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1995 - 2001

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Private Pension Issues 

Archives  2004

Six Are Found Guilty of Tax-Shelter Fraud
Government Cheated Out of $32 Million (December 28, 2004)

A Seattle federal court jury found six people guilty yesterday of conspiring to cheat the government out of $32 million through the use of an overseas tax shelter that ended up siphoning millions of dollars from investors. These shelters, which can be fraudulent, also withhold taxes that otherwise would help finance the "common good" or public welfare, such as fire departments, schools, etc. 

World: The Number of Old People in the World is Soaring. Soon They Will Change Everything from Politics to Tax Structures to the Width of Doorways (November 29, 2004) 
"The elderly are no longer a sidelined sliver of society, but its mainstream. . More and more, it's not the children who are our future, it's the seniors," says Ann Pawliczko of the United Nations Population Fund. It's why societies have to change. The rapidly shifting demographics now force a radical rethinking of many facets of our lives. Two billion elderly will need new systems of care and support. Some changes have been already been made. Different countries have their own approaches. But it's still necessary to change mentalities, because the young often abandon older persons and view them as "dead."

Age Before Duty (November 28, 2004) 
More seniors today continue to work through retirement. Some change careers after a lifetime on another job track. Some want to stay physically and mentally young. Others have to work for social or financial reasons. This situation benefits both seniors and younger workers, as well as employers. Furthermore, it demonstrate how society is going to change for the future older persons

Retirement Isn't Just a Date - It's a New Life (November 23, 2004)
Retirement has to be prepared for. "The biggest mistake people make is not realizing there's a psychological component to retirement." It represents many transitions in a seniors's life : they no longer have the identity that their job gave; they may change their community and their relationships. "Leaving a job is a lot more than just ceasing work,"
The author claims that fewer than 10% of retired or partly retired persons had any preparation on how to spend their time.

USA : The Majority of The Baby Boomers in Good Health Are Not Going to Retire... (November 19,2004) 
About three-quarters (74%) of affluent Baby Boomers who are still at work do not plan to fully retire when they reach their chosen retirement age, according to a new report released by the Spectrem Group. (The study defines affluent as those households with $500,000 in investment assets.) In lieu of traditional retirement, 34% of this group intends to work a reduced schedule, 30% plans to start a new career, and 10% does not expect to retire at all. Further, nearly two-thirds of affluent, non-retired Baby Boomers (63%) intend to finance their eventual retirement by selling their primary residence. Does this mean that even the affluent worry about having cash to fund retirement? Spectrem Market Insights(TM) reported these findings in a recent publication, "Serving Baby Boomer Retirees."

The « Papy Boomers » Reinvent Work ! (November 9, 2004)
(Article in French)
In the United States, during the 1950's, many employees left their jobs at retirement age and devoted themselves to a life free of paid work. It meant staying at home, travel, playing golf, tennis, or bridge with other retiree friends. Now, this time doesn't exist anymore! In the USA, many older persons are really active and some seniors now return to the workplace. And this movement is likely to continue as baby-boomers generation get older.  

SEC Said to Probe Pension Accounting (October 18, 2004)
The Securities and Exchange Commission (SEC) is looking into whether six large companies manipulated their assumptions about pension fund performance. The SEC Enforcement Division sent letters to those companies earlier this month, asking for documents to explain how they came up with their estimates. According to the SEC, some companies assume returns of 9 percent or more on pension fund assets, which is “tough to justify.” The issue in question is that if the estimated return exceeds the pension cost, the company can count the surplus in its earnings. If the large companies are lying about their performance, it makes choosing an appropriate “private” pension problematic for workers of any age.

Cost of Pensions Hurts N.Y. Communities (October 10, 2004) 
Ogdensburg is about 220 miles away from the new $82.5 million limestone-and-granite-veneered 15-story building that houses the offices of the State Retirement System in downtown Albany. But decisions reached there and at the Capitol have affected the lives of people like Shelley Breen, a mother of eight who lives in Ogdensburg, a city of 12,000 people along the St. Lawrence River near the Canadian border. 

Squeezing More Pennies from a Cache of Cash (October 10, 2004)
Investment in stable value funds could help U.S. workers save more money for their retirement. While interest rates for many types of investment keep falling, stable value funds, devised primarily for employer-sponsored 401(k) retirement plans, have the average returns of more than 4 percent. Gina Mitchell, president of the Stable Value Investment Association, says workers should examine stable value funds since it “[has] been the life raft for retirement savers through the rocky times of the last four years.” Terms such as guaranteed interest income funds, capital preservation funds, and fixed-income funds are known as the synonyms for stable value funds. Sorting out options is not easy.

Pension Guarantor Calls for Changes –PBGC Asks Congress for New Powers- (October 8, 2004)
Facing a $9.7 billion deficit, the Pension Benefit Guarantee Corp. (PBGC), a federal insurance agency, has asked Congress to re-examine the powers granted to PBGC. They also suggested that PBGC should be given more flexibility to negotiate with bankrupt companies in order to keep them operating. Following a number of bankruptcies, especially in the steel and airline businesses, the agency’s deficit is estimated to increase if no changes are made. “The longer-term solvency of the pension insurance program … is at risk,” said Bradley D Belt, executive director of the PBGC, in the Senate Commerce Committee. Current arrangements mean that companies can “game” or cheat the PBGC; further, the agency has no way to attach financial assets to protect employees’ pensions. 

‘Pension Fairness Act’ Proposed to Freeze Some Executive Benefits (October 8, 2004)
The Pension Fairness Act, a bill introduced earlier this month, will prohibit bankrupt companies with under-funded pensions from paying special pensions to top executives for the following five years. Many bankrupt companies, including a major airline industry like Delta Air Lines, tend to shed pension payments for their employees while keeping special payments for top executives and directors. Though the bill has little chance of passage before Congress recesses due to the election, Ellen E. Schultz, from the Wall Street Journal, points out that the introduction of the Pension Fairness Act is among the first efforts by a lawmaker to link “the fate of executive pensions to rank-and-file pension.”

Report Sees Retirement Plan Growth: Average 401(k) Up 25 Percent (September 30, 2004)
The 401(k) retirement plans grew 25 percent in 2004, reaching the average balance of $55,000, according to Fidelity’s fifth annual Building Futures, the nation’s biggest fund management company. In spite of the growth, however, the survey conducted by the company shows that “a disturbing number of Americans are under-saving for their retirement years.” In addition, only about 10% of the American workers who are using a 401(k) plan are saving $12,000 a year, the maximum amount allowed to save under the 401(k) plan. Time to re-think 401(k)’s? 

“Goodbye, Pension. Goodbye, Health Insurance. Goodbye, Vacations” (September 23, 2004)
US welfare capitalism is going to disappear, and the US will look more like Europe in terms of welfare economy, according to author Daniel Gross. He points out the changing nature of private welfare programs in the US. While prominent companies of the 1920’s made tremendous efforts to ensure the welfare of their employees, those of the 21st century tend to shed company’s health insurance as well as pension plans. Businesses increasingly switch their pension plans to 401(k)s, and a decreasing number of workers are now covered by employers’ health insurance. Thus, private sector no longer provides such benefits. Will the public sector begin to pick up the slack? Or will US workers simply become poorer and die earlier due to sickness and old age?

