| Benefit Briefs | From Participation to Engagement | Retirement plan participants who receive regular
advice from a financial professional are more aggressive and engaged when it
comes to pursuing individualized savings targets, a new study shows. The
results of a Natixis Global Asset Management study reveal participation in
employer-sponsored retirement plans is substantial. About 90% of all employees
with access to workplace retirement programs elect to participate. But,
contribution rates tend to rise with advice. On average, advised investors put
9.5% of annual salary into a defined contribution (DC) retirement plan,
compared with 7.8% by those without advisers. Ed Farrington, an executive vice
president of Natixis Global Asset Management, tells PLANSPONSOR that the mixed
study findings show the DC retirement industry has a lot of work to do before
it can ensure retirement readiness for most Americans. Advisers and sponsors
have a critical role to play in helping participants understand both savings
needs and strategies for maximizing readiness. | How Social Security Calculates Income Replacement | Actuaries with the Social Security
Administration (SSA) have determined a comparison of benefits relative to
wage-indexed career-average earnings is the best approach for calculating
income replacement rates. An actuarial note from the SSA’s Office of the Chief
Actuary (OCACT) explains that individuals consulting with financial planners
about the income replacement rate generated in retirement by their personal
savings or employer-sponsored retirement plans may see replacement rates
calculated by comparing benefits to total income (often net of taxes) just
before retirement. In contrast, income replacement rates calculated by SSA use
a career-average earnings level based on the average of the 35 highest years of
wage-indexed earnings. | Reform Calls for New Look at Money Market Funds | Plan sponsors that offer money market
investments in their defined contribution plans should start talking with their
investment advisers to evaluate their money market strategy, says Robert C.
Lawton. Aside from the need to regularly evaluate investment strategies anyway,
certain money market fund reforms recently enacted by the Securities and
Exchange Commission (SEC) require plan sponsors’ attention, Lawton, president
of Lawton Retirement Plan Consultants, LLC in Milwaukee, says in a blog post on
his website. “Plan sponsors and participants look at money market funds as
savings accounts because they feel they can’t lose money, but that will
change,” he tells PLANSPONSOR. | | Industry Voices | Industry Voice: Stock Fund Prudence After Dudenhoeffer | The death of the Moench presumption means that
fiduciaries responsible for employer stock funds should revisit their plan
documents, plan governance structures and fiduciary procedures in light of the
Supreme Court’s articulation of the prudence standard that applies to employer
stock. In addition, fiduciaries and their advisers should be alert to future
decisions of lower courts interpreting and applying the Supreme Court’s ruling to
claims of fiduciary breach when employer stock funds plummet in value. | | Economic Events | THE ECONOMIC WEEK AHEAD: Today, the
Census Bureau will report about new home sales for July, and tomorrow, it will report about durable
orders for July and the Conference Board will release its Consumer Confidence
Index for August. Thursday, the
Labor Department will issue its initial claims report. | | Market Mirror | The Dow slipped 38.27 points (0.22%)
Friday to 17,001.22, while the NASDAQ moved up 6.45 points (0.14%) to 4,538.55,
and the S&P 500 was down 3.97 points (0.20%) at 1,988.40. The Russell 2000
increased by 0.31 (0.03%) to 1,160.34, and the Wilshire 5000 decreased 29.65
points (0.14%) to 21,054.86.
On the NYSE, 3.2 billion shares traded,
with 1.6 declining issues for every advancing issue. On the NASDAQ, 2.8 billion
shares changed hands, with a slight lead for advancers.
The price of the 10-year Treasury note
was up 1/32, bringing its yield down to 2.405%. The price of the 30-year
Treasury bond increased 21/32, decreasing its yield to 3.157%.
WEEK’S
WORTH: For the week ending August 22, the Dow climbed
2.03%, the NASDAQ increased 1.65%, and the S&P 500 gained 1.71%. The
Russell 2000 was up 1.64%, and the Wilshire 5000 finished 1.69% higher.
| | Rules & Regulators | Court Tosses Multiemployer Plan Withdrawal Liability Challenge | An employer that participated in a multiemployer
pension plan cannot sue plan trustees regarding the amount of its plan
withdrawal liability. The 6th U.S. Circuit Court of Appeals found the employer
had standing under the Employee Retirement Income Security Act (ERISA) to sue
the plan trustees for negligence, but only regarding actions that violated the
purpose of ERISA, which is “to promote the interests of employees and their
beneficiaries in employee benefit plans.” | | Small Talk | Early Financial Lessons Can Deliver | Even basic financial education in high school
may help people feel more comfortable with financial matters later in life,
according to a survey from MoneyRates.com. The survey suggests relatively few
Americans—and especially few women—have received much financial education in a
formal academic setting. Respondents who received little or no financial
education were much less likely to rate themselves as proficient in financial
concepts than the respondents who reported receiving more financial education
in high school. | ON THIS DATE: In 1840,
Joseph Gibbons received a patent for the seeding machine. In 1916, the National Park Service was
established as part of the U.S. Department of the Interior. In 1939, the movie “Wizard of
Oz” opened around the United States. In 1962, 17-year-old singer Eva Narcissus Boyd (Little Eva) scored her
first and only No. 1 hit with “The Loco-Motion.” In 1984, Truman Capote, the author of the
pioneering true-crime novel “In Cold Blood” died at age 59 in Los Angeles. In 2009, Edward “Ted” Kennedy,
the youngest brother of President John F. Kennedy and a U.S. senator from
Massachusetts from 1962 to 2009, died of brain cancer at age 77 at his home in
Hyannis Port, Massachusetts. | SURVEY SAYS: Employer Changes | Last week, I asked NewsDash readers, 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? The vast majority of those who responded have either had two to five
employers (43.2%) or six to 10 employers (40.8%) since the age of 18. Nearly
four percent have only worked for one employer, 8% have had 11 to 15 employers,
nearly 3% have had 16 to 20 employers, and 1% have worked for more than 20
employers since age 18. Six-in-ten (60.7%) NewsDash readers who responded to
the survey expect their current employer to be the one from which they retire,
while 18% do not, and 21.4% are unsure. When asked if their first career job
(not counting jobs before finishing school or while still supported by
parents/guardians) was in a retirement plan-related field, 30.2% of respondents
indicated it was, while 69.8% said it was not. Just for fun, I asked
respondents to share what was the first job they ever held, including before
they finished high school. There were a number of common responses—cashier, stocker, waiter/waitress, babysitter, newspaper
deliverer—to name a few. Some jobs were not so typical, and some
responses elicit some nostalgia—or even a testament to the evolution of
workplace laws. Verbatim responses showed it is still possible to have a long
career with one employer, but quite a few readers who left comments recounted
situations in which they worked at the same desk but had several different
employers. And, readers shared some good reasons to change employers. Editor’s Choice goes to the reader who
said: “When I was younger I moved for salary and title, then it was for breadth
and depth of experience until now where I just want to be ‘that person who has
been here forever’ and knows all the answers.” A big thank you to all who
responded to the survey! It was fun getting to know our readers better! | Share the good news with a friend! Pass the Dash along – and tell your
friends/associates they can sign up for their own copy. | News from PLANSPONSOR.com
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