MMiissssiioonn SSttaatteemmeenntt

PEBA will strive to berecognized throughout theDelaware Valley as the premierorganization in all areas relatedto employee benefits andcompensation by providingopportunities for:

• education• information• professional

development andexchange, and

• sharing professionalexpertise.

IInnssiiddee TThhiiss IIssssuuee

IRS and DOL Clear the Way ForAutomatic Enrollment In 401(k)and 403(b) Plans . . . . . . . . 1

A Letter To Members From PEBA’s President, Jim Bowers . . . . . . . . . . . . 2

Communicating Compensation –Research From a Layperson’s Perspective . . . 3

Understanding New WebTechnology and Terms . . . . 4

Wellness Works, So What’s the Problem? . . . . . 5

Campbell Expands Automatic Enrollment . . . . 6

My Day at PEBA’s 26th Annual Forum . . . . . . .8

With Your Help, PEBA Continues to Grow . . . . . 10

Summer - Fall 2008

ppeebbaa nneewwssYOUR BENEF I TS AND COMPENSAT ION ASSOCIAT ION

The Department of Labor (DOL) andthe Internal Revenue Service (IRS) havetaken significant actions to clarify manyof the issues surrounding automaticenrollment programs, under whichemployers automatically deduct 401(k)or 403(b) contributions from payrollunless an employee affirmatively electsout of the arrangement or elects adifferent level of contributions. Automaticenrollment programs have been foundto increase employees’ savingssignificantly (“Golden Arches Preps forGolden Years,” Wall Street Journal,October 19, 2007, page C13; “SomeNo-Brainer Savings Ideas,” Wall StreetJournal, October 30, 2007, page A18.)

The Pension Protection Act (PPA) of2006 encourages such programs in fourspecific ways: 1. The PPA directs the DOL to issue

regulations protecting fiduciariesfrom liability for investingautomatic contributions in adefault investment fund.

2. The PPA introduces another401(k) non-discrimination safeharbor for some automaticenrollment programs, effectiveJanuary 1, 2008.

3. The PPA permits 401(k) and403(b) plans to returncontributions to participants whodo not want to participate in theautomatic enrollment program.

4. The PPA provides for full Federalpre-emption of state wagepayment laws that somepractitioners believe may hinder

or even prohibit automaticenrollment programs.The DOL recently issued final default

investment regulations. The 401(k) non-discrimination safe harbor is effectiveJanuary 1, 2008 and the IRS has issuedproposed safe harbor regulations and amodel automatic enrollment and defaultinvestment notice. Guidance is now inplace to move ahead with an automaticenrollment program, and now is a goodtime to review the PPA opportunities.

CCOOMMMMEENNTT: All PPA-related opportunities andrelief are contingent on the planadministrator’s notifying eligible employeesof their rights and obligations under theautomatic enrollment program. Suchnotices may have to be issued as early asNovember 24, 2007 in order to get thefull benefit of the new rules. The IRS hasposted on its website a comprehensive“Sample Automatic Enrollment andDefault Investment Notice” that isdeemed to meet all of the PPArequirements (http:://www.irs.gov/pub/irs-tege/se111.pdf). Plan administrators willhave to tailor the model notice for each planand substantial work may be required.Nevertheless, the model notice is a goodstarting point for all plan administrators.

NNoo FFiidduucciiaarryy LLiiaabbiilliittyy ffoorr DDeeffaauulltt IInnvveessttmmeennttss

Many qualified plans have longincluded “default” investments fordefined contribution plan participantswho do not give investment instructions.Default investments are necessary for

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By Barry L. Klein, Esq. and Virginia E. Neiswender, Esq.

Continued on Page 6.

2

Dear Members,PEBA started in 1979 as a small

organization devoted to providingeducation for benefits professionals.Since 1979, PEBA has grown inmembership from single digits to over1,000. We added compensationprofessionals in the 1980’s and nowoffer a wide variety of programs,networking, and training opportunities,especially through our alliance withWorldatWork. This year, the Board ofDirectors and committee chairs met inseveral joint sessions to review the futuredirection of PEBA. The outcome of thesesessions includes various initiativesdesigned to ensure that PEBA growsstronger in fulfilling its mission in thecoming years.

SSttrraatteeggiicc PPllaann The mission and vision of PEBA

remain the same: to provide education,professional development, andnetworking opportunities to those in thebenefits and compensation field. Tofulfill this mission and vision, we mustchallenge ourselves regarding how weadd value to our membership. Ourstrategic plan produced the followinginitiatives to accomplish in the next fiveyears:• BBuuiilldd oouurr BBrraanndd. We believe the

name PEBA has a lot of positivebrand value, but is not reallydescriptive of our true mission.Many today forget what ourname initially stood for – thePenJerDel Employee BenefitsAssociation. Now, although weadded Compensation, the “C” issilent! At one point, weentertained the name “PEBCA,”but it never got off the ground.We want our association to bethe best in our field – one wherebenefits and compensationprofessionals can findprofessional development,

networking, and a true sense ofcommunity. While we’re notabandoning the PEBA conceptand commitment, look for anexciting “Name PEBA!” contestcoming soon.

• BBuuiilldd MMeemmbbeerrsshhiipp. We plan toincrease membership by 50%.While this may seem overlyaggressive, we believe our“market share” – especially inthe compensation community –can be improved dramatically.

• BBuuiilldd MMeemmbbeerr IInnvvoollvveemmeenntt. Weplan to increase program andevent attendance by 75% bymaking our morning programs,WorldatWork classes, and theForum more useful, effective,and exactly what you need toperform your job. Our newSpecial Events committee isfocusing on innovative programsto reflect membership interestsand fulfill their diverse needs.

