Compliance January 10, 2006

DoL Requires Funding Notice for Multiemployer Pension Plans

January 10, 2006 (PLANSPONSOR.com) - The Department of Labor (DoL) has issued final rules requiring administrators of multiemployer pension plans to issue an annual notice of the funding status of the plans.
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According to a press release the requirement falls under the provisions of the Pension Funding Equity Act of 2004 (See  PBGC Issues Guidance on Participant Notice of Underfunding  ).

The regulation requires that a notice be sent annually to multiemployer plan participants, beneficiaries, labor organizations, contributing employers and the Pension Benefit Guaranty Corporation (PBGC).   The notice must include basic financial information about the multiemployer plan, including a statement as to whether or not the plan is 100% funded.  

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In addition, the notice must provide a comparison of the plan’s assets to benefit payments, a description of the law governing insolvent multiemployer plans, and the benefits guaranteed under the PBGC’s multiemployer program.   The DoL included a model notice in the rules to aid in compliance for administrators.

“These rules will ensure that workers and employers receive important information about the funding status of their multiemployer plans and encourage sound funding so that sufficient assets are available to pay future benefits,” said Ann Combs, assistant secretary of labor for employee benefits security, in the release.   “The rules will result in greater transparency for individuals, employers and the government.”

The rules will be published in the Federal Register on Wednesday.

Administration January 9, 2006

Pension Reform Co. Stock Provision Delays Firm's IPO

September 1, 2006 (PLANSPONSOR.com) - Provisions in the new Pension Protection Act (PPA) reform measure providing for new participant company stock diversification rights may have tripped up a San Diego company trying to issue an initial public stock offering (IPO).
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In a memo to employees quoted in the San Diego Union-Tribune, SAIC Chairman and Chief Executive Ken Dahlberg said a shareholder vote on a proposed corporate reorganization that would include an IPO will be delayed by a month.

Dahlberg said the vote has been rescheduled for September 27. “The delay is unavoidable and necessary to provide you with time to understand the implications of the recently adopted Pension Protection Act of 2006 (PPA) on the Company and its retirement plans,” Dahlberg wrote in his memo.

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SAIC, a $7.8-billion research conglomerate, disclosed plans in 2005 to raise up to $1.73 billion through the IPO. In its regulatory filings, the company said most of the proceeds from the stock sale would be distributed to SAIC’s employee shareholders.

Even though Dahlberg blamed the delay on the new law, he did not provide details about the law’s impact on his company’s IPO, and an SAIC spokesman declined further comment to the Union-Tribune.

The only hint came in a Dahlberg comment about deeper issues affecting the firm’s financing. “Among other things,” he said in the memo, “this 900-page legislation provides participants with rights to diversify or sell company stock in retirement plans.”

The PPA includes a diversification provision mandating that, if a company matches employee contributions to a 401(k) plan using company stock, an employee can diversify out of company stock into other plan investments once he or she has three years of service.

The latest development is the second time in less than a year the government contractor has delayed its plans to go public. SAIC put off the move in December, citing an unforeseen loss in a troubled contract to build a command-and-control security network for the 2004 Olympic Games in Athens, Greece.

SAIC specializes in providing information technology services for the   US military and some of the government’s most secretive agencies. It employs more than 43,000 people. Also known as Science Applications International Corp. SAIC ranks as one of the nation’s biggest employee-owned companies, the Union-Tribune said.

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