Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
December 29th, 2014
Benefits & Administration
A new research report suggests public school teachers would not choose a DC retirement plan over a DB retirement plan without powerful incentives. The National Institute for Retirement Security (NIRS) examined the retirement benefit elections of teachers in two states when new teachers had a choice between a DB plan or a plan that combines a defined contribution DC individual account with a DB pension.Read more >
Feasibility of HSAs As Retirement Savings Strategy
Recent reports have claimed health savings accounts (HSAs) can be a useful additional tool for retirement saving. But, how feasible is it that employees can accumulate savings in HSAs to use in retirement, and should employers consider offering them?Read more >
Ongoing fiduciary responsibility and spending money on former employees are two reasons to consider amending a plan to include automated rollovers, according to Millennium Trust. Retirement plan sponsors should consider several factors when deciding to include a provision for rollovers, says Terry Dunne, senior vice president and managing director of the rollover solutions group at Millennium Trust.Read more >
Products, Deals & People
John Hancock Acquires New York Life RPS
Manulife Financial Corporation announced that its U.S. Division, John Hancock Financial, and New York Life have entered into an agreement under which John Hancock will acquire New York Life’s Retirement Plan Services (RPS) business. Peter Gordon, SVP and president of John Hancock RPS, told PLANSPONSOR that the deal reflects two companies viewing the same business in two ways. “We are very interested in retirement plans and wealth management, so we want to expand our RPS business as a way to fulfill our strategic goals. New York Life has concluded they want to focus on their core insurance and wealth management business.”Read more >
From the Magazine
Saxon Angle: Missing Participants
Issues involving so-called “missing” participants will not go away anytime in the near future. On August 14, the Department of Labor (DOL) released Field Assistance Bulletin (FAB) 2014-01, which provides additional guidance to plan fiduciaries of terminated defined contribution (DC) plans with regard to missing participants. Plan fiduciaries often find themselves in a quandary because they are required by the Internal Revenue Code (IRC) to seek affirmative direction regarding the distribution of a terminating plan’s participant accounts, yet they may be unable to locate some of the participants from whom such direction is sought. The DOL issued the new FAB in order to update and supersede earlier guidance.Read more >
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Economic Events

Last week the Census Bureau reported new orders for manufactured durable goods in November decreased $1.7 billion or 0.7% to $242.3 billion. This decrease, down three of the last four months, followed a 0.3% October increase. Excluding transportation, new orders decreased 0.4%. Excluding defense, new orders decreased 0.1%. Transportation equipment, also down three of the last four months, led the decrease, $0.9 billion or 1.2% to $75.5 billion.

Privately-owned housing starts in November were at a seasonally adjusted annual rate of 1,028,000. This is 1.6% below the revised October estimate of 1,045,000 and 7.0% below the November 2013 rate of 1,105,000. Single-family housing starts in November were at a rate of 677,000; this is 5.4% below the revised October figure of 716,000. The November rate for units in buildings with five units or more was 340,000.

In the week ending December 20, the advance figure for seasonally adjusted initial claims for unemployment insurance was 280,000, a decrease of 9,000 from the previous week’s unrevised level of 289,000, the Labor Department reported. The four-week moving average was 290,250, a decrease of 8,500 from the previous week’s unrevised average of 298,750.

THE ECONOMIC WEEK AHEAD: Friday, the Census Bureau will report about construction spending for November.

Market Mirror

Friday, the Dow was up 23.50 points (0.13%) at 18,053.71, the NASDAQ climbed 33.39 points (0.70%) to 4,806.86, and the S&P 500 increased 6.89 points (0.33%) to 2,088.77. The Russell 2000 gained 8.42 points (0.70%) to finish at 1,215.21, and the Wilshire 5000 closed 81.20 points (0.37%) higher at 21,949.03.

On the NYSE, 3.2 billion shares traded, and on the NASDAQ 2.8 billion shares changed hands, with advancing issues outnumbering declining issues 2 to 1 on both exchanges.

The yields for the 10-year Treasury note and 30-year Treasury bond were 2.253% and 2.820%, respectively.

WEEK’S WORTH: For the week ending December 26, the Dow gained 1.40%, the NASDAQ was up 0.87%, and the S&P 500 increased 0.88%. The Russell 2000 climbed 1.61%, and the Wilshire 5000 closed 1.02% higher.

Compliance
Bill Aims to Encourage Retirement Plan Offerings
U.S. Representative Ron Kind (D-Wisconsin) has introduced the Small Businesses Add Value for Employees (SAVE) Act of 2014. The bill would establish automatic deferral IRAs, modify the current automatic enrollment safe harbor and encourage multiple employer pension plans for employers that do not share a common interest, among other provisions.Read more >
Investing
A TDF Glidepath Checklist
Russell Investments published a short white paper looking at key questions that can help plan sponsors make sure their target-date funds (TDFs) remain on course and serve participants’ best interest. In the article, Josh Cohen, managing director of defined contribution, and Rod Greenshields, consulting director, argue that TDFs have become so popular because they don’t require much ongoing input from participants. However, the funds do need to be regularly updated by providers, Russell says, and sponsors have an ongoing fiduciary duty to make sure the products gel with participant needs. Otherwise, TDF models can drift out of touch with participant behavior or prevailing market conditions.Read more >
Given relatively expensive domestic equity market valuations and historically low developed market interest rates, institutional investors are increasingly looking for return outside the United States, according to an analysis from Cerulli Associates.Read more >
Small Talk
ON THIS DATE: In 1808, future President Andrew Johnson was born in Raleigh, North Carolina. In 1845, six months after the congress of the Republic of Texas accepted U.S. annexation of the territory, Texas is admitted into the United States as the 28th state. In 1851, the first American Young Men’s Christian Association (YMCA) was organized, in Boston, Massachusetts. In 1890, the U.S. Seventh Cavalry massacred more than 400 men, women and children at Wounded Knee Creek, South Dakota. This was the last major conflict between Indians and U.S. troops.
SURVEY SAYS REWIND: In 2005, we asked NewsDash readers to pick the most significant trend or development that impacted the industry that year.Read more >
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