Administration June 7, 2011

U.S. Pension Plans Experience Funded Status Setback in May

June 7, 2011 (PLANSPONSOR.com) - New figures from Mercer show that the aggregate deficit in pension plans sponsored by S&P 1500 companies corresponds to an aggregate funded ratio of 86% as of May 31, down from 88% on April 30, 2011. 
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According to Mercer, the deficit increase from $209 billion as of April 30 to $246 billion as of May 31, the first since August 2010, ends a consecutive eight-month streak of funded status improvements. The loss of $37 billion effectively wipes out the gains seen in March and April.  

The drop in funded status, claims Mercer, was driven by a combination of equity losses of over 1% and a decrease in yields on high quality corporate bonds, with the discount rate for the typical U.S. pension plan decreasing approximately 13–16 basis points during the month.  

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“The volatility that we have seen in the funded status, and the potential for setbacks like we observed in May, are not unexpected,” said Jonathan Barry, a partner with Mercer’s Retirement Risk and Finance group, in a news release. “With this level of negative outcomes a possibility, it’s important for plan sponsors to proactively look at their financial management polices and determine whether they remain appropriate, especially in light of the improvements in funded status we have seen prior to May.”  

  

-Sara Kelly 

Benefits June 7, 2011

Court Awards $600K in AutoZone EEOC Case

June 7, 2011 (PLANSPONSOR.com) - A federal court jury has returned a verdict of $600,000 against AutoZone, Inc. for failing to provide a reasonable accommodation to a disabled sales manager, the U.S. Equal Employment Opportunity Commission (EEOC) announced.
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In the lawsuit, AutoZone was charged with requiring a sales manager to perform certain cleaning tasks, including mopping floors, which violated his medical restrictions. The sales manager, who worked at the company’s Macomb, Illinois, retail store until 2003, is disabled with permanent back and neck impairments.   

According to the announcement, the EEOC presented evidence that mopping floors was a non-essential function of the sales manager position that could have been reassigned to other employees, and that the employee could perform all of the essential functions of his job. The sales manager testified that that he asked not to be assigned mopping and supported his request with documentation of his impairment.  

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The EEOC’s evidence at trial indicated that in 2003, new store management refused the request and required the employee to mop, leading to further injury and necessitating a medical leave.  

The agency charged that the company’s actions violated the Americans With Disabilities Act (ADA), which requires that employers make reasonable accommodations to the known physical limitations of employees with disabilities. Under the ADA, a reasonable accommodation may include the elimination or modification of a non-essential job duty, or the transfer of a non-essential job duty to another employee, the EEOC said.

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