors have become more of a sales target than ever for insurance agents seeking to sell them annuities. On Sunday, April 13 (7:00 PM/ET), "Dateline" goes undercover in "Tricks of the Trade" -- a hidden camera investigation revealing what some insurance agents say, and what they don't say, when they think they are alone with a senior. In his signature style, Chris Hansen then confronts agents about their questionable sales pitches.

NBC News footage shows the widespread practice of agents cloaking themselves in fancy titles and insurance agents attending a seminar to learn these sales tactics. Minnesota Attorney General Lori Swanson, who reviewed "Dateline's" footage, and who has filed several suits alleging fraud in the sale of annuities to seniors, tells Hansen: "...what is tragic about it is when those agents go into the seniors' homes, it is literally the wolf among the lambs."      

New CRS reports on spouses' federal retirement benefits

Retirement and Survivor Annuities for Former Spouses of Federal Employees
April 03, 2008
Open CRS (User submitted)

A former spouse of a federal employee may be entitled to a share of the employee's retirement annuity under the Civil Service Retirement System (CSRS) or the Federal Employees' Retirement System (FERS) if this has been authorized by a state court decree of divorce, annulment, or legal separation. An employee also may voluntarily elect a survivor annuity for a former spouse. A state court can award a former spouse a share of the employee's retirement annuity, a survivor annuity, or both. A court also can award a former spouse of a federal employee a portion of the employee's Thrift Savings Plan (TSP) account balance as part of a divorce settlement. This report will be updated as legislative developments warrant.

Pension plan funding ratios decline precipitously

The funding ratio of a typical US pension scheme has fallen by nearly a quarter in the past nine months, suffering from a combination of volatile equity markets and declining interest rates.  Acording to the US Pension Fund Fitness Tracker from UBS Global Asset Management, in the first quarter of this year, the US pension funding ratio, or the estimated ratio of a typical scheme’s assets to its expected liabilities, declined by 11%.  UBS said in a statement that most of the drop occurred in January, whose 8% decline was the largest in a single month since 2002. It is the third consecutive quarter that the ratio has dropped. Since the middle of last year, it has gone from about 113% to 90%.  Furthermore, declining interest rates meant the present value of liabilities increased by nearly 8% in the quarter.

Source:  Financial News Online, http://www.financialnews-us.com/?page=ushome&contentid=2350252828
 

Urban Inst. report: the changing nature of work and retirement

Author(s): Richard W. Johnson, Gordon Mermin, Matthew Resseger

Other Availability: PDF | Printer-Friendly Page

Posted to Web: March 28, 2008

Permanent Link: http://www.urban.org/url.cfm?ID=1001154

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

The text below is an excerpt from the complete document. Read the  full paper in PDF format.

Belgium pushes for cross-border pensions

Creating a robust cross-border pension market is a priority for the Belgian government, the Belgian Pensions Regulator (BPR) has said.   Speaking at an event organised by Towers Perrin, Henk Becquaert of the BPR outlined the steps the Belgian government has taken to attract multi-national corporations to set up cross-border pension schemes.   Becquaert said cross-border schemes need flexible structures and low taxation to be attractive, which the Belgian government had implemented. Groupacier and Pfizer Pension Fund have set up cross-border pension schemes based in Belgium.   “The legal framework of pension funds in Belgium allows a sponsor to adapt the organisation and structure of a cross-border scheme to its own individual business situation,” he said.

Source:  Global Pensions, http://globalpensions.com/showPage.html?page=gp_display_news&tempPageId=787158

CRS report discusses Roth and traditional IRAs

RL34397
Traditional and Roth Individual Retirement Accounts (IRAs): A Primer
March 03, 2003

In response to concerns over the adequacy of retirement savings, Congress has created incentives to encourage individuals to save more for retirement through a variety of retirement plans. Some retirement plans are employer-sponsored (such as 401(k) plans), and others are established by individual employees (such as Individual Retirement Accounts (IRAs)). This report describes the primary features of two common retirement savings accounts that are available to individuals. Both traditional and Roth IRAs offer tax incentives to encourage individuals to save for retirement. Although the accounts have many features in common, they differ in some very important aspects. This report explains the eligibility requirements, contribution limits, tax deductibility of contributions, and rules for withdrawing funds from the accounts. This report will be updated as legislative activity warrants.

