Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 10th, 2015
Benefits & Administration
Health Care Keeps U.S. Down in Global Retirement Index
Where does the United States rank on the list of the top global retirement systems? Not as high up as industry practitioners might expect given the nation’s overall wealth and global influence. Natixis says health care significantly impacts the Global Retirement Index results. The quality of a nation’s health care and the physical wellbeing of its population are key contributors to widespread retirement readiness.Read more >
U.S. Pensions Show Greatest Home Bias in Equities
There is a clear sign of reduced home bias in equities, as the weight of domestic equities in pension portfolios fell, on average, from 65% in 1998 to 43% in 2014, according to Towers Watson’s Global Pensions Asset Study 2015. However, during the past 10 years, U.S. pension plans have maintained the highest bias to domestic equities (67% in 2014), having also increased domestic equity bias during the past three years.Read more >
How Pensions Impact Corporate Financial Distress
A team of academic researchers published a new paper, “Corporate Pensions and Financial Distress,” finding greater underfunding of corporate pension plans is not a significant determinant of the outcome of corporate financial distress. In other words, corporations with large unfunded pension obligations appear no more likely than their counterparts with healthier pension plans to enter bankruptcy rather than achieve an out-of-court restructuring when the going gets tough.Read more >
Products, Deals & People
New Fund Series Helps Sponsors with TDF Selection
Greenspring Wealth Management launched the Target Date (k)larity fund series to help defined contribution plan fiduciaries engage in a prudent process to choose the most appropriate target-date fund (TDF) strategy for their participants. “Target Date (k)larity is a comprehensive three-phase, seven-step target date evaluation process that aligns closely with Department of Labor guidance from 2013,” the firm explains.Read more >
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Market Mirror

Major U.S. stock indices followed European markets lower as worries mount over Greece’s standoff with its creditors, according to the Associated Press. The Dow lost 95.08 points (0.53%) to finish at 17,729.21, the NASDAQ decreased 18.39 points (0.39%) to 4,726.01, and the S&P 500 was down 7.85 points (0.38%) at 2,047.62. The Russell 2000 fell 9.68 points (0.80%) to 1,195.78, and the Wilshire 5000 closed 103.23 points (0.48%) lower at 21,602.52.

On the NYSE, 3.2 billion shares traded, with 1.3 declining issues for every advancing issue. On the NASDAQ, 1.7 billion shares changed hands, with a 1.6 to 1 ratio of decliners to advancers.

The price of the 10-year Treasury note slipped, bringing its yield up to 1.959%. The price of the 30-year Treasury bond was down 7/32, increasing its yield to 2.538%.

Compliance
AEGON Sued Over Management of Its Retirement Plan
A participant in the AEGON Companies Profit Sharing Plan has sued AEGON USA, some of its subsidiaries and trustees of the plan, alleging they violated the Employee Retirement Income Security Act’s (ERISA) requirement to act for the best interest of plan participants. The complaint says the defendants burdened the plan with layers of superfluous fees; the plan pays fees higher than its peers; and the fees go mostly to AEGON, which serves as recordkeeper and investment manager for the plan through its affiliates Transamerica Asset Management, Transamerica Financial Life Insurance Company, and Diversified Retirement Corporation, now rebranded as Transamerica Retirement Solutions.Read more >
Investing
The median return for plans in the Wilshire Trust Universe Comparison Service (TUCS) was 6% in 2014—making it the sixth consecutive year of positive returns. All plan types had a median return of 1.70% in the fourth quarter of 2014. Robert J. Waid, managing director at Wilshire Associates, said, “Similar to 2013, U.S. Equities trumped all other asset classes in the 2014 fourth quarter and full year. The exception for 2014 was the U.S. real estate asset class, with the Wilshire U.S. RESI gaining 15.05% and 31.53% for the quarter and year, respectively. The Wilshire 5000 Total Market Index was up 5.26% and 12.74%, respectively, during the fourth quarter and in 2014.”Read more >
Small Talk

ON THIS DATE: In 1763, the Seven Years’ War, a global conflict known in America as the French and Indian War, ended with the signing of the Treaty of Paris by France, Great Britain, and Spain. In 1863, the fire extinguisher was patented by Alanson Crane. In 1870, the YWCA was founded in New York City. In 1957, Laura Ingalls Wilder, author of the best-selling “Little House” series of children’s novels based on her childhood on the American frontier, died at age 90 in Mansfield, Missouri. In 1967, the 25th Amendment to the U.S. Constitution was ratified. The amendment required the appointment of a vice-president when that office became vacant and instituted new measures in the event of presidential disability. In 1996, after three hours, world chess champion Gary Kasparov lost the first game of a six-game match against Deep Blue, an IBM computer capable of evaluating 200 million moves per second. In 2014, Shirley Temple Black, who as a child in the 1930s became one of Hollywood’s most successful stars, died at her Woodside, California, home at age 85.

 

TUESDAY TRIVIA: The Sweethearts valentine candies with messages on them have about 80 different sayings each year. A marketing director for the candy-maker NECCO told TIME magazine in 2011 that the company tries to have about 20 new sayings each year, and one of the most popular sayings that will never go away is “Marry Me.” The company gets requests for those all the time.

TRIVIAL PURSUITS: How was Saran wrap invented/discovered?Read more >
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