• BBuuiilldd VVaalluuee. We believe it’s timeto address our membershippricing structure, which iscurrently organization-based.We want to make it moreindividual professional based –much like other associationssuch as WorldatWork. We’relooking at ways to simplify ourmembership pricing to achievegreater clarity and fairness,while holding costs down anddriving value up.

AAlliiggnniinngg BBooaarrdd aanndd MMeemmbbeerrCCoommmmiitttteeeess

To ensure Board and committeemember alignment, we’ve assigned ourofficers and Board membersaccountability for each of ourcommittees. Committee members willperiodically attend Board meetings, andBoard members will periodically attendcommittee meetings to ensure

alignment between the strategic role ofthe Board and the delivery role of thecommittees.

RRee--ssttrruuccttuurreedd CCoommmmiitttteeeessWe’ve combined the Membership,

Marketing, and Community OutreachCommittees to best harness theircombined talent in helping PEBA attractand retain members. We’re excited tosee the contributions this group willmake to the PEBA community as theprimary conduit for outreach activities,from marketing collateral to newmember welcome to community partnerevents. Our Special Events committeewill focus on creating two blockbusterevents a year — our evening event inOctober and a new compensation-focused event. We’ll be looking forvolunteers for this and the othercommittees, and encourage you tocheck out our committee structure onour website – www.peba.org.

OOuurr oonnggooiinngg ccoommmmiittmmeenntt ttoo yyoouuThis is one thing that is nnoott

changing. We endeavor to create acommunity of committed volunteers whowant to contribute to their field, and aPEBA staff that will work with you tocreate the best PEBA experience for allmembers.

I would like to take this opportunityto thank our Board members, committeechairs, and facilitators for contributingto our strategic goals for the next fiveyears and, more importantly, to thecommitment to achieve them!

If you have any questions aboutthese changes, please contact PEBA byphone at (215) 735-9435 or by e-mailto peba@peba.org.

JJiimm BBoowweerrss is Vice President atHay Group.

AA LLeetttteerr TToo MMeemmbbeerrss FFrroomm PPEEBBAA’’ss PPrreessiiddeenntt,, JJiimm BBoowweerrss

3

I’ve been writing articles for PEBAfor many years, mostly on employeebenefits issues, since this is my area ofexpertise. When the topic ofcommunicating compensation came up,I agreed to tackle it since I know a lot ofknowledgeable professionals in theareas of compensation andcommunications and I immediatelythought of them as resources for theresearch for this article. Thank you to allwho responded.

To get a different perspective, Iasked employees how their companiescommunicate with them. This wasn’t ascientific sample by any means, butpeople I know who work for a variety ofdifferent organizations in variousprofessional positions not related to HR.Those perspectives were extremelyvaluable, since they told me whatemployees hear and understand ordon’t understand.

I perused the trade press related tothe subject to see what the professionalshave to say. To those of you reading thisarticle, please remember that this is acompilation of other peoples’ adviceand tips. I hope some of these tips willbe helpful to you.

So, how do employers communicatecompensation to employees – how theirraise is determined, changes in the salarystructure, incentives or bonus programs?How do managers get this message toemployees to be sure they understand thechanges? The research for this articlecame up with several practical tips fromemployers and some equally interestingobservations from employees, mostcentering around key themes:

KKeeeepp iitt ssiimmppllee aanndd kkeeeepp iitt ppeerrssoonnaall..• Employees don’t want to hear a

lot of “technobabble.” Accordingto LLiissaa GGaalllloommbbaarrddoo, Director ofHR at Bluestar Silicones,employees simply want tounderstand why a change is

being made and how it willbenefit them.

• Lisa also advises employers toexplain how changes in pay-related objectives impactindividual employees. Often, ifthese objectives are too manylevels removed from employees,the objectives will have anegative effect and actually de-motivate employees.

BBee hhoonneesstt.. TTeellll eemmppllooyyeeeess hhooww tthheepprrooggrraamm wwoorrkkss..• When I asked employees about

compensation communication,the answers were quite colorful…“What communication? A raiseshows up in my paycheck but noone tells me why I got it or howmy performance last year [gotme] the level of increase. Weheard a lot about our new payfor performance plan a fewyears ago when the consultingfirm put it in place, but sincethen nothing …[i]t’s business asusual.” (The employee prefers toremain anonymous.)

• Other employees say thatbeautiful brochures, handbooks,manuals, and PowerPointpresentations aren’t veryeffective. In fact, employeesoften react negatively to them,especially if they’recommunicating a decrease insalary budgets or in base pay tofund variable pay. Employeesknow communicationscampaigns are expensive toproduce and would rather seethose dollars go directly intotheir paychecks. The Knowledgeof Pay Study sponsored byWorldatWork also suggests thatmost people find such vehiclesineffective. When it comes topay, employees want honest,

personal contact, with messagesdelivered by managers one-on-one.

GGeett mmaannaaggeerrss iinnvvoollvveedd eeaarrllyy iinn tthheepprroocceessss aanndd ttrraaiinn tthheemm ttooccoommmmuunniiccaattee wwiitthh eemmppllooyyeeeess.. • Most managers secretly dread

pay discussions because theydon’t feel like part of thedecision-making process, theyhaven’t been trained to discusscompensation, or they simplydon’t understand theircompany’s compensationprograms. It’s difficult to getemployees to understand theircompensation if managers don’t!

• HR needs to coach managershow to communicate the overallcompensation structure andchanges to the structure in asimple, straightforward way.

EExxppllaaiinn hhooww yyoouurr bbaassee ppaayy wwoorrkkss.. • Most workers don’t know how

their pay raises are determined.According to The Knowledge ofPay Study, only 4 in 10employees know how they canincrease their base salary orcash bonuses. The studyindicates that understandingbase pay has the most directimpact on employee retention,commitment to the organization,and overall trust in companymanagement. Ensuring thatemployees understand their basepay will yield the greatest returnon your communicationinvestment.

