Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
July 13th, 2015
Benefits & Administration
The funded status of the typical U.S. corporate pension plan increased 1.5 percentage points in June to 87.8%, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG). Liabilities declined more rapidly than assets during the month. The June BNY Mellon Institutional Scorecard is the first to reflect a realignment in the December 2014 funded status for the typical U.S. corporate plan resulting from recent changes in mortality tables produced by the Society of Actuaries to estimate life expectancies. These longer life expectancy assumptions caused a 5-percentage-point reduction in the December 2014 funded status, which was then carried forward, ISSG said.Read more >
Products, Deals & People
The Newport Group Inc. and its affiliates will be acquiring the Greensboro, North Carolina, operations of Clark Consulting LLC, and its broker/dealer (B/D) Clark Securities Inc. This will make Newport the largest administrator of bank-owned life insurance (BOLI) and corporate-owned life insurance (COLI) in the nation, according to the announcement. BOLI and COLI are used to recover the costs of supplemental employee health and nonqualified retirement plans.Read more >
RIA Issues eBook About TDF Best Practices
Guidance Point Retirement Services, a registered investment adviser (RIA) in Bangor, Maine, has issued “Navigating the Target-Date Fund Evaluation Process,” an e-book for defined contribution (DC) plan sponsors containing best practices for evaluating and selecting a target-date fund (TDF) series for their participants. The book uses tips and information gleaned from the Department of Labor’s (DOLs) “Target-Date Retirement Funds – Tips for ERISA Plan Fiduciaries.”Read more >
A financial wellness vendor, Four Seasons Financial Education (FSFE), has introduced a voluntary option to its corporate financial wellness programs. According to FSFE, this offering is the first of its kind in the U.S. and gives employers an alternative to traditional programs for which plan sponsors generally cover the cost.Read more >
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
Economic Events

The U.S. Census Bureau announced that May sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $449.8 billion, up 0.3% from the revised April level, but down 3.8% from the May 2014 level. May sales of durable goods were down 0.1% from last month, but were up 1.6% from a year ago. Sales of furniture and home furnishings were down 2.8% from last month, while sales of motor vehicle and motor vehicle parts and supplies were up 2.2%. Sales of nondurable goods were up 0.7% from April, but were down 8.3% from last May. Sales of petroleum and petroleum products were up 4.3% from last month.

THE ECONOMIC WEEK AHEAD: Tomorrow, the Census Bureau will report about retail sales in June and business inventories in May. Wednesday, the Bureau of Labor Statistics will reveal the producer price index (PPI) for June. Thursday, the Labor Department will issue its initial claims report. Friday, the Bureau of Labor Statistics will reveal the consumer price index (CPI) for June, and the Census Bureau will report about housing starts for June.

Market Mirror

Friday, the Dow was up 211.79 points (1.21%) at 17,760.41, the NASDAQ rose 75.30 points (1.53%) to reach 4,997.70, and the S&P 500 climbed 25.31 points (1.23%) to 2,076.62. The Russell 2000 finished 17.87 points higher (1.45%) at 1,252.02, and the Wilshire 5000 closed 267.70 points higher (1.23%) at 21,954.36.

On the NYSE, 3.2 billion shares traded, with a nearly 4 to 1 lead for advancers. On the NASDAQ, 2.9 billion shares changed hands, with roughly 3 advancing issues for every declining issue.

The price of the 10-year Treasury note slipped 23/32, bringing its yield up to 2.403%. The price of the 30-year Treasury bond was down 1 9/32, increasing its yield to 3.194%.

WEEK’S WORTH: For the week ending July 10, the Dow increased 0.17%, the NASDAQ finished 0.23% lower, and the S&P 500 was down 0.01%. The Russell 2000 finished 0.30% higher and the Wilshire 5000 was up 0.02%.

