| | Benefit Briefs | | Is LDI Feasible for DC Participants? | | Defined contribution (DC) plans are increasingly
adopting practices similar to defined benefit (DB) plans to improve participant
outcomes, including automatic enrollment and “do-it-for-me”
investments. One current DB trend is liability-driven investing (LDI), in an
attempt to match assets to future benefit obligations. Is there a way for DC
plans to make use of LDI? | | According to the 2013 UBA Health Plan Survey
from United Benefit Advisors, 19.2% of the four most popular types of insurance
plans (CDHP, PPO, HMO, POS) offer a wellness program, and consumer-driven
health plans (CDHPs) continue to lead the trend, with 26.9% offering such
programs. While employers with 1,000 or more employees (58.2%) offer the most
wellness programs, middle market employers saw a growth rate around 12.5% in
the offering of wellness programs during 2013, which is double that of any
other employer size. Employers with more than 1,000 employees, on the other
hand, actually decreased their wellness offerings by 0.7%. | | Employers Say ACA Affects Retirement Benefits | | A new analysis from the LIMRA Secure Retirement
Institute suggests more than four in 10 employers believe the Patient
Protection and Affordable Care Act (or ACA) has directly impacted their
retirement plan. The research shows around 43% of employers report the ACA has
affected their current retirement benefits strategy and spending, and 45%
believe the ACA will change their retirement plans in the future. | | “The ADP Annual Health Benefits Report: 2014
Benchmarks and Trends for Large Organizations” indicates that between 2010 and
2014, the percentage of full-time employees who were eligible for
employer-provided health benefits remained relatively steady at an average of
90%. The overall percentage of those participating in health benefits also
remained relatively constant at an average of 68%. However, the report shows
distinct trends with regard to age. A growing number of older employees were
eligible and participated in employer-provided health benefits. Among employees
between ages 50 and 59, 73% of those eligible participated. In all groups 40
and older, participation was more than 70% in 2014. | | IRA Rollover Marketplace May Soon Be Reshaped | | Federal regulators and policymakers appear to
have embarked on a mission to reshape the operation of the individual
retirement account (IRA) rollover marketplace. Several announcements from
various officials signal efforts to impose new duties on financial institutions
and intermediaries when interacting with distribution-eligible plan
participants, or to reinterpret existing duties and standards of care in new
ways as a means of influencing and reconfiguring the rollover discussion. Why
is this so important? The IRA market has become the largest retirement system
in the U.S., totaling more than $6 trillion, with contributions in excess of
$300 billion per year. | | | Economic Events | | In the week
ending April 5, the advance figure for seasonally adjusted initial claims for
unemployment insurance was 300,000, a decrease of 32,000 from the previous
week’s revised level, the Labor Department reported. The last time initial
claims were this low was May 12, 2007, when they were 297,000.
The average interest rate for a 30-year fixed-rate
mortgage is 4.34%, down from 4.41% one week ago, according to Freddie Mac. The
average interest rate for a 15-year fixed-rate mortgage is 3.38%, down from 3.47%.
| | | Market Mirror | | Major U.S. stock indices suffered a blow
Thursday, with the Dow declining 266.96 points (1.62%) to 16,170.22, the NASDAQ
plummeting 129.79 points (3.10%) to 4,054.11, and the S&P 500 falling 39.10
points (2.09%0 to 1,833.08. The Russell 2000 lost 32.30 points (2.78%) to
finish at 1,127.66, and the Wilshire 5000 closed 437.60 points (2.19%) lower at
19,524.45.
On the NYSE, 3.2 billion shares traded,
with declining issues outnumbering advancing issues more than 3 to 1. On the
NASDAQ, 2.7 billion shares changed hands with a more than 6 to 1 lead for
decliners.
