Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
December 19th, 2018

Future Regulation Holds the Key for Lifetime Income Options in DC Plans

The safe harbor provision in the Retirement Enhancement and Savings Act (RESA) would safeguard plan sponsors from liability issues stemming from any losses from the insurer’s ability to meet financial obligations. “We believe the safe harbor provision in RESA will significantly advance the adoption and availability of annuities within DC plans,” says Roberta Rafaloff, vice president of Institutional Income Annuities at MetLife. Read more >
Benefits & Administration
Most Retirees Say Employers Did Nothing to Help With Retirement Transition
A survey of 2,043 retirees by the Transamerica Center for Retirement Studies (TCRS) shows two-thirds (66%) say their most recent employers did “nothing” to help pre-retirees transition into retirement, and 16% are “not sure” what their employers did. Among the 18% of retirees whose employers helped pre-retirees, the most frequently cited offerings are financial counseling about retirement (6%), seminars and education about transitioning into retirement (5%), the ability to reduce work hours and shift from full- to part-time (5%), and accommodating flexible work schedules and arrangements (5%). Both retirement plan sponsors and employees can learn lessons from the experiences recounted by retirees surveyed. Read more >
Compliance
9th Circuit Questions Meaning of ‘Actual Knowledge’ for ERISA Statute of Limitations
The 9th U.S. Circuit Court of Appeals sent a case over Intel’s use of alternative investments in its target-date funds back to a lower court for review. A district court ruled that there was no dispute of material fact that the plaintiff had actual knowledge of the alternative investments more than three years before filing the action, and entered summary judgment in favor of Intel. The appellate court ruling questions the definition of “actual knowledge.” Its opinion says, “In light of the statutory text and our case law, we conclude that the defendant must show that the plaintiff was actually aware of the nature of the alleged breach more than three years before the plaintiff’s action is filed.” Read more >
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Do Cases Questioning Mortality Tables Used to Determine DB Plan Benefits Indicate a New Trend?
Cases have been filed against MetLife, Pepsi and American Airlines saying the use of outdated mortality tables in determining annuity payments causes retirees to lose part of their vested retirement benefits. A Benefits Brief from Groom Law Group says, “The similarities in the complaints, and the fact that the same two law firms filed the complaints, suggest that additional lawsuits against other large pension plan sponsors may soon follow.” The law firm also warns that, “For the many remaining corporate sponsors of older pension plans, these cases may present a new area of potential legal exposure.” Read more >
Economic Events

Privately‐owned housing starts in November were at a seasonally adjusted annual rate of 1,256,000, the Census Bureau reported. This is 3.2% above the revised October estimate of 1,217,000, but is 3.6% below the November 2017 rate of 1,303,000. Single‐family housing starts in November were at a rate of 824,000; this is 4.6% below the revised October figure of 864,000. The November rate for units in buildings with five units or more was 417,000.

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Market Mirror

Tuesday, the Dow increased 82.66 points (0.35%) to 23,675.64, the NASDAQ closed 30.18 points (0.45%) higher at 6,783.91, and the S&P 500 was virtually unchanged at 2,546.16. The Russell 2000 was down less than one point (0.07%) at 1,377.18, and the Wilshire 5000 was down 1.90 points (0.01%) at 26,158.25.

The price of the 10-year Treasury note increased 11/32, bringing its yield down to 2.819%. The price of the 30-year Treasury bond climbed 25/32, decreasing its yield to 3.075%.

Ask the Experts
What Is a Retirement Income Account?
“What is a retirement income account?” Read more >
Small Talk
Twenty-nine percent of companies have updated their performance appraisals in the past year, according to a survey from staffing firm OfficeTeam. Top changes include making the process shorter and increasing the frequency of feedback. A majority of HR managers (86%) indicated they feel their organization’s review process is effective in improving employee performance. Read more >

ON THIS DATE: In 1732, Benjamin Franklin began publishing “Poor Richard’s Almanac.” In 1777, General George Washington led his army of about 11,000 men to Valley Forge, Pennsylvania, to camp for the winter. In 1842, Hawaii’s independence was recognized by the U.S. In 1843, Charles Dickens’ “A Christmas Carol” was first published in England. In 1903, the Williamsburg Bridge opened in New York City. It opened as the largest suspension bridge on Earth and remained the largest until 1924. It was also the first major suspension bridge to use steel towers to support the main cable. In 1917, the first games of the new National Hockey League (NHL) were played. Five teams made up the league: Toronto Arenas, Ottawa Senators, Quebec Bulldogs, the Montreal Canadiens and the Montreal Wanderers. In 1972, Apollo 17 splashed down in the Pacific, ending the Apollo program of manned lunar landings. In 1985, ABC Sports announced that it was severing ties with Howard Cosell and released him from all TV commitments. Cosell continued on ABC Radio for another five years. In 1989, U.S. troops invaded Panama to overthrow the regime of General Noriega. In 1990, Bo Jackson (Los Angeles Raiders) became the first athlete to be chosen for All Star Games in two sports. In 1998, President Bill Clinton was impeached on two charges of perjury and obstruction of justice by the U.S. House of Representatives. In 2008, President George W. Bush signed a $17.4 billion rescue package of loans for ailing auto makers General Motors and Chrysler.

 

WEDNESDAY WISDOM: “More business is lost every year through neglect than through any other cause.”—Rose Kennedy

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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

Advertising: Paul Zampitella paul.zampitella@strategic-i.com

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