DOL Seeks Independent Fiduciary for Abandoned Plan
The U.S. Department of Labor (DOL) has filed a lawsuit seeking appointment of an independent fiduciary for the abandoned 401(k) plan of Ants Software Inc. in Dunwoody, Georgia. According to the DOL, in February 2013, Ants Software Inc. ceased operations, and at the time, Rik Sanchez was fiduciary to the Ants Software Inc. 401(k) Plan. The plan’s recordkeeper refused to make distributions after Sanchez changed each participant’s address to his own.Read more >
Connecticut Governor Dannel Malloy signed Public Act 15-167 into law, bringing additional protections to retirees’ assets from creditor claims. Under the text of the law, any annuity contract to which employee defined benefit (DB) plan assets are transferred and lose protections of the Employee Retirement Income Security Act (ERISA) and insurance by the Pension Benefit Guaranty Corporation (PBGC) will be considered a trust protected from claims of creditors.Read more >
IRS Announces Halt to Certain Lump-Sum Offerings
The Internal Revenue Service (IRS) has issued Notice 2015-49 announcing its intent “to amend the required minimum distribution regulations under § 401(a)(9) of the Internal Revenue Code to address the use of lump sum payments to replace annuity payments being paid by a qualified defined benefit pension plan.”Read more >
Report Rounds Up Retirement Reforms Needed
The U.S. Senate Committee on Finance’s Savings and Investment Bipartisan Tax Working Group has issued a report in support of recommendations for reform related to retirement savings. To enable small employers to sponsor high-quality, low-cost plans, the working group recommends that the Committee on Finance consider proposals that allow employers to join open multiple employer plans (MEPs). The report says MEPs allow businesses to share administrative and other responsibilities associated with providing retirement plans to their employees; however, it notes, current law hinders the formation of MEPs by requiring a “nexus” between employers who wish to join an MEP.Read more >
Retirement Income Shortfalls Are Everyone’s Problem
A survey from the CFA Institute and Mercer finds a lack of retirement income could put a drag on capital markets over the five years (and likely longer), driving financial stress for individuals and entire economies. The 2015 Global Market Sentiment Survey asked CFA Institute members to identify “the most underestimated risk” that could negatively impact global capital markets in the next five years. Fully 20% pointed to the “the impact from the demographic trends of aging populations,” and another 14% designated “pension plan shortfalls and low levels of retirement savings” as leading threats to global investors. Read more >
Small Talk
ON THIS DATE: In 1585, a group of 108 English colonists, led by Sir Richard Grenville, reached Roanoke Island, North Carolina. In 1787, the U.S. Congress, under the Articles of Confederation, enacted the Northwest Ordinance, which established the rules for governing the Northwest Territory, for admitting new states to the Union and limiting the expansion of slavery. In 1863, opponents of the Civil War draft began three days of rioting in New York City, which resulted in more than 1,000 casualties. In 1930, France defeated Mexico 4-1 and the United States defeated Belgium 3-0 in the first-ever World Cup football matches, played simultaneously in host city Montevideo, Uruguay. In 1985, at Wembley Stadium in London, Prince Charles and Princess Diana officially open Live Aid, a worldwide rock concert organized to raise money for the relief of famine-stricken Africans. In 2010, George Steinbrenner, long-time owner of the New York Yankees, who re-established the team as one of baseball’s most successful franchises, died of a heart attack at age 80 in Tampa, Florida.
Last week, I asked NewsDash readers, “What do you think would happen in your workplace if a technology failure occurred?” Nearly half (47.1%) of responding readers said business would only be interrupted for a short period of time; they have a good backup plan in place. Slightly more than 39% indicated it would take a while to switch to manual processes and get the business moving again, but they could do it, and 13.7% reported that their business would halt; they are unprepared. Several readers who chose to leave comments noted how likely a widespread technology failure is to happen— “What do you mean “if”?!? I think you mean, when.”—while even more expressed what a relief it would be to them if it happened in the workplace—“SNOW DAY!!!” I appreciated all the comments about the generational shift of power that could happen if such an event occurred—“Fortunately, there are still enough of us gray-hairs around who’d be able to snap the screen-gazers out of their trances and show ’em how to use a pen, pencil and paper.” Editor’s Choice goes to the reader who injected a good dose of humor into the seriousness of the possibility. A big thank you to all who participated in the survey!Read more >
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Copyright © Asset International, Inc., 2015.

All rights reserved.  No reproduction without prior authorization.

Editorial: Alison Cooke Mintzer


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