Get it here.

PBGC to diversify in effort to cover liabilities

The Pension Benefit Guaranty Corporation, the US government-sponsored guarantor for pensions, plans to step up its investments in riskier assets such as equities as it seeks to plug a $14bn deficit.  The move, quietly announced on the President’s Day public holiday in the US on Monday, will mean the PBGC will double its allocation of equity investments to 45 per cent of its total assets.  The PBGC, which in effect acts as a pensions insurance fund, guarantees the benefits of 44m workers and is currently paying benefits to 700,000 retirees. It holds approximately $55bn (€37.4bn, £28bn) in assets to invest under its new policy.  It has, however, no access to credit from the government. It relies only on insurance premiums paid by the companies whose plans it insures and the investment returns those premiums can earn. If it became insolvent, it would either have to slash benefits paid to retirees or seek a taxpayer bailout.  The PBGC did not have the resources to meet all its future commitments, Charles Millard, director of the corporation, said yesterday.

Source/more:  Financial Times, http://www.ft.com/cms/s/0/51023502-de5e-11dc-9de3-0000779fd2ac.html?nclick_check=1

New GAO report says VA needs to improve pension management

In 2006, most of the over 500,000 VA pensioners had nonpension incomes well
below the federal poverty level, were beyond retirement age, and had multiple
impairments, and the population has been decreasing in number. The average
annual reported income of these pensioners, excluding their VA pensions, was
less than $5,000. The average age of VA pensioners was 70. More than 80
percent had no spouse or dependent children. Three-fourths of veteran
pensioners had multiple impairments. After reaching a peak of almost 2
million in 1978, the overall size of the pensioner population has gradually
decreased, although the number of pensioners from more recent service
periods has been increasing.

VA policies and procedures are not sufficient to ensure sound decisions on
new pension claims. Unlike other federal agencies with similar income-based
programs, VA largely does not independently verify the accuracy of financial
information provided by claimants to support initial pension program
eligiblity. In addition, the guidance used by staff to make pension eligibility
decisions is not always current or clear. Further, VA’s quality assurance
review process for initial claims does not select a sufficient number of
pension cases to ensure the accuracy of pension claims decisions. Finally, VA
does not adequately evaluate training for pension staff.

VA procedures for assessing whether pensioners continue to receive the
proper benefits have significant limitations. Although the agency requires
pensioners to report changes that might affect their pensions, VA does not
require documentation such as bank or asset statements when pensioners
report financial changes. Also, a key data match operation with the Internal
Revenue Service is not conducted in a timely or efficient manner. Finally,
despite millions of dollars in improper pension payments made each year, VA
lacks a system to monitor and analyze their causes.

http://www.gao.gov/new.items/d08112.pdf?source=ra

WISER establishes new web-based National Education and Resource Center on Women and Retirement Planning

FROM the Women's  Institute for a Secure Retirement (via ELDERBAR list serv):

The Administration on Aging and the Women’s Institute for a Secure Retirement (WISER) have jointly established a web-based National Education and Resource Center on Women and Retirement Planning (Center).  The Center’s overriding goal is to assist the Aging Network in educating women of all ages about planning for their future financial, health and long-term care.

The Center focuses its activities on educational materials that meet the special needs of disadvantaged women and their families, including individuals with limited English proficiency. The Center improves women’s access to basic financial and retirement planning tools that promote financial literacy. Our materials include a full library of fact sheets on topics such as budgeting, saving and investing, understanding your pension plan, buying long-term care insurance, Social Security, retirement health and other important topics.

We are writing to invite you to review the products and materials available on the Center’s website and also WISER’s website, and distribute them through your agency. Our goal is to promote greater awareness and utilization of materials by average and vulnerable women. WISER’s website address is www.wiserwomen.org and the Center’s website can be reached from our home page. Most of the materials are downloadable and may be printed and distributed to your clients free of charge. Bulk orders are available for a nominal fee. We encourage you to make these materials available to clients in your community and to link to our website if possible.

We also encourage you to join WISER’s email list. You can use the link below to join. We send monthly updates regarding WISER’s activities, new publications and other useful tips. Your email address is kept completely private.

 http://visitor.constantcontact.com/email.jsp?m=1101429300774&p=oi 

WISER believes that lifetime financial planning is one key to reducing the unacceptably high rate of poverty among older women. Women with financial skills and resources live a more secure and healthy life. We hope that you will partner with us to create access to these tools and resources. If you have any suggestions for collaborations or dissemination of the materials, we would love to hear from you.