TTiimmiinngg iiss eevveerryytthhiinngg..• According to LLiissaa GGaalllloommbbaarrddoo

at Bluestar, changes should bemade and communicated at alogical point in time (i.e. beforethe beginning of the incentiveperiod), not “mid-swing.” It’s

CCoommmmuunniiccaattiinngg CCoommppeennssaattiioonn –– RReesseeaarrcchh FFrroomm aa LLaayyppeerrssoonn’’ss

PPeerrssppeeccttiivveeBy Bobbi Butler

Continued on Page 4.

4

very difficult for employees to“shift gears” mid-year from oneset of goals and objectives toanother, and if employees arenegatively impacted, theprogram can be doomed tofailure.The professional research revealed

that many employers are doing some orall of these things and doing them well.

Their advice and the findings in TheKnowledge of Pay Study note that“Employees increasingly expect anddesire to be treated less like hired handsand more like integral members of theteam; the very act of letting them in onthe long-held compensation “secret”can create good will…Coupled with thatis an economic climate in whichmanagement is less able to buy

employee happiness through raises.”

BBoobbbbii BBuuttlleerr is Principal andDirector of Group BenefitsConsulting Practice at The SavitzOrganization.

CCoommmmuunniiccaattiinngg CCoommppeennssaattiioonn –– RReesseeaarrcchh FFrroomm aa LLaayyppeerrssoonn’’ss PPeerrssppeeccttiivvee

(continued from page 3.)

Ever feel like you need a handbookto decode all the acronyms and wordscreated by technology? Few would besurprised to hear that the world’sauthorities on words—the OxfordEnglish Dictionary and MerriamWebster—have added more technologywords than any other category in thepast ten years. “Google” is now officiallya verb, and “mouse potato” an officialnoun used to describe people you justcan’t pry away from their computers!Here are a few common and importanttechnological trends you should knowhow to use. Have any sugggestions toadd? Email me at deminico@peba.organd we’ll post them on www.peba.org.

RRSSSS FFeeeeddssThis orange icon is linked to many

webpages, but what is it and what doesit do? RSS is a web feed of frequentlyupdated content, typically coming fromnews sites or blogs. There’s no need tosearch a website to see if new articlesor information have been posted—theRSS feed does that for you. You canaccess the feed in two ways. In manyinternet browsers, there is a grayed-outRSS feed logo. When you go to awebpage with an RSS feed, the iconchanges color to bright orange. Clickon the icon and the most updatedcontent appears. Many websites alsoallow you to filter the feed to include

only certain subtopics or authors. Youcan also subscribe to a feed, similar toadding it to one of your web browser“Favorites.” Click on Favorites to seeand read all the feeds of websites yousubscribe to.

RSS feeds can help you stay on topof current events and industry news. Whywaste time typing in web addresses overand over? Let RSS feeds do the work foryou.

PPooddccaassttssA podcast is a series of digital media

files distributed over the internet for useon portable media players orcomputers. When podcasts first gainedpopularity, most were taped radio showsto download to media players. Today,you’ll find podcasts on every imaginabletopic—from college classes to “how-to...” training sessions. You can alsodownload your favorite NPR programs.

Besides keeping your professionalskills fresh, podcasts are becoming amore common way to find newemployees. Jobcasts feature interviewswith HR staff to help potential employeesfind out about the company’s corporateculture, work environment, etc.

SSoocciiaall MMeeddiiaa aanndd SSoocciiaall NNeettwwoorrkkiinngg SSiitteess

Social Media is an umbrella termencompassing activities that combine

technology, social interaction, andmultimedia. YouTube, Twitter, blogs, andsocial networking sites are all examplesof social media. The sheer volume ofsocial networking sites can beoverwhelming. Most of us have heardof Facebook, MySpace and LinkedIn,but what about del.iciou.us, Ning, orEons?

Before joining a networking site, it’simportant to identify your goal. Are youtrying to connect with old friends? Ifyou’re a baby boomer, Eons might bethe right site for you; for a Gen X/Y-er,MySpace is probably better. Are youtrying to find people with similarinterests? Ning users create their ownonline social communities on anyimaginable topic. Are you looking toexpand your professional connectionsand see what others in the businesscommunity are doing? Try LinkedIn toexpand your potential contacts by“linking” with colleagues and gainingaccess to their professional network. Youcan also ask and answer questions onLinkedIn and discover the expertise ofyour connections. If you do decide tocheck out LinkedIn, be sure to link withme!

SSuussaann DDeemmiinniiccoo is the ExecutiveDirector of PEBA.

UUnnddeerrssttaannddiinngg NNeeww WWeebb TTeecchhnnoollooggyy aanndd TTeerrmmss

By Susan Deminico

5

WWeellllnneessss WWoorrkkss,, SSoo WWhhaatt’’ss tthhee PPrroobblleemm??By Angelo J. Devita, MPH

The rising cost of health carecontinues to be among the mostpressing issues facing Americanbusiness. Increases in health costs faroutpace inflation, wage growth, and theGNP. It’s been that way for 40 yearsdespite the transitions from indemnitycare to managed care to consumer-driven plans.

General Motors now spends moreon health care than steel and Starbucksputs more resources into employeehealth than coffee beans. Businessesfacing global competition are at asignificant competitive disadvantagerelative to foreign companies that don’tshare this burden.

PEBA members have already heardabout moving beyond the cost-cuttingmeasures traditionally employed bybusiness and making a paradigm shiftfrom a treatment-based system to aprevention-based system. However, thisapproach is not moving as quickly aswe hope. Here are some of the barriersto making wellness a business priorityand how they can be overcome.