Miami Police Ex-chief Denied Pension (September 16, 2004)
Donald Warshaw, former Miami Police Chief, is not entitled to his annual police pension of about $128,8000 on the ground that he was convicted of diverting $70,000 from a charity for his personal use, the Florida State Appeals Court ruled. Attorney Ivy Ginsberg who represents Warshaw said “We’re planning to move for a rehearing by the entire court” and claimed that the funds Warshaw was convicted of misusing were not really public money but the private funds of Do The Right Thing that was meant be spent to reward teens for good civic deeds. Though he has not pleaded guilty to this case, he was once arrested for federal mail fraud in 2002 and has the record of serving one year in federal prison.

17,000 Enron Pension Holders to Get Paid in Full (September 14, 2004)

Enron finally agreed to fund fully the under-funded pensions for its 17,000 retirees, Houston Chronicle reported. Though retirees in four different pension plans will receive the full amount of pension that was originally expected, the issue of future payments for current employees has not been solved. According to Houston Chronicle, Enron will most likely arrange with an insurance company to take over the plans.

Pension Agency May Be Broke by 2020 (September 14, 2004) 
The Pension Benefit Guarantee Corp. (PBGC), the government agency that insures corporate pensions of about 43 million more, is estimated to go “broke” by 2020 without a taxpayer-funded government bailout, according to a study conducted by PBGC. Due to the increasing numbers of bankruptcy in private companies, PBGC now pays benefits to some 1 million Americans. The study also shows that, out of those insolvent companies, the airline and steel industries had accounted for more than 70 percent of claims since its insurance program was created in 1974. If U.S. Airlines defaulted on their pension obligations, the agency itself will end up being “insolvent” by 2018.

As Returns Sag, Employers Turn Up Heat on 401(k) Fees (September 14, 2004)
Do you know that the 401(k) retirement plan often has some invisible fees? Many of Schulte Roth’s employees did not--- earlier this year, after finding out how much they lost in those hidden fees, they finally persuaded Wachovia Corp. to slash those fees that were charged by the bank to run Schulte Roth’s retirement plan. Fees in question are usually a percentage of money invested and they usually range from 0.5% to 2%. However, the quarterly statements only show investors how much money their 401(k) made or lost in the previous quarter, which are calculated after the fees are deducted. This means, if your quarterly statement shows a gain of 5%, your fund may have gained up to 7% but 2% deducted from your fund as a fee. Ken Brown, from the Wall Street Journal, writes about the little known truth about 401(k) “fees.”

Pension-Fund Billions for Hedge Funds –Institutions to Invest $300B in Hedge Funds (September 13, 2004)
Institutions may boost their investments in hedge funds by as much as $300 billion in the next five years, according to the study conducted by the Bank of New York. Partly because stock market losses caused pension fund deficits in the past three years, many institutions are now looking into investing in hedge funds. “Institutions will lower their expectations for annual returns to 8 percent as they look for less-volatile investments and lower risk,” the study said. It also predicted that defined-benefit pension plans will be the fastest segments to increase investment in hedge funds.

Pilots Might Alter Their Pension Plans- Norhtwest Weighs Retirement Benefits (August 27, 2004)
Pilots unions at seven of the biggest U.S. airlines, including Continental Airlines and Northwest Airlines, are gearing up to protect their pension plans, Bloomberg has reported. Their common strategy focuses on freezing the current plan and switching to defined benefit plans, such as a 401(k). Defined contribution plans have become popular in recent years because they provide benefits to employee accounts on a regular basis before retirement. “We want to look at ways to increase the security of our plan,” Northwest’s pilots union spokesman Hal Myers commented.

Retirees May Suffer In Pension Takeover (August 30, 2004)
Duane Warning, a 60-year-old former pilot in Chicago, wound up with only about half of the pension that Trans World Airline promised him. After airline companies go bankrupt and a federal insurance agency takes over, retirees like Warning do not receive 100 percent of the benefits once promised to them. “I was decimated. I was upset. But there was nothing I could do. I had to swallow it,” said Warning helplessly. Though pension funds are supposed to be protected by the Pension Benefit Guarantee Corp., a federal insurance agency, why can’t they often get the expected amount of pension? Why do those retirees who worked for the company for a long time have to suffer from the company’s failure? And it may get worse as US taxpayers must bail out the federal insurance agency itself. With the current regressive tax system in the U.S., low and middle income workers who actually pay income tax will have to supply most of the funds. Rich Americans have hired accountants or bank offshore to allow them to duck taxation. Not a pretty picture.

Struggling Pension Plans May Need $350 Billion Bailout, Study Says (August 25, 2004)
According to the study conducted by the Cato Institute, a $350 billion pension shortfall among U.S. companies may force the Pension Benefit Guaranty Corp (PBGC), federal insurance agency for private companies, to seek a taxpayer bailout. The PBGC's deficit has been dramatically increasing due to the skyrocketing number of businesses that claim a bankruptcy, including Bethlehem Steep Corp. and US Airways, and the deficit is likely to swell to $18 billion in the next 10 years. "If exposures create claims that reach catastrophic levels, taxpayers will be called upon to provide a bailout," says Richard Ippolito, who wrote the Cato study.

Study by the Century Foundation: Promises To Keep (August 11, 2004)
"What can working people count on for their retirement?" ---The Century Foundation raises a fundamental question in its report about the future of the U.S. pension systems. While the Social Security system is currently estimated to be able to provide promised benefits through 2052, it will definitely need additional funding after that. Private pensions, on the other hand, may lower benefits or raise the level of insurance contributions when they want to, and thus seem to be less reliable. While more companies claim bankruptcy and tend to shed their pension plans, maybe it's time for us to think about and re-examine the structure of private versus public pension guarantees.

Admit We Have A Problem (August 9, 2004)
Bob Herbert, New York Times journalist, strictly points out that American citizens, including seniors, are facing a serious economic decline. As a result of more income going to housing and other rising expenses related to medical care, education, vehicles, and so forth, "more people will end up bankrupt than will suffer a heart attack" or "than will graduate from college" in 2004. About 32,000 jobs were created in the month of July, but it is "equivalent to no jobs," considering the size of the U.S. economy. No matter which party wins the presidency, Herbert concludes, the first step for the better U.S. economy is to recognize and acknowledge the enormous size of the problem we have.

Gov't Holds Millions In Unclaimed Pensions (August 6, 2004)
The federal government is holding approximately $75 million in unclaimed pension benefits for thousands of Americans, the Associated Press reported. The Pension Benefit Guaranty Corp., a federal insurance agency, has a list of about 26,000 people who are eligible for the benefits. The unclaimed benefits vary from person to person, but they range from $1 to as much as $264,548. If you believe you or anybody you know may be eligible for those lost pension money, you can check for their names on the PBGC website at 

Enron Battles Agency Over Funding Of Pensions (August 6, 2004)
Enron Corp., facing the emerging criticism over its under-funded pension status, has announced that they would seek to work out a "standard termination" for four of its pension plans. Applying a standard termination for the workers and retirees means that Enron would buy annuities from private insurers and pay all the plans' benefits. However, according to Pension Benefit Guaranty Corp.(PBGC), a federal insurance agency, "Enron has failed to make any progress toward executing a standard termination" and thus the company's sincerity is questionable. If Enron fails to carry out its commitment to exercise a standard termination, PBGC is to pay all of the guaranteed benefits to Enron pensioners, which could cost as much as $321.8 billion.

