DELOITTE SURVEY FINDS GOVERNMENTS NEED TO CLOSE LOOPHOLES ON UNDERFUNDED PENSIONS: As the number of underfunded public pension funds has risen dramatically over the past five years, state and local governments need to close loopholes, adjust the level of employee contributions and rethink overall fund management, or risk a crisis, according to a Deloitte Research study.The report, titled "Paying for Tomorrow,"' also warned that the pending crisis could be aggravated by the coming wave of Baby Boomer retirees tapping into their pension accounts, unless fund managers move quickly to adopt a solution. Among the areas of greatest concern cited are:
* Lack of prefunding requirements that mandate that public retirement plans fund their pension liabilities.
* In the 1990s, many government plans opted not only to expand benefits, but to make those benefits easer to receive.
* Retirement plans have greatly expanded supplemental benefits over the past 10 years, increasing pension costs.
* As plan costs have increased, employee contributions have often not proportionately kept up, or have actually fallen.
Deloitte Research's recommended solutions for staving off a possible pension crisis include:
* Closing loopholes to prevent large pay raises in the years immediately before retirement, tightening overly generous sick-leave policies that also increase final-year earnings, and narrowing eligibility for public-safety-worker status;
* Adjusting pension benefit formulas to reduce or eliminate special formulas that increase overall costs, and, where possible, raising employee contributions to better match rising costs;
* Changing employee contributions to tie contributions to actual plan costs; and,
* Exploring other revenue sources. Illinois, for example, recently proposed selling a license that is currently in suspension for a riverboat casino. The proceeds will go to the state pension system.
GLAUBER TO DEPART NASD: Robert Glauber, who headed the National Association of Securities Dealers for more than five years, will leave the regulator to become a visiting professor at Harvard University.
Glauber, 67, was due to officially leave at the end of August. In addition to his teaching duties at Harvard, he also will join the board of troubled mortgage financer Freddie Mac. Mary Shapiro, who served as NASD's president of regulatory policy, will succeed Glauber. Shapiro, 51, is also a former commissioner at the Securities and Exchange Commission.
A former U.S. Treasury undersecretary for finance, Glauber's tenure at the regulator was defined by a spate of Wall Street scandals and heightened regulation. NASD is the former parent of the Nasdaq stock market, which was spun off into a separate publicly held entity.
401KLOANS UNVEILS ORIGINATION AND DOCUMENTATION SOLUTION: 401kLoans has rolled out 403bLoans, a 403(b) loan origination and documentation solution designed specifically for the not-for-profit qualified plan industry.
The 403bLoans product is an automated loan origination and documentation service that provides plan administrators with workflow efficiencies, consistent processing, convenient online application and approval, automated notices, and compliant document sets with accurate calculations. The online application, communication and approval features help plan administrators save time and expenses, and make loan processing easier for the participants. The automated process provides consistency and control to minimize errors. In addition, the compliant calculations and documentation minimize regulatory risk for plan administrators and plan sponsors.
PAYCHEX RANKS AMONG TOP 401(K) RECORDKEEPERS: Payroll and benefits outsourcing provider Paychex Inc. has been ranked among the top 401(k) recordkeepers, according to a survey conducted by PlanSponsor magazine.
The eighth annual survey ranks 83 defined-contribution recordkeepers by total assets reported under administration. Among companies surveyed, Paychex was ranked first by number of plans won in 2005, with an increase of 9,456 new plans.
With regard to the total number of defined-contribution recordkeeping plans, the publication ranked Paychex fourth. Paychex is the recordkeeper for more than 36,000 401(k) plans.
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