Despite evidence that wellnessprograms provide a return-on-investment, many decision makers stillfind studies unconvincing orinapplicable to their situation. Thefragmented nature of some poorly-designed wellness programs makesdirect cause-and-effect assessmentsdifficult, undercutting their importancein the business case for wellness.

Employers may also fear thatemployees who feel “singled out” fordisciplinary action or suspect thatconfidential medical information hasbeen accessed could pursue litigation,potentially undercutting wellnessprogram savings. Employers are notanxious to intrude into employees’personal lives, especially asking themto change behavior outside the

workplace, such as quitting smoking orlosing weight. Some firms questionwhether they retain employees longenough to realize a return.

Employees sometimes hesitate toparticipate in workplace programs.Some are concerned that revealing amedical condition could cost them theirjob or affordable medical coverage.Others are easily discouraged whenthey don’t enjoy early success in theirwellness efforts, and some simply don’twant to change habits they know aremaking them sick.

These challenges can be overcomeif employers invest in a data-driven,custom-tailored, coordinated approachto wellness — a program to pprreeddiicctt,eennggaaggee, and ssuuppppoorrtt.

Effective wellness programs must be custum-tailored

to the workforce.

PPrreeddiicctt means using state-of-the-arttechnology to analyze claims data, riskappraisals, and health screenings tohelp employers understand the group’shealth issues and identify workers whocan benefit from assistance. Usingsophisticated algorithms to determinewhich initiatives will have the biggestimpact and attitudinal research todetermine how employees feel abouthealth helps design the best program.

Information must be kept in thestrictest confidence and neither theinsurance carrier nor the employerreceives information on individualemployees. Establishing employee trustand dispelling privacy concerns is a toppriority, critical to program success.

EEnnggaaggee means using motivationaltools and customized incentives toencourage participation. What

motivates people to make changes?One-size-fits-all programs simply don’twork in today’s diverse workplace.What excites and motivates one workermay be anathema to someone with adifferent “health personality.” Acontinuous improvement approachretains program elements that work andeliminates those that do not.

SSuuppppoorrtt refers to a “high-tech/high-touch” methodology that combines aself-help Web portal with personalattention from highly-trained carecoordinators, including biometric testingand quarterly reporting of results to theemployer.

Worksite medical care representsboth a new trend and a return to pastpractices. Many businesses thateliminated worksite care havereconsidered the convenience andefficiency of giving workers direct accessto medical professionals, which cansignificantly decrease absenteeism (and“presenteeism”) and increase productivity.

Effective wellness programs canmake a huge difference in workerproductivity, and businesses can recovera good portion of the losses related topersonal and family health problems.Studies show that these indirect costs canbe 200% to 300% of direct medicalcosts, totaling $1,685 per employee peryear, or a whopping $225.8 billionannually.

It’s time we got started on the hardbut rewarding challenge of creatinglong-term, sustainable ways to rein inthe cost of health care and enhanceworker productivity. It all starts with eachof us deciding it’s time follow a new andmore effective path to good health.

AAnnggeelloo JJ.. DDeevviittaa,, MMPPHH iis vicepresident of sales and clientengagement for AllOne HealthGroup.

6

automatic enrollment programs as wellas for any plan that provides foremployer contributions. Properlystructured and publicized defaultinvestment mechanisms should notpresent significant fiduciary issues.However, many employers andpractitioners have been concerned thatthe plan fiduciary’s decision to investaccounts in default investments were notprotected from liability under ERISA.Such concerns may have dissuadedemployers from adopting automaticenrollment programs.

The PPA directed the DOL to issueregulations to extend ERISA § 404(c)protection to default investments. TheDOL issued final regulations in lateOctober 2007 and amended thoseregulations in April 2008. Section 404(c)generally protects fiduciaries frominvestment losses resulting fromparticipant investment directions.Pursuant to the regulations, a participantis deemed to invest the account in thedefault investment and, therefore, thefiduciary is generally relieved of liabilityfor investment losses resulting from theinvestment of a participant’s account ina default investment if all of the followingare met:• The default investment fund is

one of the following:– A “life-cycle” or “targeted

retirement-date” fund or fund offunds, or a life-cycle or targetretirement-date investmentservice, based on the investor’sage, target retirement age or lifeexpectancy, where the fund is amix of equity and fixed-incomeinvestments that become moreconservative over time.

– A “balanced” fund consisting of amix of equity and fixed incomeinvestments, with a target level ofrisk appropriate for participantsin the plan as a whole.CCOOMMMMEENNTT:: Whether the target levelof risk is, and continues to be,appropriate for participants of theplan as a whole is an ongoingfiduciary decision subject to ERISAstandards of fiduciary conduct.

Choosing a “moderate” life-stylefund may not always beappropriate for participants of theplan as a whole.

New rules simplify administrationand ease fiduciary concerns.

– A capital preservation fund offeredby a state or federally regulatedfinancial institution, such as a bank,insurance company, or mutual fundcompany, and designed to preserveprincipal and provide a reasonablerate of return, seeking to maintainthe dollar value that is equal to theamount invested. This fund may beused for not more than 120 daysafter the participant’s firstcontribution.CCOOMMMMEENNTT:: The capitalpreservation alternative is onlyavailable as a place to “park”contributions for a short period,such as the 90-day period duringwhich a participant may opt out ofautomatic enrollment.

– Finally, the DOL “grandfathered”default investments in many stablevalue funds. This grandfatheringobviates plan fiduciaries fromhaving to withdraw defaultinvestments from stable valuefunds that may charge a penaltyfor early withdrawal. Thegrandfather relief is available onlyfor assets invested in such fundsprior to December 24, 2007. CCOOMMMMEENNTT:: The grandfatheredfunds are those that provide a rateof return generally consistent withintermediate investment gradebonds. Accordingly, money marketfunds are generally not eligible forgrandfathering.