Pension Funding Improves Among Large Companies (August 5, 2004) 
The funded status of pension plans among large US companies improved from an average of 82% in 2002 to 88% in 2003, according to a study conducted by Watson Wyatt consulting firm. Kevin Wagner, a consulting actuary at the firm, has commented that the change is to be highly regarded, considering the market tendency of "low interest and weak investment performance" over the past three years. The analysis was based on information gathered by 622 of the nation's 1000 largest companies. But why aren't pensions fully funded? Why do companies' keep tapping the pensions funds that they are obligated to pay their pensioners?

Enron Pension Decision Expected -Settlement Ruling Set For Tuesday- (August 2, 2004)
Enron employees are anxious to find out if U.S. Bankruptcy Judge, Arthur Gonzalez, authorizes Enron Corp.'s insurance companies to release $85 million to partially settle pension-fund claims that stemmed from Enron's 2001 bankruptcy. Gonzales said he would try his best to make his ruling before U.S. District Judge Melinda Harmon considers the settlement on Aug. 19. Employees have also taken a legal action, accusing the management of encouraging them to increase Enron shares to their retirement accounts while the management-level officials keep selling their shares.

Bailout Feared If Airlines Shed Their Pensions -U.S. Taxpayers Could Face Huge Bill If United Sets Off Chain Reaction- (August 1, 2004) 
If United Airlines defaults on its pensions, the federal agency that insures company pensions now faces a possible multi-billion problem. By law, industries' pension systems are to be secured by the money they set aside, but United had saved only about $7 billion in the pension funds as of December 2003. The figure is far less than $13 billion that United is supposed to pay its pensioners. Now the airline has proposed a smaller pension as well as a pay cut for its current employees. If the United decides to shed some or all of its $13 billion in their pension obligations, the federal insurance agency worries, a domino effect in airline industries is more likely to happen, which is ultimately going to be a financial burden for the U.S. taxpayers. The pension insurance program shouldn't be used "as a piggy bank to help companies restructure," Bradley Belt, the executive director of the government's Pension Benefit Guaranty Corp. said.

Microsoft Gives Public Pension Funds Boost (July 27, 2004)
The bigger the share, the greater the payout! Business giant, Microsoft, has opted to contribute an additional $3 per share to public employee pension funds. New York's state and local government currently holds 45 million shares of Microsoft and stands to gain $135 million. California's Public Employees Retirement System owns 54 million of Microsoft stock and also stands to profit significantly from the contribution. Conversely, others such as David Neustadt, spokesman for state Comptroller Alan Hevesi, insist that the dividend payout is relatively small and will not cause much difference in the pockets of pensioners.

United's Pension Decision `Illegal' (July 27, 2004)
The government and unions accuse United Airlines of trying to discontinue illegally their worker pension plans. In an effort to reduce mounting debt, the Airline allegedly made an agreement with lenders to stop contributing to funds while in bankruptcy. The $1 billion in loans that United borrowed from money-lenders contractually prohibits payouts while the company is beholden. United Airline's pension funds are estimated to be underfunded by $7.5 billion.

The Coming Retirement Crisis (July 20, 2004)
In June, the Pension Benefit Guaranty Corporation failed to fund existing pensions adequately. The Corporation revealed that companies with underfunded pension plans saw a total shortfall of $278.6 billion during the last year. This figure indicates a huge increase from 1999 when the reported shortfall was $18.4 billion. Even worse, many corporations do not offer any pension to their workers. Workers and retirees alike fear poverty at the end of their lives. In addition to underfunding, the writer notes that poor enrollment in pension schemes may also cause a problem for future retirees. Citizens must struggle for a portable pension system that is based a real, publicly controlled program.

Safer Retirement Just A Click (Or 50) Away (July 18, 2004)
At least they had the right idea, suggests Bruce Mohl of the Boston Globe. In a recent trial of LTSave Incorporated’s purportedly 10 minute internet-based retirement sign up, the program failed to live up to its proposal. Nonetheless, the company appears to offer a very comprehensive, unique and convenient way to monitor retirement investments. It is anticipated that other firms in the future will adopt a similar strategy to allow easier access and management of retirement funds. Will it be “objective” and not push certain products? Hard to say!

Mothers Call For Pension Reinstatement (July 12, 2004)
Many teachers in New York are fighting for the enactment of what is being called, "The Mommies Bill." Teachers who left their jobs in the 80s and early 90s, many to raise children, are being forced to live on pensions of little more than half what they would earn had they returned to work after the passage of the first reinstatement bill in 1998. Sixty-four year old Carol Cocozzo complains that she is living in poverty because of her low pension. She stopped teaching for 13 years to raise her children and now receives a pension of approximately $8000 annually. Had she returned to work in 1998 or later, she would be receiving almost two times that amount. It will cost state and local employers as much as $22 million and increase the annual pension bill to $3.8 billion to elevate the retired teachers to Tier 1 pension status.

Comparing Pensions Around the World (July 12, 2004)
It's a small world after all. A comparison of several countries' pension schemes reveals that there exists a universal problem in pension funding. Increased life expectancy is costing billions more for retirement plans annually and though large private firms are often in a better position to foot the costs, they too will have to fork out millions more to keep up with the change. The report also revealed variations from country to country. The U.S. for instance of seems to have the highest pension bill of all western nations.

County Pension Gravy Train (July 10, 2004)
Los Angeles County boasts some of the nation's wealthiest pensioners, states the Los Angeles Daily Times. According to a recently published article in the paper the region has over 1,100 retirees with $100,000-plus pensions, the highest of which is $316,047. "These people are millionaires" counters an incensed Steven Frates, senior fellow at the Rose Institute of State and Local Government at Claremont McKenna College. The state pays an enormous amount of money to maintain the current pension system. For the coming year, however, the cost will increase to $2.6 billion, up from $160 million last year. The California Public Employees Retirement System estimates that the average family, not receiving a pension, will end up paying $300 in taxes to support the system. Nonetheless, for the 1,198 Los Angeles retirees riding the pension gravy train, there is no immediate plan to retract the pricey passes any time soon.

Debt Woes Hitting Elderly (July 7, 2004)
How did a notoriously thrifty generation of baby boomers come to be knee-deep in debt? That is the question that many like Dale Gravelle are asking. The answers vary. Some blame social security, which they argue does not stretch nearly as far as they initially thought. Others blame absurdly high medical costs. Whatever the reason, credit cards don't help. Gravelle explains that her cards forced her $22,500 in debt. Her overall advice, "rely on good old-fashioned cash and maybe a debit card for some bills."

