Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 21st, 2014
Benefit Briefs
A New Employee Benefit Is Evolving: Financial Wellness
Employee financial education is moving from a product-driven model to a true planning model. “When I first started [in this business], there was a model of financial education in which financial planners were focused on capturing assets and the investing strategies for those assets, so the business was focused on those with higher incomes and assets to invest,” noted Linda Robertson, certified financial planner with Financial Finesse, during a webcast hosted by the firm. “Most employees were financially stressed and so they were not targeted for financial planning. They had no help with basic financial and savings habits.” According to Robertson, financial wellness is becoming a new employee benefit.
Focus on DC Plan Benefits Renewed
Rebounding from the economic downturn of 2008/2009, retirement plan participants and plan sponsors are renewing their focus on their retirement benefits. According to Deloitte’s 13th Annual Defined Contribution Benchmarking Survey, a more stable economy and job market helped remove a degree of employee anxiety about setting aside money for the future. The research underlying the survey found average defined contribution (DC) plan account balances have reached an all-time high of more than $95,000, up from $85,600 in 2012. Survey results also show an increased number of employees are participating in defined contribution plans, with participation jumping 6 percentage points (77% in 2013 vs. 71% in 2012). Companies are also showing renewed confidence in the economy and taking steps to make DC plans more accessible and attractive to employees. For example, immediate eligibility for matching contributions increased to 62% in 2013, up 6% from 2012. Unlike previous surveys, no plan sponsors indicated a suspended or discontinued company match.
As more state and local governments reform pensions following the recession, public sector employees have more concerns about retirement. A new report released by the Center for State and Local Government Excellence and the TIAA-CREF Institute finds only 18% of full-time public-sector workers are very confident about their retirement income prospects, down from 21% in 2012. In particular, many public-sector workers also express concern about retiree health care costs, future benefits from Social Security and Medicare, and their own saving and investing for retirement.
HR, Finance See DC Plan Issues Similarly
We looked at how human resource (HR) and finance executives responded to subjective questions posed in PLANSPONSOR’s annual Defined Contribution (DC) Survey. For this exercise, we fully expected to see differences in how these two groups of professionals view aspects of retirement plan recordkeepers and fees, as well as each group’s confidence that employees will achieve their retirement goals. We were quite surprised.
Market Mirror
Wednesday, the Dow was up 59.54 points (0.35%) at 16,979.13, the NASDAQ decreased by 1.03 (0.02%) to 4,526.48, and the S&P 500 closed 4.91 points (0.25%) higher at 1,986.51. The Russell 2000 fell 4.96 points (0.43%) to 1,157.51, and the Wilshire 5000 increased 42.32 points (0.20%) to 21,031.55. On the NYSE, 3.2 billion shares traded, with a slight lead for advancers. On the NASDAQ, 2.8 billion shares changed hands, with 1.7 declining issues for every advancing issue. The price of the 10-year Treasury note fell 8/32, bringing its yield up to 2.430%. The price of the 30-year Treasury bond was down 2/32, increasing its yield to 3.218%.
Rules & Regulators
English-Language SPDs May Not Violate ERISA
A court has dismissed a claim that a company violated federal law by not sending a Spanish-language retirement plan document to Hispanic participants. U.S. District Judge Ellen Lipton Hollander of the U.S. District Court for the District of Maryland, noted that the Employee Retirement Income Security Act (ERISA) provides: “A summary plan description of any employee benefit plan shall be furnished to participants and beneficiaries…” and the “summary plan description … shall be written in a manner calculated to be understood by the average plan participant.” The plaintiffs in the case claim that the “average participant in the Defendant Plan speaks and reads Spanish as his primary language, and requires translation assistance with reading or speaking English.”
Summaries of the latest from Washington and the courts—what’s coming, what’s contemplated and what’s critical to plan sponsors.
DOL Wants Input About Brokerage Windows in DC Plans
The U.S. Department of Labor (DOL) issued a request for information (RFI) about the use of brokerage windows, self-directed brokerage accounts, and similar features in 401(k)-type retirement plans. The DOL says it received a significant number of questions and comments about brokerage windows following the 2012 publication of a final regulation on participant-level fee disclosure, and so it is now considering whether to update rules related to brokerage windows.
Small Talk
ON THIS DATE:  In 1841, a patent for venetian blinds was issued to John Hampton. In 1878, the American Bar Association was formed by a group of lawyers, judges and law professors in Saratoga, New York. In 1888, the adding machine was patented by William Burroughs. In 1959, Hawaii became the 50th state. U.S. President Eisenhower also issued the order for the 50 star flag. In 1984, Clint Eastwood was given a star on the Hollywood Walk of Fame. In 1996, the Health Insurance Portability and Accountability Act (HIPAA) was signed by U.S. President Clinton. The act made it easier to obtain and keep health insurance. In 1997, Cicely Tyson received a star on the Hollywood Walk of Fame. In 1998, Wesley Snipes received a star on the Hollywood Walk of Fame.
SURVEY SAYS: I recently told someone with which I used to work that when I was hired by that employer 24 years ago, I believed I would work there until I retired. Since then, I have been sold, merged, and bought, and moved myself to a new employer. A survey we covered in June found by age 35, 25% of workers have held five jobs or more. For workers ages 55 and older, 20% have held 10 jobs or more. This week, I’d like to know, for how many employers have you worked? Do you expect your current employer to be the one from which you retire? Did you start out in a retirement plan-related field? You may respond to this week’s survey by 6 p.m. Pacific time today.
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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