Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
April 21st, 2015
Benefits & Administration
Moving the Needle on Retirement Confidence
The 25th Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute (EBRI) finds Americans’ confidence in their ability to afford a comfortable retirement has continued to rebound from the record lows experienced between 2009 and 2013, but this increased level of confidence does not appear to be grounded on objectively improved retirement preparations. The increased confidence since 2013 is strongly related to retirement plan participation, the survey report says. Nevertheless, many workers say they could save a small amount more. Seven in 10 (69%) state they could save $25 a week more than they are currently saving for retirement.Read more >
Loan Policy Affects Plan Leakage
A study concludes that retirement plan loan policy is economically meaningful in shaping participant borrowing. In “Borrowing from the Future:  401(k) Plan Loans and Loan Defaults,” researchers say their administrative dataset tracks several hundred plans over five years and shows 20% of retirement plan participants borrow at any given time, and almost 40% do at some point over five years. They estimate loan default “leakage” at $6 billion annually. According to the research report, when a plan sponsor permits multiple rather than only one loan, the probability of plan borrowing nearly doubles.Read more >
Retirement Planning Should Consider the Unexpected
Sixteen percent of workers in the 2015 Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute (EBRI) say the age at which they expect to retire has changed in the past year, and of those, the large majority (81%) report their expected retirement age has increased. Luke Vandermillen, vice president of retirement and investor services at The Principal, a co-sponsor of the survey, notes that workers and retirees responding to the survey say they spend little time doing retirement planning—less than they spend planning for the holidays. “This leads to misconceptions,” he tells PLANSPONSOR. “Workers think if they don’t have enough money to retire, they will just work longer or work in retirement, but sometimes people can’t retire on their own terms because of health issues or company downsizing.”Read more >
Products, Deals & People
Tonya B. Manning joined Buck Consultants at Xerox as chief actuary, a role that involves shaping and improving the firm’s understanding of current market trends.Read more >
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Charles P. Nelson will spearhead tax-exempt and corporate markets and wealth management at Voya in his new role as retirement chief executive.Read more >
Sponsored message from American Funds
Webinar Invite – Evaluate TDFs for Better Participant Outcomes
Join us on May 7 as industry professionals from American Funds discuss the five most important elements of the target date fund selection process. Register now for this 60-minute webinar, including a live Q & A.Read more >
Market Mirror

Better than expected earnings reports led to gains for major U.S. stock indices yesterday. The Dow gained 208.63 points (1.17%) to finish at 18,034.93, the NASDAQ climbed 62.79 points (1.27%) to 4,994.60, and the S&P 500 increased 19.22 points (0.92%) to 2,100.40. The Russell 2000 closed 13.06 points (1.04%) higher at 1,264.92, and the Wilshire 5000 was up 194.83 points (0.88%) at 22,255.62.

On the NYSE, 3.2 billion shares traded, with 2.4 advancing issues for every declining issue. On the NASDAQ, 2.8 billion shares changed hands, with a 2 to 1 lead for advancers.

The price of the 10-year Treasury note was down 8/32, increasing its yield to 1.891%. The price of the 30-year Treasury bond decreased 30/32, bringing its yield up to 2.563%.

From the Magazine
Barry’s Pickings: Expanding Coverage
Once again, President Barack Obama’s budget—now for 2016—includes an “Auto-IRA,” or automatic individual retirement account, proposal. For retirement savings policymakers, one of the most pressing issues is how to get the “78 million working Americans” not covered by a workplace retirement plan to start saving. Pretty much everyone thinks doing so would be a good idea. Here are four reasons to think twice.Read more >
Investing
Department of Labor advisory opinions make it challenging to include environmental, social or governance (ESG) investing themes in a tax-advantaged retirement plan, but some investment managers want to change that, and the reasons they cite probably differ from what industry practitioners expect.Read more >
Plan Design Trend Improved Participant Allocations
In a significant number of American households, defined contribution (DC) retirement plan participants’ investment allocations occupy the extremes, finds an analysis from Towers Watson. About 15% of investors shy away from equities entirely, while roughly 22% invest everything in equities. In “Asset Allocations: How American Workers Are Investing Their Retirement Savings,” Tusheng Huang and Gaobo Pang note that avoiding equity entirely forgoes opportunities for higher returns, and investing everything in equities poses the risk of major losses. However, according to the analysis, the extent of extreme investing declined from 2004 to 2013, suggesting that households are better diversifying their retirement portfolios.Read more >
Small Talk

ON THIS DATE: In 1789, John Adams was sworn in as the first U.S. Vice President. In 1895, Woodville Latham and his sons, Otway and Gray, demonstrated their “Panopticon,” the first movie projector developed in the United States. In 1973, the song “Tie a Yellow Ribbon Round the Old Oak Tree,” by Tony Orlando and Dawn, topped the U.S. pop charts.

 

TUESDAY TRIVIA: Former U.S. President Bill Clinton was born William Jefferson Blythe, III, but had his last name legally changed as a teenage to that of his step father, Roger Clinton.

TRIVIAL PURSUITS: How were the letter distribution and scores decided for the game Scrabble?Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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