Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
July 7th, 2015
Benefits & Administration
HSAs Have Long-Term Potential
A new report from UMB Healthcare Services, “HSAs Build Long-Term Wealth with Tax-Favored Savings,” looks at the balances of 440,000 health savings account (HSA) investors in 2014 and found they had an average balance of $1,874—far lower than the annual maximum contribution the Internal Revenue Service (IRS) allows. Most employees who have access to HSAs mistakenly think these work like flexible spending accounts (FSAs)—if they don’t use their balance in a given year, they will lose it. Thus, the majority of HSA holders use them only for current health care expenses.Read more >
The aggregate funded ratio for U.S. corporate pension plans increased to 86.2% for the month of June, according to Wilshire Consulting. Ned McGuire, vice president and member of the Pension Risk Solutions Group of Wilshire Consulting, said: “The improvement in funding levels was driven by a 3.5% decrease in liability values versus a 2.8% decrease in asset values. The asset result is due to negative returns for most asset classes, while liability values fell due to an increase in corporate bond yields.”Read more >
Retirement Plan Onboarding for Younger Employees
“We’ve got basically three significantly different types of generations that want information in different ways,” says Gerald Erickson, principal, Milliman Inc., in Minneapolis. In general, Baby Boomers want to receive retirement plan materials printed out: “Even if you could give them a website, they’d want to print it out and save it,” he says. Generation X is “the website generation,” he adds, and Millennials want mobile applications (apps). “How you craft certain messages, and how people receive those messages, is definitely different among those three different generations,” Erickson believes, but most retirement plans do not account for Millennials in their plan design and communications.Read more >
Sponsored message from Vanguard
How America Saves 2015
Get the latest in DC plan trends from Vanguard’s annual report. How America Saves 2015 is a comprehensive report that offers useful insights into current issues affecting DC plans, including employer contribution trends, automatic plan features use of target-date funds, use of advice services and more.Read more >
2022 Recordkeeping Survey
IRS Updates Life Expectancy Tables for Retirees
TRIVIAL PURSUITS: How Many States Are in More Than One Time Zone?
TRIVIAL PURSUITS: Meaning and Origin of the Idiom “Watershed Moment?”
TRIVIAL PURSUITS: Which are the most northern, southern, eastern and western U.S. States?
Market Mirror

U.S. stocks ended Monday slightly lower as equities came under pressure following Greece’s overwhelming rejection of bailout terms, according to MarketWatch. The Dow was down 46.53 points (0.26%) at 17,683.58, the NASDAQ decreased 17.27 points (0.34%) to 4,991.94, and the S&P 500 lost 8.76 points (0.42%) to finish at 2,068.02. The Russell 2000 slipped 1.22 points (0.10%) to 1,247.04, and the Wilshire 5000 closed 80.61 points (0.37%) lower at 21,869.98.                     

On the NYSE, 3.2 billion shares traded, with 1.7 declining issues for every advancing issue. On the NASDAQ, 2.8 billion shares changed hands, with a 1.3 to 1 ratio of decliners to advancers.

The price of the 10-year Treasury note increased 25/32, bringing its yield down to 2.294%. The price of the 30-year Treasury bond climbed 1 29/32, decreasing its yield to 3.090%. 

A Montana court has put a halt to a change in inflation adjustments made to state retirees’ pension payments in a 2013 reform bill. The Montana First Judicial District Court in Helena, found that the change in guaranteed inflation increases of 1.5% to just 0.5% starting in January 2014, violated the contract clause in the state’s constitution.Read more >
DOL Reiterates Stance on ‘Top Hat’ Plans
The Employee Retirement Income Security Act (ERISA) exempts from many requirements “a plan which is unfunded and is maintained by an employer primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees.” In an amicus brief filed with the 4th U.S. Circuit Court of Appeals, the U.S. Department of Labor (DOL) says the word “primarily” is an adverb that modifies the prepositional phrase “for the purpose of providing deferred compensation” that immediately follows it. It does not modify the more remote prepositional phrase “for a select group of management or highly compensated employees.”Read more >
From the Magazine
How the Fiduciary Rule May Affect Plan Sponsors
On April 14, the U.S. Department of Labor (DOL) released its long-awaited re-proposed regulation on the definition of fiduciary under the Employee Retirement Income Security Act (ERISA). The proposal is highly controversial, in large part because it broadens the fiduciary scope to encompass common sales activities. Equally important, the proposal would result in the “ERISA-fication” of the $7 trillion individual retirement account (IRA) market, essentially applying ERISA-type fiduciary standards to IRAs. How might the fiduciary regulation affect plan sponsors?Read more >
There May Be a Place for Alternatives in DC Plans
Even though the Pension Protection Act of 2006 encouraged the use of target-date funds and managed accounts, defined contribution plans may still not be properly diversified, OppenheimerFunds says in a new report, “Using Alternatives in Defined Contribution Plans.” Because fixed income is at record low yields, the asset management firm says, “plan sponsors need additional tools to help participants cope with a more challenging market currently characterized by low rates, the potential for higher volatility and structurally lower expected returns. Alternative investments may be able to supply these additional tools to help fill the performance gap.”Read more >
Small Talk

ON THIS DATE: In 1865, Mary Surratt was executed by the U.S. government for her role as a conspirator in Abraham Lincoln’s assassination. She was the first woman executed by the federal government. In 1930, construction of the Hoover Dam began. In 1962, “The Stripper,” by David Rose, became the No. 1 pop hit in America. In 1976, for the first time in history, women were enrolled into the United States Military Academy at West Point, New York. In 1981, President Ronald Reagan nominated Sandra Day O’Connor, an Arizona court of appeals judge, to be the first woman Supreme Court justice in U.S. history. In 1983, Samantha Smith, an 11-year-old American girl, began a two-week visit to the Soviet Union at the invitation of Soviet leader Yuri Andropov.


TUESDAY TRIVIA: The fast-food restaurant Arby’s gets its name from founders Leroy and Forrest Raffel, who chose it to represent the initials R.B. for Raffel Brothers. 

TRIVIAL PURSUITS: What was the first credit card in America?Read more >
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Copyright © Asset International, Inc., 2015.

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Editorial: Alison Cooke Mintzer


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