Benefits August 4, 2003

Johns Manville Retirees Call for DoL Probe

August 4, 2003 (PLANSPONSOR.com) - The head of the Johns Manville retiree group has called on US Secretary of Labor Elaine Chao to investigate whether Johns Manville Corporation deliberately falsified ERISA-required reports in order to make a case for health cost hikes.
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In a letter to Chao, Johns Manville Retirees Association President John Leasher said it appeared Johns Manville may have engaged in a campaign of deliberate deception in order to justify further health cost shifting to retirees when, according to the company’s summary annual reports, the company’s retiree costs had stayed pretty much the same over the past decade, according to a news release.

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Among many examples, Leasher cited the 2001 summary annual reports for two Johns Manville retiree health plans that reported retiree health expenditures in excess of $42 million while the full audited financial reports of the plans for that year only showed expenditures slightly in excess of $21 million.

Leasher said, “We are asking the Department of Labor not only to investigate this matter thoroughly but to consider referring it to the Department of Justice for criminal prosecution if the results of the investigation warrant it. It looks to us as if Johns Manville may have intentionally exaggerated its increases in retiree health costs in official reports required by federal law.”

Leasher said he began monitoring the company’s retiree medical reports in 2001 and has repeatedly requested clarification from the company on reporting inconsistencies. The company, according to Leasher, has never fully explained the discrepancies and at times never responded to requests for further clarification.

Compliance August 3, 2003

Pension Proposals Primed in House, Senate

March 20, 2002 (PLANSPONSOR.com) - With the aim of safeguarding America's retirement savings, committees of both the House of Representatives and the Senate are scheduled to vote on competing legislation today.
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House Rules

The House Education and Workforce Committee will vote on Representative John Boehner (R-Ohio)’s pension reform proposal, which incorporates proposals put forward by the White House and business groups (see Employee Benefits Bill Passed by House Committee ). Business groups had called for revision of the bill’s diversification requirements

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However, there are some subtle shifts underway, shifts that apparently reflect a heightened sensitivity to employer concerns. For instance, while the earlier version of the Boehner/Johnson-sponsored bill (see Boehner, Johnson Bring Bush Pension Reform to House ) would have required employers to allow workers to sell company stock in their retirement plans three years after enrolling in the plan, the version that will be voted on today reportedly would allow employers to implement a ‘rolling’ diversification requirement.

That would tie worker investments to the stock for a holding period of three years from when they actually acquired the investment, rather than the length of a worker’s participation in the plan.

Price Protection

Business groups had also opposed a feature of the bill that held employers liable for certain stock price fluctuations that occur during blackout periods. The revised version would shield employers from legal liability, provided:

  • certain procedures, such as worker notification, are followed, and
  • the length of the blackout is “reasonable”

It is also likely that changes will be made to a provision that would allow plan sponsors to provide investment advice to participants.  Committee Chairman Boehner has been a long-time proponent of expanding investment advice options for retirement plans – and sponsored an investment advice bill that passed the House last fall (see House OKs Participant Advice Bill ).

However, those changes are likely to be challenged by ranking member Representative George Miller (D-California), who offered his own version of pension protection earlier this year (see Pension Proposal Offers Participants ‘100% Control’ ). 

Miller’s bill calls for participant diversification rights after a single year of participation in the plan and expanded fiduciary insurance requirements that would enhance the odds of participant recovery of financial losses. It also includes a more controversial proposal that would call for direct worker participation in committees that oversee defined contribution plans that permit participant direction.

Senate Committee

That same element of worker participation is contained in the bill currently deemed most likely to emerge from the Senate. That bill, the Protecting America’s Pensions Act of 2002 sponsored by Senator Edward Kennedy (D-Massachusetts), would also impose restrictions on the availability of company stock in retirement plans, as well as calling for heightened disclosures of executive stock sales.

The Senate Health, Education, Labor, and Pensions Committee will vote on Kennedy’s bill today.  It is expected to pass by a narrow margin, along party lines.

– Camilla Klein and Nevin Adams      &n

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