• The participant is provided anotice which includes:– A description of the circumstances

under which the participant’saccount may be invested in thedefault investment;

– A description of the circumstancesunder which elective contributions

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((CCoonntt.. FFrroomm PPaaggee 11..))CCaammppbbeellllEExxppaannddss

AAuuttoommaattiiccEEnnrroollllmmeenntt

By Chris Stanton

In January 2008, Campbell SoupCompany began automaticallyenrolling all new U.S. salaried andhourly employees in their 401(k)plan.

“For the past few years, we wereenrolling salaried employees afterone year of service, after they becameeligible for company matchingcontributions” said Ray Murphy,Director of U.S. Benefit Plans. “For2008, it made sense to expand theautomatic enrollment program toinclude hourly employees and toencourage employees to participatein the 401(k) plan immediately aftertheir hire date, giving them more timeto save for retirement.”

New salaried employees areautomatically enrolled at a 5%contribution rate, and new hourlyemployees are enrolled at 3%.Contributions are automaticallyinvested in a targeted “lifestyle” fundthat corresponds to the year in whichthe employee will attain age 65. Sofar, the majority of new enrollees arestaying in the plan. “Through May2008, over 85% of eligible newemployees are participating in the401(k) plan,” said Ray. “We’llcontinue to monitor the enrollmentstatistics, but so far, we’re pleasedwith the results.”

Campbell Soup Company, amember of PEBA, is based inCamden, NJ and has over 11,000employees across the United States.

CChhrriissttiinnee BB.. SSttaannttoonn is Principalat Stanton Consulting.

7

(i.e. participant pre-tax and after-tax contributions) may be made,including, if applicable, adescription of the automaticenrollment program;

– A description of the defaultinvestments, including theinvestment objectives, risk andreturn characteristics and feesand expenses;

– An explanation of the participant’sright to direct investments and, inparticular, a description of theparticipant’s right to directinvestments out of the defaultinvestment; and

– An explanation of where theparticipant may obtain additionalinvestment information about theplan.

• The notice must be provided atleast 30 days before planeligibility (or at any time beforeplan eligibility if the participanthas a right to opt out of theprogram and withdraw fundscontributed pursuant to theprogram), at least 30 days inadvance of each subsequentplan year, and at least 30 daysbefore the first investment in adefault investment fund.CCOOMMMMEENNTT:: Plan sponsors shouldpay close attention to deliveringthis notice on time, particularly tonew employees who will not be onthe recordkeeper’s database.

• The participant had theopportunity to direct theinvestment of his or her accountbut did not do so.

• The plan administrator providesall of the information about thefund otherwise required by ERISASection 404(c).

• The participant has the samerights to transfer amounts out ofthe default fund as if he or shehad affirmatively elected suchinvestment.

• The fund does not hold or permitthe acquisition of employersecurities, unless the fund is aregistered mutual fund or similarpooled investment vehicle.CCOOMMMMEENNTT:: The DOL regulationsconfirm that the fiduciary continuesto be responsible to prudentlyselect and monitor the defaultinvestment alternative(s). Thus, in

choosing default investmentalternatives, plan fiduciariesshould, at a minimum, engage ina deliberate, thoughtful process,record deliberations and revise theplan’s investment policy statementaccordingly.

Safe harbor alternative offers relieffrom ADP/ACP testing.

NNoonn--DDiissccrriimmiinnaattiioonn SSaaffee HHaarrbboorrThe PPA introduced another 401(k)

discrimination safe harbor specificallyfor plans that implement automaticcontribution programs. Generally, theanti-discrimination tests (the “ADP” testfor participant pre-tax contributions andthe “ACP” test for participant after-taxcontributions and employer matchingcontributions) are waived for such plansif:• The automatic contribution starts

out at least 3% and increases toat least 4%, 5%, and 6% for thesecond, third, and subsequentyears of participation,respectively;

• The automatic contribution maynot exceed 10%;

• The participant may electanother contribution percentage(including zero);

• The employer provides matchingcontributions equal to 100% ofthe participant’s pre-taxcontributions up to 1% of theparticipant’s compensation and50% of the participant’s pre-taxcontributions in excess of 1% ofcompensation but not in excessof 6% of compensation, or theemployer provides a 3% ofcompensation non-elective(profit-sharing) contribution forall eligible employees;

• All participant contributionsbecome vested in not more thantwo years; and

• Participants are provided with anotice explaining their rights andobligations under the automaticenrollment program.CCOOMMMMEENNTT:: The Sample AutomaticEnrollment and Default InvestmentNotice is deemed to comply withthese requirements.

CCOOMMMMEENNTT:: The automaticcontribution safe harbor may beless expensive than the other401(k) safe harbors. Any employerthat currently has a safe-harbordesign should consider switchingto the automatic contribution safeharbor for 2008.

OOpptt--OOuuttAny automatic contribution

arrangement (regardless of whether itis intended to meet the non-discrimination safe harbor), includingautomatic contribution arrangementsfor 403(b) plans, may permit employeesto withdraw all of the automaticcontributions within 90 days after thefirst contribution is made for theparticipant. This is an importantexception to the general rules of 401(k)and 403(b) which permit in-servicedistributions of employee pre-taxcontributions only for hardship,disability, and attainment of age 59½.Such withdrawals are only permitted ifparticipants are provided notice of theirrights under the plan. The SampleAutomatic Enrollment and DefaultInvestment Notice is deemed to complywith these requirements.

PPrree--eemmppttiioonn ooff SSttaattee LLaawwssState laws typically prohibit payroll

withholding without employee consent,unless legally required. Practitionershave generally taken the view that suchlaws do not apply to automaticenrollment of employees into ERISAplans because of ERISA’s broad pre-emption provisions. The PPA adopts thisview legislatively, subject to therequirement that each year the planadministrator must provide notice toparticipants of their rights andobligations under the automaticenrollment program. The IRS’s SampleAutomatic Enrollment and DefaultInvestment Notice is deemed to complywith these requirements.

