Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 14th, 2014
Benefit Briefs
Ensuring Best Practices for NQDC Plans
As the year began, information abounded about
how qualified retirement plans can review their plans for compliance and
implement best practices. But, what about non-qualified plans? Yong Lee, chief
operating officer for retirement plan services provider MullinTBG, tells
PLANSPONSOR that there are four main areas that non-qualified deferred
compensation (NQDC) plan sponsors should consider in examining their plans.
Using its proprietary Retirement Security
Projection Model (RSPM), the Employee Benefit Research Institute (EBRI) finds
last year’s gains in the financial markets and housing values mean fewer Baby
Boomer and Generation X households are likely to run short of money in
retirement. However, factors such as age, income, and especially access to an
employment-based defined contribution retirement plan, can produce significant
individual differences, EBRI says in a report. The risks of a long life and
high health-care costs drive huge variations in retirement income adequacy, the
model shows.
Accumulation No Longer the Name of the Game
The retirement industry has shifted its focus
from accumulation to income in retirement, changing the way tools present
readiness and income projection. Plan advisers and plan sponsors now want to be
able to tell participants how their accumulated assets in a 401(k) plan
translate into income they can live on in retirement, says Jamie Ohl, president
of tax-exempt markets for ING U.S. Retirement.
Fidelity Investments
finds the average 401(k) balance has continued to increase, ending the fourth
quarter of 2013 at a record high of $89,300. According to an analysis by
Fidelity, the growth represents a 15.5% increase from a year earlier and nearly
doubles the low reached in March 2009, when the average 401(k) balance was
$46,200.
Globally Mobile Employees and the ACA
The Patient Protection and Affordable Care Act
(ACA) imposes new requirements and related penalties for employers regarding
health insurance coverage. But how do globally mobile employees (e.g., those on
a long-term assignment to the U.S. or abroad, or who frequently cross borders
on business travel) factor into the equation? An “Insights” report from PwC’s
Human Resource Services and Global Mobility addresses this question.
Buyer's Market
Through a partnership with GetInsured, insurance
exchange provider SelectQuote Benefit Solutions has added health insurance for
pre-65 individuals to their employer benefits portfolio. SelectQuote’s pre-65
exchange, offered through GetInsured, is compliant with the Patient Protection
and Affordable Care Act (ACA).
Prudential Adds Russell TDFs to IncomeFlex
Prudential Retirement is now offering defined
contribution (DC) plans guaranteed income solutions that include Russell
Investments’ lineup of institutional target-date funds (TDFs). “We are happy to
welcome Russell Investments’ LifePoints Institutional Target Date Funds to the
list of target-date funds available with IncomeFlex,” says Srinivas Reddy, head
of Prudential Retirement’s Institutional Income and Capital Markets, based in
Newark, New Jersey.
Five mutual funds from BlackRock Inc. seek to
deliver a total return that tracks the expected median cost of lifetime income.
The funds aim to provide long-term investment results that correspond to the
total return of the applicable BlackRock CoRI Retirement Indexes, known as the
CoRI Indexes. Investors can remain in the CoRI fund for up to 10 years after
turning 65 and can take distributions as part of a retirement income plan.
Economic Events
The U.S.
Census Bureau announced the combined value of distributive trade sales and manufacturers’
shipments for December, adjusted for seasonal and trading-day differences but
not for price changes, was estimated at $1.3 trillion, up 0.1% from November
2013, and up 3.8% from December 2012. Advance
estimates of U.S. retail and food services sales for January, adjusted for seasonal
variation and holiday and trading-day differences, but not for price changes,
were $427.8 billion, a decrease of 0.4% from the previous month, but 2.6% above
January 2013. Total sales for the November 2013 through January 2014 period
were up 3.4% from the same period a year ago. The November to December 2013
percent change was revised from +0.2% to -0.1%. In the week
ending February 8, the advance figure for seasonally adjusted initial claims for
unemployment insurance was 339,000, an increase of 8,000 from the previous
week’s unrevised figure of 331,000, the Labor Department reported. The four-week
moving average was 336,750, an increase of 3,500 from the previous week’s
revised average of 333,250. The average interest rate for a 30-year fixed-rate
mortgage is 4.28%, up from 4.23% one week ago, according to Freddie Mac. The average
interest rate for a 15-year fixed-rate mortgage is 3.33%, unchanged from a week
ago.
Market Mirror
Thursday, the Dow was up 63.65 points
(0.40%) at 16,027.59, the NASDAQ climbed 39.38 points (0.94%) to 4,240.67, and
the S&P 500 closed 10.57 points (0.58%) higher at 1,829.83. The Russell
2000 gained 15.25 points (1.35%) to finish at 1,147.79, and the Wilshire 5000
closed at 19,585.69, up 133.98 points (0.69%). On the NYSE, 3.2 billion shares traded,
with a near 3 to 1 lead for advancers. On the NASDAQ, 2.7 billion shares
changed hands, with 2.6 advancing issues for every declining issue. The price of the 10-year Treasury note was up 17/32,
bringing its yield down to 2.734%. The price of the 30-year Treasury bond
increased 21/32, decreasing its yield to 3.686%.
