Category: Benefits

The law firm of Reish, Luftman, Reicher & Cohen has posted on their website the Memorandum in Support of Tittle Plaintiffs’ Motion for Preliminary Approval of Proposed Partial Settlement and Conditionally Certifying Class for Purposes of Settlement (pdf 135 pages). (Thanks to Benefitslink.com for the pointer.) The settlement was reached on Wednesday, May 12, 2004 as discussed in previous posts here and here.

The Memorandum contains an interesting discussion on the issue of damages:

To determine damages, a Court may look at the return plaintiffs’ would have obtained had the plan’s investment in Enron stock been invested instead in the best performing fund alternative in the plan. . . The Defendants will undoubtedly attempt to dispute this measure of damages or offer some alternative measure of damages. . .

In order to assist the Court with its evaluation of the adequacy of the settlement amount, the following information is provided with respect to theoretical damages for both the Savings Plan and ESOP. The analysis for the Savings Plan includes separate calculations of both “purchaser” and “holder” damages because both those who held stock in their accounts at the beginning of the Class Period and allocated moneys to the Enron Stock Fund (and received matching contributions from Enron in the form of Enron common stock) during the Class Period were damaged. . .[T]the approximate range of total holder and purchaser damages for the Savings Plan and the damages for the ESOP, not taking into account the risk of not prevailing, is between $1.1 billion and $1.2 billion. Therefore, under scenarios assuming the highest conceivable recovery after a full trial on the merits, the proposed settlement amount is between 7.73% and 7.09% of the total potential damages suffered by the Savings Plan and ESOP. If, as the defendants likely will argue, only purchaser claims for the Savings Plan may be considered, the range of alleged damages is between $856 and $865 million, under which scenario the proposed settlement amount is between 9.94% and 9.83% of the damages allegedly suffered by the Plans.

This article from the HoustonChronicle.com–“Recovery is closer for Enron retirement cash
But Lay, Skilling hold partial claim,” reports that “[a]bout 20 percent of the total would likely be consumed by federal fines and plaintiffs attorneys fees.”

The U.S. Senate Special Committee on Aging held a hearing today on the topic of health savings accounts. You can read testimony from the hearing or view the hearing at this link. (There is some good information here for those interested in HSAs, especially this survey from Mercer.)

June 2004 Applicable Federal Rates are here. (Compliments of Benefitslink.com)

Speaking of Benefitslink.com, Dave Baker, benefits-internet-guru, has rolled out a great new search engine, at no extra charge, I might add. Thanks, Dave! If you want to thank him too, you can do so by clicking here.

Palmer & Dodge LLP has published a handy summary (pdf) of the benefits issues pertaining to the legalization of same-gender marriages in Massachusetts. Also, this article from BusinessWeek Online indicates the legal battles ahead will keep benefits professionals very busy. Some companies are already scaling back their domestic partnership benefits programs as discussed in this article here from the Washington Post. And cost will be a factor as this article from the Washington Times reports:

A General Accounting Office report lists 1,138 federal laws in which marital status conveys benefits, rights or privileges. The benefits include Social Security, disability payments, food stamps, Medicare and welfare. “Won’t this just break the bank?” said Rep. Spencer Bachus, Alabama Republican, during a House Judiciary Constitution subcommittee hearing last week. . . Health care and retirement benefits for domestic partners of federal employees would cost the government about $1.4 billion from 2004 to 2013, according to a Congressional Budget Office report. . .

Also, retired government employees in Iraq are finally getting their pensions, as reported here by Blogger Arthur Chrenkoff. (From the Wall Street Journal‘s Best of the Web Today.)

Oh, and, what new skills do you need for the 21st century? The answer is here. (From the TaxGuru.)

The DOL has announced that it is launching a national education campaign called “Getting It Right—Know Your Fiduciary Responsibilities” in this press release. An excerpt from the press release:

“Strong fiduciary oversight and protecting workers’ benefits is our highest priority,” said Secretary Chao. ‘Getting it Right,’ however, can be challenging. This is particularly true for small and medium-sized employers who have limited time, resources and access to professional help with benefit programs. Today, we are announcing a series of educational seminars to help plan sponsors understand the rules and meet their responsibilities to workers and retirees, thereby improving their financial security.”

Visit the DOL’s Fiduciary Education Campaign website here.

