NewsDash – February 18, 2014

February 18th, 2014

Industry Insights

The Next Great DB Risk: Complacency

What a difference a year makes—strong investment performance and a modest rise in interest rates during 2013 caused a steep increase in the funded status of the typical defined benefit (DB) plan, reversing a multi-year downward trend. The improvements moved most frozen plans closer to being ready for termination and gave active plans a welcome reprieve from the pains of the last several years. But the drastic improvements could lull plan sponsors into a false sense of security that could result in complacency at a time when they should be evaluating what actions to take.

Benefit Briefs

Non-ERISA 403(b)s an Endangered Species

Aside from government and non-electing church plans, is there really such thing as a non-ERISA 403(b), given the rules plan sponsors must follow now? “Yes, non-ERISA still exists, the safe harbor is still available, but organizations will have to work at it,” Robert J. Toth Jr., from the Law Office of Robert J. Toth Jr. in Fort Wayne, Indiana, tells PLANSPONSOR. However, Toth contends the Department of Labor (DOL) really doesn’t like non-Employee Retirement Income Security Act (ERISA) plans because in its view, they lessen participant protections.

Buyer's Market

As traditional defined benefit pension plans are placing a strain on state and local budgets, policymakers across the country are taking a closer look at alternative ways to design a retirement plan. A new brief provides an overview of cash balance plan designs and discusses related policy issues.

Participant Planning Guides Available from IFEBP

Two updated employee retirement planning guides from the International Foundation of Employee Benefit Plans (IFEBP) offer help with timing retirement and managing pension benefits.

Economic Events

THE ECONOMIC WEEK AHEAD: Tomorrow, the Census Bureau will report about housing starts for January, and the Bureau of Labor Statistics will reveal the Producer Price Index (PPI) for January. Thursday, the Labor Department will issue its initial claims report, and Friday, the National Association of Realtors will report about existing home sales for January.

Market Mirror

The Dow climbed 126.80 points (0.79%) Friday, to 16,154.39. The NASDAQ added 3.35 points (0.08%) to finish at 4,244.03, and the S&P 500 closed 8.80 points (0.48%) higher at 1,838.63. The Russell 2000 increased by 1.40 (0.12%) to 1,149.19, and the Wilshire 5000 closed at 19,665.77, up 80.08 points (0.41%). On the NYSE, 3.2 billion shares changed hands, with advancing issues outnumbering declining issues nearly 2 to 1. On the NASDAQ, 2.6 billion shares traded, with a slight lead for advancers. The price of the 10-year Treasury note decreased 3/32, bringing its yield up to 2.745%. The price of the 30-year Treasury bond was unchanged, with its yield at 3.693%. WEEK’S WORTH: For the week ending February 14, the Dow was up 2.28%, the NASDAQ gained 2.86%, and the S&P 500 increased 2.32%. The Russell 2000 climbed 2.92%, and the Wilshire 5000 finished 2.41% higher.

Financial Sense

Does your employee retirement education include information about carrying a mortgage into retirement? It can have a big impact on retirement wealth, says a report from the National Center for Policy Analysis (NCPA).

Rules & Regulators

The U.S. District Court for the Middle District of Florida consented to the DOL appointing Jeanne Bryant of Brentwood, Tennessee, as an independent fiduciary for the terminated IAQ Inc. 401(k) Plan. The DOL learned that former fiduciary Gail Garrow and IAQ distributed assets to only five plan participants. The account balances of the remaining 40 participants were not distributed and remained in the operating account of IAQ.

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PLANSPONSOR DC Survey Standouts Companies such as MassMutual, T. Rowe Price and TIAA-CREF will be recognized at the Awards for Excellence dinner. View the top providers and reserve your table.

Small Talk

Love Is in the Air at the Workplace

Workplace romances are not merely the stuff of TV sitcoms, according to a new survey. CareerBuilder finds more than one-third of employees (38%) have dated someone who worked for the same company, with 16% having done so more than once. Of those who dated someone from the office, nearly one-third (31%) ended up marrying their office sweetheart.

ON THIS DATE: In 1885, Mark Twain published his famous novel “The Adventures of Huckleberry Finn.” In 1929, The Academy of Motion Picture Arts and Sciences announced the winners of the first Academy Awards. In 1930, Pluto, once considered the ninth planet, was discovered at the Lowell Observatory in Flagstaff, Arizona, by astronomer Clyde W. Tombaugh. In 2001, Dale Earnhardt Sr., considered one of the greatest drivers in National Association for Stock Car Auto Racing (NASCAR) history, died at the age of 49 in a last-lap crash at the 43rd Daytona 500 in Daytona Beach, Florida.

SURVEY SAYS: Performance Reviews

Last week, I asked NewsDash readers what they think about their companies’ employee appraisal/performance review process. Ninety-four percent of responding readers reported their firms use a formal employee appraisal/performance review program. Nearly three in ten (29.4%) of respondents said they are “very dissatisfied” with their companies’ programs. Twenty-eight percent reported being somewhat satisfied, 22.1% are somewhat dissatisfied and 5.9% are very satisfied. When asked what they like about the appraisal process, nearly four in ten (39.7%) responding readers like being able to let their boss know about the work they’ve done. About one-third each said they can get input from their boss about their work (32.4%) and they usually get a raise after appraisal time (33.8%). When asked what they disliked about the appraisal process, 34.3% said rarely is any action taken on goals. Nearly one-third (32.8%) stated it takes to much time, 31.3% feel uncomfortable rating themselves, and 22.4% indicated their bosses do not really know what they do. The majority of the verbatim comments can be summed up with one reader’s sentiment: “It is inherently capricious, subjective and a complete waste of time.” Editor’s Choice goes to the reader who said: “Once a year it is the most painful part of my job.” A big thank you to everyone who participated in the survey!

TUESDAY TRIVA: Screenwriter Sidney Howard was posthumously nominated for an Oscar for “Gone with the Wind” in 1939. He also won.

TRIVIAL PURSUITS: Who was the first actor posthumously nominated for an Academy Award?

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