BBaarrrryy LL.. KKlleeiinn,, EEssqq.. is a Partnerand VViirrggiinniiaa EE.. NNeeiisswweennddeerr,, EEssqq..is an Associate at Blank Rome.

8

MMyy DDaayy AAtt PPEEBBAA’’ss 2266tthh AAnnnnuuaall FFoorruummby “Tote Bag”

As a Forum tote bag, one getsunrestricted access to one ofPhiladelphia’s premier compensationand benefits events. Along with 208other red-and-black Trion bags, Iattended PEBA’s 26th Annual Forum atthe Philadelphia Marriott Downtown onApril 10th.

I observed four generations of PEBAmembers — Traditionalists, BabyBoomers, Gen X’ers, and Millenials –who mirror today’s multigenerationalworkforce with their different needs andwants. We began the day visiting the37 exhibitor booths, where I overheardthe start of new business relationshipsand became increasingly stuffed withhelpful information on the latestproducts and services. I also had abird’s eye view of PEBA membersmingling with colleagues and friends,sharing professional experiences andreuniting after several years.

When I was filled to overflowingwith pens, plush animals, and even apedometer, it was on to the workshops.Both the morning and afternoonsessions included Foundation andAdvanced choices in compensation, HR,and benefits, enabling members tolearn about topics best suited to theirinterest and skill levels. Next, I wasentertained by Keynote speaker DaveRaymond of The Fun Department, whoshared how a culture of fun and levityin the workplace can increaseproductivity and creativity. As a “tote inthe know,” I also attended the LegislativeUpdate to hear Brian Pinheiro, partnerat Ballard Spahr Andrews & IngersollLLP, discuss the latest regulatorydevelopments.

The other tote bags and I spent thenext hour under the table as theparticipants enjoyed lunch and the luckyones claimed raffle prizes provided by

the vendors, including golf gear, iPods,and gift baskets. Congratulations toMMaarryyaannnn MMiikkllaavviicc, Senior Director ofCompensation and Benefits at theFederal Reserve, who won the PEBAgrand-prize, a $500 American Expressgift certificate.

Here are some comments Ioverheard as I swung on myparticipant’s arm. First-time attendeeRRiittaa GGuuzzeewwsskkii, Manager of RetirementPlans at Main Line Health Services: “Assomeone who’s been away from thevendors for a while, it was nicenetworking with friends. The quality ofthe presentations was excellent and thevariety of exhibitors was great. It feltlike “old home week!” The timing wasjust right too – we got out before rushhour.”

TTeerreessaa AArrmmsstteeaadd, Benefits ProjectManager at Advanta, attends almostevery year. “It’s a wonderful Forum andan excellent opportunity to network withknowledgeable HR professionals andhear what other companies are doing.This year, the session on automatic401(k) enrollment was right on time, asmy company is in the process ofimplementing it. The session and casestudy were most informative andvaluable, and the practical tips will beuseful. PEBA, maintain the awesomejob you do with keeping HRprofessionals informed and up-to-date.”

Session C1 speaker MMaayyaa JJoohhnnssoonn,Manager of HR at Air ProductsHealthcare: “I’ve been a member forseveral years, and in the past haveparticipated in the Forum as anattendee. This year, I was able toparticipate as a speaker and was veryimpressed by the caliber of memberswho attended the session. It is re-energizing to be surrounded by a

group of professionals who have sucha genuine enthusiasm about their field,and a true eagerness to share theirexperiences and learn from others.PEBA has always done a wonderful jobcoordinating valuable programs andevents, and carrying them out in a veryorganized manner. Kudos to all theplanners!”

eConsultingNetwork’s DDeebb GGrriiggssoonn,Design Partner for JobBlox, PEBACommittee Member and brand newForum Exhibitor: “The PEBA Forum was agreat opportunity to show off our newtechnology and to network with localcompensation and benefits colleagues andfriends. The HR community was eager tosee what exhibitors brought with them andto talk about new products and resources.The event was well run and offered anengaging environment; eConsulting-Network will plan to return again nextyear.”

Many thanks to our Forumsponsors, including Commerce BancInsurance Services, Watson Wyatt, Trion,Carebridge, Corporate Synergies, HayGroup, United HealthCare, Aetna,Medco Health Solutions, Royalty Press,The Rosen Group, Mercer, The EliteGroup, and Buck Consulting. Thanksalso to the Forum Committee, co-chaired by RRoonn SSeeiiffeerrtt (Hay Group) andJJoohhnn HHooddeerrnnyy (C&D Technologies);PEBA’s Executive Director, SSuussaannDDeeMMiinniiccoo; and PEBA staff members RRoozzCCoolleemmaann and JJooyy WWiillssoonn for makingthis “return to Philly” Forum such a hugesuccess.

“Tote Bag” was carried bySShhaarroonn KKaazzaarraass, President ofSharon E. Kazaras Consulting.

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SSeeee yyoouu nneexxtt yyeeaarr aatt tthhee 22000099 AAnnnnuuaall FFoorruummSSaavvee tthhee DDaattee AApprriill 2222,, 22000099!!

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With Your Help, PEBA Continues to Grow We thank the following member companies who joined in recent months:

HHRRAAddvvaannccee(Chris Gada, Northeast Regional VP)

HRAdvance, founded in 2004, develops auto-mated human resource, benefits, administrative,and financial solutions for public and private organ-izations. Their experience in HR, benefits, technol-ogy, auditing, call center, and public accountinghelps their clients maximize the potential of theirhuman assets.