Read U.S. Secretary of Labor Chao’s comments on the program here in which she states:

The Department uncovered the need for this kind of program because of our vigorous enforcement efforts in the health benefits and pension plan areas. In FY 2003 alone, our enforcement recovered $1.4 billion for employee pension and health benefit programs. . . [M]any employers have not implemented a systematic process to educate fiduciaries about their responsibilities under ERISA. We have found that many ERISA fiduciaries are generally not full-time plan fiduciaries. They have other jobs—for instance, running the company—and may not spend time daily focusing on their retirement plans. This program offers a helping hand to those who want to do the right thing, so that the pension plans of workers will be better protected. That’s the goal of compliance assistance.

You can also listen to an audio version of the news release here.

Some related reading from BizJournals.com: “Are you living up to responsibility?“

The Associated Press via SFGate.com is reporting that, for the second time in a week, House Republicans have blocked a Democratic attempt to force a vote on the new overtime pay rules issued by the Department of Labor and discussed in a previous post here. According to reports:

Tuesday’s vote, 216-199, barred an effort by Democratic Rep. George Miller of California to get a vote on the new rules, which take effect in August. Miller’s provision would require the Labor Department to retain the eligibility of all workers who currently qualify for overtime pay. The House had also rebuffed Miller’s effort last week.

The Senate approved a similar measure earlier this month which you can read about here.

The Internal Revenue Service has announced that it is introducing two new tools to help small businesses keep their employee retirement plans compliant with federal tax law. The tools are as follows:

• A Check-Up for Your SEP, SIMPLE or Similar Plan
• A Newsletter entitled “Retirement News for Employers.” You can access the first installment for Spring 2004 here.

The Newsletter has a section entitled, “We’re With the Government and We’re Here to Help You.” (It is great to know the IRS has a sense of humor. Remember that line when you’re audited. :-)

You can read more about how the IRS has used these checklists in the past in this previous post entitled “Plan Information or Pre-Audit Preparation Packets?“

How about this? (Courtesy of the BBC via Discourse.Net) Thanks to TaxProf Blog for the pointer.

Brooks C. Holtom, Ph.D., has written an interesting article at About.com–“Are You Getting the Best Benefit From Your Benefits?” Here’s an excerpt from the article:

Is your benefits package giving you the payback you deserve in increased employee appreciation and satisfaction? Chances are, it’s not. On average, organizations spend 41 cents for benefits for every dollar of payroll. That’s 29 percent of the total employee compensation package. Research reported in the journal, Personnel Psychology, suggests that employees only understand and appreciate between 31 and 68 percent of the cost or market value of the benefits they receive.

What is most interesting is the Benefits Roundup which contains a list of benefits supposedly being offered by different organizations around the country. The “Bring a pet to work” day and bereavement period for loss of pets are ones I confess I had not heard of before.

Bev Butula has written an article on blogs for the Technology section of the May edition of the Wisconsin Lawyer. The article entitled “Blogs – Another Online Resource” provides some good thoughts on the benefits of reading blogs:

A good blog can enhance professional development because keeping informed translates into good business. Law journals, newsletters, magazines, and newspapers can accumulate in an office, often read only when a large block of time becomes available. Office routings can be slow in arriving. On the other hand, reading a Weblog (and possibly having it delivered to your email account) offers a concise, current, and focused summary of relevant information. And, unlike office routings or journals, a link (if included) supplements the Weblog piece by leading the reader to a decision, opinion letter, or full text article.

If you have ever been a part of large organization, you can relate to that statement. Remember that newsletter that arrives in your office in May of 2004 when it was dated back to October of 2003? As it got passed around from office to office, and sat on desk after desk for weeks, it finally arrives in your inbox. By then, the news is old, stale and outdated. . .

(No stale stuff here at Benefitsblog–hopefully! Many thanks to Bev for mentioning Benefitsblog in her article.)

The Senate Finance Committee (SFC) has released its report on the National Employee Savings and Trust Equity Guarantee (NESTEG) Bill of 2004, along with a summary of the bill. (You can access the Revenue Charts for the bill here.) The Committee approved the measure on September 17, 2003, as discussed in a previous post. According to CCH, it is unclear when further action on the bill will be taken. CCH also reports that a Committee spokesperson has remarked that staff turnover and the subject’s complexity delayed release of the documents until now.

Also, RIA is reporting that the House is expected to consider the following tax-related bills:

• H.R.4109, the “Simple Tax for Seniors Act” which would allow seniors with social security and pension income to file their income tax returns on a new simplified tax form (to be designated “Form 1040SR”) without regard to the amount of their taxable interest or taxable income.
• H.R. 4359, to make permanent the $1,000-per-child tax credit and ensure that soldiers serving in a combat zone do not lose eligibility for the refundable credit by reason of receiving nontaxable combat pay.