Month: May 2003

BenefitsNews.com reports here about a growing trend to offer professionally managed options for amateur investors in 401(k) plans. Called “lifestyle” or “age-based funds,” the asset mix changes over time to reflect differences in age and risk levels and the funds are professionally managed to reflect those differences. According to the article, both Charles Schwab and Nationwide are offering this type of program, with participants paying additional fees for the programs. Despite the costs, participants appear to be liking the idea.

I know of several who have recently lost jobs in the computer industry due to their company’s outsourcing those tasks to India. This article in the Washington Times describes this increase in the practice of employing foreign labor in detail. The article describes the impact this is having on U.S. employee careers and occupations but also on U.S. wages. The article mentions that on April 26th, the New York Times reported that real earnings of those in the top 10 percent fell 1.4 percent over the last year. More to come on this practice and its effect in the pension arena. . .

An article in the Las Vegas Sun indicates Senators John Ensign (R-Nev.) and Barbara Boxer (D-Calif.) have announced plans to introduce the 2003 Broad-Based Stock Option Plan Transparency Act which would take aim at FASB‘s recent decision to expense stock options. The bill will call for better disclosure of company employee stock option plans on corporate financial statements and would prohibit SEC recognition of any new accounting standard on stock options. Here is a critical response by Bill Mann of the Motley Fool to the upcoming proposed legislation. Another article by Bill Fleckenstein at MSN.com recommends expensing at the time the options are exercised.

An article at Plansponsor.com discusses a 401(k) plan’s ability to limit frequent trading practices of participants who are engaging in “market timing” techniques. Certain participants under the Prudential Employee Savings Plan had developed a strategy of moving large sums of money in and out of investment funds several times a month. When the Administrative Committee took action to restrict such transfers, the participants sued. Both the Plan and the Summary Plan Description contained language stating that “in certain situations there may be limitations regarding transfers.” Also, the Administrative Committee was given discretion to decline to implement investment instructions “where appropriate.” The case provides some helpful examples of plan language which could be used to provide such restrictions.

The U.S. House of Representatives is scheduled to debate and vote on family time legislation?H.R. 1119, the Family Time Flexibility Act, introduced by Rep. Biggert (R-Ill.). The vote is scheduled to take place the 1st or 2nd week of May.