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Cypen & Cypen
NEWSLETTER
for
SEPTEMBER 23, 2004

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001

1. MAIL ADDRESSED TO PUBLIC OFFICIALS SHOULD NOT BE SENT UNOPENED TO THEIR HOMES:

In the past, mail received at city hall addressed to the mayor or one of the city council members has been opened by staff, copied and then forwarded to the named addressee at his home address. Because council members do not have offices at city hall and do not go there on a regular basis, such procedure allows for a more timely review of correspondence. A change has been requested, whereby all such mail will be sent directly to the mayor’s or council member’s residence, unopened and with no copy made. Florida’s Public Records Law requires that every person having custody of public records must permit them to be inspected at reasonable times and under reasonable conditions. In order to assure public access, all public records should be kept in the buildings in which they are ordinarily used. Removal is appropriate only when necessary for repair or storage. The Florida Attorney General has previously held that retention of public records in the home of a public official would produce a chilling effect on rights of the public to examine and copy such records. He has now found that removal of letters that constitute public records after they are received at city hall by forwarding them unopened to the public official at his personal residence would also appear to have a chilling effect on the public’s right to examine and copy such records, and would raise questions as to retention and maintenance of such records. The Florida Attorney General concluded that mail addressed to the mayor or a city council member at city hall and received there should not be forwarded unopened to the private residence, but rather the original or copy of the mail that constitutes a public record should be maintained at city offices. AGO 2004-43 (September 14, 2004).

2. MIAMI “OVERPRICED”:

No matter how much you think where you live is overpriced, there are plenty of other Americans who probably have it worse. One of the inalienable rights of American citizenship, unexpressed in the Declaration of Independence, is the ability to complain about how much things cost. The griping becomes even more heartfelt when the cost of living is not keeping pace with people’s incomes. The U.S. Department of Commerce recently reported a .7% dip in spending for June, 2004 attributable to the fact that job growth has not come back in yet and personal income growth had been slight. MSNBC.com has compiled a list of the Most Overpriced Places. The rankings are determined by looking at the cost of living, housing affordability and job and income growth of 150 locations. The places with the highest cost of living, least affordable housing and most modest job and income growth make the list. In descending order, the following are the five most overpriced places determined in accordance with the foregoing criteria: Seattle, Bergen-Passaic (NJ), Miami, Portland (OR) and Middlesex (NJ).

3. DESPITE CHALLENGES, DEFINED CONTRIBUTION PLANS GROW IN POPULARITY:

Employers in North America are taking significant steps to improve their retirement programs but more needs to be done, according to a Mercer Investment Consulting survey. Employers increasingly are turning away from traditional pension plans, making defined contribution plans the primary vehicle for funding employees’ retirement savings. However, the study finds employees’ rates of contributions to employer-sponsored DC plans fell well below the most published estimates of the savings levels required for a comfortable retirement. Employers must take steps to address challenging issues like participation, contribution levels and investment options and conversion to pension income. Although employees bear the investment risk in a defined contribution plan, it is up to the plan sponsor to offer competitive investment options and communicate the plan effectively so that employees can take full advantage. Plan sponsors are improving investment performance and risk management, including the use of “premixed” funds like target risk (that is, asset allocation) and target-year (that is, life cycle). Plan sponsors are also attempting to hold down plan costs. Fee benchmarking is becoming a standard industry practice in addition to negotiated fee reductions and other methods. The survey found that participation rates in the median U.S. company are only 75% (compared to 99% in Canada). In both the U.S. and Canada, one-fourth of plans report that participants contribute an average of 4% of salary or less. Survey results are based upon 434 responses.

4. HOUSE COMMITTEE ON EDUCATION AND THE WORK FORCE ISSUES FACT SHEET:

On September 14, 2004 the House Committee on Education and the Work Force issued a Fact Sheet entitled Retirement Security for U.S. Workers: Six Principles for Fixing America’s Outdated Pension Laws. The principles are

CERTAINTY -- Congress should implement a permanent interest rate accurately to calculate employers’ pension fund promises.

COMMON SENSE -- Congress should require companies fully to fund their plans.

STABILITY -- Congress should reduce funding volatility in pension plans to ensure that employers make adequate and consistent payments to their plans.

HONESTY -- Employers and unions should not make promises to workers they know cannot be kept.

TRANSPARENCY -- Workers deserve more accurate and meaningful disclosure about the status of their pension plan.

SECURITY -- Congress should ensure that hybrid plans, such as cash balance pensions, remain a viable part of the defined benefit system.

Committee Chairman John Boehner (R-OH) outlined the principles after several hearings held by the Committee.

5. SENATOR CALLS FOR REVIEW OF MANDATORY RETIREMENT:

Senator Larry Craig (R-ID), Chairman of the Senate Special Committee on Aging, called for a review of the nation’s mandatory retirement age for pilots, air traffic controllers and other public safety officials. He noted that there has been a dynamic increase in longevity and a trend toward healthy aging over the past half-century. Also, he cited reports that nearly half of the nation’s air traffic controllers will reach the mandatory retirement age of 56 in the next decade. (Federal Aviation Administration rules mandate that pilots of large commercial aircraft retire at age 60.) Although some pilots associations oppose the age-60 retirement rule, the National Air Traffic Controllers Association opposes any change in the rules. Of course, federal mandatory retirement ages have little direct effect in Florida and other states that have state law provisions prohibiting mandatory retirement.

6. ERIP PAYMENTS NOT SUBJECT TO FICA:

Contradicting another United States District Court ruling (see C&C Newsletter for August 19, 2004, Item 10), a federal judge has held that installment payments toward a fixed sum made to school teachers by their school districts as an inducement to relinquish their tenure rights and retire early do not constitute wages from which deductions must be made under the Federal Insurance and Contribution Act. Unlike the earlier case, this court followed a circuit court of appeals decision that payments made in exchange for tenure rights -- that is, the right to continued employment absent just cause for termination -- pursuant to early retirement incentive plans are not “wages” within the meaning of FICA. Klender v. United States of America, Case No. 02-10082-BC (E.D. Mich., August 2, 2004).

Copyright, 1996-2004, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.


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