More States Using Pension Money to Lure Biotech Start-Ups (July 6, 2004)

The anticipation of an economic shake-up in the Biotech industry has states across the United State investing pension fund assets in private venture capital firms. The industry is expected to see job increases of up to 13 percent through 2012, more than overall annual job growth for other sectors. In an industry where the annual salary is, on average, $18, 600 more than other businesses, the redirected investment of public funds seems a good move. Many fear, however that state officials are acting prematurely and warn that investing in the life-sciences industry is risky and leaves state finances open to uncertain returns. 

Governor's Pension Deal Just New Way To Borrow (July 1, 2004) 
In an apparent attempt to comply with appeals from state workers, California Governor Arnold Schwarzenegger has relinquished plans to postpone employee pension increases approved during former Governor Gray Davis' incumbency. Schwarzenegger opted for the abandonment under the condition that incoming state workers agree to a two-year probationary period. During this time retirement funds will be directed to a savings account and can later be translated into pension funds or can be used at will by the employee. The deal will prove beneficial to the state, in particular, because the government will not be required to contribute to an employee's retirement plan during these two years. Some speculate that the Governor has ulterior motives and suggest that he has agreed to the pension plan, as well as several other proposals for employee raises, primarily to legitimize borrowing money in excess of $900 million from state revenue.

Loophole Lets Teachers Avoid Government Pension Offset (June 29, 2004)
Under Texas State law, Social Security benefits for a couple in which one person is a teacher residing in Texas, is calculated by deducting two-thirds of the teacher's pension from the entire spousal benefit. The couple can then claim the remaining amount. The June 30 expiration of this so-called "offset," has many teachers in Texas racing to catch the retirement clock. For the first time since 1977, teachers in Texas will be able to claim the entire amount of their spousal benefit.

Pension Reform Deal Reached (June 28, 2004)

California overcame another of several hurdles this week when it approved a statewide pension reform. The amendment was accepted in concordance with proposals made by Assembly Speaker Fabian Núñez and Assemblyman Darrell Steinberg and is estimated to save the state as much as $2.6 billion over the next 20 years. The new scheme will not affect current employees but will render newly hired public safety workers ineligible for state pension for up to 2 years. In its stead workers can allocate funds to an interest-yielding, tax-free account. At the beginning of the third year, employees can either enter the scheme as a "third year" worker or they can keep the money and begin a new scheme as a first year employee. Officials speculate that if at least 75 percent of employees continue the scheme after their second year as third year workers, the State will save close to $59 million.

Pension's Demise Whacks Retirees (June 28, 2004) 
Studies that quantify the average pension earned per household indicate that retirees today are poorer than their predecessors. Research that suggests the converse omits the amount of traditional pension being earned by the family's retirees. The data also reveals that more than 60 percent of households in 1983 had a retiree receiving a pension. Almost two decades later, less than fifty percent of households do. The significant difference, explains New York University economist, Edward N. Wolff, has to do with employee compensation. Some 18 years of research indicates that middle and low-income families today earn approximately 2.2 percent less than their counterparts did a few years ago. With middle class families making less and fewer people investing in pension schemes, the gap between the pensions of upper and lower class groups is much greater. Other factors that influence retirement funds include deregulation, job-change and self-retirement schemes.

Life-Science Ventures Lure More State Pension Funds (June 22, 2004)
Bio-technology and the Life Science industry is expected to grow in the coming years. Many state governments are keen to tap into this growth and want to invest public pension dollars in such schemes. States such as Oregon, Florida, Ohio and Washington have already started investing in such schemes. What are the implications of investing public pension dollars in the speculative private sector?

Assembly Relents, Keeps Pension Bill (June 18, 2004)
The Californian Assembly returned the controversial pension bill SB 9 to an Assembly committee for a hearing. The pension bill is supposedly to go into effect on July 1. Two years ago, a law was passed that offered generous public-safety pensions to 3,200 state workers. The SB 9 bill intends to reverse this law that exempted workers who were state driving examiners, inspectors of milk, livestock and funeral homes. The law, if passed, would save the state about $11 million annually.

Pension Plan Underfunding Drops 9 Percent To $278.6 Billion (June 17, 2004)
The Pension Benefit Guaranty Corporation reports an overall deficit of $305.9 billion over the previous year in pension plan funding. The data, which was released on April 15 for the 2003 period, indicates that the more than 1000 underfunded pension plans filed experienced a loss a 9 percent, the equivalent of approximately $278.6 billion. The statistics, which are generally released later in the year, are expected to draw attention to the seriousness of the existing private pension system and possibly foster awareness among retirees about their pension plan. Since the enactment of a new pension bill in Congress during the Bush administration, underfunded filings have increased significantly from 166 in 1999 to as much as 1,050 in 2003. Even the Pension Benefit Guaranty Corporation is seeing substantial loss. For May, 2004 the PBGC saw a deficit of $9.7 billion resulting from an increased number of bankrupt pension plans.

Corporate Reform: Democracy, Soviet Style (June 16, 2004)
Due to the recent scandals, the Securities and Exchange Commission is trying to change the way mutual fund directors are elected and inject some democracy into the process. The SEC wants to make directors more "independent" and watchful of shareholders' interests. However, companies and their lobbyists are putting pressure on the SEC to change its mind.

Baby Boomers May Want To Consider Drawing Pensions Early (June 14, 2004)
Millions of Americans have changed jobs at least once in their careers. Many of them left defined benefit pension plans behind. Some workers are not even aware that they are eligible for this money. Older baby boomers should start locating these pensions now. In most cases, the benefits are paid out as a fixed monthly payment for a set number of years. Since pension payouts are taxable as income, baby boomers can seek help from financial planners or advisers to decide if they should find their missing pension benefits or not.

Une Retraite De Plus En Plus Tardive Au Massachusetts (June 14, 2004)
(Article in French)
Baby boomers in Massachusetts will soon retire. However, many of them will have to work longer in order to have a sufficient income in old age. With the stock market's golden age over, workers are counting more and more on their Social Security pension. However, age discrimination might be one of the problems they face as they enter the last phase in their careers.

Healthier and Wiser? Sure, but Not Wealthier (June 13, 2004)
Today's older workers appear more ready for their retirement than any previous generation. However, traditional pensions, widely available until the early 80's have slowly disappeared from the American workplace. Retirement benefits offered today, especially the 401(k) account, are not worth as much as the older kind of retirement. Also, many Americans have lost part of their pension by moving from one job to another. Others that stayed in the same company saw their benefits sheared off when their company merged with another one or was reorganized. Many older workers will have to work longer in order to have a decent retirement.

Pension Insurer Takes over 4 Enron Retirement Plans (June 4, 2004)
The Pension Benefit Guaranty Corporation filed a notice to terminate four of Enron's pension plans and to take them over as trustee. This measure concerns about 17,000 workers. If the PBGC had not acted now, the funds would have paid off creditors instead of covering the shortfall in the pension plans.

