Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
July 27th, 2015
Benefits & Administration
Beyond Auto-Enrollment: Financial Wellness Education
Travis Freeman likes to tell this story: When the husband of an employee at a client’s firm lost his job, the couple debated withdrawing funds from his 401(k). But, thanks to the wife’s financial wellness training, they made a better choice. Consulting with an expert in a follow-up to a financial wellness education session, they learned she could net $350 more per pay period, just by changing her withholding status. “That education alone probably saved them $4,000 to $5,000 in taxes and penalties,” says Freeman, president of Four Seasons Financial Education. “That doesn’t include the money they wouldn’t have been able to grow again.”Read more >
Two-thirds (66%) of private industry workers were offered a retirement savings plan in March, the Bureau of Labor Statistics found in its National Compensation Survey. Among workers in the lowest wage category, the 10th percentile, only 31% had access to a retirement plan. By contrast, among those in the highest wage category, the 90th percentile, 88% had access to a retirement plan.Read more >
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A Plan Sponsor Implements a Financial Wellness Program
Roy Richter, deputy inspector of the New York City Police Department (NYPD) and president of the Captains Endowment Association, is the trustee for the Senior Officers Council (SOC) Annuity Trust Fund. It has always been important to Richter to educate plan members about the value of their financial health and how to use all of the retirement plans offered by the city to achieve financial security and, ultimately, retire well. He noticed that members were not aware of how much they had available to retire, or how much it really would require. Many were in a position of being able to retire but didn’t know it. The plan adviser with whom Richter works, Barbara Delaney, principal at Stone Street Equity, saw an opportunity to further Richter’s mission and bring the SOC plan members a full financial wellness benefit.Read more >
Products, Deals & People
Diana Jordan comes to Unified Trust Company; Julie Niccum rejoins Ascensus.Read more >
Kravitz Offers New Investment Product for Cash Balance Plans
Kravitz has launched a new product that “can offer diverse investment options within a single cash balance plan.” Traditional cash balance plans are pooled and invested collectively to meet a single targeted interest crediting rate (ICR), explains Dan Kravitz, president of the retirement plan administration firm Kravitz, but recent regulatory changes allow for a new approach. Kravitz says the Internal Revenue Service’s (IRS) approval of “actual rate of return” interest crediting rates for cash balance plans “gave plan sponsors greater flexibility and removed some funding challenges.”Read more >
Meiji Yasuda Life Insurance Company has entered into a definitive agreement to acquire StanCorp Financial Group (The Standard). The Standard, founded in 1906 and headquartered in Portland, Oregon, is a provider of insurance, retirement and investment products and services. Its subsidiaries include Standard Retirement Services, Standard Insurance Company, The Standard Life Insurance Company of New York, StanCorp Mortgage Investors, StanCorp Investment Advisers, StanCorp Real Estate and StanCorp Equities. Founded in 1881 and headquartered in Tokyo, Meiji Yasuda is the oldest and third-largest life insurance company in Japan.Read more >
Economic Events

Sales of new single-family houses in June 2015 were at a seasonally adjusted annual rate of 482,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 6.8% below the revised May rate of 517,000, but is 18.1% above the June 2014 estimate of 408,000.

THE ECONOMIC WEEK AHEAD: Today, the Census Bureau will report about durable goods orders for June. Tomorrow, the Conference Board will release its Consumer Confidence Index for July. Thursday, the Labor Department will issue its initial claims report.

Market Mirror

Friday, the Dow was down 163.39 points (0.92%) at 17,568.53, the NASDAQ lost 57.78 points (1.12%) to finish at 5,088.63, and the S&P 500 closed 22.50 points (1.07%) lower at 2,079.65. The Russell 2000 fell 18.98 points (1.52%) to 1,225.99, and the Wilshire 5000 decreased 225.23 points (1.02%) to 21,906.75.

