| Benefit Briefs | An Argument for ‘To-Retirement’ TDFs | Retirement plan participants are showing strong
interest in target-date strategies, but one provider says retirement investors
should stick to the most conservative approaches. Ron Surz, president of Target
Date Solutions, has developed something of a reputation as an outspoken critic
of target-date funds (TDFs) in the wake of the 2008 financial crisis. His firm
is a division of PPCA Inc., specializing in target-date products that
incorporate elements of capital preservation and take a more conservative
approach than many TDFs currently included in defined contribution (DC) plan
lineups. It’s a challenging balance to strike, Surz tells PLANSPONSOR, between
helping participants limit investment risk while also addressing longevity
concerns. | The Patient Protection and Affordable Care Act
of (or ACA) has influenced companies’ health care benefits strategy, with more
employers moving toward or at least considering the use of a defined
contribution (DC) benefits model, according to the “Eight Annual Study of
Employee Benefits Today and Beyond: Group Benefits and the Defined Contribution
Model,” released by Prudential Group Insurance. Forty-seven percent of
employers report having already moved to this model or are currently
implementing this type of program. Sixty-two percent of those that are likely
to move to an exchange and those that are currently considering participating
in an exchange believe they will adopt this model in the next two years. | Lessons from Top-Ranked Retirement Systems | Like a smooth-running watch, Switzerland’s
retirement system is keeping pace with retirees’ expectations and needs,
suggests the 2014 Global Retirement Index. The Swiss system ranked No. 1 in the
survey by Natixis Global Asset Management, which examined 20 factors in four
subcategories in retirement: health, material well-being, quality of life and
finances. The U.S. system ranked 19th. Edward Farrington, executive vice
president of Natixis Global Asset Management, U.S. distribution, tells
PLANSPONSOR he feels the elements that make Switzerland’s system so successful
are its simplicity, use of automatic enrollment, access of plans and the
incentives. | Results from the Charles Schwab Money Myths
survey show a prevailing sense of overconfidence and unfounded optimism among
U.S. workers planning for finances after age 50. The survey also shows that
while roughly three out of four Americans (76%) believe it is harder to plan
for retirement now than it was for their parents’ generation, they may be
overly optimistic about their financial options in the future. For instance,
39% of survey respondents who are still in the work force expect to receive
income from a part-time job in retirement, Schwab says, yet only about 4% of
current retirees actually do so. | | Buyer's Market | TIAA-CREF to Acquire Nuveen Investments | Financial services provider TIAA-CREF announced
an agreement to acquire Nuveen Investments, a diversified investment management
company. The transaction will provide clients with additional investment
choices and access to new products, according to the firms. | | Industry Voices | Industry Voice: Roth Maximizes Retirement Savings Power | If you’re thinking of adding a Roth feature to
your defined contribution (DC) plan, you’re not alone. Interest is growing
around this option, and the existence of other after-tax retirement savings
vehicles begs the question, why offer Roth accounts? Once familiar with Roth
accounts, plan sponsors quickly realize there are many benefits to this DC plan
design feature—for both the employer and the employee. | | Economic Events | The U.S.
Census Bureau announced that advance estimates of U.S. retail and food services
sales for March, adjusted for seasonal variation and holiday and trading-day
differences, but not for price changes, were $433.9 billion, an increase of 1.1%
from the previous month, and 3.8% above March 2013. Total sales for the January
2014 through March 2014 period were up 2.5% from the same period a year ago. The
January 2014 to February 2014 percent change was revised from 0.3% to 0.7%.
Manufacturers’
and trade inventories, adjusted for seasonal variations but not for price
changes, were estimated at an end-of-month level of $1,715.6 billion, up 0.4%
from January 2014 and up 4.2% from February 2013.
| | Market Mirror | Yesterday, the Dow was up 146.49 points
(0.91%) at 16,173.24, the NASDAQ increased 22.96 points (0.57%) top 4,022.69,
and the S&P 500 closed 14.92 points (0.82%) higher at 1,830.61. The Russell
2000 added 3.92 points (0.35%) to finish at 1,115.35, and the Wilshire 5000
closed at 19,454.42, up 133.27 points (0.69%).