Many Young Workers Shirk 401(k), so Industry Pushes 'Autopilot' Plans (June 4, 2004)
Many young workers ignore the calls from financial planners encouraging them to join 401(k) plans. Global political instability and corporate corruption do not persuade them to participate when they are eligible. Young workers have a hard time planning retirement now since they need to earn money to pay living expenses and save for houses or cars. Paperwork concerning those plans can also become overwhelming. However, experts find that education is not working. The way the plan operates and is designed needs to change. Or perhaps an involuntary public system, such as an augmented Social Security, is better.

Actuaries Under Scrutiny On Pension Fund Pacts (June 2, 2004)
The trade publication, Pension and Investments, revealed that some firms asked their pension fund clients to sign clauses limiting their ability to sue them. Instead of suing, any disputes should be solved through binding arbitration. Also, the amount of damages the clients could seek in a lawsuit should be limited. The Department of Justice asked several large actuarial firms for information to learn if certain provisions violate antitrust laws.

To Afford Retirement, Cut Your Taxes, Fire Your Broker, And Get a Part-Time Job (June 2, 2004)

When you retire, you do not want to run out of money before you run out of breath. You need to pick the right investments and cut unnecessary expenses to make sure you can benefit from a secure retirement. Four strategies can be implemented. First, use a broker or planner with mutual-fund expenses that do not amount to more than 1.2% a year of your portfolio's value. Then, you can sell your home and buy a smaller one to cut down housing expenses. Also, you can shrink your income and invest strategically to cut back the amount of taxes you need to pay. Finally, you need to keep busy with a paid or volunteer job to prevent superfluous expenses.

In Connecticut, a Pension Fund Trial Could Shake Wall Street (May 27, 2004)
Connecticut's Attorney General Richard Blumenthal and State Treasurer, Denise L. Nappier accused Theodore J. Forstmann and his private equity firm, Forstmann Little & Company to have improperly invested $125 million of the state's pension fund money. If the plaintiffs prevail in this case, it could lead to more suits against Forstmann, Little and other buyout firms that lost investors' money. However, many investors in Forstmann Little's fund refused to join the suit. Some legal experts believe that the firm is standing on firmer ground than Connecticut's Attorney General. So far, the firm persuaded the judge to throw out two securities law charges removing the main accusations.

S.E.C. Mutual Fund Inquiry Widens to Include Wellington (May 26, 2004)
The Securities and Exchange Commission is investigating the Wellington Management Company, one of the nation's oldest and most respected money management firms. As of March 2004, Wellington managed $416 billion in stock and bonds portfolios for approximately 1,000 clients. The company is also an adviser to more than a dozen funds offered by the Vanguard Group. The S.E.C. declined to comment on its investigation so far. However, the commission is probably looking at personal trading by fund managers, at various institutional accounts and at the possibility that commissions on securities trades were directed to firms that helped Wellington's marketing efforts. 

Not Much Movement in 401(k)s ( May 25, 2004 )
Many employees have not yet signed up for their 401(k) plans despite the stronger stock market. Participation is one of the key measures of a plan's success. Employers also want high participation rates so their plans don't fail anti-discrimination tests. But many employers are still having a hard time getting younger, lower-paid people involved. Some employers take advantage of employees' inaction by automatically enrolling them in the plan as soon as they are eligible. However, employees must be given a chance to opt out if they want to. If they don't, a certain percentage of their pay is automatically invested in a default option, usually a money market fund. Even when they participate, only a few employees are actively managing their plans.

S.E.C. Feels Pressure to Weaken Some Rules (May 10, 2004)
The Securities and Exchange Commission is under pressure from businesses and some members of the Bush administration to weaken the proposed rule changes in the way corporate boards are elected, mutual funds are governed and hedge funds are regulated. The agency's chairman, William H. Donaldson, is considering changing some of the original proposals. The agency had planned to allow big shareholders to propose their own candidates for board seats at troubled companies. Another rule would have forced the boards of mutual funds to be led by chairmen not involved in the management of the funds. Under the proposed rules, eighty percent of the nation's mutual funds chairmen would need to be replaced. 

Voters Release Houston From Pension Law (May 17, 2004)
In 2001, pension officials added a generous package of benefits for Houston city workers. In 2003, the Texas Constitution required by law the city to pay all the pension benefits. Now, the cost is too high. In a referendum, seventy three percent of Houston residents voted to exempt their city's pension plan from pension requirements. Mayor Bill White insisted however that he did not want to reduce city worker's pension. Houston just needed more flexibility to keep benefits affordable.

Pension Agency Proposes New Penalties (May 6, 2004)
The Pension Benefit Guaranty Corporation proposed a revised penalty system for companies that fail to notify workers of underfunded plans. The fines would be based on the number of plan participants instead on how late the participants were notified. The revision would increase the penalties for big companies while easing them for smaller companies.

Some Cities Struggling to Keep Pension Promises (May 5, 2004)
A few years ago, the city of Houston, Texas, decided to increase its workers' retirement benefits. Along with their traditional pensions, city workers nearing retirement were offered special accounts, fed with the city pension fund's money. Although the accounts would pay generous returns to pensioners, a study showed the cost for the city would be modest. However, it turned out that the city cannot support the payouts. It has about $1.5 billion less than the benefits it owes the work force. On May 15, Houston will decide in a referendum whether to opt out or not. 

Early-Retirement Cost 'Cries for' Probe, Gov's Office Decides (May 5, 2004)
An Illinois State program enabling 11,000 state workers to retire early unexpectedly quadrupled in cost, leaving taxpayers with a $2.45 billion bill. John Filan, the budget chief is expected to ask Comptroller Dan Hynes to investigate why the cost increased so much. Lawmakers approved the plan thinking it would eventually pay for itself by inducing high-paid employees off the payroll and not replacing them.

A Broker's Empty Promise, a Retiree's Shattered Dream (April 18, 2004)

Norman Huff worked 30 years at the East Ohio Gas Company. When he was offered an early retirement package, he was tempted but with his wife, they worried it would not be enough. Nonetheless, under the influence Michael G. Dobbins, a vice president and broker at a local branch of Prudential Securities, the Huffs invested all their savings into a portfolio of stocks. Mr. Dobbins promised them they could live very comfortably for the rest of their lives. However, it is not the case. The Huffs lost everything. This situation is disturbingly common. Stockbrokers see in older Americans receptive and trusting targets from whom to pocket assets. 

On Their Own, in the Same Boat (April 13, 2004)
A recent study by two private groups, the Employee Benefit Research Institute and the Milbank Memorial Fund, concluded that single women face the greatest difficulties in order to plan for a decent pension. Many women work at low-wage or part-time jobs. They often jump in and out of the work force to take care of children or elderly parents and do not accumulate enough to have a full pension. According to this study, only 35 percent of single women have 401(k)'s, IRA's or other retirement accounts compared with 63 percent of married couples or 42 percent of single men. To fight their way out of poverty, women need to decide whether to work longer or leave their community for a cheaper living area. Sometimes, they even need to choose between drugs and food. 

How to Plan Ahead for your Retirement (April 13, 2004)
Many future retirees wonder if they have accumulated enough wealth to sustain their standard of living during their retirement years. Planning for retirement can be challenging but four steps can be followed to make it easier. First, individuals need to establish retirement goals and determine where they stand today. Then they can calculate their retirement needs and re-evaluate their retirement goals. Finally, they need to revisit the entire process periodically to update it. Being involved in the retirement process is the best way to have a secure financial future.

