Compliance July 28, 2004

Appeals Judges Back PBGC Termination Audit Findings

July 28, 2004 (PLANSPONSOR.com) - A federal appeals court has upheld an order by the federal private pension insurer that a Texas hospital pay more than $3 million to 800 workers after short-changing their lump sum pension distributions.
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The US 5 th Circuit Court of Appeals upheld a lower court ruling that the Wilson N. Jones Memorial Hospital of Sherman, Texas make the additional payments plus interest to workers covered by the hospital’s terminated pension plan (See  Participants Net $3 Million After Pension Calculation Deemed Wrong ).  

The Pension Benefit Guaranty Corporation (PBGC), which steps in to take over pension plans for ailing or bankrupt companies, ordered the extra payments after auditing the hospital’s plan termination and finding that employees taking lump sums had gotten underpaid because the hospital had relied on the wrong interest rate factor.

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“This ruling serves as a useful reminder that PBGC plays an active role in auditing standard terminations,” said PBGC Executive Director Brad Belt. “When we find something amiss, we will take all necessary steps, including legal action, to ensure that employers pay benefits in full.”

The pension plan terminated as of December 31, 1995, and the PBGC audit followed. The appeals court decision caps three years of litigation in which the agency sought to enforce its audit findings. The decision does not affect participants in the hospital plan who receive their benefit as monthly payments, the PBGC said.

The ruling is at http://www.ca5.uscourts.gov:8081/isysquery/irl5595/1/doc .

Benefits July 27, 2004

Employees, Bosses Not on Same Benefits Page

July 27, 2004 (PLANSPONSOR.com) - Midwest employers and employees differ in their satisfaction levels with employee benefit plans, according to an industry survey.
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They survey by Delta Dental of Missouri found that only one in 10 employees felt involved in the benefit design and selection process, although nearly half of employers said their employees participated. Not only that, more than half (51%) of employees said their biggest concern was having enough money for retirement, while the same number of employers said they thought their employees’ biggest concern was making ends meet between paychecks.

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Other discrepancies involved pension plans and overall satisfaction. A third of employers without a pension plan said they thought it was a priority for employees, while nearly three quarters (74%) of employees without a pension plan said getting one was high on their list. Nearly six in 10 employers said they were “very satisfied” with the benefits they offered, whereas only 28% of employees shared that joy. The reason: Nearly three-fourths of employees said they didn’t care for high co-pays and deductibles.

“This information on how employees and employers view their benefits environment and on shared goals and discrepancies between employer and employee benefit goals will provide a valuable framework for HR decision-makers and benefits consultants as they plan their benefits futures,” said Angie Rightnowar, director of corporate communications for Delta Dental, in a statement.

The survey involved more than 1,100 full-time employees from Missouri, Illinois, Kansas, Iowa, Nebraska and Arkansas and 159 human resources or benefits departments from Missouri companies.

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