EEGGEE AAddvviissoorrss,, LLttdd..(Douglas MacGray, Senior VP, Financial Planning)

EGE Advisors, Ltd. provides a wide range ofservices including financial planning, asset alloca-tion modeling, fee-based investment management,and insurance design and implementation to highnet worth individuals, charitable organizations, andbusinesses.

CChheecckkPPooiinntt HHRR(Marc Sanchez, Associate)

CheckPoint HR helps mid-size organizations(50-5,000 employees) automate their HR opera-tions. Their powerful, web-based HumanResources Management System offers an afford-able, innovative solution to manage payroll andbenefits administration and other business-criticalHR processes.

SSuunnGGaarrdd DDaattaa SSyysstteemmss(Michelle Bruno, Sr. Director, Total Rewards &HRIS)

SunGard, serving 25,000+ customers in over50 countries, is a global leader in software and pro-cessing solutions for financial services, higher edu-cation, and the public sector. They also helpinformation-dependent enterprises of all types withbusiness continuity.

TThhee AAddoobbee GGrroouupp,, LLLLCC(Arlene Weissman, Partner)

The Adobe Group specializes in employeecommunication, working since 1995 to help organ-izations throughout the U.S. to communicate moreeffectively, understand employee opinions, alignthe workforce with business strategy, show bene-fit value, and help manage benefit costs.

CCeennttuurryy AAssssoocciiaatteess(Lynn Radice, Executive Recruiter)

Century Associates has been providing exec-utive search services and talent to client compa-nies for over 30 years. Their exper tise intechnology and medical—their core industries—and systematic search process deliver successfulcandidates in a timely and cost-effective manner.

HHoorriizzoonn HHoouussee,, IInncc..(Yusef Joyner, Director of Human Resources)

Horizon House provides comprehensive, inte-grated, continuous mental health services inSoutheastern PA and Delaware. A pioneer in thefield of community-based treatment and rehabili-tation, Horizon House uses a holistic approach toaddress psychiatric, medical, and behavioral healthimpediments, supporting the individual’s activemembership in family and community.

TToommlliinnssoonn HHRR && CCoommmmuunniiccaattiioonnss(Sherry N. Tomlinson, Consultant)

Tomlinson HR & Communications specializesin business communications, particularly employ-ee communications and communications-relatedprojects for companies of all sizes. Sherry’s HRwork experience informs her work with clients onprojects from easy-to-read pension explanationsto employee handbook reviews and communica-tion planning.

SSaallaarryy..ccoomm(John Delaney, Account Executive)

Salary.com builds on-demand compensationsoftware to help customers win the war for talentby simplifying the connections between people,pay, and performance. Their cutting-edge technol-ogy is integrated with actionable data and content,empowering customers to make the best decisionsand help them attract, motivate, reward, and retaintop performers.

CClleemmeenntt PPaappppaass && CCoommppaannyy,, IInncc..(Rosemari Hicks, Director, Compensation)

Clement Pappas is an industry leader in pro-ducing fruit juices, fruit drinks, and cranberrysauces, while providing the best solutions for theircustomers’ businesses. Clement Pappas’ successis based on their steadfast commitment to quality,integrity, accomplishment, and innovation.

TTiippttoonn CCoommmmuunniiccaattiioonnss(Daniel R. Tipton, President)

Tipton Communications creates and imple-ments strategic employee and benefits communi-cations plans that engage employees, minimizeuncer tainty, and add value to its clients’ benefitsand compensation programs. Tipton’s servicesrange from strategic communications planning tocompanywide benefit program launches, fromnewsletters to open enrollment guides. Clientsinclude some of the nation’s largest and most pro-gressive organizations.

CCaattaallyysstt RRxx(Troy Loney, VP of Sales, East)

Catalyst Rx is a full service Pharmacy BenefitManagement (PBM) company. Founded in 1994,they currently manage about 5 million members inall 50 states. The company’s continued commit-ment to innovation, efficiency, and superior cus-tomer service has helped its clients balancemanagement of pharmacy costs with quality ofcare.

FFooxx RRootthhsscchhiilldd LLLLPP(Anne Slattery, Compensation & 401(k) Specialist)

Fox Rothschild delivers a full range of legalservices—from the traditional (litigation, corpo-rate, labor and employment) to the emerging (art,intellectual proper ty, tech, and venture finance).With 400 lawyers in 14 offices coast to coast, FoxRothschild is a member of Lexwork International,an alliance of independent law firms located acrossEurope and North America, and the World ServicesGroup, a global membership association providingprofessional business services.

TThhee KKeeaannee OOrrggaanniizzaattiioonn(Dianna Schell, HR Administrator)

The Keane Organization, Inc. provides com-pliance and risk management solutions to corpo-rations, mutual funds, and financial institutionsworldwide. With 135 employees in four operatingdivisions—investor communication and retention,unclaimed property compliance, enterprise riskmanagement (ERM), and qualified retirement planservices—Keane is headquar tered in suburbanPhiladelphia and has offices in Atlanta, Baltimore,Cleveland, Miami, Seattle, and the UK.

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CCllaayymmoonntt SStteeeell,, IInncc..(Judith Stevenson, Benefits Administrator)

Claymont Steel is North America’s only mini-mill focused on custom discrete plate. With anannual capacity of over 500,000 tons, ClaymontSteel focuses on customers with special productand service needs that are under-served by moretraditional commodity-oriented steel plate produc-ers. The facilities (located in Claymont, Delaware)are specifically configured to provide low-cost steelplate in small-order sizes and non-standard dimen-sions.

SSiiggnnaattuurree IInnffoorrmmaattiioonn SSoolluuttiioonnss(Marcia Roberts, VP, Human Resources)

Signature Information Solutions is the newname of Charles Jones LLC and Data TraceInformation Services-NJ/PA. Data Trace’s nation-al standardized title and tax information systemempowers title insurance companies to streamlineorder processing and title production. CharlesJones offers a large computerized facility to pro-vide immediate access to more than 50 millionrecords.