Financial Sense
Institutions Like Smart Beta
New analysis from State Street Global Advisors
(SSgA) shows smart beta strategies, designed to take advantage of both active
and passive investing principals, are gaining popularity. The analysis, based
on the firm’s recent “Beyond Active and Passive, Advanced Beta Comes of Age”
study, finds advanced or “smart” beta strategies are playing a more influential
role in some of the world’s largest portfolios. 
According to Adrian Banner, CEO and chief investment officer of INTECH
Investment Management LLC, which provides access to smart-beta portfolios and
mathematically driven investment solutions, the terms “smart beta”
and “advanced beta” don’t have precise definitions. Generally, he
says, smart beta describes rules-based investment strategies that do not rely
on market-capitalization weighting to set asset allocations within an
index-tracking portfolio.
The World at Large
Four in 10 UK employers are worried increasing
numbers of over 65s in the workplace will ramp up benefits costs and hold back
younger staff.
The UK Pensions Management Institute will launch
a qualification aimed at helping employers who want to offer non-regulated at-retirement
advice to staff.
Sponsored message from PLANSPONSOR
PLANSPONSOR Plan
Sponsors of the Year
These awards
recognize retirement plan sponsors that demonstrate leadership in providing a
more secure retirement for workers across several categories and honored at the
Awards for Excellence dinner. View the finalists and more dinner information.
Small Talk
The America Saves campaign has launched a new
Assess Your Savings Plan tool for people to review current savings strategies
and find new ways to save. The online tool is being released in connection with
America Saves Week 2014, which runs from February 24 to March 2.
ON
THIS DATE:
  Around
the year 278 A.D., Valentine, a holy
priest in Rome in the days of Emperor Claudius II, was executed for continuing
to perform marriages when they had been banned by Emperor Claudius. In 1929, four men dressed as police
officers entered gangster Bugs Moran’s headquarters on North Clark Street in
Chicago, lined seven of Moran’s henchmen against a wall, and shot them to
death. The St. Valentine’s Day Massacre, as it is now called, was the
culmination of a gang war between arch rivals Al Capone and Bugs Moran. In 1929, penicillin was discovered by young
bacteriologist Sir Alexander Fleming.   And now it’s time for FRIDAY FILES!
Two women who have been best friends for 94
years share what they feel about today’s pop culture. Guaranteed to make you
smile.
In Dokka,
Norway
, a 10-year-old boy put his 18-month old sister into the family’s car
one morning while his parents were still sleeping and set off to visit his
grandparents in Valdres, about 60 kilometres away. He drove more than 10
kilometres before veering off the road, where he was found by a snowplow driver
who alerted police. According to the UK’s Daily Mail, The boy told the snowplow
driver he was a dwarf and had forgotten his driver’s license at home. The children
were not injured, the car was not damaged, and no charges were filed.
In Ipswich,
Queensland, Australia
, a teenager entered a gas station threatening clerks
and allegedly demanding money, though he only left with a bottle of soda, The
Queensland Times reports. Employees were terrified as the man was brandishing a
chainsaw, damaging much of the store and a vehicle parked outside before he
left.  His “disguise” was not as
terrifying—he was wearing a flower pot.
In Akron,
Ohio
, in a clear example of “don’t shoot (or bite) the messenger,” a man
approached his postal carrier to see if he had received a check he had been
waiting for. When told no, the man became angry, grabbed the postal worker’s
pepper spray and squirted him in the eyes. According to the Akron Beacon
Journal, the two men then started wrestling in the street, and the postal
worker said the man bit him three times in the leg during their fight. The man
was arrested on misdemeanor charges of assault and resisting arrest.
In London,
England
, security personnel at Heathrow airport recently confiscated a gun
from a traveler. The traveler recently posted on social media that he has
traveled the world with it, but Heathrow labeled it a security threat and took
it. It wasn’t his gun, it was the gun for his son’s Woody from Toy Story doll.
In Sandy,
Utah
, a would-be burglar thought of a clever idea to enter a jewelry store,
but didn’t plan his escape as well. The 31-year-old entered the jewelry store
by going through a neighboring bakery and climbing down through the ceiling of
Sierra-West Jewelers, KSL TV in Utah reports. While alarms were going off, he
smashed one case and filled his bag with jewelry. But, he was unable to unlock
the door from the inside, and when he tried to break through it with a fire
extinguisher, he realized it was shatterproof glass. The man just chilled and
smoked a couple of ciga.rettes until the owner came and unlocked the door for
police to arrest him.   Have a great weekend, everyone!  We are off Monday for Presidents’ Day, but
NewsDash will be back in your inbox Tuesday.
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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