Benefits January 17, 2007

Hackers Make Off with $35,000 of TSP Participant Money

January 17, 2007 (PLANSPONSOR.com) - In spite of additional information security efforts announced last June by officials of the federal employees' Thrift Savings Plan (TSP), in late December hackers were able to make electronic transfers of $35,000 from participant accounts.
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GOVEXEC.com reports c omputers of about 25 participants were infected with software that recorded their keystrokes and gave hackers their TSP personal identification numbers. Officials said the affected participants have been notified and they are working with the Secret Service to identify the hackers.

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TSP Executive Director Gary Amelio urged participants to install programs on their computers to block spyware and remember to log off the TSP Web site when finished with any Internet transactions, according to GOVEXEC.com. Officials posted an announcement of the security breach on the Web site and a warning that only TSP participants can use the site.

TSP officials announced new security measures last June, including a switch to account numbers for online access rather than social security numbers (See TSP Takes New Measure to Enhance Data Security ), taken after a phishing e-mail was reported in March that directed participants to a bogus Web site and asked for personal information (See Scammers ‘Phish’ for TSP Participant Info ).

A survey of TSP participants conducted for the Federal Retirement Thrift Investment Board released on Wednesday found participants prefer using the Internet to access their accounts, with 49% saying they access their accounts online at home and 39% saying access them online at work (See Federal Workers Support Thrift Plan Changes ).

Compliance January 16, 2007

UK Regulators Ban Ericsson Pension Chair for Misdeeds

January 16, 2007 (PLANSPONSOR.com) - UK pension regulators have banned the chairman of the Ericsson pension fund from getting involved with any trust-based pension after finding that he had lied about executive benefits and benefited from conflicts of interest.
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The Pensions Regulator announced the move against David John Foster, an Ericsson human resources manager, in a  news release .Ericsson is a global telecommunications equipment and services provider that is based inStockholm, Sweden.

After being alerted to potential problems by a whistleblower’s report, the Pensions Regulator appointed an Independent Trustee to the Ericsson plan to secure funds and begin an investigation into Foster’s conduct, according to the announcement. The new trustee cancelled planned executive transfers and arranged to hold a second pension for Foster pending an inquiry. Two transfers worth £2.46 million, which had already been paid, were recovered by Ericsson.

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According to the regulators, as chairman of the Trustees of the Ericsson Employee Benefits Scheme, Foster misrepresented the pension benefits of executive members to Ericsson senior management. The representations added as much as £13.4 million to transfer values, increasing pension liabilities of the final salary plan and the sponsoring employer, the officials said.

Foster falsely claimed that executive members’ benefits accrued at a 1/30th rate and were entitled to receive unreduced benefits from the age of 50 – a benefit level he said already existed. The regulators said, however, that such a move would have required approval from Ericsson.

Finally, according to the news release, Foster stands accused of also accepting for himself an “exceptionally favorable” second deferred pension, which had the potential to affect the benefits of other plan members, without informing or seeking approval from other trustee directors.

The panel also found that Foster had failed to properly identify and handle conflicts of interest arising from his roles as chairman of the corporate trustees and as human resources manager. Foster excluded other trustee directors from significant decisions and failed to interact with them to the extent that some trustees were neither aware of the existence of the executive scheme, nor of its financial impact.

Foster was appointed as a director of Ericsson Employee Benefits Scheme Limited in November 2002, and was chairman of the scheme’s board of directors between July 2004 and September 2005 when he resigned.

The actions for which Foster was disciplined took place between April 2004 and June 2005. The Pensions Regulator was alerted by a whistleblower’s report on July 1, 2005 and appointed an independent trustee on July 7, 2005.

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