All the Nest Eggs in One Company Basket (April 11, 2004)
George Stewart and Gordon Casterline both worked for Corning Inc. Their loyalty and faith led them to bet their entire retirement portfolios on their company's bonds. When the stock market crashed, the company's bonds were worth far less than ever before and employees saw their retirement accounts drop. Mr. Stewart managed with a well-off pension because he retired before the crash. However, Mr. Casterline suffered from the market loss and had to keep working. Nationally, over eleven percent of employees have almost nothing else than company's stock. Retirement accounts should have a more diversified portfolio in order to prevent workers from losing their pension benefits. 

An Update on Americans and Retirement (April 11, 2004)
Many Americans are unprepared for retirement. According to a new survey from the Employee Benefits Research Institute, Americans think they will work longer, earn more and spend less as they move into their 60s and beyond. But it will not be the case for everyone. Preparation could prevent many retirees from being taken by surprise when they face financial difficulties. A couple of tips are given in this article to plan for a safer retirement. First, future retirees can look for health-care saving accounts, IRA and saving plans. Individual homes can also be great assets in old age. Finally, back up plans for saving and earning money can be thought of before retirement.

Want to Be an Independent Fund Director? Good Luck! (April 5, 2004)
After last fall's scandals, the fund industry should be finding new independent directors to replace the ones accused of illegal trading or improper management of the fund. However, when qualified independent people seek that position, the most frequent answer is no, you are not needed. For years, board members were chosen for their connections to fund companies' executives or their prestigious experience in other fields. Their understanding of the mutual fund industry was not necessary. So now, board members still prefer tapping personal connections to find independent directors instead of interviewing outside candidates.

Commissions Come In for Scrutiny (April 6, 2004)

Inspections in the mutual-fund industry are not over. The Securities and Exchange Commission issued a study asking whether funds reveal enough information on commissions and trading costs. Mutual funds now report the dollar amount of brokerage commissions paid, but consumer advocates argue that funds should report brokerage costs as a percentage of assets. Informing people about the trading costs is necessary for them to understand what they are paying for. Although low commissions don't help to get good prices for the shares, high commissions can reduce returns and rob investors of superior fund performance.

Growing Number of Retirees May Drive up Pension Costs (April 5, 2004)
According to the Daily News of Los Angeles, thousands of retired government employees in California receive an annual pension of more than $100,000. In the next few years, many state agencies will have to pay out even more retirement benefits although pensions suffer from investment losses and reduced contributions from current workers. However, not all government employees receive large pensions. The vast majority receive small pensions that can barely help them make ends meet in retirement.

Negotiators Reach Accord on Pension Bill (April 2, 2004) 
After companies strongly lobbied for pension relief, Republican Senators and House negotiators have finally reached an agreement on a bill that will save US companies about $80 billion in pension costs over the next two years. A special provision was offered for steelmakers and airlines. Now, the bill has to go through Congress and the Senate, before President George W. Bush's signature. And it might not be that easy. Democrats believe only a few large corporations will benefit from it, denying any relief to smaller companies. The Federal government is also fears getting stuck with pension plans if they collapse. Finally, pension specialists worry this would set a precedent for other companies to invoke in the future.

Companies Ask Congress to End Impasse Over Pensions (March 31, 2004)
Corporations operating pension plans urged Congress to resolve the disagreement between Democrats and Republicans, preventing the passage of a bill that would allow pensions to use an interest rate based on an index of corporate bonds, rather than the 30-year Treasury bond. Such a change would reduce the value of the plans' liabilities, cutting the amount of money companies would have to pay into their pension funds. Businesses argue that if the law is not changed, employers will have to hold back resources from investment and job creation.

Congress Urged to Act on Pensions Bill (March 30, 2004)

Business groups are urging Congress to act on the legislation reducing employers' contribution into the pension plans by $80 billion. This would protect pension funds from insolvency and free money for investment and hiring. However, the White House is opposed to the Senate-passed bill because it offers relief to multi-employer plans, run jointly by unions and management. According to the White House, these plans are in better shape than single-employer plans and the bill would only encourage underfunding the plan.

State Pension Officials Accuse Safeway Leaders of Conflict (March 25, 2004)
Ten state pension officials are urging the supermarket chain Safeway shareholders to withhold their votes for the chairman and chief executive, Steven A. Burd and two other Safeway directors. Pension funds officials think conflicts of interest in Safeway boardroom are keeping the directors from representing shareholder's interests adequately. Furthermore, pension officials believe Mr. Burd permitted the company's total market value to drop by $20 billion over the last five years. Safeway believes on the other hand that the pension trustees' initiative was politically motivated.

Pension Funds of 5 States Seek to Meet Disney Directors (March 23, 2004)
Representatives of pension funds from California, Connecticut, New York, North Carolina and Ohio gathered together to call for a meeting with the directors of Walt Disney. Although they don't all want the same thing, these five states are concerned about the company's uncertain future and what it means for the funds' long-term investments. 

Pensions Take More Risks as Shortfalls Grow-Survey (March 22, 2004)
Mutual funds see their pension obligations increase with the current low interest rates and the higher life expectancy. Due to funding shortfalls, some US pension plans are trying to boost their returns by increasing their investment risks into international equity portfolios with stocks from exotic regions. However, the reporter claims that if policy makers allow the revaluation of securities at the current market price (mark-to-market), then it would affect negatively US employees and global equity markets.

Boomers' Retirement Plans Change with the Market (March 21, 2004)
Today, some experts argue that baby boomers are more aware that they should rely less on the stock market and more on their own savings to meet their financial needs in old age. After the optimism in the stock market of the late 1990's and the pessimism of the early 2000's, boomers are building a more balanced portfolio with the help of trained professionals in order to face Social Security cuts and higher health costs. However, some boomers are still prone to excess and unless they start saving, they will have to reduce their spending, work longer or will face financial trouble.

San Diego's City Manager Resigns in Wake of Pension-Fund Scandal (March 16, 2004)

San Diego 's City Manager Michael Uberuaga resigned after the US Securities and Exchange Commission and the US Attorney's Office investigated the city's financial practices. They were questioning whether city officials had provided fraudulent information to investors or not. They also looked into the city's $1.1 billion pension fund deficit.

Ford Resumes Bonuses, 401(k) Contributions (March 12, 2004)
Starting on July 1st, Ford Motor Co. will resume its contributions to US salaried workers' 401(k) accounts. With its renewed competitiveness and profitability, Ford will pay 60 cents on the dollar for up to 5 percent of US employees' base salaries. This is less than what they were paying in 2002 when the company stopped its contributions.

Companies Must Reveal Pension Information (March 12, 2004)
A new rule set by the Financial Accounting Standards Board requires any company with a traditional retirement plan to file reports on its pension investment strategy. For the first time, the company must inform the public on how much of the plan is invested in stocks, bonds, real estate and other vehicles. Pension assets represent an enormous amount of money so these new rules of transparency were necessary.