KKeenneexxaa(Charles Spector, Director of Compensation &Benefits)

Kenexa is a leading end-to-end provider ofsoftware, proprietary content, services, andprocess outsourcing. Based on 20 years’ experi-ence, their solutions enable organizations toimprove their talent acquisition programs, increaseemployee productivity and retention, decreasecosts, and improve management decision-makingbased on analyzing and summarizing key HR met-rics associated with employee performance.

AAllvvaarreezz aanndd MMaarrssaall(Lori Hoppmann, Senior Director)

Alvarez & Marsal, a leading independent glob-al professional services firm, delivers a compre-hensive suite of performance improvement,turnaround management, and business advisoryservices to international enterprises, middle-mar-ket companies, and public sector entities. For 25years, they have worked with organizations to solvecomplex problems, boost performance, and maxi-mize stakeholder value.

JJaannnneeyy MMoonnttggoommeerryy SSccootttt(Brad Hamiliton, AVP, Benefit-Manager)

Established in 1832, Janney MontgomeryScott LLC provides comprehensive financial adviceto individual, corporate, and institutional investors.Their wealth management approach focuses onstrategic financial plans that utilize a variety offinancial products and services to help meet theirfinancial goals. Janney is an independently oper-ated subsidiary of The Penn Mutual Life InsuranceCompany.

iiWWoorrkkwweellll,, IInncc..(Sheila Scanlon, HR Knowledge, Manager/Editor)

iWorkwell is a web-based resource whichenables companies to cost-effectively managetheir human resource practices. iWorkwell sup-plements a firm’s existing internal HR resourceswith in-depth, up-to-date knowledge on a varietyof disciplines, including benefits, compensation,employee relations, leadership, communication,legal/legislative issues, safety, talent management,and technology.

BBuurrlliinnggttoonn CCooaatt FFaaccttoorryy(Anna Langenhan, Dir., Comp, Benefits & HRIS)

Burlington Coat Factory is a national depart-ment store chain offering current, high quality,designer merchandise priced up to 60% belowother department stores. Their 394 locations in44 states feature coats, apparel, shoes, and acces-sories for the entire family, baby clothes, furniture,toys, home decor items, and gifts.

SStt.. LLuukkee’’ss HHoossppiittaall HHeeaalltthh NNeettwwoorrkk(David Wannemacher, Director, Compensation)

Founded in 1872 in direct response to com-munity need, St. Luke’s has grown into an integrat-ed network of four non-profit hospitals, 1,200physicians, the Visiting Nurse Association of St.Luke’s, and many related organizations and facili-ties. St. Luke’s now provides care in eight coun-ties in Eastern PA, with over 6,000 employees and1,000 volunteers.

JJEEVVSS HHuummaann SSeerrvviicceess(Marian Baldini, Chief Operating Officer)

JEVS Human Services is a nonprofit, nonsec-tarian organization that benefits the community byenhancing individual employability and self-suffi-ciency through a broad range of support programs.With an annual operating budget of nearly $72 mil-lion, JEVS Human Services and its support staffof nearly 1,000 employees run more than 20 pro-grams providing skills development, job readinessand career services, vocational rehabilitation,recovery services, adult and residential day serv-ices, and in-home personal assistance.

TT--MMoobbiillee UUSSAA(Robert Bell, Manager, HR Admin.)

T-Mobile USA is a national provider of wire-less voice, messaging, and data services capableof reaching over 268 million Americans where theylive, work, and play. Headquar tered in Bellevue,WA, the company has 36,000 employees and is asubsidiary of Deutsche Telekom, one of the largesttelecommunications companies in the world, withnearly 120 million customers worldwide.

AAddvvaanncceedd BBeenneeffiitt AAddvviissoorrss,, IInncc..(Robert Petcove, President)

Advanced Benefit Advisors, Inc. providesemployee benefits consulting services and cost-effective solutions including streamlining humanresource staffing, ensuring competitive plan mar-keting and third-party negotiation, administeringplans, analyzing network solutions, and analyzingplan design.

DDaanniieell RR.. TTiippttoonn is President ofTipton Communications.

Have you welcomed a new member lately?

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ppeebbaa

Editor-in-ChiefSharon E. Kazaras

Graphic Artist Jill S. Anderson

This newsletter is a publication of PEBA and thecontents are intended as general information only.They do not reflect the views of PEBA and do notconstitute legal advice. You should consult yourown lawyer concerning your situation or anyspecific legal questions you may have. Thisnewsletter or any part may not be reproducedwithout the permission of a PEBA officer or theExecutive Director.

ppeebbaa nneewwss

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See PEBA home page for $9.00 parking near our office!

YOUR BENEF I TS AND COMPENSAT ION ASSOCIAT ION

PEBA-SponsoredWorldatWork

2008 Compensation & BenefitsCertification Courses

Update your contact information and addyour initial membership date by logging on to

www.peba.org. PEBA can proctor any WorldatWork exam for you- even if PEBA doesn’t offer the course!Please contact PEBA at least two weeks before your preferred test only date to reserve aseat. We need a minimum of 5 participants to host tests on these dates.

PEBA will be offering the following courses in the fall of 2008:

September 17-19th, 2008Location: Towers Perrin in PhiladelphiaB1: Fundamentals of Employee BenefitsC11: Performance Management

In addition to our classes, PEBA offers test-only sessions in our Center CityPhiladelphia office located at 1528 Walnut St, Suite 420 from 7:30am-12:00pm onthe following dates:

Friday, October 24th Friday, December 1st

November 5-7th, 2008Location: Towers Perrin in PhiladelphiaT3: Quantitative MethodsT4: Strategic Communications in

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