The price of the 10-year Treasury note was up 2/32,
bringing its yield down to 2.641%. The price of the 30-year Treasury bond
increased 8/32, decreasing its yield to 3.508%.
| | | Rules & Regulators | | EEOC Alleges Early Retirement Incentive Is Discriminatory | | The U.S. Equal Employment Opportunity Commission
(EEOC) says a Phoenix, Arizona, school district unlawfully used an early retirement
incentive plan. A lawsuit filed by the EEOC says the plan discriminates based
on age by providing for older employees to be compensated at lower rates than
are paid to younger employees. | | “Are we expecting vendor-provided 403(b) prototype
documents anytime soon? I seem to recall from a prior Ask the Experts article
that the deadline for submissions is at the end of this month.” | | | Financial Sense | | March was a light trading month for defined
contribution (DC) plan participants, according to Aon Hewitt’s 401(k) Index. The
index found the overall daily transfer volume in March averaged 0.021% of the
total daily balances, slightly lower than February’s value of 0.023%. In
addition, there were zero days in March with above normal transfer activity
levels, marking the first month of zero above normal trading days since August
2013. Total transfer activity across the index was low, at $244 million
(0.15%). When DC participants did trade in March, they favored fixed income
funds. | | Consider the Market Before De-Risking DBs | | Market conditions like those seen in 2013
benefited those plan sponsors that had not yet moved to de-risk their defined
benefit (DB) plans. Milliman’s “2014 Pension Funding Study” found that during
2013, a 7.5% decrease in plan liabilities from higher discount rates and 9.9%
average return on plan assets combined to produce a $198.3 billion improvement
in the funded status deficit from year-end 2012. Plans with high allocations in
equity investments came out as the big winners in 2013. The study reveals not
all DB plan sponsors adopted a liability-driven investing (LDI) strategy to
de-risk their plans. Some continued to maintain an equity-heavy asset mix,
awaiting a more opportune time to carry out de-risking. In 2013, say the
authors of the study, that strategy paid off as equity investments surged and
interest rates rose, giving those plans with a higher equity allocation a boost
in funded status. “2013
was actually a very good year for taking risks, since the equities market
offered such positive returns, Zorast Wadia, a principal and consulting actuary
with Milliman in New York, and one of the authors of the study, tells
PLANSPONSOR. | | The estimated cost, as a percentage of
accounting liability, of a U.S. retiree annuity purchase decreased during
February from 108.5% to 108.4%, according to Mercer. The Mercer Global Pension
Buyout Index notes that the Society of Actuaries released a new draft mortality
table predicting longer life expectancy than those currently used to determine
a plan’s accounting liability. Mercer says this change is expected to cause a
larger increase in accounting liabilities than insurer pricing, causing a
decrease in buyout premiums. | | | Sponsored message from OFI | Go Where the Growth Is
These days investors must be willing to pursue growth opportunities globally or risk missing them altogether. George Evans, head of Equities at OppenheimerFunds, talks about a strategy that starts with a global core of the best and fastest growing companies, regardless of where they are headquartered. | | | Small Talk | | ON
THIS DATE: In
1919, in Paris, France, the
International Labor Organization (ILO) was founded as an independent,
affiliated agency of the League of Nations. In 1921, the first live sports event on radio took place this day on
KDKA Radio. The event was a boxing match between Johnny Ray and Johnny Dundee. In
1947, Jackie Robinson became the
first black player in major-league history. He played in an exhibition game for
the Brooklyn Dodgers. In 1951, President
Harry S. Truman relieved General Douglas MacArthur of command of the U.S.
forces in Korea. The firing of MacArthur set off a brief uproar among the American
public, but Truman remained committed to keeping the conflict in Korea a
“limited war.” In 1961, Bob
Dylan played his first major gig in New York City, opening for bluesman John
Lee Hooker at Gerde’s Folk City. In 1968, U.S. President Lyndon B. Johnson
signed the 1968 Civil Rights Act. In 1970,
Apollo 13, the third lunar landing
mission, was successfully launched from Cape Canaveral, Florida, carrying
astronauts James A. Lovell, John L. Swigert, and Fred W. Haise. In 1980, the Equal Employment Opportunity
Commission issued regulations specifically prohibiting sexual harassment of
workers by supervisors. In 1988, at
the Shrine Auditorium in Los Angeles, the actress and singer Cher collected the
Academy Award for Best Actress for her performance in Moonstruck. In 2004,
Phil Mickelson won the Masters Golf Tournament at Augusta National Golf Club,
his first major championship in nearly 12 years as a professional golfer.