Regulators Reconsider New Trading Rule to Avoid Harming Retirement Plan Investors (March 10, 2004)
The Securities and Exchange Commission investigating mutual fund abuses considers alternatives to a proposal designed to curb after-hours trading abuses. The new plan could hurt investors in retirement plans. Managers of these plans with slower order processing would be forced to make their fund trades several hours before the 4 p.m. stock market close leaving the West Coast investors at a disadvantage.

Report Tracks Gay Couples' Retirement Plans (February 23, 2004)
The first US study to look at same-sex couples and retirement revealed that the satisfaction's level in the relationship influences significantly retirement planning. However, even gay men and lesbians in unhappy relationships need to make sure they are not ignoring their future. The study also found that when lesbians make financial planning, although they are less inclined to do so than men, they do it with their partner. Gay men tend to plan individually.

Putnam Loses Fla. Pension Contract (March 9, 2004)
Bloomberg news reports that Putnam Investment lost another contract of about $950 million for Florida's state pension fund. The mutual fund company was the first one sued for improper trading last fall. Instead of Putnam, the Florida board hired New Star Asset Management Ltd. of London and the Bank of Ireland Asset Management to oversee the pension portfolio.

Pension Rule Changes Aided Top City Officials (March 3, 2004)

In Houston, Texas, new rules increased significantly the pension benefits officials will receive. Under the 1998 pension rules, chief administrative officer Al Haines would have earned $36,000 in retirement. The rules left after Mayor Lee Brown departure from the office, allows Haines to receive about $103,000 per year. City Attorney Anthony Hall justified the increase as a way to compensate the extremely low salaries earned by city workers. However, it seems that only the department heads and the chief administrative officer got extra benefits that doubled their payouts. In the meantime, Houston's main pension fund is facing a $1.5 billion short fall over the next 18 years. To resolve the problems, taxpayer contributions to the fund could be increased next year. 

Retirees Worried over Pension Uncertainties (February 28, 2004)
The US private pension system is in trouble because the stock market declined from early 2000 to early 2003, reducing the value of pension funds that invested heavily in stocks. At the same time, interest rates dropped, increasing what companies must contribute to meet their pension obligations. The US Senate and House passed legislation providing two years of relief for companies until a long-term solution is found. Supporters of the bills fear that without relief some companies could go bankrupt, putting the pension fund in worse shape. But opponents claim that encouraging underfunding of pensions could put retirees at even greater risk. If the pension plan is taken over by the federal Pension Benefit Guaranty Corporation in case of bankruptcy, US retirees could have less to live on. 

Big Blue's Pension Problems (February 20, 2004)
A Federal judge in East St. Louis ruled that IBM owes billions of dollars to 140,000 older employees that the computer giant harmed when it converted to a "cash balance" plan in 1999. Traditional pension plans reward employees for staying in a company, giving them more retirement benefits during their last years of service. On the other hand, "cash balance" plans provide employees with individual accounts they can take with them if they switch jobs. This technique is attractive to young people but discriminates older workers. IBM appealed the decision but if it fails, then "cash balance" plans could be illegal and companies would have to come up with alternatives.

Political Money Said to Sway Pension Investments (February 10, 2004)
For over ten years, a small group of businessmen contributed tens of thousands of dollars to the political campaigns of their county commissioners in Luzerne County, Pennsylvania. In exchange, elected officials handed over control of the county's pension fund to the businessmen, who gambled it on the stock market in exchange for millions of dollars in concessions. However, when the stock market turned sour, a newly elected county controller filed suit against the businessmen. Controller Stephen L. Flood accused the men of unsuitable and risky investments, excessive fees and commissions, and passed new laws to eliminate the county's "pay to play" pension system. 

Pension Plans Still Imperiled (February 4, 2004)

As the stock market recovers, some of the strain has eased for US pension plans. However, corporations and taxpayers still face years of rising contributions to pay for pensions promised to retiring baby-boomers - the stock market's recent gains won't be enough to support all retirees. Furthermore, analysts worry that major pension managers are betting too much on the temporary recovery by investing heavily in hedge funds and other equities.

City Pension Woes Called 'Significant' (February 4, 2004)
According to Dick Murphy, mayor of San Diego, the city's pension system and finances are in good shape. However, top officials with Moody's Investor Service, a major Wall Street credit-rating agency, disagree with this statement. Moody's claims that city officials intentionally underfunded the San Diego City Employees Retirement System to balance the city's finances, which were full of accounting errors. The damage to the pension system was hidden by stock market gains, but with the market's decline, the system is now in debt. Moody's has downgraded the city's rating from "stable" to "negative."

Baby Boomers Getting Finances in Order (February 3, 2004)
Now is a good time for baby boomers to ensure they are financially ready for their retirement years, even though most are not thinking about retiring yet. Boomers, many of whom are entering their late-50s, should start gathering financial records, adopting savings strategies, and even thinking about possible part-time jobs or volunteer work during their retirement years. Financial advisors say boomers should avoid credit card debt at all costs and should try to pay off mortgages before they stop working. 

Tax Cuts and Savings Plans (February 3, 2004)
The Bush administration presented a series of tax reforms it says will stimulate the economy and simplify tax laws, many of which critics have labeled costly handouts to the rich. Among the proposals, however, is a controversial plan to convert traditional company pensions into "cash-balance" plans, portable pension plans that follow workers who switch companies at any point in their careers. While cash-balance plans may benefit younger workers who change jobs frequently, longer-term employees who stay at one firm will find their pensions smaller in the end. A recent court case ruled the practice age discriminatory.

Pension Agency to Cut Its Stock Holdings (January 30, 2004)
The Pension Benefit Guaranty Corporation has decided to shift its investments away from the stock market, just ten years after it began an "all equities" policy. PBGC head Steve Kandarian says the agency will reduce its stock investments to just 15 percent of total investments to protect the PBGC against losses and minimize risk of a potential taxpayer bailout. The move comes just as the Bush administration steps up rhetoric to allow workers to invest Social Security money in the stock market.

Senate Passes a Bill to Cover Pension Plans (January 29, 2004)
The US Senate passed legislation creating a temporary new formula for companies to calculate their pension contributions, which would save targeted companies about $80 billion over the next two years. The provisions are intended to help airlines, steel companies and unions that operate pension plans through a period of unfavorable market conditions. The Bush administration remains skeptical about the pension relief, saying it "encourages firms to underfund their pensions." Pension specialists hope Congress will use the next two years to make fundamental changes in the pension law itself.  

Hevesi Proposes Way to Delay $1.2 Billion in Pension Costs (January 27, 2004)
New York State Comptroller Alan G. Hevesi outlined a set of proposals to provide $1.1 billion in pension relief to local governments, while protecting pensioners and allowing the state to save more than $100 million. Hevesi developed the plan in opposition to Governor Pataki's proposal to put a cap on contributions to the state's Common Retirement Fund. According to Mr. Hevesi, the governor's proposal would hurt the fund's viability. However, according to Kevin C. Quinn, spokesman for the state Division of the Budget, Mr. Hevesi's plan does not provide long-term relief. 

