| | Benefit Briefs | | Auto Features Boosting Participation, Savings Rates | | Retirement plan participation and savings rates
are rising due to adoption of automatic plan features, says Vanguard in “How
America Saves 2014.” Automatic enrollment increases participation, but it also
has a positive effect on other auto features, the analysis finds. Among plans
that automatically enroll employees, 69% also automatically increase their
contribution rates annually, and 98% use target-date funds (TDFs), a balanced
investment option or managed account as the default investment option.
Vanguard’s report is an annual look at investor trends in the 401(k) and other
defined contribution (DC) retirement plans that the firm administers. | | More than half of Baby Boomers polled expressed
uncertainty about how much money they will need in retirement. According to the
Wells Fargo Millennial Survey, 54% say they “can’t estimate” how much they will
need in retirement. Twelve percent say they will need $500,000 to $1 million,
and another 12% say $1 million to $2 million. | | Millennials Learned Lesson About Saving | | A majority (80%) of Millennial Americans say the
recession of 2008 taught them they have to save “now” to “survive” economic
problems down the road. More than half (55%) are saving for retirement;
however, 45% are not, according to the Wells Fargo Millennial Survey. Of those
Millennials who have started saving, nearly half (46%) are saving between 1%
and 5% of their income for retirement; 31% are saving 6% to 10%; and 18% are
saving more than 10%. | | | Buyer's Market | | Joni Andrioff has joined Steptoe & Johnson
LLP as a partner in the Tax and ERISA, Labor & Employment Groups. Andrioff,
who will work in the firm’s Chicago and Washington, D.C., offices brings more
than 25 years of experience in the areas of employee benefits and executive
compensation. | | | Industry Voices | | Industry Voice: The Digital Frontier for Participant Engagement | | There should be little argument that digital and
the internet have remade the broader financial industry over the past decade.
People have become comfortable handling investments, moving money and paying
bills online. PLANSPONSOR magazine’s recent participant survey showed 24% rely on
the plan website as their primary source of information when analyzing
investments—more than three times those who said employer workshops/meetings
were their primary source. Corporate Insight’s own surveys have shown
Millennials in particular have a strong propensity towards using the digital
channel and this group will be plan sponsors’ major concern in the years to
come. | | | Economic Events | | Total inventories of merchant wholesalers,
except manufacturers’ sales branches and offices, after adjustment for seasonal
variations but not for price changes, were $530.6 billion at the end of April,
up 1.1% from the revised March level and up 6.7% from the April 2013 level, the
Census Bureau reported. The March
preliminary estimate was revised downward $0.1 billion. April inventories of
durable goods were up 0.9% from March and were up 6.6% from a year ago.
Inventories of electrical and electronic goods were up 2.8% from March and
inventories of metals and minerals, except petroleum were up 2.5%. Inventories
of nondurable goods were up 1.4% from March and were up 6.8% from last April.
Inventories of drugs and druggists’ sundries were up 2.6% from March and
inventories of paper and paper products were up 2.3%. | | | Market Mirror | | Major U.S. stock indices were little
moved Tuesday, with the Down eking out a 2.82 gain (0.02%) to finish at
16,945.92. The NASDAQ increased by 1.75 (0.04%) to 4,338.00, and the S&P
500 decreased by 0.48 (0.02%) to 1,950.79. The Russell 2000 slipped 3.17 points
(0.27%) to 1,172.71, and the Wilshire 5000 closed 11.46 points (0.06%) lower at
20,686.14.
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 1.2 to 1 ratio of decliners to advancers.
The price of the 10-year Treasury note was down 11/32,
bringing its yield up to 2.644%. The price of the 30-year Treasury bond fell
23/32, increasing its yield to 3.480%.
| | | Rules & Regulators | | Nonprofit Allowed to Exit Kentucky Retirement System | | A ruling by a federal bankruptcy court may set a
precedent for various agencies to exit the Kentucky Retirement System (KRS),
news reports speculate. The U.S. Bankruptcy Court for the Western District of
Kentucky recently ruled that Seven Counties Services, a community mental health
center serving Louisville, Kentucky, is permitted to leave the KRS due to
rising pension costs, which the court deemed as an unsustainable financial
burden for Seven Counties. | | IRS to Discuss Retirement Plans and Same-Gender Marriages | | An upcoming phone forum hosted by the Internal
Revenue Service (IRS) will cover updates to retirement plans to reflect the
agency’s guidance regarding same-gender marriages. In April and May, the IRS
issued guidance issued a notice providing further instruction for qualified
retirement plans about the implications of the U.S. Supreme Court’s decision in
United States v. Windsor and
announced safe harbor retirement plans can be amended mid-year for changes
relating to language about same-gender marriages. | | | Financial Sense | | A report about the funding of state and local
pensions notes 2014 could be a pivotal year. The Issue Brief, “The Funding
of State and Local Pensions: 2013-2017,” from the Center for Retirement
Research at Boston College points out that under the old Governmental
Accounting Standards Board (GASB) accounting standards, the disastrous stock
market performance of 2009 rotates out of public defined benefit plans’
smoothing calculations. In addition, under new GASB standards, assets will be
reported at current market value rather than being actuarially smoothed. In
2013, market assets surpassed actuarial assets and are projected to continue to
outpace actuarial assets in 2014, so the use of market assets should help
funded ratios, the report notes. | | | The World at Large | | More than half of employers and trustees in the
UK think the government’s promised guidance guarantee needs to be offered five
to seven years before retirement, according to research from Mercer. | | | Small Talk | | Dads Would Earn $24K for Household Duties | | A father’s stereotypical jobs around the house
are worth $24,103 this year, up slightly from 2013. Insure.com also finds finds
dinner is the number one Father’s Day gift pick among fathers this year. | | ON
THIS DATE: In
1776, the Continental Congress
selected Thomas Jefferson of Virginia, John Adams of Massachusetts, Benjamin
Franklin of Pennsylvania, Roger Sherman of Connecticut and Robert R. Livingston
of New York to draft a declaration of independence. In 1936, the Presbyterian Church of America was formed in
Philadelphia, Pennsylvania. In 1949,
Hank Williams, Sr., made his Grand Ole Opry debut. In 1963, facing federalized Alabama National Guard troops, Alabama
Governor George Wallace ended his blockade of the University of Alabama in
Tuscaloosa and allowed two African American students to enroll. In 1979, John Wayne, an iconic American
film actor famous for starring in countless westerns, died at age 72 after
battling cancer.
WEDNESDAY
WISDOM: “Middle
age is when a guy keeps turning off lights for economical rather than romantic
reasons.”—Lillian Gordy Carter, mother of former President of
the United States Jimmy Carter
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