Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
January 8th, 2015
GAO Request
If you are a defined contribution (DC) plan fiduciary who has considered adopting or has adopted a qualified default investment alternative (QDIA) for your plan, please consider answering a short questionnaire sponsored by PLANSPONSOR and the U.S. Government Accountability Office (GAO). Please note: GAO is not auditing or analyzing the policies or practices of any individual plan sponsor. All responses provided in this questionnaire will remain confidential. GAO will not attribute any provided information to any individual or company. GAO will accept responses to this questionnaire through January 30.Read more >
Sponsored message from J.P. Morgan Asset Management
PLANADVISER interviews Julia Bates, Head of Individual and Business Retirement for J.P. Morgan Asset ManagementRead more >
PLANSPONSOR Research
2014 PLANSPONSOR DC Survey Standouts Announced
Once again, PLANSPONSOR asked defined contribution (DC) plan sponsors representing employers of all sizes from across the United States: “How satisfied are you with your provider?” More than 5,200 responses, ranging from “micro” plans with less than $5 million in assets to “mega” plans with more than $1 billion in assets, were received and tabulated. From these, 14 companies stood above the rest in PLANSPONSOR’s annual Defined Contribution Survey for accumulating the greatest number of Best in Class Awards in the survey’s six main asset classes. The winners will be honored at the PLANSPONSOR/PLANADVISER Awards for Excellence dinner in New York City on March 31.Read more >
Products, Deals & People
Alliant Insurance Services announced that it will acquire American Benefits Consulting (ABC), an employee benefits consulting firm with offices in New York and Pennsylvania. Founded in 1979, ABC focuses on four core benefit areas: voluntary benefits, group insurance, executive benefits and international benefits.Read more >
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Mismanagement of ERISA Accounts
Schroders Creates R6 Share Classes for Mutual Funds
Schroder Investment Management North America, a wholly owned subsidiary of the global asset manager Schroders, announced the creation of an R6 share class for a number of its mutual funds. With no embedded shareholder servicing fees, the new share class provides more competitively priced products to eligible institutional clients, the firm says.Read more >
ICMA-RC, a nonprofit independent financial services corporation, has appointed Robert P. Schultze as president and chief executive officer. Effective February 17, 2015, Schultze will take over the leadership position currently held by Joan McCallen, who will retire after 18 years of service. Schultze will lead the organization comprised of over 750 associates managing and administering more than $57 billion in assets. ICMA-RC provides retirement plan services for nearly 1.2 million public sector participant accounts and over 9,000 retirement plans.Read more >
Market Mirror

Positive sentiment from the Federal Reserve ended the losing streak of major U.S. stock indices Wednesday. The Dow gained 212.88 points (1.23%) to finish at 17,584.52, the NASDAQ climbed 57.73 points (1.26%) to 4,650.47, and the S&P 500 closed 23.29 points (1.16%) higher at 2,025.90. The Russell 2000 increased 14.66 points (1.26%) to 1,175.97, and the Wilshire 5000 was up 241.42 points (1.15%) at 21,301.67.

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 1.7 advancing issues for every declining issue.

The price of the 10-year Treasury note was down 5/32, increasing its yield to 1.961%. The price of the 30-year Treasury bond fell 14/32, bringing its yield up to 2.524%.

Compliance
ERISA Lawsuit Filed Against Avon Products
Avon Products is facing an Employee Retirement Income Security Act (ERISA) lawsuit over its handling of the company stock fund investment option in its retirement plan for employees. The lawsuit filed in the U.S. District Court for the Southern District of New York claims that when Avon became aware that its foreign subsidiaries had engaged in violations of the Foreign Corrupt Practices Act (FCPA), it engaged in a cover up rather than make the investing public and participants in its retirement plan aware of the misconduct. The suit says the misinformation kept Avon’s stock trading at artificially high prices for years.Read more >
From the Magazine
Case Sensitive: Procedural Prudence
Does an employer breach its fiduciary duty to retirement plan participants under the Employee Retirement Income Security Act (ERISA) by dropping an investment from a plan without thoroughly investigating the prudence of doing so? If yes, by what legal standard should the committee be judged for causing a loss to participant accounts?Read more >
Investing
Retirement investors and pension funds have not had to wait very long to test their 2015 portfolio strategies against increased volatility and fluctuating asset prices. There is a confluence of factors causing the current bout of market volatility, Prudential Financial experts noted at the firm’s 7th Annual Global Economic and Retirement Outlook event in New York. Besides prolonged geopolitical instability and uncertainty about interest rates both in the U.S. and abroad, markets have yet to adjust to what appears to be a prolonged plunge in oil prices. There is even emerging concern that deflation in the Euro and other currencies could dampen growth in key economies, said panelist John Praveen, managing director and chief investment strategist for Prudential International Investments Advisers.Read more >
Considerations for DB Investing in 2015
This year, the question for defined benefit (DB) plan sponsors will not just be, “What will interest rates do?” Looking at their DB plan as part of the overall corporate strategy will help plan sponsors determine how to manage assets, says John McCareins, practice lead for DB pension strategy at Northern Trust in Chicago. Northern Trust continues to encourage plan sponsors to develop an outcome orientation strategy—to see the defined benefit plan as an asset of the company and manage enterprise risk instead of just relying on interest rates to improve funded status, McCareins says. “Our view is, if they focus on their organizational-specific situation instead of trying to guess on equity or interest rates, they will look at how each of three investment ‘buckets’ will work toward the corporate goals and make the portfolio as all-weather as possible.”Read more >
Small Talk
ON THIS DATE: In 1790, President George Washington delivered the first State of the Union address to the assembled Congress in New York City. In 1815, the Battle of New Orleans began. The War of 1812 had officially ended on December 24, 1814, with the signing of the Treaty of Ghent. The news of the signing had not reached British troops in time to prevent their attack on New Orleans. In 1918, U.S. President Woodrow Wilson announced his Fourteen Points as the basis for peace upon the end of World War I. In 1958, Bobby Fisher, at the age of 14, won the United States Chess Championship for the first time. In 1997, Mister Rogers received a star on the Hollywood Walk of Fame.
SURVEY SAYS: This week, I’d like to know, what is the best holiday gift you received in 2014? What is the worst? You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy.Read more >

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