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Benefit Briefs |
The Search for the Right TPA |
Plan sponsors need to carefully consider their
options when it comes to choosing a third-party administrator (TPA) for their
retirement plans. One issue in particular that plan sponsors need to examine is
whether or not they should use their payroll provider as their TPA. There are
some definite advantages to using a payroll provider as a TPA. “The major
advantage of using a payroll provider for your 401(k) plan is the integration
of payroll for deferral uploads and data sharing,” James F. Sampson, managing
principal for Cornerstone Retirement Advisors, tells PLANSPONSOR. |
Employer-provided medical care was available to
86% of full-time private industry employees in the United States as of March,
according to survey results from the U.S. Bureau of Labor Statistics (BLS). The
BLS National Compensation Survey, which provides measures of compensation cost
levels and trends, as well as incidence and provisions of employee benefit
plans, also finds that only 23% of part-time employees had medical care
benefits available. Access or availability also varied by establishment size,
with 57% for employees of small businesses (those with fewer than 100
employees), compared with 84% in medium and large businesses (those with 100
employees or more). Retirement benefits followed a similar pattern, according
to the survey data. |
Personal Accountability in a DC Retirement Plan World |
The concept of retirement income planning may be
common parlance among industry professionals, but plan participants are still
adjusting to the new age of personal accountability. For many workers in the
U.S., the effort of saving for retirement is no longer a cradle-to-grave
proposition with a generous lifetime pension waiting at the back end, says
Shams Talib, a senior partner at Mercer and leader of the consulting firm’s
retirement business in North America. Talib says a number of recent Mercer
research projects suggest younger workers—especially those born after the end
of the Baby Boom, circa 1965—must come to a new understanding of retirement if
they are to successfully self-fund their golden years. |
Defined contribution (DC) plan participants on
both sides of the Atlantic are worried about retirement, according to research
from State Street Global Advisors (SSgA). Less than one-third of DC
participants in three countries—the U.S., U.K. and Ireland—feel confident they
will have enough saved through an employer-sponsored retirement plan to afford
the lifestyle they want in retirement. The numbers are: just 31% of U.S.
participants, 26% of U.K. participants and 17% of Irish participants expressing
confidence in retirement preparedness, according to the “DC Transatlantic
Survey” from SSgA. The results show that DC participants see themselves as
savers rather than investors, explains Nigel Aston, managing director and
SSgA’s head of DC in the U.K, based in London. |
HSAs Offer a Good Boost to Retirement Savings |
Using health savings accounts (HSAs) can boost
savings for medical expenses in retirement as well as save employees tax
dollars now. Research from the Employee Benefit Research Institute (EBRI) shows
an individual who saves in an HSA for 10 years could accumulate between $53,000
and $68,000, depending on the rate of return realized and on the contribution
rates assumed. After saving for 40 years, an individual could have nearly $1.1
million if the realized rate of return were 7.5%. |
The Social Security Board of Trustees reports
the combined asset reserves of the Old-Age and Survivors Insurance, and
Disability Insurance (OASDI) Trust Funds are projected to become depleted in
2033. This is unchanged from the last two years, with 77% of benefits still
payable at that time. The DI Trust Fund will become depleted in 2016, also
unchanged from last year’s estimate, with 81% of benefits still payable. The
combined trust fund reserves are still growing and will continue to do so
through 2019. Beginning with 2020, the cost of the program is projected to
exceed income. |
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Buyer's Market |
Firms Join Forces for Pension Risk Transfer Services |
Penbridge Advisors and P-Solve have formed a
strategic alliance that will allow sponsors of defined benefit (DB) plans to
integrate pension risk transfer (PRT) information and advice within a fiduciary
asset management offering. Penbridge Advisors, a Stamford, Connecticut-based
provider of PRT-related services, will primarily help plan sponsors evaluate
the cost-effectiveness of annuity buyouts relative to other pension de-risking
strategies. P-Solve, a London-based provider of fiduciary asset management
services for institutional investors, will work with plan sponsors to create
and implement an investment and risk management plan to help achieve their
pension de-risking and termination goals. |
USI Consulting Group named Joyce C. Suleski as
senior vice president and practice leader for the firm’s health and welfare
administration practice. Prior to joining USI Consulting Group, Suleski held
various account management and sales roles with Wellpoint, Inc./Anthem, Marsh
& McLennan/Mercer, Aon Consulting and MetLife. |
Scorecard Helps Employers Benchmark Wellness Programs |
Mercer and the Health Enhancement Research
Organization (HERO) have released a new version of the HERO Scorecard survey
tool, which helps employers benchmark their wellness programs. Version 4.0 of
the scorecard, which is available free of charge, allows employers to evaluate
their employee health management efforts and to benchmark their program and
outcomes against companies of similar sizes and industries. |
Nyhart Actuary and Employee Benefits has opened
a new sales and consulting office in Denver. The expansion into the Rocky
Mountain region will enable Nyhart to more effectively serve local clients and
give Colorado businesses a competitive option for pension, 401(k) and other
employee benefit design and administration services, the firm says. |
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Economic Events |
In yesterday’s THE ECONOMIC WEEK AHEAD, we said Friday,
we’ll see a report about nonfarm payrolls from the Bureau of Labor Statistics
and learn the unemployment rate for June. The Bureau of Labor Statistics will
report the unemployment rate for July. We apologize for the error. |
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Market Mirror |
Yesterday, the Dow ticked up 22.02
points (0.13%) to 16,982.59, the NASDAQ slipped 4.65 points (0.10%) to
4,444.91, and the S&P 500 increased by 0.57 (0.03%) to 1,978.91. The
Russell 2000 was down 5.22 points (0.46%) at 1,139.50, and the Wilshire 5000
closed 12.12 points (0.06%) lower at 20,895.05.
On the NYSE, 3.2 billion shares traded,
with 1.3 declining issues for every advancing issue. On the NASDAQ, 2.7 billion
shares changed hands, with a 1.7 to 1 ratio of decliners to advancers.
The price of the 10-year Treasury note was down 6/32,
bringing its yield up to 2.488%. The price of the 30-year Treasury bond
decreased 11/32, increasing its yield to 3.257%.
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Financial Sense |
Investment returns at private foundations rose
to an average of 15.6% in 2013 – the second-straight year of double-digit
average returns. According to the 2013 Council on Foundations-Commonfund Study
of Investments for Private Foundations (CCSF), the highest return, at 16.5%,
was earned by organizations with assets greater than $500 million. Foundations
lowered allocations to domestic equities while increasing allocations to fixed
income for fiscal year 2013. |
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Small Talk |
ON
THIS DATE: In
1909, the newly formed General
Motors Corporation (GM) acquired the country’s leading luxury automaker, the
Cadillac Automobile Company, for $4.5 million. In 1914, the first transcontinental telephone service was inaugurated
when two people held a conversation between New York, New York, and San
Francisco, California. In 1950,
Disney’s adaptation of Robert Louis Stevenson’s “Treasure Island” was
released. In 1958, the U.S. Congress
passed legislation establishing the National Aeronautics and Space
Administration (NASA), a civilian agency responsible for coordinating America’s
activities in space. In 1967, The
Doors score their first No. 1 hit with “Light My Fire.”
TUESDAY
TRIVIA: Polar bears have black skin under which there
is a layer of fat that can measure 4.5 inches (11.5 centimeters) thick.
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TRIVIAL PURSUITS:
What color is a polar bear’s fur? |
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