Benefits issues in the campaign? Just the fact, ma'am

Get answers (not spin) to your burning questions on health care, social security, and private pension benefits issues from the Employee Benefits Research Institute.

PA House votes to give slots money to seniors for tax relief

The PA state House of Representatives voted overwhelmingly Tuesday to relieve lower income seniors of their school property tax burden, undercutting a proposal that would have slashed property taxes for all homeowners but raised sales and income taxes.  The property tax debate was expected to continue Wednesday amid uncertainty about what if anything will finally emerge from the chamber.

The plan that was approved Tuesday, sponsored by veteran Republican floor strategist Rep. John M. Perzel of Philadelphia, would dedicate the billion dollars or more a year that the slots gambling industry is projected to generate to pay the taxes of older Pennsylvanians on 600,000 homes and other properties.
It passed 159-36 but requires another favorable vote to be sent to the Senate.

Majority Leader Bill DeWeese, D-Greene, said the House would next take up a proposal to amend the constitution by ending school districts' authority to levy real estate property taxes in 2010. If passed, it could in turn affect or cancel out Perzel's legislation.  Perzel's amendment includes an age limit of 65 and an income limit for a full tax cut of $40,000. It would not increase any other taxes, unlike the Democratic plan, but it would leave empty-handed about 2.7 million families who would otherwise be on track to get tax relief next year. Perzel disputed predictions his legislation would be vetoed.

Source:  AP/PhillyBurbs.com, http://www.phillyburbs.com/pb-dyn/news/246-01302008-1479368.html

Ohio pension fund sues Freddie Mac for fraud

An Ohio pension fund filed an investor class action lawsuit against Freddie Mac, accusing the mortgage finance giant of securities fraud for failing to disclose risks from its investments in the subprime mortgage market.  Ohio Attorney General Marc Dan, who filed the suit in U.S. District Court, the Northern District of Ohio, on Tuesday said Freddie Mac had "secretly and intentionally participated in one of the largest housing investment deceptions in modern U.S. economic times."  According to Dann, the Ohio Public Employees Retirement System suffered losses of up to $27.2 million as a result of the fraud.  Attorney General Marc Dann said in a statement the company improperly bought risky home loans that fell sharply in value and led to huge losses for Freddie Mac.  Dann said Freddie Mac, a private company that holds a federal charter, was "deeply invested in the subprime mortgage industry and failed to disclose that it was not protecting itself from the billion-dollar risks it incurred."  A spokesman for Freddie Mac declined to comment.  The suit was filed on behalf of the Ohio Public Employees Retirement System and all other purchasers of Freddie Mac stock between Aug. 1, 2006, and Nov. 23, 2007. The pension fund is seeking to be the lead plaintiff in the class action suit.

More at Reuters or HERE.

Retired 64-year-old rodeo queen hates the sedentery life

If her battered joints are stiffening with the approach of winter, Jan Youren isn't complaining.  It's a deeper ache that pains her.  "I am not a person who sits around twiddling my thumbs," she says. "I'm not good at that."  But like it or not, Youren is getting older -- her 64th birthday has come and gone. She's like legions of others having trouble adjusting to retirement's slower pace. And yet, because of what she's retiring from, the challenge is uniquely her own.  "You know, when I quit rodeoing it's a big hole. This year it's harder...," says the five-time world champion bareback bronc rider, who only climbed out of the competitive saddle two years ago -- and would go back in a minute, if not for her kids, and grandkids.  "I never thought I'd stay doing it as long as I did. It's just hard to stop because it's very addictive once you start."  A lifetime of roughstock riding has left her with shattered bones, several fused vertebrae, plenty of scar tissue and shoulders that dislocate whenever she raises her arms above her head. The dislocating shoulders mean that at the end of a bronc ride -- when most riders would grab on to a pickup man, riding close by to whisk them to safety -- Youren must hang on until the bronc bucks her off. A hard landing on the arena's well-churned dirt floor has sometimes left her unconscious for a minute or two.  Five decades of watching this physical torture is enough, her family has decided. 
But Youren fears that once she really stops, the years of prophecies from orthopedic surgeons and emergency room doctors will come true.

