Benefits February 13, 2006

Japan's Welfare Ministry Rejects Pension Cut Request

February 13, 2006 (PLANSPONSOR.com) - Japan's Ministry of Health, Labor, and Welfare has rejected Nippon Telegraph and Telephone Corporation's (NTT) request to cut the defined benefit pension plan payments of retirees.
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The Jiji Press reports that the Ministry turned down the request on the grounds that NTT’s business has not deteriorated remarkably. NTT has reported profits each year since fiscal year 2002 ended in March of 2003.

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In April 2004, NTT reduced accrued pension payments for around 110,000 current employees by linking the assumed yield for pension asset investment to 10-year Japanese government bond yields. The company’s proposal for cutting the assumed investment yield for around 140,000 retirees from the present 4.5 – 7% to the levels for current employees gained agreement in December 2004 from about 90% of those already receiving payments, according to the Jiji Press.

Japanese companies must receive approval from the Ministry to change the design of their pension plans since the plans are eligible for tax breaks. This is the first time the Ministry has denied a company’s request to reduce benefits.

Administration February 12, 2006

MT Could Face Lawsuit Over Public Pension Systems

December 14, 2005 (PLANSPONSOR.com) - Montana lawmakers were told in a Legislative Audit Committee hearing that they could face a lawsuit if they do not fix the public pension systems' financial problems soon.
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The Associated Press reports that a n attorney for the Montana Public Employees Retirement Board said it is possible the state will be sued for not meeting its constitutional requirement to keep the pension funds whole.   The attorney said the board has not talked about whether it will sue the state to force a cash infusion to fix the system, but other groups or individuals could also sue if the large deficit lingers.

The total deficit for the Public Employees’ Retirement System and Teachers’ Retirement System is over $1.4 billion.   The Committee was also told that erasing all of the deficits would require an immediate infusion of about $722 million in tax money, according to the AP.   Investment returns from that money would cover the remainder of the deficit.

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Governor Brian Schweitzer has asked the legislature to approve of putting $125 million of the state’s surplus into the retirement systems (See Montana Lawmakers Face Pension Funding Bills in Special Session).   State Senator Corey Stapleton said it is unlikely that Republicans will approve of Schweitzer’s request until there is a complete solution proposed for the systems’ deficits.

The Montana Board of Investments, responsible for investing pension money, told lawmakers that steps toward improvements have been taken – a new chief investment officer has been hired, a consultant has been brought on board and the investment mix has changed.   In addition, there is also o ne legislative plan on the table that calls for future increases of employer contributions, a combination of local and state tax money, along with the $125 million Schweitzer is requesting.

The attorney said that such a plan would decrease the likelihood of a lawsuit.

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