Cypen & Cypen
DECEMBER 10, 2009
Stephen H. Cypen, Esq., Editor
1. ERISA ADVISORY COUNCIL RECOMMENDS SUPPORT OF DB PLANS BY DEPARTMENT OF LABOR: The Advisory Council on Employee Welfare and Pension Benefit Plans has recommended that the U.S. Department of Labor provide support for defined benefit pension plans. The ERISA Advisory Council is responsible for advising the Secretary of Labor and submitting recommendations regarding the Secretary’s functions under ERISA. According to GRS, the Advisory Council urged DOL to “champion” DB plans as an important means of providing retirement security. Specifically, the Advisory Council recommended that DOL should:
The Advisory Council’s recommendations are part of its ongoing efforts to evaluate adequacy and structure of U.S. retirement plans. Toward this end, the Advisory Council’s website provides summaries of its findings on three issues: (1) Promoting Retirement Literacy and Security by Streamlining Disclosures to Participants and Beneficiaries, (2) Stable Value Funds and Retirement Security in the Current Economic Conditions and (3) Approaches for Retirement Security in the United States. The Advisory Council’s final recommendations and detailed supporting reports are expected to be available on the Employee Benefits Security Administration’s website after January 2010: http://www.dol.gov/ebsa/aboutebsa/erisa_advisory_council.html
2. FUNDING STATUS OF U.S. PENSIONS IMPROVES: U.S. stocks rose 5.7 percent in November, contributing to a 2.6 percentage-point improvement in the funded status of the typical U.S. corporate pension plan, according to BNY Mellon Asset Management. The funded status of the typical plan improved to 82.5 percent at the end of November, which was the highest level since May, and up from 79.9 percent at the end of October. Assets for the typical U.S. corporate plan rose 3.6 percent, outpacing the 0.2 percent gain in liabilities during the month, which reflected interest accruals as the discount rate for November was unchanged from October. For the year, through November 30, the funding ratio for the typical plan is up 8.6 percentage points.
3. SOCIAL SECURITY CLAIMING GUIDE: At what age should you begin claiming Social Security benefits? If you are approaching retirement, it is the most important financial decision you will likely make. The Social Security Claiming Guide, from Center for Retirement Research at Boston College, sorts through all the options near-retirees need to consider. Presented in an easy-to-read, colorful format, the guide shows you where to begin, spells out how much you can get and answers frequently asked questions about how the claiming process works. An electronic copy of this little gem can be downloaded at
4. IRS ANNOUNCES 2010 STANDARD MILEAGE RATES: Internal Revenue Service has issued the 2010 optional standard mileage rates used to calculate deductible costs of operating an automobile for business, charitable, medical or moving purposes. Beginning January 1, 2010, the standard mileage rates for use of a car (also van, pickup or panel truck) will be
The new rates for business, medical and moving expenses are slightly lower than last year’s. Mileage rates for 2010 reflect generally lower transportation costs compared to a year ago. The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on variable costs as determined by the same study. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using standard mileage rates. IR-2009-111 (December 3, 2009).
5. FORMER HALLANDALE OFFICER SUES CITY ... AGAIN: A former Hallandale Beach, Florida, police officer who last year received a $250,000 settlement from the city in a wrongful discrimination suit is again suing the city. As reported by sunsentinel.com, in a complaint filed in state Circuit Court, former Officer Mary Hagopian accused police Chief Thomas Magill of reneging on the settlement agreement, by badmouthing her to Wilton Manors Police Chief Richard Perez, who hired Hagopian last year. Part of the settlement agreement forbade Hallandale Beach officials from making disparaging remarks about Hagopian, and required that they limit their responses to questions about her employment with the city. Perez fired Hagopian in March, and immediately sent an e-mail to Magill stating: “You are entitled to say ‘I told you so.’” The suit also alleges that city officials have failed to comply with several public records requests filed by Hagopian's attorneys, who are seeking more than $500,000 in damages and court costs.
6. VENTURE CAPITALIST PLEADS GUILTY IN NEW YORK PAY-TO-PLAY: A West Coast venture capitalist pleaded guilty in the latest chapter of New York Attorney General Andrew Cuomo's ongoing probe of corruption in the state pension fund. Elliott Broidy, admitted to paying about $1 Million to four top comptroller's office officials in order to get them to invest $250 Million in his fund, Markstone Capital Partners. All of the officials, who were at the Comptroller's office at the time, have since left, according to timesunion.com. The guilty plea was to a felony charge of rewarding official misconduct, and requires Broidy to pay $18 Million and possibly serve prison time. The gifts from Broidy to the comptroller's officials were lavish. One official had Broidy funnel payments of $90,000 to his girlfriend to cover rent and hospital bills and another $44,000 in payments went to a relative of the girlfriend. And who was that lady? Why, none other than actress Peggy Lipton, best known for her role as Julie Barnes in the late-60's TV series “The Mod Squad.” Linc ... I need your help.
7. THE MARKET CRASH AND MASS LAYOFFS: Recent dramatic declines in U.S. stock and housing markets have led to widespread speculation that shrinking retirement accounts and falling home equity will lead workers to delay retirement. Yet, according to a working paper from National Bureau of Economic Research, weakness in the labor market and its impact on retirement is often overlooked. If older job seekers have difficulty finding work, they may retire earlier than expected. The net effect of the current economic crisis on retirement is thus far from clear. The authors use 30 years of data to estimate models relating retirement decisions to fluctuations in equity, housing and labor markets. They found that workers age 62 to 69 are responsive to the unemployment rate and to long-run fluctuation in stock market returns. Less-educated workers are more sensitive to labor market conditions and more-educated workers are more sensitive to stock market conditions. The authors found no evidence that workers age 55 to 61 respond to these fluctuations or that workers at any age respond to fluctuating housing markets. On balance, the authors predict that increase in retirement attributable to the rising unemployment rate will be almost 50 percent larger than the decrease in retirement brought about by the stock market crash. Very interesting. NBER Working Paper No. 15395 (October 2009).
8. THE TEN STRANGEST MUTUAL FUNDS: Perhaps you thought you already were invested in some weird stuff. For your further edification, here is U.S. News & World Report’s take on the 10 strangest mutual funds:
And, of course, we have a bridge for you in Brooklyn (because someone already bought the one in London).
9. YOU COULD HAVE HEARD A PIN DROP: At a time when our president and other politicians tend to apologize for our country’s prior actions, here`s a refresher on how some of our former patriots handled negative comments about our country :
When in England , at a fairly large conference, Colin Powell was asked by the Archbishop of Canterbury if our plans for Iraq were just an example of empire building by George Bush.
He answered by saying, ”Over the years, the United States has sent many of its fine young men and women into great peril to fight for freedom beyond our borders. The only amount of land we have ever asked for in return is enough to bury those that did not return.”
You could have heard a pin drop
10. AN OLD FARMER’S ADVICE: A bumble bee is considerably faster than a John Deere tractor.
11. IDIOSYNCRASIES OF OUR LANGUAGE: Is there another word for synonym?
12. QUOTE OF THE WEEK: “Between two evils, I always pick the one I never tried before.” Mae West
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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.