Source/more:  Utah Daily Herald/AP, http://www.heraldextra.com/content/view/248311/

New GAO report discusses issues with defined contribution plans and lower-income workers

PRIVATE PENSIONS:  Low Defined Contribution Plan Savings May Pose Challenges to Retirement Security, Especially for Many Low-Income Workers

Over the last 25 years, pension coverage has shifted primarily from “traditional” defined benefit (DB) plans, in which workers accrue benefits based on years of service and earnings, toward defined contribution (DC) plans, in which participants accumulate retirement balances in individual accounts. DC plans provide greater portability of benefits, but shift the responsibility of saving for retirement from employers to employees. This report addresses the following issues: (1) What percentage of workers participate in DC plans, and how much have they saved in them? (2) How much are workers likely to have saved in DC plans over their careers and to what degree do key individual decisions and plan features affect plan saving? (3) What options have been recently proposed to increase DC plan coverage, participation, and savings? GAO analyzed data from the Federal Reserve Board’s 2004 Survey of Consumer Finances (SCF), the latest available, utilized a computer simulation model to project DC plan balances at retirement, reviewed academic studies, and interviewed experts.

What the GAO found: 
GAO’s analysis of 2004 SCF data found that only 36 percent of workers participated in a current DC plan. For all workers with a current or former DC plan, including rolled-over retirement funds, the total median account balance was $22,800. Among workers aged 55 to 64, the median account balance were $50,000, and those aged 60 to 64 had $60,600 (see figure below). Low-income workers had less opportunity to participate in DC plans than the average worker, and when offered an opportunity to participate in a plan, they were less likely to do so. Modest balances might be expected, given the relatively recent prominence of 401(k) plans.

Projections of DC plan savings over a career for workers born in 1990 indicate that DC plans could on average replace about 22 percent of annualized career earnings at retirement for all workers, but projected “replacement rates” vary widely across income groups and with changes in assumptions. Projections show almost 37 percent of workers reaching retirement with zero plan savings. Projections also show that workers in the lowest income quartile have projected replacement rates of 10.3 percent on average, with 63 percent of these workers having no plan savings at retirement, while highest-income workers have average replacement rates of 34 percent. Assuming that workers offered a plan always participate raises projected overall savings and reduces the number of workers with zero savings substantially, particularly among lower-income workers.

Recent regulatory and legislative changes and proposals could have positive effects on DC plan coverage, participation, and savings, some by facilitating the adoption of automatic enrollment and escalation features. Some options focus on encouraging plan sponsorship, while others would create accounts for people not covered by an employer plan. Our findings indicate that DC plans can provide a meaningful contribution to retirement security for some workers but may not ensure the retirement security of lower-income workers.

Get the full report (temporary address):  http://www.gao.gov/new.items/d088.pdf?source=ra

New CRS Report discusses lump sum pension distributions

The Pension Protection Act of 2006 (PPA, P.L. 109-280) modified the provisions of federal law that prescribe how the minimum value of a lump-sum distribution from a defined benefit plan will be determined in 2008 and thereafter.  It also established conditions under which payment of lump sums from defined benefit plans will be restricted.  The attached report summarizes the provisions of the PPA that will affect lump sums paid from defined benefit pension plans.

 

The effect of the changes made by the PPA on lump sums paid in 2008 is likely to be relatively small.  An individual eligible for an immediate annuity at age 65 is likely to see his or her lump sum reduced by less than 1%, and those who will be eligible for an immediate annuity at age 60 or age 55 will see the lump-sum value of their benefits reduced by less than 2%.  When the PPA is fully in effect in 2012, the reduction in lump sums will be greater.  Individuals eligible for an immediate annuity at age 65 will see their lump sums reduced by about 9%, and those eligible for an immediate annuity at age 55 will see their lump sums reduced by about 12%.

 

The effect of the PPA on the lump-sum value of deferred annuities also is likely to be relatively small in 2008.  An individual eligible for a deferred annuity at age 65 who takes a lump sum at age 60 is likely to see his or her lump sum reduced by less than 1%, and those who take lump sums at age 55 or age 50 will see the lump-sum value of their benefits reduced by about 3%.  When the PPA is fully in effect in 2012, the reduction will be about 12% for lump sums taken at age 60, 21% for lump sums taken at age 55, and 25% for lump sums taken at age 50.