On the NYSE, 3.2 billion shares traded, with 2.7 declining issues for every advancing issue. On the NASDAQ, 2.9 billion shares changed hands, with a more than 3 to 1 lead for decliners.

The price of the 10-year Treasury note was up 3/32, decreasing its yield to 2.257%. The price of the 30-year Treasury bond increased 6/32, bringing its yield down to 2.959%.

WEEK’S WORTH: For the week ending July 24, the Dow lost 2.86%, the NASDAQ finished 2.33% lower, and the S&P 500 was down 2.21%. The Russell 2000 fell 3.24%, and the Wilshire 5000 decreased 2.29%.

Compliance
PBGC Proposes Change to Waiver of Reporting Requirements
The Pension Benefit Guaranty Corporation (PBGC) is proposing to amend its regulation on Annual Financial and Actuarial Information Reporting to codify provisions of the Moving Ahead for Progress in the 21st Century Act (MAP-21) and the Highway and Transportation and Funding Act of 2014 (HATFA). In its proposal, the PBGC says the current regulation does not allow it to access important available information about plans that present substantial risk and exposure to the pension insurance system. The agency is not receiving data in 4010 filings that it would otherwise receive because plans that were never intended to qualify for a regulatory waiver are, in fact, qualifying as a result of MAP-21 and HATFA funding relief.Read more >
Investing
Investment Product Development Is Changing
Less than 25% of investment products launched since 2000 managed to attract $1 billion or more during the last decade, according to a report from Casey Quirk & Associates. The research, titled “New Arrows for the Quiver: Product Development for a New Active and Beta World,” finds that a strong shift towards customization and individualized asset allocation is redefining longstanding product development processes impacting the retirement plan industry. The report argues greater demand for customization “has revealed weaknesses in the current product development strategies used by many asset management firms.”Read more >
Small Talk
ON THIS DATE: In 1804, the 12th Amendment to the U.S. Constitution was ratified. With the amendment Electors were directed to vote for a President and for a Vice-President rather than for two choices for President. In 1953, the United States, the People’s Republic of China, North Korea, and South Korea agreed to an armistice, bringing the Korean War to an end. In 1965, in the U.S., the Federal Cigarette Labeling and Advertising Act was signed into law. The law required health warnings on all cigarette packages. In 1974, the House Judiciary Committee recommended that America’s 37th president, Richard M. Nixon, be impeached and removed from office. In 1995, the Korean War Veterans Memorial was dedicated in Washington, D.C., by U.S. President Bill Clinton and South Korean President Kim Young-sam. In 1996, in Atlanta, Georgia, the XXVI Summer Olympiad was disrupted by the explosion of a nail-laden pipe bomb in Centennial Olympic Park. In 2003, the legendary actor-comedian Bob Hope died at age 100 in Toluca Lake, California.
Last week, I asked NewsDash readers, “Who covers your work while you’re on vacation?” More than half (52%) of responding readers said only essential or emergency tasks get covered, while more than one-quarter (26%) said none of their work gets covered. Similarly, nearly one-quarter (24.7%) of respondents indicated that no one covers their work while they are on vacation. For 19.2%, a combination of their boss, co-workers or employees they supervise cover for them. Nearly 7% reported that they check in and handle their own work while on vacation. Among those who chose to leave verbatim comments, most lamented about how much work has to be done before and after taking a vacation, with one reader asking, “Wait, what? I can get work covered while on vacation?” Many just check in and work during vacation to try to get ahead of the backlog awaiting them. However, one reader chooses to look at it positively, “Although it can be overwhelming to come back to a pile of work, it is certainly a great reminder that the daily work we do really does mean something.” Then, there were those who lamented about the coverage they supposedly have, “The question should have been who is supposed to cover your work on vacation?” one reader says, while another notes, “My boss covers my work when I’m on vacation. I fix everything when I get back.” Editor’s Choice goes to the reader who said: “Dust covers my work until I return.” Thanks to everyone who participated in the survey!Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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