On the NYSE, 3.2 billion shares changed
hands, with advancing issues outnumbering declining issues nearly 2 to 1. On the
NASDAQ, 2.7 billion shares traded, with a slight lead for advancers.
The price of the 10-year Treasury note was down 6/32,
bringing its yield up to 2.649%. The price of the 30-year Treasury bond slipped
3/32, increasing its yield to 3.490%.
| | Rules & Regulators | Investment Adviser Restores Funds to Pension Plans | An investment adviser based in Johnston, Iowa,
has paid $341,487 to 68 pension plans covered by the Employee Retirement Income
Security Act (ERISA). The payments were made as part of a settlement agreement
following an investigation by the U.S. Department of Labor’s Employee Benefits
Security Administration (EBSA), which found the adviser, as well as entities he
owns and representatives he employed, violated federal law when they
recommended certain investments to clients participating in ERISA-covered
employee benefit plans. Investigators also found the companies and advisers
charged higher fees than those agreed to by their clients. | Multinational employers that sponsor non-U.S.
retirement plans may have new requirements under the Foreign Account Tax
Compliance Act (FATCA). An alert from the Chicago-based law firm Winston &
Strawn notes these employers may be required to register those plans with the
U.S. Internal Revenue Service (IRS) as foreign financial institutions (FFIs) by
April 25. They may also need to comply with certain FATCA withholding and
reporting obligations starting on July 1. | Coalition Defends Retirement Plan Tax Incentives | The Coalition to Preserve Retirement sent an
open letter to Representative David Camp, R-Michigan, chairman of the House
Ways and Means Committee, pushing back on certain tax reforms floated by the
lawmaker. “While
the spirit of the discussion draft serves as a catalyst for constructive
discussion, there are several provisions that are of concern and could negatively
impact retirement savings opportunities for working Americans,” the letter
says. As an initial matter, the coalition warns lawmakers it is important to
distinguish a tax deferral from a tax exclusion or deduction. Unlike a tax
exclusion or deduction, tax deferral in retirement plans increases taxes paid
when the taxpayer receives distributions from the plan. Not appreciating this
distinction can lead to unintended policy choices, the coalition says. | | Small Talk | More investors are planning to spend their
federal income tax refund on a vacation, says a new survey. The Investor
Sentiment Survey from John Hancock Financial Services finds that half of
respondents expect to receive a 2013 federal refund, with 17% planning to spend
it quickly and 56% earmarking their return for a vacation. Of those who aren’t
spending their refund check, 63% say they will put the money into a savings
account. | ON
THIS DATE: In
1783, the Continental Congress of
the United States officially ratified the preliminary peace treaty with Great
Britain that was signed in November 1782. In 1784, the first balloon was flown in Ireland. In 1817, the first American school for the
deaf was opened in Hartford, Connecticut. In 1865, President Abraham Lincoln, the 16th president of the United
States, died from an assassin’s bullet. In 1892,
the General Electric Company was organized. In 1912, the RMS Titanic,
billed as unsinkable, sunk into the icy waters of the North Atlantic after
hitting an iceberg on its maiden voyage, killing 1,517 people. In 1947, Jackie Robinson, age 28, became
the first African-American player in Major League Baseball when he stepped onto
Ebbets Field in Brooklyn to compete for the Brooklyn Dodgers. In 1967, the Nancy and Frank Sinatra duet
“Somethin’ Stupid” was No. 1 on the U.S. singles chart. It was the
first father and daughter act to hit No. 1. In 1990, Swedish film star Greta Garbo died at the age of 84, in New
York City. In 1994, the World Trade
Organization was established. In 1997,
Christopher Reeve received a star on the Hollywood Walk of Fame. In 2013, two bombs went off near the
finish line of the Boston Marathon, killing three spectators and wounding more
than 260 other people in attendance.
TUESDAY
TRIVIA: The word “senate” is derived from the Latin senatus—”council of elders”—which originates from the word senex (as does the word
“senile”), which means “old man” or “old.”
| TRIVIAL PURSUITS: In
1967, Katherine Switzer became first woman to officially enter and run the
Boston Marathon, though women were not allowed to officially enter the race
until 1972. How did she manage that? | 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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