Get the report. 

Supremes hear 401(k) case

Although U.S. workers can invest money in a retirement fund sponsored by their employer, it is not clear whether they can sue to recover money lost because of mistakes by the fund's administrator. That issue came before the Supreme Court on Monday in a case that could shape the pension rights of 70 million employees.  The case began when James LaRue, a management consultant from Texas, said he lost $150,000 from his 401(k) retirement account when the plan's administrators ignored his instructions to move his money from a high-risk stock fund into government bonds in 2001. LaRue sued his employer, DeWolff, Boberg & Associates, but his claim was thrown out before a trial because, according to the lower courts, the federal law governing pensions and benefits does not allow individuals to sue over losses in their retirement accounts.  His case prompted the high court to reexamine the federal pension law in an era when employees -- not their employers -- are responsible for deciding where their retirement funds will be invested.  In 1974, Congress adopted federal rules for employer-sponsored pension funds and health benefits in the Employee Retirement Income Security Act. In the decades since, the high court has interpreted this worker-protection law to bar employees from suing their employers over benefit claims. For example, the court said employees and their families could not sue for damages if their healthcare plan refused to pay for a needed medical treatment.

Source/more:  LA Times, http://www.latimes.com/news/nationworld/nation/la-na-scotus27nov27,1,1269671.story?ctrack=2&cset=true

Read the briefs:  http://www.abanet.org/publiced/preview/briefs/dec07.shtml#larue

Center for Retirement Research offers hefty research grants

The Center for Retirement Research at Boston College announces the
2008 Steven H. Sandell Grant Program "Call for Proposals."  This annual
program is funded by the U.S. Social Security Administration. The Sandell
Program provides the opportunity for junior scholars from a wide variety
of academic disciplines and senior scholars working in a new area to
pursue projects on retirement income issues. Up to eight grants of 45,000
dollars will be awarded for one-year projects. The submission deadline for
grant proposals is January 31, 2008. Grant award recipients will be
announced in March 2008.  For more information see:

http://crr.bc.edu/index.php?option=com_content&task=view&id=122&Itemid=23

Canadian boomers plan to volunteer "even more" when they retire

The Bank of Montreal has just released one that shows 34% of Canadians aged 45 to 60 volunteer and a further 38% of boomers who do not yet volunteer say they plan to when they retire.  BMO says it started looking into what boomers were planning to do in retirement in October 2005, and found 16% expected to spend “a great deal of time” in retirement doing non-profit and charitable work while 72% said they expected to spend “some time” doing it. The likelihood of spending “a great deal of time” doing charitable work increased with age.Tomorrow, November 15^th, has been designated National Philanthropy Day – right smack in the middle of National Retirement Planning Week. The way BMO explains it, while the boomers have been until recently focused on working and raising their families, Canadian boomers are now setting their sights to helping others. Perhaps the good example of Bill Gates is starting to rub off. 

Source:  National Post, http://communities.canada.com/financialpost/blogs/wealthyboomer/archive/

2007/11/14/a-third-of-boomers-volunteer-and-more-plan-to-when-they-retire.aspx

And did you know this is National Retirement Planning Week?  I didn't...until five minutes ago!
Who makes up the National Retirement Planning Coalition and why aren't they doing a better job of promoting this even?

Seniors get big bucks through Google website ads--and it doesn't affect their social security!!

Jerry Alonzy figured he'd be working into his 70s at least. As an independent handyman at the mercy of weather patterns near Hartford, Conn., he'd always made a decent income that rarely grew.  Then he found Google, and his life changed. Alonzy, 57, now makes $120,000 a year from the ads Google places on his Natural Handyman website, and he couldn't be more thrilled.  I put in two, maybe three hours a day on the site, and the checks pour in," he says. "What's not to like?"  In return for placing its ads on websites and blogs, Google pays Web publishers every time one of its ads are clicked. Those clicks help keep Alonzy and his wife living comfortably and talking about moving to Hawaii. "All I need is a laptop and a high-speed Internet connection, and I can live anywhere."  The Internet may be a young person's medium, but the retired and those nearing retirement such as Alonzy have found that they can work the Web just as well. Sometimes, such "Gray Googlers" can live a richer, more financially rewarding life than when they were supposedly working.  "Google isn't just for kids anymore," says Google executive Kim Scott, who runs the company's AdSense program, the ad platform that provides the income for Web publishers such as Alonzy and others.

