Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
February 25th, 2014
Webcast Event
Nonqualified plan decisions are becoming increasingly complicated for key employees. This webcast will highlight our 2013 MullinTBG-PLANSPONSOR Executive Benefits Survey results with a focus on how we can leverage behavioral science to influence participant engagement strategies that help increase plan effectiveness, produce better outcomes, and provide for a safe and secure retirement. Join MullinTBG’s Mark Maizel and special guest Adam Alter, an NYU Stern School of Business professor and best-selling author, as we review this year’s data and explore the psychology of decisionmaking and its application to nonqualified plans.
Benefit Briefs
U.S. Retirement System Barely Holds Top 20 Spot
The United States narrowly holds its spot among the top 20 nations globally in its capacity to meet retirement security needs and expectations. According to the 2014 Global Retirement Index, published by Natixis Global Asset Management, the U.S. scored 19th among 150 nations analyzed, as the benefits of increasing U.S. economic stability are moderated by the potential for rising interest rates and inflation, as well as persistent income inequality. “It’s important to remember the index is not simply focused on retirement savings, it’s a combination of factors,” Edward Farrington, executive vice president and leader of Retirement and Offshore Sales at Natixis Global Asset Management in Boston, tells PLANSPONSOR. “What’s missing for us is just to expand opportunities for retirement savings. We need to find ways to incent people to save more for retirement so they have a pool of assets that will finance them to live longer than their parents.”
Stronger Economy, Weaker Savings
A joint survey from four retirement industry advocacy groups, released as part of America Saves Week, finds improving macroeconomic conditions haven’t reversed widespread savings challenges. The seventh annual national survey assessing household saving—released by the Consumer Federation of America (CFA), America Saves, the American Savings Education Counsel, and the Employee Benefit Research Institute (EBRI)—finds most Americans continue to face significant personal savings challenges. When asked if they were making progress in meeting their savings needs, only about one-third (35%) of U.S. workers say they are making “good” or “excellent” progress. That compares with nearly two-thirds (63%) who report making either “fair” or “no” progress towards savings benchmarks.
Retirement Specialist Advisers Give Plan Sponsors an Edge
Working with a financial adviser entirely dedicated to retirement plans gives plan sponsors an edge over peers who do not do so. A study from the industry advocacy group Retirement Advisor Council, “Partner with a Professional Retirement Plan Advisor and Achieve Higher Participant Retirement Readiness Scores,” compares retirement specialist advisers with two other broadly defined channels—benefits consultants and investment consultants—that are regularly engaged by retirement plans. Many findings in the report’s underlying survey suggest the advantage of working with a retirement specialist over other types of consultants, Steven LaValley, second vice president of retirement services at MassMutual Financial Group, tells PLANSPONSOR.
Market Mirror
Yesterday, the Dow closed 103.84 points (0.64%) higher at 16,207.14, the NASDAQ climbed 29.56 points (0.69%) to 4,292.97, and the S&P 500 was up 11.36 points (0.62%) at 1,847.61. The Russell 2000 gained 9.92 points (0.85%) to finish at 1,174.55, and the Wilshire 5000 increased 123.32 points (0.63%) to 19,812.58. On the NYSE, 3.2 billion shares traded, with 1.6 advancing issues for every declining issue. On the NASDAQ, 2.7 billion shares changed hands, with a nearly 2 to 1 lead for advancers. The price of the 10-year Treasury note was down 3/32, bringing its yield up to 2.746%. The price of the 30-year Treasury bond slipped 5/32, increasing its yield to 3.705%.
Rules & Regulators
Washington Update
Summaries of the latest from Washington and the courts—what’s coming, what’s contemplated and what’s critical for plan sponsors.
The Internal Revenue Service (IRS) released the “Quick Reference Guide for Public Employers.” This guide is produced annually by the IRS office of Federal, State and Local Governments (FSLG). It aims to provide a brief introduction to basic federal employment tax and reporting information issues for governmental employers.
No Harm Required to Seek Plan Reformation
A federal appeals court has found a retirement plan participant need not show “harm” to pursue a remedy of plan reformation for failing to disclose information. The appellate court noted that in CIGNA Corp. v. Amara, the Supreme Court held that, with respect to the equitable remedies under Employee Retirement Income Security Act (ERISA) § 502(a)(3), “any requirement of harm must come from the law of equity.”  To obtain contract reformation, equity does not demand a showing of actual harm. The 2nd U.S. Circuit Court of Appeals agreed to take up the case on appeal from plaintiff Geoffrey Osberg who claimed his employer, Foot Locker, issued false and misleading summary plan descriptions (SPDs) in violation of ERISA disclosure requirements.
Sponsored message from PLANSPONSOR
PLANSPONSOR Plan Sponsors of the Year – Public Defined Contribution Finalists include State of Tennessee, State of Michigan, Office of Retirement Services, and City of Austin Deferred Compensation Program. Winners in each category will be announced in February and recognized at the Awards for Excellence dinner. View other categories.
Small Talk
ON THIS DATE:  In 1862, the U.S. Congress passed the Legal Tender Act, authorizing the use of paper notes to pay the government’s bills. This ended the long-standing policy of using only gold or silver in transactions, and it allowed the government to finance the enormously costly Civil War long after its gold and silver reserves were depleted. In 1870, Hiram Rhoades Revels, a Republican from Natchez, Mississippi, was sworn into the U.S. Senate, becoming the first African American ever to sit in Congress. In 1938, the city of Miami opened its first drive-in movie theater. In 1964, 22-year-old Cassius Clay (who later became known as Muhammad Ali) shocked the odds-makers by dethroning world heavyweight boxing champ Sonny Liston in a seventh-round technical knockout.   TUESDAY TRIVIA: In its original incarnation, Play-Doh was off-white and came in 1½ lb. cans. However, in less than a year it was available in three colors (red, yellow and blue) which were vended in a 3-pack of 7 oz. cans.
TRIVIAL PURSUITS: What was the original use for Play-Doh?
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PLANSPONSOR’s 2014 Plan Sponsor of the Year Winner
Finalists for our 2014 Plan Sponsor of the Year Award in the Public Defined Contribution category are City of Austin Deferred Compensation Program (Austin, Texas); State of Michigan, Office of Retirement Services (Dimondale, Michigan); and State of Tennessee (Nashville, Tennessee). And, the winner is…
IRS Notice Defines Retirement Plan Tax Distribution Exceptions
ERISA Advisory Council Explores Annuity Default Options in DC Plans
Legislation to Overturn Fiduciary Rule Advances Through House Committee

Editorial: Alison Cooke Mintzer


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