Benefits September 29, 2005

Retirement Plans Designed for Workers to Stay Put

September 29, 2005 (PLANSPONSOR.com) - An article presented by the Department of Labor's (DoL) Bureau of Labor Statistics (BLS) points out the plan design features of retirement plans that may negatively impact today's mobile workforce.
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As background in the article, the author William Wiatrowsky reveals that data from surveys show the median time workers had been with their current employer as of January 2004 was four years. He points out in the article that the percent of workers age 35 and over that have been with their current employer for 10 years or more is just over 30%.

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According to the article, certain plan design features for both defined contribution and defined benefit plans can impact workers who change jobs in negative ways. The article points out the following:

  • Many plans impose eligibility requirements. Some plans require new employees to work a certain amount of time before being able to participate. Employees who switch jobs frequently may not be covered in retirement plans from some employers or may have gaps in their coverage.
  • Many plans impose a vesting schedule. While employees always have a non-forfeitable right to their own contributions, many plans impose a vesting schedule on employer monies.
  • In some plans, especially defined benefit plans, benefits accumulate based on years of service. The longer the employee is with an employer, the greater his/her retirement balance.

Wiatrowsky does point out that many plan sponsors encourage new employee participation and vesting quickly in order to pass the required discrimination testing, however.

The complete BLS article is here .

Compliance September 28, 2005

VT Loses Rx Drug Importation Fight

September 28, 2005 (PLANSPONSOR.com) - Vermont's lawsuit against the federal Food & Drug Administration (FDA) over its imported prescription drug policy has been thrown out.
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BNA reports that US District Judge William Sessions, III of the US District Court for the District of Vermont dismissed the suit, saying the FDA did not act improperly in denying Vermont’s petition to allow it to set up a drug importation plan that would import cheaper drugs from Canada since drug importation is illegal under federal law.

The judge said in his opinion, according to BNA, that, in addition to being illegal under the Federal Food, Drug, and Cosmetic Act, the Medicare Prescription Drug, Improvement and Modernization Act (MMA) does not provide authorization for Vermont’s plan since the secretary of the Department of Health and Human Services (HHS) has not certified to Congress that importation is safe and effective, which is a prerequisite to importation under the act.   The court rejected Vermont’s argument that the certification required by MMA was only intended to apply to commercial importation rather than importation by individuals.

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In addition, BNA reports, the court rejected the argument that the certification provision was unconstitutional since it improperly delegates legislative power to the executive branch.   Sessions also found that the HHS secretary had not unreasonably delayed action on the certification provision of MMA.

The suit filed in August 2004 was the first move by a state to sue the federal government regarding importation of prescription drugs (See  Vermont Sues FDA Over Drug Importation ).   The FDA had denied  Vermont’s December 4, 2003 citizen petition requesting FDA’s permission to establish a program for the importation of prescription drugs from Canada, BNA reports.   The state sought a court order requiring “prompt adoption of regulations and waiver guidance and appropriate consideration of Vermont’s proposed program.”

The opinion was issued in re: Vermont v. Leavitt, D. Vt., No. 2:04-cv-00206 (WKS), 9/19/05.

Despite the legality of the issue, many states have already passed measures to allow importation of prescription drugs from Canada and other countries (See  Illinois Becomes Fifth State to Import Prescription Drugs from Abroad ).

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