Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 20th, 2014
Benefit Briefs
Employers to Change Health Benefit Delivery
The majority of employers plan to continue
sponsoring health benefits for active employees and retirees but will change
how those benefits are managed and delivered, says a new survey. The latest
release of Aon Hewitt’s Health Care Survey finds that 95% of employers plan to
continue providing health care benefits to active employees in the next three
to five years. However, a growing number plan to move away from their
traditional managed trend approach, which includes aggressively managing costs
through vendor selection and employee cost sharing.
Plan sponsors should factor in the needs of
Millennials when designing their company’s retirement plan, says a new paper.
“Retirement Plans for the Millennial Workforce: New Values Need New Plan
Designs,” was recently released by Buck Consultants and examines common characteristics
of employees born after 1980 (i.e., Millennials) and how plan design can
reflect these traits. For one thing, Millennials are technologically savvy, so
presentation of plan information is important, says Jerry Levy, a principal and
retirement consultant in Buck’s Chicago office, and co-author of the report.
“Millennials are used to having information on demand and it being presented in
the most up-to-date way,” he tells PLANSPONSOR.
Buyer's Market
DC Plan Sponsors Drawn to Alternative Investments
John Hancock Investments is seeing defined
contribution (DC) retirement plan clients add alternative mutual funds to their
menu of investment options at a rapid pace. “We’re seeing firms use
alternatives—either as part of a target-date or asset-allocation portfolio or
as single additional investments in their DC lineup—to solve for three things,”
Todd Cassler, president of institutional distribution for John Hancock
Investments in Boston, tells PLANSPONSOR. “They are looking for non-correlated
and diversified sources of return, a way to manage volatility and tail risk,
and a hedge against some type of future event, such as rising interest rates or
Jorgen Gustafson has joined the U.S. Bank
Institutional Trust and Custody division as a senior portfolio manager. In this
position, Gustafson provides institutional clients with customized investment
services. He is based in Seattle.
A 10% Savings Challenge to Offer Employees
The Principal Financial Group is issuing a 10%
savings challenge to retirement plan participants and a new way to track
progress through a Retirement Wellness Report. The “Take the 10% Challenge” is
an educational campaign that encourages participants to push themselves in the
race toward retirement security by deferring at least 10% of their salary
annually to retirement savings.
Economic Events
housing starts in January were at a seasonally adjusted annual rate of 880,000.
This is 16.0% below the revised December estimate of 1,048,000 and is 2.0%
below the January 2013 rate of 898,000. Single-family housing starts in January
were at a rate of 573,000; this is 15.9% below the revised December figure of 681,000.
The January rate for units in buildings with five units or more was 300,000.
Market Mirror
Wednesday, the Dow lost 89.84 points
(0.56%) to finish at 16,040.56, the NASDAQ fell 34.83 points (0.82%) to
4,237.95, and the S&P 500 was down 12.01 points (0.65%) at 1,828.75. The
Russell 2000 closed 12.37 points (1.06%) lower at 1,149.11, and the Wilshire
5000 closed at 19,583.17, down 136.63 points (0.69%).   On the NYSE, 3.2 billion shares traded
with 1.7 declining issues for every advancing issue. On the NASDAQ, 2.7 billion
shares changed hands, with a 2.6 to 1 ratio of decliners to advancers.   The price of the 10-year Treasury note
was down 7/32, bringing its yield up to 2.734%. The price of the 30-year
Treasury bond fell 15/32, increasing its yield to 3.704%.
Financial Sense
CalPERS Adjusts Another Factor in Funding
The California Public Employees’ Retirement
System (CalPERS) Board of Administration approved new demographic assumptions
designed to ensure greater sustainability and soundness for the pension fund. Specifically,
CalPERS’ Board approved new demographic assumptions that take into account
public employees living longer based on a recent study of CalPERS membership. Adoption of the new
assumptions marks the third change in factors that impact the long-term funding
of the system.
Institutional investors working with Towers
Watson more than doubled asset flows moving into “smart beta” strategies last
year, reaching $11 billion of inflows in 2013. Towers Watson says the strong growth in smart beta
strategies among its institutional clients is not surprising, as institutions
have long been expressing interest in alternative strategies that can provide
lower fees. Put simply, smart beta assumes that better diversification and
rebalancing rules can generate returns that exceed the capitalization-weighted
index without expanded risk or excessive oversight. Like indexed investments,
smart beta’s most attractive features typically include low management fees,
high transparency and low asset turnover, but great diversity exists in the
The World at Large
Long-term savings are the lowest savings
priority for people in the UK, according to research from Cass Business School
and the Pensions Institute.
Small Talk
European Cities Dominate Quality of Living Ranking
Vienna is the city with the world’s best quality
of living, according to Mercer’s “2014 Quality of Living Survey.” European
cities dominate the list of the best places to live. Zurich and Auckland follow
in second and third place, respectively. Munich is in fourth place, followed by
Vancouver, which is also the highest-ranking city in North America. Globally,
Singapore is the highest-ranking Asian city, whereas Dubai ranks first across
the Middle East and Africa. The city of Pointe-à-Pitre, Guadeloupe, takes the
top spot for Central and South America.
1792, President George Washington
signed legislation renewing the United States Post Office as a cabinet
department led by the postmaster general, guaranteeing inexpensive delivery of
all newspapers, stipulating the right to privacy and granting Congress the
ability to expand postal service to new areas of the nation. In 1962, from Cape Canaveral, Florida,
John Hershel Glenn Jr. was successfully launched into space aboard the Friendship 7 spacecraft on the first
orbital flight by an American astronaut. In 1998, 15-year-old Tara Lipinski won the gold medal in women’s
figure skating at the Olympic Winter Games in Nagano, Japan, and became the
youngest gold medalist in her sport.
It’s that time of year again—the 86th Annual Academy Awards event will air on
ABC March 2. This week, I’d like to know, which Best Picture nominations have
you seen and which one do you think should win? Was there a film you feel
should have been nominated? You may respond to this week’s survey by 6 p.m.
Pacific time today.
Sponsored message from PLANSPONSOR
PLANSPONSOR Plan Sponsors of the Year – Corporate 401(k) – $50MM to $1B Finalists include Akin Gump Strauss Hauer & Feld LLP, American Woodmark Corporation, O.C. Tanner Company, Range Resources Corporation and Vermeer Corporation. Winners in each category will be announced in February and recognized at the Awards for Excellence dinner. View other categories.
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PLANSPONSOR Lifetime Achievement Award
2014 PLANSPONSOR Lifetime Achievement Award
At the annual PLANSPONSOR/PLANADVISER Awards for
Excellence Dinner, Charles Nelson, president of Retirement Services at
Great-West Financial, will be given the 2014 PLANSPONSOR Lifetime Achievement
Award. Nelson joined Great-West Financial in 1983 and was appointed president
of its Retirement Services division in 2008 after serving as the unit’s senior
vice president since its inception. He continues as the senior officer
responsible for all aspects of the firm’s defined contribution (DC) and defined
benefit (DB) programs, overseeing the corporate, government, health care,
nonprofit and institutional lines of business.
Sidecar Savings Accounts Create Current and Future Financial Security
Avoid Pitfalls to Properly Replacing DC Plan Investments
What Safe Harbors Are Available to Retirement Plan Sponsors?
(b)lines Ask the Experts – Can a 401(a) Plan Account be Rolled Into a 403(b) Plan?
Plan Sponsors Should Address Financial Squeeze Put on Gen X

Editorial: Alison Cooke Mintzer


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