Source/more:  USA Today,  http://www.usatoday.com/printedition/money/20071026/greygoogle.art.htm

Midwest Pension Rights Project loses funding

After 1After four years of helping people track down "lost" pensions, the Midwest Pension Rights Project is in danger of shutting down.  The project, housed in the Women's Support and Community Services building on Hampton Avenue in St. Louis, serves people in five states, including Missouri and Illinois. Since October 1993, it has helped find pensions worth $12.5 million for more than 2,600 people, recovering $11.94 for every $1 in federal money it has received since October 1993.  But late last month, the project received word that its federal grant wasn't being renewed. The grant provided three-fourths of the budget for offices here and in Chicago, said Suzanne Lagomarcino, the project's manager and executive director of OWL, the Voice of Midlife and Older Women.   Lagomarcino said the project hasn't received a good explanation of why the $157,000 grant request was turned down, although she had been told in August that the U.S. Administration on ­Aging would approve just five of six projects that had applied for funds.  The pension project also receives small grants from private foundations, and its office is provided by Women's Support. Lagomarcino is looking for alternate funding sources that can keep the project going through early next year.

Source/more:  St Louis Post-Dispatch, http://www.stltoday.com/stltoday/business/stories.nsf/0/7A878521571D5CAC8625737E004E665E?OpenDocument

Older Americans borrow against 401(k)s...tax hits and all

Despite potential tax and investment problems, more investors have been borrowing from their 401(k) plans or taking hardship withdrawals in recent months, some retirement plan providers say.  Many in the field expect more borrowing in 2008, as consumers struggle with tighter credit and potentially higher mortgage payments.  "I don't think it's a groundswell but it's enough to be noticed," said Rick Meigs, president of 401khelpcenter.com, which provides information on 401(k) plans. Increased borrowing on 401(k)s could be because of the credit crunch and slumping housing prices. To be sure, the indications are preliminary; it's too early to say why it's happening, according to the Hartford Financial Services Group.   Borrowing against your retirement nest egg may seem tempting but it presents a host of problems. It could significantly reduce your savings at retirement and create an expensive tax bill if you can't repay the loan when it's due.

Source and more:  Chicago Tribune, http://www.chicagotribune.com/business/yourmoney/chi-ym-borrowing-1014oct14,0,5181066.story

Kansas Silver Hairs speak out on retirement

Delegates to the Kansas Silver Haired Legislature spoke out in force during a debate Tuesday over whether to support a resolution in favor of a cost-of-living increase in state employees' retirement benefits.  As one former Boeing employee stood in opposition, saying he didn't think the state employees benefits were the province of the Silver Haired Legislature, there was an immediate resistance.  Members of the Silver Haired Legislature will convene again at 8 a.m. today when they will take final action on the items discussed Tuesday.  Jim Miller, of Topeka, responded that seniors had to stand as a group in support of better retirement benefits in the face of current workers who might "resent" having to pay taxes for older Kansans.  "We're going to be facing an intergenerational warfare," he said.  Bette Ford, of Valley Falls, stood to tell the delegates that she had been a state employee, and in the 20 years since retiring she has had one incremental increase.  Throughout the process, delegates clapped as speakers made points they liked. The proposal to support the retirement increase eventually was passed.

Source/more:  Topeka Capital Journal, http://cjonline.com/stories/100307/sta_204848259.shtml

Warfare?  Come now!  That's inflammatory!!

Canada: Older couples don't always agree about how to spend retirement funds

Many older couples are approaching retirement with very different ideas about what those golden years will be like, even about whether they want to retire and how much time they want to spend together once they do, says a bank report, titled We Need to Talk.  A lot of couples age 50 and above simply don't agree with each other on important aspects of retirement because they don't discuss the issue enough, according to the Scotiabank study, based on results of a survey by pollster TNS Facts.  "We have seen many retirement plans hit a road bump almost immediately out of the gate because the shared vision that the couples thought they had wasn't as shared as it could be," said Barry LaValley, a retirement planning expert, working with ScotiaMcLeod. "Part of the problem is that couples don't often talk about the change in the relationship dynamic and how their day-to-day life will change in retirement."

