Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 28th, 2014
Benefit Briefs
Automatic Rollovers Not Just for Active Plan Cleanup
Implementing an automatic rollover program can help retirement plan sponsors establish safe harbor individual retirement accounts (IRAs) for missing or non-responsive participants. “With companies that implemented auto enrollment, participants may not even know they have an account, so these programs have been more needed in the last five or so years,” B.J. Ralston, chief compliance officer with Wealth Management Systems, Inc. (WMSI), in New York, New York, tells PLANSPONSOR. But, automatic rollovers are not just beneficial for sponsors of active retirement plans. For terminating defined contribution (DC) plans, automatic rollovers provide the ability to transfer all missing and non-responsive participants, regardless of balance, and enable plan sponsors to “close-out” the plan, WMSI notes in a white paper, “Trends and Best Practices for Addressing Automatic Participant Rollovers.” In addition, for defined benefit (DB) plans, an automatic rollover program can be an important first step in cleaning up employee data records prior to the launch of a cash-out window or pension risk transfer solution.
Women Showing Greater Retirement Plan Engagement
Women are showing more engagement in retirement savings plans than men, according to an analysis by MassMutual Retirement Services. Data from marketing campaigns and employer-sponsored retirement plans shows women are responding more favorably than men to initiatives encouraging retirement savings, especially women ages 18 to 34, MassMutual reports. Retirement savings rates among women are also catching up to those of men, but women’s average salary deferral or savings rates still lag behind those of their male counterparts.
Industry Voices
Insights: Disconnect-Ed
I think that, overall, as the defined contribution (DC) plan’s importance in retirement savings has increased, the industry has generally tried to help broaden participant knowledge. However, there are still phrases we take for granted that I have realized don’t always connect with our intended audience. When I think about ways to help participants understand the plan opportunity better, I come up with the following.
Market Mirror
Wednesday, the Dow was up 15.31 points (0.09%) at 17,122.01, the NASDAQ decreased by 1.02 (0.02%) to 4,569.62, and the S&P 500 increased by 0.10 (0.01%) to 2,000.12. The Russell 2000 slipped 2.46 points (0.21%) to 1,172.71, and the Wilshire 5000 decreased by 1.06 (0.01%) to 21,192.48. On the NYSE, 3.2 billion shares traded, with a 1.3 to 1 ratio of advancers to decliners. On the NASDAQ, 2.8 billion shares changed hands, with a 1.3 to 1 ratio of decliners to advancers. The price of the 10-year Treasury note increased 12/32, bringing its yield down to 2.357%. The price of the 30-year Treasury bond climbed 1 5/32, decreasing its yield to 3.104%.
Rules & Regulators
Government Backs Top Court Review of 401(k) Fee Case
The U.S. Solicitor General has filed a brief asking the United States Supreme Court to review parts of a widely followed 401(k) fee litigation case, Tibble v. Edison International. The Solicitor General filed the brief in response to an earlier request from the Supreme Court, which sought the Solicitor General’s view on whether the 9th U.S. Circuit Court of Appeals might have erred in finding some imprudent investment claims against retirement plan fiduciaries at Edison International could be time-barred by the Employee Retirement Income Security Act’s (ERISA) six-year limitations period.
Financial Sense
ESG Investing Slowly Going Mainstream
Nearly nine in 10 asset managers polled for a recent Cerulli Associates report view increasing attention to environmental, social, and governance (ESG) strategies as a lasting trend. Although many investment managers see the growth of ESG as a permanent shift that will influence the long-term investment strategies they implement for clients, most managers only consider it to be somewhat important for managers to offer ESG capabilities today. Cerulli notes this is a significant development, however, as most asset managers have historically thought of socially responsible investing as a niche area that appealed only to religious groups and certain other mission-based, nonprofit organizations. Today, managers are observing increased demand for ESG from all types of clients and prospects, Cerulli says, especially in the institutional and retirement planning channels.
Small Talk
Americans Find Conversations About Finances Difficult
A significant number of Americans find conversations about financial issues difficult, a survey finds. Northwestern Mutual’s 2014 Planning and Progress Study found 42% of American adults have not spoken to anyone about their retirement. Only 39% have had conversations with their spouse or partner about the subject.
ON THIS DATE:  In 1907, American Messenger Company was started by two teenagers, Jim Casey and Claude Ryan. The company’s name was later changed to United Parcel Service. In 1922, the first radio commercial aired on WEAF in New York City. The Queensboro Realty Company bought 10 minutes of time for $100. In 1963, Dr. Martin Luther King, Jr., gave his “I Have a Dream” speech at a civil rights rally in Washington, D.C. More than 200,000 people attended. In 1972, Mark Spitz captured the first of his seven gold medals at the Summer Olympics in Munich, Germany. He set a world record when he completed the 200-meter butterfly in two minutes and seven-tenths of a second. In 1981, “The New York Daily News” published its final afternoon edition. In 1995, the biggest bank in the U.S. was created when Chase Manhattan and Chemical Bank announced their $10 billion deal.   SURVEY SAYS: Not this week.
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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