Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 24th, 2014
Benefit Briefs
Ways Plan Sponsors Can Encourage Employees to Save
In honor of “America Saves Week,” Prudential Retirement suggests ways plan sponsors can help their employees turn up the savings to better prepare for retirement. Plan design is a great starting point, says Christine Marcks, president of Prudential Retirement. “Spend time working with the right adviser on plan design so it reflects the employer’s objectives for work force management and their budget,” she tells PLANSPONSOR.
The Arizona Supreme Court upheld a March 2013 decision by the Maricopa County Superior Court that Arizona lawmakers acted illegally when they passed legislation in 2011 requiring most sitting judges in the state to pay more into their retirement system, the Elected Officials Retirement Plan (EORP). The higher court also rejected the state’s argument that reducing pensioners annual cost-of-living adjustments does not violate the state’s constitution, saying the term “benefits” includes the promise of future benefit increases using a specified formula.
Buyer's Market
USI Consulting Group has named David Brisnehan as vice president of retirement services for its Irvine, California, office. Brisnehan has worked in the areas of retirement, employee benefit and property casualty consulting, the firm says. His 15 years of experience also includes financial analysis, client service and investment consulting.
Time Is Ripe for Next Big All-ETF 401(k) Provider
An innovator in the offering of exchange-traded funds (ETFs) in 401(k)s is selling its intellectual property. “We have been running plans with all ETFs since October 2003, and continually enhancing our product—keeping costs down and automating almost everything,” Darwin K. Abrahamson, CEO and founder of Invest n Retire, LLC in Portland, Oregon, tells PLANSPONSOR. The firm has filed for Chapter 11 bankruptcy protection.
Investment services provider American Century Investments launched a collective investment trust (CIT) designed for defined contribution (DC) participants that incorporates the firm’s One Choice Target Date Portfolios. “Collective investment trusts are critical to the defined contribution business because they give plan sponsors and their consultants more flexibility in building investment lineups for their employees,” says Rick Luchinsky, senior vice president of defined contribution investment-only (DCIO) business at American Century Investments.
Economic Events
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 5.1% to a seasonally adjusted annual rate of 4.62 million in January from 4.87 million in December, and are also 5.1% below the 4.87 million-unit pace in January 2013. According to the National Association of Realtors, last month’s level of activity was the slowest since July 2012, when it stood at 4.59 million. THE ECONOMIC WEEK AHEAD: Tomorrow, the Conference Board will release its Consumer Confidence Index for February. Wednesday, the Census Bureau will report about new homes sales for January. Thursday, the Census Bureau will report about durable goods orders for January, and the Labor Department will release its initial claims report.
Market Mirror
Friday, the Dow slipped 29.93 points (0.19%) to 16,103.30, the NASDAQ decreased by 4.13 points (0.10%) to 4,263.41, and the S&P 500 was down 3.53 points (0.19%) at 1,836.25. The Russell 2000 was up 2.52 points (0.22%) at 1,164.63, and the Wilshire 5000 closed 20.86 points (0.11%) lower at 19,689.26. 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 nearly even split between advancers and decliners. The yields for the 10-year Treasury note and 30-year Treasury bond were 2.734% and 3.696%, respectively. WEEK’S WORTH: For the week ending February 21, the Dow was down 0.32%, the NASDAQ was up 0.46%, and the S&P 500 slipped 0.13%. The Russell 2000 climbed 1.34%, and the Wilshire 5000 finished 0.12% higher.
Financial Sense
Are Emerging Market Equities an Acquired Taste?
Spices and seasonings that originate in exotic locales—curry, Sichuan peppercorns, ginger, cumin—take traditional Western foods in enjoyable new directions. But they can be overwhelming, too, if handled improperly or added in the wrong proportions. Plan sponsors take a similar view when it comes to adding stocks from faraway places—such as emerging market equities—as stand-alone options in their defined contribution (DC) plan core menus. As a high-risk, high-return asset class, they are an acquired taste, often seen in limited quantities or avoided altogether as direct investments.
Rules & Regulators
ACA Employer Responsibility Relief Calls for Planning
Final regulations implementing the employer responsibility provisions under the Patient Protection and Affordable Care Act (ACA) provide some relief for employers, but require careful planning. In addition, the final rules phase in the percentage of full-time workers to whom employers with 100 or more employees need to offer coverage—from 70% in 2015 to 95% in 2016 and beyond. “This is to ease employers into the shared responsibility rule and protect them from the ‘no-coverage’ penalty,” Andy Anderson, partner at Morgan Lewis & Bockius LLP in Chicago, tells PLANSPONSOR. The 70% rule will provide employers some cost relief and give them more time for planning.
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
Wells Fargo Offers Free Finance Seminars for Military
Banking and investment services provider Wells Fargo says it is expanding its efforts to support military personnel and veterans by offering a series of free online financial education seminars. The webinars coincide with the unofficial Military Saves Week, which runs February 24 to March 2, alongside America Saves Week.
ON THIS DATE:  In 1803, the Supreme Court, led by Chief Justice John Marshall, decided the landmark case of Marbury vs. James Madison, Secretary of State of the United States and confirmed the legal principle of judicial review—the ability of the Supreme Court to limit Congressional power by declaring legislation unconstitutional. In 1868, the U.S. House of Representatives voted 11 articles of impeachment against President Andrew Johnson, nine of which cited Johnson’s removal of Secretary of War Edwin M. Stanton, a violation of the Tenure of Office Act. The House vote made President Johnson the first president to be impeached in U.S. history. In 1982, Wayne Gretzky scored his 77th goal, breaking a record held by Phil Esposito of 76 goals in a single season. In 1988, the U.S. Supreme Court voted 8-0 to overturn the $200,000 settlement awarded to the Reverend Jerry Falwell for his emotional distress at being parodied in Hust.ler, a por.nographic magazine. The court ruled that, although in poor taste, the parody fell within the First Amendment’s protection of freedom of speech and the press. In 1991, after six weeks of intensive bombing against Iraq and its armed forces during the Gulf War, U.S.-led coalition forces launched a ground invasion of Kuwait and Iraq.
SURVEY SAYS: Best Picture Nominees
Last week, I asked NewsDash readers which Best Picture nominations they’ve seen and which they feel should win. More than half of responding readers (54.2%) have seen “American Hustle,” while half have seen “Gravity.” “Captain Phillips” was seen by 45.8% of readers. One-third (33.3%) have seen “The Wolf of Wall Street,” and one-quarter each have seen “Dallas Buyer’s Club” and “Philomena.” “12 Years a Slave” was viewed by 16.7% of readers, “Nebraska” by 12.5% and “Her” by 8.3%. Seen by the most respondents, “American Hustle” also received the highest number of votes to win the Best Picture Oscar, at 26.3%. “Captain Phillips” came in second with 21.1% of votes, and “12 Years a Slave,” “Dallas Buyer’s Club” and “Gravity” tied for third with 10.5% of votes. All other movies were each selected by 5.3% of responding readers. I also asked readers what movie they’ve seen they feel should have been nominated for Best Picture this year. In verbatim responses, there were a few negative comments about the Academy Awards. Several readers noted they have not seen any of the nominated movies. Editor’s Choice goes to the reader who said: “I look forward to this survey each year- reminds me to update my Netflix queue!”  A big thank you to everyone who participated in the survey!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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