CUNA Regulatory Comment Call

September 26, 2002

Retirement Benefits for Employees of Federal
Credit Unions – Revised Proposal



  1. The proposal notes that as competition to attract and retain qualified employees has increased and the employee benefits marketplace has become more sophisticated, FCUs are increasingly providing more diverse and less traditional forms of employee benefits (such as deferred compensation plans and stock option plans). NCUA intends this proposal to provide needed flexibility to credit unions to fund their employee benefit obligations. Do you agree the proposal provides enough flexibility for your credit union to adequately fund employee benefit obligations given the competitive marketplace?

    Yes ______ No ______

    If not, what other modifications would you like to see incorporated into the rule to make it more flexible?

  2. Do you agree with the new proposed provision to allow credit unions to make investments, otherwise impermissible by statute and regulation, to fund a defined benefit plan not covered by ERISA fiduciary requirements?

    Yes ______ No ______

    If not, why not?

  3. Are there any other changes NCUA could adopt to make it easier for credit unions to manage their employee benefit plans?

    Yes ______ No ______

    If so, what are those changes?

  4. Are there any other things NCUA could do to assist credit unions in attracting and retaining highly qualified employees?

    Yes ______ No ______

    If so, what are they?

  5. Subsection (d) of the revised proposal would prohibit the use of variable funding arrangements (arrangements that have exposure to the stock market, such as mutual funds) to fund non-qualified defined benefit deferred compensation plans. We understand that about 50 federal credit unions offer these plans. They have used these types of plans (including discounted option plans under which they grant executives options to purchase certain property such as mutual fund shares at discounted prices at a future date) to supplement retirement income for their executives. Do you believe the subsection’s provisions would have the effect of limiting of the ability of credit unions to attract and retain talented executives?

    Yes ______ No ______

    Please elaborate. (Does your credit union offer such non-qualified defined benefit deferred compensation plans?)

  6. Other comments?

Eric Richard • General Counsel • (202) 508-6742 •
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 •
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 •
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 •