President Signs Landmark Pension Reform Into Law
President Bush has signed off on pension reform, finally concluding a debate that has swirled around Capitol Hill for years. The Pension Protection Act of 2006 enacts sweeping changes that will affect defined benefit plan sponsors, workers and — eventually — retirees. Court Rules IBM’s Cash Balance Plan Is Not Age-Discriminatory
On August 7, the Seventh Circuit Court of Appeals ruled that IBM’s cash balance plan is not inherently age-discriminatory. In a strongly worded decision, the court rejected arguments against hybrid plans, specifically that: (1) compound interest is age-discriminatory, and (2) the accrual rate of the normal retirement annuity benefit is the only standard for judging age discrimination. SEC Finalizes Revised Executive Compensation Proxy Disclosure Rules
The Securities and Exchange Commission voted unanimously to adopt a sweeping overhaul of proxy disclosures for executive compensation. The new disclosures will give shareholders a far more complete picture of compensation paid and payable to the CEO, the CFO and the three highest-compensated named executive officers. FASB to Implement Postretirement Benefit Accounting Reform in 2006
The Financial Accounting Standards Board is moving ahead with the first phase of its proposed changes to postretirement benefit accounting, which involves recording a plan’s underfunding or overfunding on the corporate balance sheet. IRS Issues Final Regulations on Comparable Contributions to HSAs
On July 31, the IRS issued much-anticipated final regulations on how employer contributions to health savings accounts can satisfy the comparability rules. The final regulations are substantially similar to the proposed rules (see Watson Wyatt Insider, October 2005). Electronic Filing of Form 5500 and Proposed Form Revisions
Companies must file their Form 5500s electronically for plan years beginning January 1, 2008, under final guidance recently released by the U.S. Department of Labor’s Employee Benefits Security Administration. Pension Funding and Business Risk in 2005
Over the last six years, pension finances — just like the stock market — have been riding a roller coaster. Before then, defined benefit plan assets were outpacing pension liabilities.
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