Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 27th, 2018
Benefits & Administration
A Combination of Changes Can Improve an Individual’s Retirement Outlook
Noting that nearly half of Americans have nothing saved for retirement and the median 401(k) balance is less than $10,000, Morningstar set out in a new report, “Easing the Retirement Crisis,” to figure out how people can better position themselves for a successful retirement. Morningstar analyzed eight changes people can make to build a more secure financial future. For both the general public and mass-affluent households, saving more, choosing to invest one’s savings, delaying retirement and lowering standard-of-living expectations have a far greater effect on one’s retirement outlook than asset allocation, reducing fees or achieving alpha, Morningstar found. It notes that what works varies by household; therefore, personalized advice is important. Read more >
Cash Balance Plans Particularly Appealing to Small Businesses
There has been a 15% increase in the number of new cash balance plans and a 30% rise in employer contributions, according to Kravitz, Inc. Kravitz research found that 92% of cash balance plans are in firms with fewer than 100 employees. “Cash balance plans are particularly appealing to small business owners who need to catch up on delayed retirement savings,” says Dan Kravitz, head of Kravitz, Inc. “In many cases, they can double or even triple their pre-tax retirement savings.” Read more >
Products, Deals and People
Retirement Industry People Moves
Ascensus Acquires PenSys; USI Names Retirement Services VP; Hooker & Holcombe Promotes Consultants; and more. Read more >
MOST READ ARTICLES
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AT&T Sued Over Calculation of Early Retirement Benefits
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Congressional Leaders Want SECURE Act Passage in 2019
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New Lawsuit Highlights Importance of Cybersecurity for Retirement Plans
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IRS Releases 2019-2020 Priority Guidance Plan
5
DC Plans 3.0 Will Really be Tailored to Individual Situations
Economic Events

New orders for manufactured durable goods in July decreased $4.3 billion or 1.7% to $246.9 billion, the U.S. Census Bureau announced. This decrease, down three of the last four months, followed a 0.7% June increase. Excluding transportation, new orders increased 0.2%. Excluding defense, new orders decreased 1.0%. Transportation equipment, also down three of the last four months, drove the decrease, $4.6 billion or 5.3% to $82.8 billion.

 

THE ECONOMIC WEEK AHEAD: Tomorrow, the Conference Board will reveal its Consumer Confidence Index for August. Thursday, the Labor Department will release its initial claims report.

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Market Mirror

Friday, the Dow increased 133.37 points (0.52%) to 25,790.35, the NASDAQ climbed 67.52 points (0.86%) to 7,945.98, and the S&P 500 closed 17.71 points (0.62%) higher at 2,874.69. The Russell 2000 was up 8.62 points (0.50%) at 1,725.67, and the Wilshire 5000 gained 183.74 points (0.62%) to finish at 30,014.72.

 

The price of the 10-year Treasury note was up 4/32, decreasing its yield to 2.815%. The price of the 30-year Treasury bond increased 15/32, bringing its yield down to 2.959%.

 

WEEK’S WORTH: For the week ending August 24, the Dow was up 0.47%, the NASDAQ gained 1.66%, and the S&P 500 increased 0.86%. The Russell 2000 climbed 1.93%, and the Wilshire 5000 finished 1.03% higher.

Compliance
Court Finds All Claims Plausible in T. Rowe Price Self-Dealing Suit
The original complaint accuses T. Rowe Price 401(k) plan trustees of breaching their fiduciary duties under ERISA by either failing to remedy their predecessors’ breaches, or, in a few cases of offering expensive retail class versions of proprietary mutual funds, waiting too long to act to shift into lower cost versions of the funds. The defendants’ motion to dismiss all claims in the suit was denied. Read more >
Will Strong Support for RESA Remain After Mid-Terms?
Although Senator Orrin Hatch, champion of the Retirement Enhancement and Savings Act, is retiring in January, there is still much hope that many of his retirement plan proposals will move forward after the mid-term elections. Read more >
Small Talk

ON THIS DATE: In 1858, the first cabled news dispatch was sent and was published by “The New York Sun” newspaper. The story was about the peace demands of England and France being met by China. In 1859, the first oil well was successfully drilled in the U.S. by Colonel Edwin L. Drake near Titusville, Pennsylvania. In 1889, Charles G. Conn received a patent for the metal clarinet. In 1894, the Wilson-Gorman Tariff Act was passed by Congress. The provision within for a graduated income tax was later struck down by the U.S. Supreme Court. In 1921, the owner of Acme Packing Company bought a pro football team for Green Bay, WI. J.E. Clair paid tribute to those who worked in his plant by naming the team the Green Bay Packers. In 1945, American troops landed in Japan after the surrender of the Japanese government at the end of World War II. In 1962, Mariner 2 was launched by the United States. In December of the same year the spacecraft flew past Venus. It was the first space probe to reach the vicinity of another planet. In 1972, North Vietnam’s major port at Haiphong saw the first bombings from U.S. warplanes. In 1984, President Ronald Reagan announced that the first citizen to go into space would be a teacher. The teacher that was eventually chosen was Christa McAuliffe. In 1998, James Brolin received a star on the Hollywood Walk of Fame. In 1998, “Titanic” became the first movie in North America to earn more than $600 million. In 2001, work began on the future site of a World War II memorial on the U.S. capital’s historic national Mall.

SURVEY SAYS RESPONSES: Last week, I asked NewsDash readers, “Do you bump up your retirement savings each year, or does your employer do it for you? Also, if you do not increase your savings each year, why is that?” The majority of respondents (54.7%) do NOT increase the amount they save for retirement each year. However, 40.6% say they do so themselves, and 4.7% say their employer-sponsored retirement plan automatically increases their deferral amount each year. When those who do not increase their savings each year were asked why, most (57.8%) cite already being maxed out on the statutory limit they can save. Three in ten (31.1%) cite other financial priorities, such as debt, saving/paying for a child’s education, medical bills, etc. In comments left by readers, many noted that they increase their retirement plan deferral percentage when they get a raise; however, others said the raises are paltry and health benefit costs continue to rise, so it’s hard to save more. Some shared their strategies for saving, such as making deferrals to get the maximum match, putting other savings into a health savings account (HSA) or switching from pre-tax to Roth deferrals. And for some, their increase in savings occurs in vehicles other than employer-sponsored retirement plans. Editor’s Choice goes to the reader who said, “Assuming we get wage increases every year, maintaining a fixed percentage deferral would increase what we save in absolute dollar terms…now let’s just get those wage increases to be more than 2% to 3% and we can see a real difference.” A big thank you to all who participated in the survey! Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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