Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 11th, 2014
Benefit Briefs
Encouraging Savings Without a Match
An employer match contribution can encourage
participants to save in retirement plans, but for those plan sponsors that
don’t offer one, certain tools, auto features and education can do the trick. Auto
features are the likeliest ways to boost savings rates, according to Robyn
Credico, defined contribution practice leader for North America at Towers
Watson. “Even companies that do offer a match aren’t always successful in
getting people to save,” Credico tells PLANSPONSOR. And when companies
suspended the match because of economic stresses, she says, they saw almost no
change in savings rates. Even without a match people do stay auto enrolled.
For defined contribution (DC) plan participants,
average daily transfer activity in January remained unchanged from the previous
month, according to the Aon Hewitt 401(k) Index. Despite equity markets getting
off to a rough start in 2014, the index finds that DC plan participants
continued to favor stock funds in January. Out of the total net transfer
activity of $306 million (0.19%) in January, $212 million (0.13%) flowed into
diversified equities (equity assets excluding company stock). In addition,
employee discretionary contributions to equities, another measure of
participant sentiment, increased to 65.6% in January, up from 64.1% in December
Buyer's Market
J.P. Morgan Diagnostics Tool Promotes Better Plan Design
A new tool from J.P. Morgan Retirement Plan
Services gives sponsors and advisers a data-driven view of participant behavior
that can help improve plan design and communications. J.P. Morgan says the
“Plan Diagnostics Tool” leverages data visualization technology to give
sponsors and advisers an intuitive, visual-based understanding of participant
behavior patterns across 401(k) plans. Such insights, the firm says, can be
used to enact meaningful plan design changes and develop targeted communication
campaigns to help motivate specific groups of employees to adopt stronger
investing and saving habits.
Professional services and consulting company
Towers Watson has named Chris Ford as global head of the firm’s investment
business. Ford will succeed Carl Hess, who has held the position since July
2008 and is now assuming the role of managing director of the firm’s Americas
The Next “Best Thing” in Retirement Plan Offerings?
Over the past couple of weeks, two retirement
industry providers have introduced offerings they purport to be the next trend
in the evolution of retirement plan offerings. On January 30, TD Ameritrade
announced a turnkey, registered investment adviser (RIA)-managed retirement
plan program, and on February 5, Schwab Retirement Plan Services launched a
full-service 401(k) program using only exchange-traded funds (ETFs). How do the
offerings differ, and what benefits do the firms say they provide for retirement
plan participants?
Market Mirror
Yesterday, the Dow ticked up 7.71 points
(0.05%) to 15,801.79, the NASDAQ was up 22.31 points (0.54%) at 4,148.17, and
the S&P 500 added 2.82 points (0.16%) to finish at 1,799.84. The Russell
2000 increased 2.21 points (0.20%) to 1,118.76, and the Wilshire 5000 closed
31.50 points (0.16%) higher at 19,235.41. On the NYSE, 3.2 billion shares traded,
and on the NASDAQ, 2.6 billion shares changed hands, with 1.4 advancing issues
for every declining issue on both exchanges. The price of the 10-year Treasury note was up 2/32,
bringing its yield down to 2.676%. The price of the 30-year Treasury bond
increased 9/32, decreasing its yield to 3.657%.
Financial Sense
Large defined benefit (DB) plans lost asset
values and gained pension liabilities during January, resulting in a decrease
in overall funded status. Milliman, Inc., a global consulting and actuarial
firm, released the results of its most recent pension funding index survey,
which tracks 100 of the nation’s largest defined benefit pension plans. In
January, following a year of major improvement, these plans experienced a $7
billion decrease in asset values and a $60 billion increase in pension
liabilities, resulting in a $67 billion decline in pension funded status.
The World at Large
A quarter of UK workers not eligible to be auto-enrolled
would like to be entered into a workplace pension plan, a survey shows. The
research—from the Chartered Institute of Personnel & Development—also indicates
low earning staff value employer contributions and are prepared to pay into a
scheme for them.
Rules & Regulators
Sunset of PPA Rule for Pensions Requires Clarification
The Pension Protection Act of 2006 (PPA)
established a framework for identifying and remedying funding problems for
multiemployer pension plans. In a Compliance Alert, consulting firm Segal notes
that Congress included as a safeguard a “sunset” provision (with a
“continuation clause” to keep the rules in place for plans currently operating
under them) that would require it to revisit these rules to determine if they
were working as anticipated.
Paying for Legal Fees During DOL Investigations
When the Department of Labor (DOL) gives notice
of an investigation, plan fiduciaries likely believe that the cost of their
attorney’s fees will not come out of their own pockets but will be paid by the
plan’s fiduciary insurer. Regrettably, this is not currently the case.
Small Talk
1937, after a six-week sit-down
strike by General Motors (GM) autoworkers at the Fisher Body Plant No. 2 in
Flint, Michigan, GM president Alfred P. Sloan signed the first union contract
in the history of the American auto industry. In 1990, in a major upset, Buster Douglas defeated Mike Tyson, the
undisputed heavyweight champion of the world, in 10 rounds at a boxing match in
Tokyo, Japan. In 1990, Nelson
Mandela, leader of the movement to end South African apartheid, was released
from prison after 27 years. In 2012,
48-year-old Whitney Houston, one of the world’s top-selling singers from the
mid-1980s to late 1990s, was found dead in the bathtub of her suite at the
Beverly Hilton Hotel in Beverly Hills, California.   TUESDAY
The only U.S. president who served as a labor
union leader was Ronald Reagan who served as president of the Screen Actors
Guild from 1947 to 1952.
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Editorial: Alison Cooke Mintzer


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