Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 13th, 2014
Benefit Briefs
Doing More to Help Participants Reach Retirement Goals
Michael Barry, president of the Plan Advisory Services Group, has been thinking a lot lately about retirement goals—more or less the issue of target income-replacement ratios. He’s come to the conclusion that the project of setting a specific goal that a participant must “save to” is seriously misleading.
Health savings accounts (HSAs) grew to exceed $20 billion in assets during January, according to a new survey. The survey was conducted by Devenir, a provider of investment solutions for the HSA custodian marketplace. Findings from the survey indicate that HSAs grew to an estimated $19.3 billion in assets and 10.7 million accounts at year-end 2013, and then exceeded the $20 billion mark in January.
More Employers Contribute to Employee Health Accounts
Nearly three-quarters of employees (71%) with a health reimbursement account (HRA) or health savings account (HSA) say their employers contributed to it in 2013. According the 2013 Consumer Engagement in Health Care Survey, conducted by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates, the percentage of employers contributing to their employees’ health accounts has been steadily increasing since 2009.
Buyer's Market
Ascensus Separates Retirement and College Savings
Retirement plan services provider Ascensus created a new organizational structure to support the firm’s growth expectations in the retirement and college savings space. The new structure segments the business into two divisions—retirement services and college savings—and implements a realignment of the company’s leadership team.
Market Mirror
The Dow slipped 30.83 points (0.19%) Wednesday, to 15,963.94. The NASDAQ was up 10.24 points (0.24%) at 4,201.29, and the S&P 500 decreased by 0.49 points (0.03%) to finish at 1,819.26. The Russell 2000 ticked up 3.37 points (0.30%) to 1,132.54, and the Wilshire 5000 closed 10.61 points (0.05%) higher at 19,451.71.   On the NYSE, 3.2 billion shares changed hands, with 1.3 advancing issues for every declining issue. On the NASDAQ, 2.7 billion shares traded, with a slight lead for advancers.   The price of the 10-year Treasury note was down 8/32, with its yield up to 2.758%. The price of the 30-year Treasury bond decreased 18/32, increasing its yield to 3.720%.
Financial Sense
Pension finances endured a rocky start to 2014. There were major hits to both asset and liability measures, as equity returns were uniformly negative and interest rates dropped significantly. The Towers Watson Pension Index dropped 5.1% to 74.2, essentially giving up all the prior quarter’s gains.
Rules & Regulators
The Tests You Don’t Want to Fail
Good news: Your employees are contributing to the 401(k) plan. Bad news: Your highly compensated employees are contributing more than others to the 401(k) plan. Every employer-sponsored 401(k) plan must undergo non-discrimination tests in order to make sure the plan is not too highly weighted in favor of upper-level employees. An employer has several options to improve test results, Derrin Watson, an attorney with the Relius Education division of SunGard Financial, tells PLANSPONSOR.
The Puerto Rico Treasury Department has issued guidance about retirement plan deferral limits for 2014.
DOL Wins Lawsuit Over Unremitted Contributions
Two Department of Labor (DOL) lawsuits have resulted in plan trustees of an Aurora, Illinois, business being ordered to restore more than $4 million in employee contributions and other losses. The lawsuits, brought on behalf of plan participants, sought the recovery of $75,416.72 in unremitted employee contributions and participant loan repayments, and associated lost opportunity costs to the Mid-States Express Inc.’s 401(k) Plan.
Small Talk
ON THIS DATE:  In 1635, the Boston Public Latin School—the first public school building in the United States—was established. In 1741, “The American Magazine,” the first magazine in the U.S., was published in Philadelphia, Pennsylvania. In 1914, the American Society of Composers, Authors and Publishers (known as ASCAP) was formed in New York City. The society was founded to protect the copyrighted musical compositions of its members. In 2000, Charles M. Schulz’s last original Sunday “Peanuts” comic strip appeared in newspapers. Schulz had died the day before. In 2002, former New York mayor Rudolph Giuliani received an honorary knighthood from Queen Elizabeth II.
SURVEY SAYS: This week, I’d like to know what you think about the employee appraisal/performance review process at your company and in general.
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