Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
April 8th, 2014
Webcast Event
Employers are placing greater importance on the benefits programs they provide to their employees, and the proper integration of these programs is critical. As corporations aim to provide participants with the ability to see all their benefits and financial accounts together—and look to ensure employee appreciation and utilization of these benefits—financial wellness programs are gaining momentum, and the role of human resources (HR) professionals is quickly changing. Join us for a thought-provoking webcast which will discuss how to develop a financial wellness program and enhance the productivity of your firm.
Benefit Briefs
Retirement Income Needs Vary
Those saving for retirement may be able to survive on a much lower retirement income than popularly advised, according to a research paper about the subject. The paper, “Estimating the True Cost of Retirement,” written by David Blanchett, head of Retirement Research for Morningstar Investment Management, notes a common approach to estimating the total amount of savings required to fund retirement is to first apply a generic replacement rate to pre-retirement income (e.g., 70% to 80%) to get the desired retirement income need. However, Blanchett finds the actual replacement rate is likely to vary considerably by retiree household, ranging from 54% to 87%. “In helping participants estimate what they’ll need for retirement, it’s important for plan sponsors to understand the costs that will be unique to each person,” Blanchett tells PLANSPONSOR.
Workers Need Planning Help Through Retirement
The Insured Retirement Institute (IRI) released a new report showing Baby Boomers’ confidence in their plans for retirement continues to decline. During a press call to kick off National Retirement Planning Week, Danielle Holland, senior vice president with the Insured Retirement Institute (IRI) said its recent study showed the percentage of Baby Boomers with no to low confidence increased from 23% in 2011 to 31% in 2014. In addition, those who said they are satisfied economically decreased from 77% in 2013 to 65% in 2014. One-quarter of Baby Boomers polled reported they postponed plans to retire within the last 12 months.
Buyer's Market
BNY Mellon Reopens Stable Value Fund for DC Plans
The Bank of New York Mellon is accepting new investors into the Mellon Stable Value Fund, a bank-sponsored collective investment fund for defined contribution benefit trusts. The fund stopped accepting new investors in January 2012 due to an industry-wide shortage of investment contracts, which the fund uses to help insulate investors from market volatility.
AllianceBernstein LP, a global investment management firm, announced that Roberta Matheny has joined the firm as vice president and senior client service officer. Matheny will be responsible for servicing existing institutional clients and for supporting the growth of the firm’s defined contribution (DC) business. She will focus on servicing and growing the firm’s $20 billion client base of customized target-date and lifetime income strategies.
Cleary Gull, Inc. announced a new pre-retirement planning program for United Airlines pilots and their 401(k) plans. Cleary Gull’s ClearWealth Pre-Retirement Program allows pilots to work with an outside adviser to create a professionally managed portfolio within their 401(k) plan via their plan’s Schwab Personal Choice Retirement Account brokerage window.
Recordkeeper Adds Personal Advice Offering
Recordkeeping and custodial services provider Retirement Revolution added vWise’s SmartPlan Enterprise solution to its retirement plan product offerings. Retirement Revolution offers recordkeeping and asset custody services to registered investment advisers (RIA), third-party administrators (TPAs) and their plan sponsor clients. The SmartPlan Enterprise solution from vWise seeks to provide the benefits of a personal financial adviser to help organizations cut costs while increasing both plan enrollment and participant contribution levels.
Giuliana Rivers joined benefits consulting firm Mercer within its defined contribution (DC) advisory practice. Rivers is tasked with providing operational and investment advisory support services to Mercer’s defined contribution plan clients in Houston and throughout the central U.S. markets.
DCIIA Offers Q&A About Automatic Plan Features
A paper answering commonly asked questions about implementing automatic features for retirement plans is now available for plan sponsors. “Implementing Automatic Features in Defined Contribution Plans: Answers to Frequently Asked Questions” was recently released by the Defined Contribution Institutional Investment Association (DCIIA). The aim of the paper is to review best practices for implementing automatic features in defined contribution (DC) plans and provide clarification about common regulatory questions that plan sponsors and their advisers may have when putting automatic plan features into practice.
Market Mirror
Yesterday, the Dow fell 166.84 points (1.02%) to 16,245.87, the NASDAQ decreased 47.97 points (1.16%) to 4,079.75, and the S&P 500 lost 20.05 points (1.08%) to finish at 1,845.04. The Russell 2000 took a 16.60-points dive (1.53%) to finish at 1,135.78, and the Wilshire 5000 closed 240.33 points (1.21%) lower at 19,637.27. On the NYSE, 3.2 billion shares traded, with 2.6 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares changed hands, with a near 3 to 1 lead for decliners. The price of the 10-year Treasury note was up 7/32, bringing its yield down to 2.698%. The price of the 30-year Treasury bond increased 18/32, decreasing its yield to 3.556%.
Rules & Regulators
Not All Retirement Plans Must Be Amended for Windsor
Internal Revenue Service (IRS) Notice 2014-19 provides further instruction for qualified retirement plans about the implications of the U.S. Supreme Court’s decision in United States v. Windsor. Specifically, the notice gives examples of Internal Revenue Code requirements under which the marital status of the participants is relevant to the payment of benefits; provides guidance about how to satisfy those requirements in light of Windsor and Revenue Ruling 2013-17; and describes when retirement plans must be amended to comply with Windsor, Revenue Ruling 2013-17, and IRS Notice 2014-19.
Small Talk
ON THIS DATE:  In 1513, explorer Juan Ponce de Leon claimed Florida for Spain. In 1789, the U.S. House of Representatives held its first meeting. In 1913, the Seventeenth Amendment was ratified, requiring direct election of senators. In 1935, Congress voted to approve the Works Progress Administration (WPA), a central part of President Franklin D. Roosevelt’s “New Deal.” In 1935, President Franklin D. Roosevelt signed the Emergency Relief Appropriation Act authorizing almost $5 million to implement work-relief programs. Hoping to lift the country out of the crippling Great Depression, Congress allowed the president to use the funds at his discretion. The act was unprecedented and remains the largest system of public-assistance relief programs in the nation’s history. It also created the Works Progress Administration (WPA). In 1944, Russian forces led by Marshal Fedor Tolbukhin attacked the German army in an attempt to win back Crimea, in the southern Ukraine, occupied by the Axis power. In 1974, Hank Aaron of the Atlanta Braves hit his 715th career home run, breaking Babe Ruth’s legendary record of 714 homers. In 2013, Margaret Thatcher, the first—and so far only—female prime minister of the United Kingdom, died in London at age 87 from a stroke. In 1994, rock star Kurt Cobain was found dead from sui.cide in his home outside Seattle, Washington.   TUESDAY TRIVIA: The longest running daily newspaper in the U.S. still in circulation is The Hartford Courant, which began as the weekly Connecticut Courant in 1764.
TRIVIAL PURSUITS: What are the top 25 U.S. newspapers by circulation?
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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