Many Wait on Congress to Fix 'Bleak' Pension Shortfall (January 23, 2004)
Many US companies are struggling to come up with the necessary funds to meet their pension obligations as a result of stock market losses, growing numbers of retirees, and what some call an "artificially low" interest rate. The US Senate is considering whether or not to allow employers to reduce their required pension fund payments by using a higher bond rate in an effort to help them remain competitive.

Agreement Reached On Pensions (January 23, 2004)
Key US senators reached an agreement on a bill granting major pension-funding relief to airline and steel industries, allowing companies to pay only 20 percent of their pension obligations in the first year and 40 percent in the second year. Senator Edward Kennedy defended the plan as "immediate short-term measures needed to deal with [a] temporary crisis," but the Bush administration argues it will only allow the weakest plans to grow weaker.

Many Retirement Funds Affected by Scandal-Survey (January 22, 2004)
In a recent poll by Financial Executives International, almost half of all corporate chief financial officers surveyed said their company 401(k) plan included funds tainted by charges of improper trading and excessive fees. About 38 percent of the companies have since changed their plans, and 39 percent are considering switching investments. Many chief financial officers are concerned about the legal and fiduciary consequences if they do not switch from funds connected to the scandal.

Hevesi, Spitzer Want Combined Pension Power of States Used for Reform ( January 16, 2004 )
State officials controlling more than $400 billion in pension assets have joined New York Attorney General Eliot Spitzer to pressure the mutual fund industry to disclose management fees and other costs to clients at all times. The states' massive combined buying power could exert powerful leverage on pension funds, and they will try to convince other pension funds and large investors to request the reforms as well.

Pension Agency Piles Up Record-Setting Deficits ( January 16, 2004)
The Pension Benefit Guaranty Corporation (PBGC) is facing its greatest deficit in history, after taking over 152 failed pension plans in the last year. The agency will be able to pay pension benefits for a few more years, but if the situation does not improve, taxpayers might be called in to bail out the agency. PBGC's executive director, Steven A. Kandarian, is pushing the government to reform the system by creating tougher funding requirements for companies that sponsor pension plans. However, corporations warn that tougher requirements could force them to drop seriously underfunded plans altogether.

L'Amertume des Cols Bleus (January 15, 2004)
Article in French
For the last 4 years, the  US steel industry has weathered a financial crisis as factories close one after another, leaving retirees and future retirees with drastically reduced pension and health insurance benefits. Many former steel workers and their families survive merely on Pension Benefit Guaranty Corporation (PBGC) funds. Steelworker unions accuse the government of shirking its responsibly for the fate of pensioners who were guaranteed a decent retirement package. One unionist in particular thinks the  US should use its dollars to help its own people first.

Ponzi Scams Still Bilk Many, Watchdogs Say Senior Citizens are among Con Artists' Top Targets ( January 14, 2004)
While the mutual fund scandal has attracted the most press coverage, the old-fashioned "Ponzi" scheme ranked first in the North American Securities Administrators Association's (NASAA) top 10 investment scams. The Ponzi scheme, named after flapper-era scam-artist Charles Ponzi, lures investors by promising high returns and then using new investors' money to pay off old investors. The scheme collapses when it runs out of victims. In  California , 3,290 investors were robbed of $800 million. Investment scams frequently target seniors, and big losses can "wipe out retirement homes and shatter dreams for a better life."

S.E.C. Has Found Payoffs in Sales of Mutual Funds ( January 14, 2004 )
The Securities and Exchange Commission (SEC) revealed that a significant number of mutual funds provide cash and other compensation to brokerage houses for directing investors towards specific funds. The charges raise the mutual fund scandal to a new level, exposing undisclosed conflicts of interest and transaction fees passed on directly to investors. Regulators had suspected the inadequate disclosure of payments for years, but SEC officials ignored the issue until members of Congress and the New York State attorney general, Eliot Spitzer, pressured the commission to clean up the industry and restore investors' confidence.

Pension Agency To Post Deficit Above $10 Billion ( January 13, 2004)
The government's Pension Benefit Guaranty Corporation (PBGC) is facing a $10 billion deficit, a landmark figure that does not bode well for millions of American workers' pensions. For many Democrats, the White House and the Republican Congress have not done enough to protect workers' retirement plans, and they will use the criticism as a political weapon in the upcoming elections. The Bush administration continues to allow companies to pass billions of dollars worth of pension debt onto the PBGC, threatening the solvency of the agency and leaving employees with huge retirement-benefit cuts.

SEC looking at pension consulting firms (January 12, 2004)

The Securities and Exchange Commission has opened an investigation of investment-consulting firms' dealings with pension fund clients, with particular scrutiny on a practice called the "pay-to-play" system. "Pay-to-play" involves a situation in which a money management firm might pay a consultant through various hidden means, in return for a recommendation to a pension fund. The Department of Labor unsuccessfully attempted to restrict this method of "cooperation" in the late 1990s.

Kaiser Aluminum Aims to Ax Benefit Plans (January 12, 2004)
Kaiser Aluminum Corporation says it cannot continue to pay medical and life insurance for its retirees and dependents, and the company's 25,000 retirees could lose up to $800 million in health insurance benefits. Kaiser also filed a motion with a federal bankruptcy court to turn over its underfunded pension plan to the government's Pension Benefit Guaranty Corporation. United Steelworker District Director David Foster argues, "Almost two years after filing for Chapter 11 protection, Kaiser Aluminum is now forcing retirees--its most vulnerable stakeholders--to shoulder the greatest burden in reorganizing the company." 

Pension Peril Looming: U.S. (January 11, 2004)
Steven Kandarian, outgoing head of the Pension Benefit Guaranty Corporation (PBGC) issued a severe warning in his resignation letter, characterizing the US private pension system as a "time-bomb." The agency, which insures the pensions of millions of Americans, is $8.8 million in the red after a wave of corporate bankruptcies. Kandarian warns that workers, retirees, and healthy companies have suffered from the actions of irresponsible corporations, and, left unchanged, tax-payers may be left to pick up the tab for mounting costs. So far, PBGC has been able to cover the gap with its sizable assets, but those reserves won't last forever. 

For Boomers Near Retirement, Toolboxes Aplenty (January 4, 2004)
Investment companies in the US are preparing marketing tactics to help baby boomers make the transition into retirement, and to profit from a huge potential market for financial advice. Increasing life expectancies, higher health care costs and some lingering unrealistic expectations about investment returns make it difficult for some investors to get complex retirement decisions right. However, experts warn that financial advice should be taken with "a dose of skepticism." Investors should ask for a detailed breakdown of the cost of any financial advice, and to check the credentials of potential advisers before signing any document.

2003 Mutual-Fund Scandals an Affront to Small Investors (January 1, 2004)
Investors who had already weathered countless corporate scandals and dot-com busts found in 2003 that even seemingly trustworthy institutions are not above malfeasance. Mutual funds were supposed to be a more secure, responsible way to manage money, leaving small investors stunned at the news of widespread illegal and unfair trading practices at multiple fund companies. Apparently, the time-honored Wall Street tradition of favoring big investors was too hard to overcome.


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