Compliance April 9, 2003

Study: Proposed Rules Would Hurt More DB Plans

April 9, 2003 (PLANSPONSOR.com) - Proposed pension regulations that include a new interpretation of age discrimination would invalidate more than two thirds of the defined benefit plans sponsored by Fortune 100 companies.
Reported by

Of the 72 surveyed companies with DB plans, 50 would fail under the proposed regulations while 22 would pass, according to the analysis sponsored by the Coalition to Preserve the Defined Benefit System and conducted by Watson Wyatt.   Eighteen companies do not currently offer defined benefit plans.

“The flaws in the proposed regulations will trip up pension plans that have never before been questioned and are clearly not discriminatory,” Kathy Cissna, director of retirement plans at R.J. Reynolds, testified at a two-day Washington public hearing conducted by the Treasury Department and Internal Revenue Service. “We’re afraid that the proposed regulations will force even more companies to abandon defined benefit plans, which provide a critical source of retirement income to millions of American workers.” Cissna represented the coalition.

For more stories like this, sign up for the PLANSPONSOR NEWSDash daily newsletter.

Treating DB Plans Differently

According to a news release, one of the coalition’s major concerns with the proposed regulations is the restrictive general rule that applies to defined benefit plans, and the way in which the proposed rules treat defined contribution and cash balance plans on one hand, and all other defined benefit plans on the other hand, Cissna said.   About 80% of all retirement plans are defined contribution or cash balance plans.

While commending federal regulators for their decision earlier this week to withdraw the portion of the proposed regulations that would have imposed new comparability nondiscrimination tests on cash balance plans (See  Regulators Pull Back Some Cash Balance Conversion Rules) , Cissna also called on them to consider several changes to the proposed regulations:

  • test age discrimination for all retirement plans on the same basis.   There should not be a different and more onerous age discrimination rule that applies to only 20% of the employer-sponsored plans.
  • adopt an accrued-to-date test rather than an annual test for determining accrual rates.
  • allow offset pension plan designs to test for discrimination on the basis of the gross benefit, not the net benefit.
  • maintain the existing rules for benefit delivery to employees who are older than the plan’s normal retirement age, particularly in situations where the plan does not suspend benefits or offset for in-service distributions.

For more information on the coalition, go to www.preservedb.com .

Compliance April 8, 2003

EEOC Offers ADA Primer for Small Biz

August 16, 2002 (PLANSPONSOR.com) - The US Equal Employment Opportunity Commission (EEOC) has released a new handbook to help employers deal with the provisions of the Americans with Disabilities Act.
Reported by

Called “The Americans with Disabilities Act: A Primer for Small Business,” the EEOC describes the tome as a “practical, reader-friendly handbook outlining the employment provisions of the Americans with Disabilities Act of 1990 (ADA) as they relate to both employees and job applicants.” 

The ADA applies to employers with as few as 15 employees.

Get more!  Sign up for PLANSPONSOR newsletters.

The handbook covers:

  • Who is protected by Title I of the ADA;
  • How to avoid mistakes when interviewing applicants with disabilities;
  • When you are allowed to ask an employee questions about a medical condition;
  • What to do if safety issues arise;

As well as information on:

  • the obligation to make reasonable accommodations to the limitations of qualified applicants and employees with disabilities; and
  • tax incentives for businesses that hire and retain people with disabilities.

The publication is available on the Commission’s web site at www.eeoc.gov .  It is also available in hard copy as well as in alternate formats (braille, large print, audio tape, or computer disk file) by calling (202) 663-4900 voice or (202) 663-4494 TTY.

«