Source and more:  Montreal Gazette, http://www.canada.com/montrealgazette/news/business/story.html?id=2cc6db52-d8a1-4d29-9510-0e0e5fc3063d

Israel pension agreement guarantees pensions access for all

In what is being termed as an "historic moment" by industry and business leaders, Shraga Brosh, president of the Manufacturers Association of Israel, and Ofer Eini, chairman of the Histadrut Labor Federation, signed an agreement on Thursday guaranteeing that beginning next year all of the country's workers will have pension plans.  "An agreement like this has never before been signed in the history of the country," said Brosh. "At the end of the day, employers will have to pay more to the employees, but they will do so trusting that this is the best way to support all of the country's workers and to allow them to live properly even after retiring."  According to the agreement, beginning in January 2008 employees who have been working at the same company for at least nine months will be immediately eligible to start receiving payments into their pension plans, beginning with allocations of 2.5 percent of their monthly salary, with this number increasing to 5% in 2009, 7.5% in 2010, 10% in 2011, 12.5% in 2012 and 15% in 2013.  The agreement additionally stipulated that workers will be able to place the money either into a straight pension fund, a trust fund or a patient fund.

Full story:  Jerusalem Post, http://www.jpost.com/servlet/Satellite?cid=1184766016845&pagename=JPost%2FJPArticle%2FShowFull

Teachers file suit against NEA over annuities

A lawsuit filed last week in federal court in Washington State contends that the National Education Association breached its duty to members by accepting millions of dollars in payments from two financial firms whose high-cost investments it recommended to members in an association-sponsored retirement plan.  The case was filed on behalf of two N.E.A. members who had invested in annuities sold by Nationwide Life Insurance Company and the Security Benefit Group. It contends that by actively endorsing these products, which carry high fees, the N.E.A., through its N.E.A. Member Benefits subsidiary, took on the role of a retirement plan sponsor, which must put its members’ interests ahead of its own.  By taking fees from the two companies whose annuities N.E.A. Member Benefits recommended to its members, the N.E.A. breached its duty to them, the suit contends. The N.E.A. is the nation’s largest professional organization; its Web site says it serves 3.2 million workers in education, from preschool to university graduate programs.  The suit reflects heightened concern among retirement plan participants that excessive fees are diminishing their savings and enriching financial services firms. Last November, the General Accountability Office published a study concluding that retirement plan participants, as well as the Labor Department, needed clearer information on fees in these investment vehicles.

Source:  New York Times, http://www.nytimes.com/2007/07/17/business/17suit.html

NYT exposes "senior financial advisors"

The NEW YORK TIMES ran an expose on so-called certified senior financial advisors who hold themselves out as experts on senior investing, and often sell products that aren't suited to older clients.  To wit: 

Many graduates of these short programs say they only want to help older Americans. But they are frequently dispensing financial counsel they are unqualified to offer, advocates for the elderly say. And thousands of them are paid by some of the country’s largest insurance companies — including Allianz Life, Old Mutual Financial Network and American Equity Investment Life Insurance — to sell elderly clients complicated investments that economists say most retirees should never own.  The prize for these insurers and sales agents is a piece of the $15 trillion held by Americans 65 and older, the largest pool of assets ever amassed by an aging population, according to the Government Accountability Office.  As older Americans’ wealth has grown, so too have programs that offer quickly earned credentials or that teach agents how to sell to the elderly. The number of certified senior advisers has increased by 78 percent in the last five years. More than two dozen such programs now exist, and have enrolled more than 39,000 people over the last decade. As more baby boomers retire, the number of programs and enrollees is likely to grow significantly, analysts say.