And now it’s time for FRIDAY FILES!
| | And you thought you were having a bad day at
work… There’s fish in that crate. | | In New York City, New York,
police saw a man drive erratically and hit a car, before making a U-turn and
crashing into another car, causing injuries for occupants in both vehicles,
court papers alleged. According to the Daily
News, the man then drove off and plowed through a traffic stop with “police
jumping out of the way,” the document said. Who was the man? A seven-year
veteran of the NYPD. Cops charged the officer with leaving the scene of an
accident, DWI, reckless driving and refusing to take a breath test.
In Louisville, Kentucky, a
34-year-old man snuck onto the rooftop of a residence earlier this month,
busted a skylight and dropped a ladder into the residence. Police say he fell,
broke his leg and called 911. According to the WLKY news station, police found
him in the residence and took him to University Hospital then charged him with
burglary. He has pleaded not guilty.
| | A father and son’s choreographed dance to
Pharrell’s “Happy” was the winner at this NCAA finals game. | | In Texarkana, Texas, a
woman was arrested after making a report to police—that her drug dealer sold
her a bad bag of marij.uana. She also told them the dealer would not give her a
refund, and had in her possession a small bag of pot, according to Reuters. She
was released on bail, but was arrested the very next day for public
into.xication, as she was yelling in the streets.
In Maplewood, Minnesota, a
911 dispatcher first got a call and hang-up, then another call from the same
number. The second time, the call stayed open, and the dispatcher overheard
pieces of a conversation about where police were and the dangers of getting
caught. It was “pretty clear based on some of that conversation that this
was a burglary,” Maplewood Police Chief Paul Schnell said, according the Pioneer Press. The burglars had
accidentally pressed the phone’s emergency-call feature. As is the case with
all 911 calls, the dispatcher could see the location: a car-repair shop.
Officers arrived to see the two men leaving the building, one carrying a
television, the other a box. Upon seeing the officers, the men dropped the
objects and ran. Officers ordered them to stop then sent police dogs to nab
them.
| | You can feel like a kid again, as this
78-year-old riding a roller coaster for the first time shows. | | In Dover, New Hampshire,
police could not identify any suspects in their initial investigation of a
burglary of an Apple laptop. After several months and the laptop’s owner
thought the computer was gone for good. Then, he got an email from Apple,
thanking him for calling customer service. According to the WMUR news station,
Apple had taken a call from someone who referenced the serial number of the
stolen computer. “It then took us a while to track down the individual who
made the phone call, but we were able to put that together and ultimately come
up with enough evidence to charge him with the original burglary and recover
the computer,” said Lt. Brant Dolleman of the Dover Police.
In Orlando, Florida, police
and fire crews were called to a fire at an apartment building. A man was
rescued from his burning apartment and taken to Orlando Regional Medical Center
to be treated for smoke inhalation, the Orlando
Sentinel reports. The man told authorities he started the fire “to
burn the bugs in his home and computer.”
In Exeter, England, the
first viewing of the blockbuster film Noah
at the Vue cinema was cancelled—due to flooding. However, the amount of what
was not in such biblical proportions as the film; reportedly, workers discovered
the flooding from a leaky ice machine, but had the cinema cleaned up by the
afternoon.
Have a wonderful weekend,
everyone! | | Share the good news with a friend! Pass the Dash along – and tell your
friends/associates they can sign up for their own copy. | | News from PLANSPONSOR.com
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