Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 10th, 2015
Benefits & Administration
African Americans More Confident in Finances
African Americans demonstrate continued optimism when it comes to finances, due to growing affluence, Prudential Financial found in its biannual “African American Financial Experience” report. However, many are not taking advantage of financial and investment tools, which may hinder long-term wealth accumulation.Read more >
Beyond Auto-Enrollment: Decumulation and Retirement Income
For plan sponsors with a long view—one stretching beyond saving, down the lengthening span of retirement years—helping participants plan for decumulation seems increasingly important. But having to choose from the array of products now targeting this trend is only complicated by the dearth of clear regulations detailing how to use them. Faced with so many uncertainties—risk of fiduciary breach among them—plan sponsors may wonder how to proceed. Read more >
MOST READ ARTICLES
1
2021 Target-Date Fund Survey
2
The DOL Has Begun Retirement Plan Cybersecurity Audits
3
Rush of Litigation Against Retirement Plans Expected to Continue
4
2020 Recordkeeping Survey
5
Differences Between Safe Harbor and Traditional DC Plans
Products, Deals & People
Retirement Industry People Moves
John P. Carbone has joined Fred Alger Management as senior vice president, institutional sales and service. Jessica Portis joined Mercer Investments as a senior consultant to support Mercer’s work in the endowment, foundation and non-profit health care sectors. Read more >
Economic Events

Total nonfarm payroll employment increased by 215,000 in July, and the unemployment rate was unchanged at 5.3%, according to the Bureau of Labor Statistics. Job gains occurred in retail trade, health care, professional and technical services, and financial activities.

THE ECONOMIC WEEK AHEAD: Tomorrow, the Census Bureau will report about wholesale inventories for June. Thursday, the Labor Department will issue its initial claims report, and the Census Bureau will report about retail sales for July and business inventories for June. Friday, the Bureau of Labor Statistics will reveal the producer price index (PPI) for July.

Sponsored message from Charles Schwab
“The unique value of Target-Date Funds” from Charles Schwab Investment ManagementRead more >
Market Mirror

Friday, the Dow decreased 46.37 points (0.27%) to 17,373.38, the NASDAQ was down 12.90 points (0.26%) at 5,043.54, and the S&P 500 closed 6.81 points lower at 2,076.75. The Russell 2000 fell 8.95 points (0.74%) to 1,206.90, and the Wilshire 5000 lost 70.71 points (0.32%) to finish at 21,852.59.

On the NYSE, 3.2 billion shares traded, with 1.4 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares changed hands, with a 1.5 to 1 ratio of decliners to advancers.

The price of the 10-year Treasury note increased 16/32, bringing its yield down to 2.164%. The price of the 30-year Treasury bond climbed 1 13/32, decreasing its yield to 2.824%.

WEEK’S WORTH: For the week ending August 7, the Dow lost 1.79%, the NASDAQ lost 1.65%, and the S&P 500 was down 1.29%. The Russell 2000 fell 2.57%, and the Wilshire 5000 finished 1.48% lower.

Compliance
How to Treat Lawsuit Awards and Settlements
When a defined contribution (DC) retirement plan is awarded damages or receives a settlement from a lawsuit, it is incumbent on the plan administrator to figure out how to award the funds to participants. “Current regulations do not give specific instructions, and the process for allocation to participants may not be the same for every single plan receiving a settlement,” says Rick Skelly, client executive at Barney & Barney’s retirement services division in San Diego. Read more >
Investing
The growth rate of target-date funds (TDFs) continues to slow but remains positive, as plan sponsors move to collective trusts and custom solutions, according to Morningstar’s quarterly target-date report. In the second quarter, TDFs experienced $19.3 billion in positive inflows. Meanwhile, target-risk funds saw aggregate outflows. Read more >
Heavy Fixed Income Allocations Hurt Pensions
In the second quarter of 2015, institutional asset owners recorded a median gain of 0.2%, Northern Trust Universe data shows. This marks a drop from the 4% median gain in the second quarter last year and 2.3% median gain in the previous quarter. Corporate Employee Retirement Income Security Act (ERISA) plans returned -1.6% at the median in the second quarter. Corporate ERISA plan returns were negatively affected by a large allocation to U.S. fixed income, particularly bonds with a longer duration profile. Read more >
Small Talk
ON THIS DATE: In 1821, Missouri became the 24th state to join the Union. In 1846, the Smithsonian Institution was chartered by the U.S. Congress. It was made possible by $500,000 given by scientist Joseph Smithson. In 1921, Franklin D. Roosevelt was stricken with polio. In 1945, the day after the atomic bombing of Nagasaki, Japan announced it would surrender. The only condition was that the status of Emperor Hirohito would remain unchanged. In 1948, on ABC, “Candid Camera” made its TV debut. The original title was “Candid Microphone.” In 1988, U.S. President Reagan signed a measure that provided $20,000 payments to Japanese-Americans who were interned by the U.S. government during World War II.
Last week, we asked NewsDash readers, “Are you concerned about being able to pay health care costs in retirement?” The vast majority of responding readers (85.7%) said yes, they are concerned about being able to cover these expenses. Nearly 9% said they are not concerned, and 5.7% are not sure. Asked if their company has provided education or communication to its retirement plan participants about their estimated health care costs in retirement, more than four in 10 (42.9%) said no. Twenty percent each said their company has educated or communicated directly and through its recordkeeper. Among the few respondents who chose to leave verbatim comments, there were explanations about how the cost of health care is addressed with participants, and one reader suggested projections of health care costs in retirement are not very useful. A big thank you to all who participated in our survey!Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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