Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 3rd, 2015
Benefits & Administration
Terminated Participants Are Still Participants
Plan sponsor responsibilities to a retirement plan participant do not end when the participant terminates employment. “For ERISA purposes, they’re still a participant in the plan,” says Jeffrey Capwell, a partner at McGuire Woods and leader of the firm’s employee benefits and executive compensation group. “The employer still has all of the same fiduciary and other ERISA obligations for a terminated participant that has an account balance in the plan as it does for active participants who have an account balance under the plan.” Read more >
If deals recently announced by major carriers go through—including Anthem’s purchase of Cigna and Aetna Inc.’s acquisition of Humana—plan sponsors can expect innovation that will drive down health care costs, according to Tucker Sharp, global chief broking officer of Aon Health. Motivations for these deals include the Patient Protection and Affordable Care Act (ACA) legislation and efficiency, according to Tucker. The acquisitions will increase scale and will help carriers gain greater leverage for deeper discount negotiations. Read more >
What Kind of Payments Can a Hardship Request Cover When Buying a Home?
2022 Recordkeeping Survey
TRIVIAL PURSUITS: What do the M’s stand for in M&Ms?
Maximum Benefit and Contribution Limits Table 2023
TRIVIAL PURSUITS: How Many States Are in More Than One Time Zone?
Products, Deals & People
Weekly People Moves Roundup
Jamie Ohl leaves Edward Jones for Lincoln Financial Group; Barbra A. Byington and Christopher Jarmush receive promotions at Gallagher Fiduciary Advisors; Brett Dutton comes to PNC; Trang Lam comes to Northern Trust Asset Management.Read more >
One key to better engagement in the retirement savings effort is improving knowledge about how assets and liabilities accumulate, according to financial technology provider SmartAsset. The company’s new free retirement income calculator considers more than 80 variables while crunching retirement readiness assessments for individual savers. AJ Smith, managing editor and vice president of SmartAsset, says the intuitive user interface is controlled mainly through digital slide rules and a step-by-step information entry process that gathers key data points.Read more >
Economic Events
THE ECONOMIC WEEK AHEAD: Today, the Census Bureau will report about construction spending for June. Tomorrow, the Census Bureau will report about factory orders for June. Thursday, the Labor Department will issue its initial claims report. Friday, the Bureau of Labor Statistics will report about nonfarm payrolls and reveal the unemployment rate for July.
Market Mirror
Friday, the Dow lost 56.12 points (0.32%) to finish at 17,689.86, the NASDAQ was virtually unchanged at 5,128.28, and the S&P 5000 closed 4.79 points (0.23%) lower at 2,103.84. The Russell 2000 closed 6.61 points (0.54%) higher at 1,238.68, and the Wilshire 5000 was down 25.78 points (0.12%) at 22,180.08.

On the NYSE, 3.2 billion shares traded, with 1.7 advancing issues for every declining issue. On the NASDAQ, 2.8 billion shares traded, with a 1.3 to 1 ratio of advancers to decliners.

The price of the 10-year Treasury note increased 21/32, bringing its yield down to 2.184%. The price of the 30-year Treasury bond climbed 22/32, decreasing its yield to 2.909%.

WEEK’S WORTH: For the week ending July 31, the Dow was up 0.69%, the NASDAQ increased 0.78%, and the S&P 500 gained 1.16%. The Russell 2000 closed 1.04% higher, and the Wilshire 5000 climbed 1.25%.
Alternatives and ESG Continue Gaining Traction
Asset managers and consultants alike continue to position their businesses for a rise in environmental, social, and governance (ESG) investing, notes the July 2015 issue of “The Cerulli Edge -U.S. Monthly Product Trends Edition.” The United Nations Principles for Responsible Investment (UNPRI) remains a catalyst for the ESG/responsible investing movement. As institutions pursue alternative strategies for both diversification as well as potential return, ESG investing continues to gain traction even while retirement plans grapple with how to incorporate ESG investing into their lineups.Read more >
Annuitization Costs Decrease
The estimated cost of future retirement income eased for workers in their 50s and early 60s during the second quarter, according to BlackRock’s CoRI Retirement Indexes. The indexes track the current cost of purchasing future retirement income (hence “CoRI”) via deferred annuities, based on the price today of a dollar of annual retirement income starting at age 65. A second-quarter summary finds long-term interest rates stabilized somewhat during the three months ended June 30, leading to better retirement income purchasing power.Read more >
Small Talk
On This Date: In 1492, Christopher Columbus left Palos, Spain with three ships. The voyage led him to what is now known as the Americas. He reached the Bahamas on October 12. In 1777, During the Siege of Fort Stanwix the first U.S. flag was officially flown during battle. In 1900, Firestone Tire & Rubber Co. was founded. In 1914, Germany declared war on France. The next day World War I began when Britain declared war on Germany. In 1923, Calvin Coolidge was sworn in as the 30th president of the U.S. after the sudden death of President Harding. In 1949, The National Basketball Association (NBA) was formed. The league was formed by the merger between the Basketball Association of America and the National Basketball League. In 1984, Mary Lou Retton won a gold medal at the Los Angeles Summer Olympics. In 2004, In New York, the Statue of Liberty re-opened to the public. The site had been closed since the terrorist attacks on the U.S. on September 11, 2001.
Survey Says: Last week, we asked NewsDash readers about the Department of Labor’s fiduciary rule proposal. Although we received many out of office replies, explaining a lower response rate than normal, there were a number of interesting responses. Asked about familiarity with the DOL’s proposal, most respondents (68.75%) said they were somewhat familiar. Almost one-fifth (18.75% were very familiar) and only 12.50% were slightly familiar. No one selected the “not at all familiar” response.

Respondents were nearly evenly split about level of concern about whether the proposal could increase plan sponsor regulatory burdens and costs—and were relatively evenly distributed among various plan sizes.

Verbatim comments generally agreed that the rule will not create havoc in the industry. However, some supported the idea, such as “I realize that there may be some wrinkles to be ironed out on this matter, but the basic premise of requiring advisers to act as a fiduciary is sound” and “The solution seems simple, but life never is. If the financial services industry doesn’t like the proposal, why can’t they propose something that works…but that also raises the bar for brokers and others to a level that is equitable for their customers?”

Others were against what they saw as overregulation: “It would cut the personal relationship between and investor and there investment manager greatly. we have way to many regulations now leave us alone!” or “I’m always concerned where the government gets involved. All this compliance drives up costs, not to mention it drives me crazy!”

And of course, there were those who were perhaps apathetic “It’s not any more clear than it was before so in the words of Rhett Butler: ‘Frankly, my dear, I don’t give a dam#.'” and those who think it won’t be as big a deal as it is made out to be: “After all the hand-wringing, the financial services industry will adapt. it’s a market economy….”

Thanks to everyone who participated in the survey!Read more >

Editorial: Alison Cooke Mintzer


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