Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
April 30th, 2015
Benefits & Administration
Plan Sponsors Are Getting the Retirement Message
Discussing the results of the firm’s first-quarter 2015 retirement industry analysis, one Fidelity expert suggested plan sponsors are seeing real payoffs from popular plan design changes, especially in the areas of automatic enrollment and deferral escalation. Meghan Murphy, a director of thought leadership at Fidelity Investments, tells PLANSPONSOR that the slowly increasing prevalence of automatic enrollment and automatic deferral escalations is still redefining the defined contribution (DC) retirement system—nearly a decade after the Pension Protection Act codified the thinking behind these innovative plan design features. The snapshot data shows 27.9% of sponsors with plans administered by Fidelity are running plans that utilize auto-enrollment, another small uptick from the previous quarter.Read more >
Number Expecting to Rely on Social Security Increasing
U.S. nonretirees are more likely to say Social Security will be a major source of income in their retirement than they have been at any point in the last 15 years, according to a Gallup poll. Still, defined contribution retirement plans top the list of expected major sources of retirement income. The current 36% of nonretirees expecting to heavily rely on Social Security is roughly 10 percentage points higher than a decade ago. Another 48% believe it will be a minor source. Fourteen percent do not expect Social Security to be a source of retirement funds for them at all.Read more >
Fidelity Reports Record High Retirement Plan Balances
Fidelity’s first-quarter 2015 update shows retirement plan participant accounts earned marginal growth in the first three months of the year—just enough to set new record account balances. More than 1 million people increased savings rates within retirement plans and individual retirement accounts (IRAs) administered by Fidelity during the first quarter of 2015, the firm says.Read more >
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Retirement a Top Priority Even for the Affluent
Nine in 10 affluent investors, defined as those with $250,000 or more in investable assets, say their most important investment goal is retirement related—50% intend to generate income and 41% want to accumulate savings for their golden years. Just 5% say creating a legacy for their heirs is a top priority. “Retirement looms large even for higher-net-worth Americans who recognize the importance of saving and investing,” says Kathie Andrade, executive vice president, head of Individual Advisory Services (IAS) at TIAA-CREF.Read more >
Market Mirror

The Fed report of a weak economy caused major U.S. stock indices to close lower Wednesday. The Dow closed 74.61 points (0.41%) lower at 18,035.53, the NASDAQ lost 31.78 points (0.63%) to finish at 5,023.64, and the S&P 500 was down 7.91 points (0.37%) at 2,106.85. The Russell 2000 fell 12.40 points (0.98%) to 1,246.96, and the Wilshire 5000 decreased 90.17 points (0.40%) to 22,277.02.

On the NYSE, 3.2 billion shares changed hands, with declining issues outnumbering advancing issues nearly 2 to 1. On the NASDAQ, 2.8 billion shares traded, with a more than 2 to 1 lead for decliners.

The price of the 10-year Treasury note was down 11/32, increasing its yield to 2.043%. The price of the 30-year Treasury bond decreased 1 1/32, bringing its yield up to 2.757%.

Compliance
DOL Sues Bank for Excessive Retirement Plan Fees
A lawsuit filed by the Labor Department alleges excessive fees were charged to participants in the City National Corp. Profit Sharing Plan, leading to a breach of federal law and the Employee Retirement Income Security Act (ERISA). The Department of Labor (DOL) says the fiduciaries of the City National Corp. Profit Sharing Plan caused the plan to lose more than $4 million by engaging in self-dealing and conflicted transactions that enriched themselves and their employer.Read more >
IRS Issues Draft Guide to Electronic ACA Reporting
The Internal Revenue Service (IRS) issued Draft Publication 5165 outlining the communication procedures, transmission formats and other rules for returns filed electronically through the Patient Protection and Affordable Care Act (ACA) Information Returns (AIR) system.Read more >
Small Talk
ON THIS DATE: In 1789, in New York City, George Washington was inaugurated as the first president of the United States. In 1803, representatives of the United States and Napoleonic France concluded negotiations for the Louisiana Purchase, a massive land sale that doubled the size of the young American republic. In 1812, Louisiana was admitted as the 18th U.S. state. In 1938, Happy Rabbit appeared in the cartoon “Porky’s Hare Hunt.” This rabbit would later evolve into Bugs Bunny. In 1939, the New York World’s Fair opened in New York City. The opening ceremony, which featured speeches by President Franklin D. Roosevelt and New York Governor Herbert Lehman, ushered in the first day of television broadcasting in New York. In 1945, in a bunker under his headquarters in Berlin, Adolf Hitler committed suicide by swallowing a cyanide capsule and shooting himself in the head.
SURVEY SAYS: This week, we covered an analysis that showed the number of female, minority and older workers are increasing. I’d like to know, have you seen a change in the demographics of employees at your workplace? You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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