More here:  http://www.nytimes.com/2007/07/08/business/08advisor.html

Supremes deny cert in prisoner pension case

The Supreme Court refused to review a case today that undercuts Michigan’s use of inmates’ pensions to pay the costs of imprisonment.  A federal appeals court ruled that pension managers can disregard directives from Michigan wardens to deposit inmates’ pension money in their prison accounts.  The DaimlerChrysler-UAW pension plan argued successfully that the state ran afoul of federal pension law, which prohibits transfers of benefits without the pensioner's permission.  The state says the appeals court voided Michigan’s powers restricting an inmate’s access to funds.  The Michigan State Correctional Facility Reimbursement Act requires prisoners to reimburse the state for their confinement costs from their own assets, including pensions. In addition, state corrections officials require inmates to receive all money through their prison account, to limit any potentially illegal or fraudulent activities outside prison.  See http://www.supremecourtus.gov/orders/courtorders/061807pzor.pdf

The Sixth Circuit decision is available at

Issue brief--Older Workers: Lessons From Japan

Working longer is one way to improve the retirement security of today’s older workers. It increases retirement resources while shrinking the period over which these resources will be needed. Working longer would also contribute to economic growth, allowing the nation to benefit from the knowledge and skills of older Americans. And it could potentially reduce spending on federal programs such as Medicare and Medicaid.

As U.S. policymakers consider ways to encourage people to extend their worklives, one place to look is Japan, the only major industrial nation with higher labor force participation rates among older workers than the United States. This brief presents five reasons why the Japanese work so long.

Aging rock stars--rock all night and party every day

In the next few months, a handful of past acts of legend, minus some hair and appetite for late nights, will take to the stage for a globe-trotting, nostalgia-tinged encore following a slew of band reunions.
The Police, The Who, Sly and the Family Stone, Iggy Pop and The Stooges and what remains of The Doors are all heading once more for the road.  "The desire to play never goes away and neither does the desire of fans to see them perform," says Giles Green, senior vice president of Sanctuary Records, an independent record label specialised in "heritage" music acts.  "Every heritage act can return, perform, and find a section of the market that is interested, wants to revisit their youth, and re-live a time gone by."

Go here for more--including a really scary picture of Iggy Pop.... http://news.sawf.org/Lifestyle/37106.aspx

EBRI 60th conference is May 3

EBRI's 60th policy forum, The Impact of PPA, FASB, and GASB on Defined Benefit Pension Plans, will be held in Washington, DC, on Thursday, May 3, 2007." For more information, please contact Alicia Willis at (202) 572-7422; e-mail: willis@ebri.org, or Jack VanDerhei at (202) 775-6327; e-mail: vanderhei@ebri.org

http://www.ebri.org/

Agenda:  http://www.ebri.org/pdf/PolicyForumAgenda-May07-Final.pdf

Minnesota AG sues California trust mill

Minnesota's Lori Swanson today became the third state attorney general in under a year to take legal action against a so-called "trust mill."  Swanson today filed suit against two California businesses operated by the same family. Swanson alleges the two bilked Minnesota seniors out of millions of dollars.  She charges that American Family Legal Plan (AFLP) inappropriately sold "living trusts" to as many as 2,000 Minnesota seniors. She also charges Heritage Marketing and Insurance Services, a related company, with selling annuities deceptively.  Both companies are owned and controlled by father-and-son partnership Jeffrey and Stanley Norman and allegedly preyed on the same elderly people.  "These companies deceptively sold boilerplate living trusts to senior citizens regardless of whether those trusts were suitable for the seniors' estate planning or financial needs," Swanson said.

Read more about the lawsuit at Legal News Line.

Dole and Shalala will head up VA hospitals investigation

President Bush named former Sen. Bob Dole and former Secretary of Health and Human Services Donna Shalala on Tuesday to lead an investigation of problems at the nation's military and veterans' hospitals.  "We have a moral obligation to provide the best possible care and treatment to the men and women who served our country," Bush said in a speech to the American Legion. "They deserve it and they're going to get it."  Already grappling with low approval ratings and eager to avoid charges that he failed to act promptly, Bush said an interagency task force of seven Cabinet secretaries, led by Veterans Affairs Secretary Jim Nicholson, would be convened to determine what can be done immediately to improve veterans' care.  The president announced last Friday he had ordered a comprehensive review of conditions at the nation's network of military and veteran hospitals, which has been overwhelmed by injured troops from the wars in Iraq and Afghanistan.  The review came in the wake of disclosures of shoddy outpatient health care at Walter Reed Army Medical Center, one of the nation's premier facilities for treating veterans wounded in Iraq and Afghanistan.

Read more at Yahoo News/AP.

How serious is the President about improving our vets' care?  You be the judge:  look at his 2008 budget proposal.