Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
June 12th, 2015
Benefits & Administration
Millennials Have Priorities Ahead of Retirement Saving
The latest Allstate/National Journal Heartland Monitor Poll finds 32% of “younger” Americans believe paying off credit card and student loan debt is the best use of the money they have right now. There were several other financial priorities that ranked above saving for retirement for younger survey respondents.Read more >
The 2015 edition of Vanguard’s “How America Saves” study finds plan sponsors and advisers are in general focused on plan fees and bringing meaningful savings to the participants they serve. The annual study shows more plan sponsors have incorporated a wider range of low-cost index funds into their plans, Vanguard notes. The firm says half of its plan sponsor clients now offer an “index core lineup,” defined as a comprehensive set of low-cost index options that span the global capital markets.Read more >
What Plan Committees Should Know and Discuss
About 62% of plan sponsors understand their fiduciary responsibility, says Jordan Burgess, senior vice president, Specialty Field Sales at Fidelity Financial Advisor Solutions. “They understand the basics of participant education and communication,” he tells PLANSPONSOR, “which should be a regular part of what they talk about.” Typically, says Bill McClain, senior defined contribution (DC) consultant with Mercer, plan committee members need updates about judicial, regulatory and legislative issues as well as retirement trends. “There’s so much happening in the DC world, it’s difficult for a committee member to keep up with everything going on without support.”Read more >
In the second half of a conversation with PLANSPONSOR, U.C. Berkeley Economics Department Chair Shachar Kariv discusses the importance of defining and driving “financial rationality” among workplace savers.Read more >
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Economic Events

In the week ending June 6, the advance figure for seasonally adjusted initial claims for unemployment insurance was 279,000, an increase of 2,000 from the previous week’s revised level. The four-week moving average was 278,750, an increase of 3,750 from the previous week’s revised average.

The U.S. Census Bureau announced that the combined value of distributive trade sales and manufacturers’ shipments for April, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,318.8 billion, up 0.6% from March, but down 2.3% from April 2014. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,793.2 billion, up 0.4% from March and up 2.6% from April 2014.

Advance estimates of U.S. retail and food services sales for May, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $444.9 billion, an increase of 1.2% from the previous month, and 2.7% above May 2014. Retail trade sales were up 1.4% from April, and 2.0% above last year. Motor vehicle and parts dealers were up 8.2% from May 2014 and food services and drinking places were up 8.2% from last year.

The average interest rate for a 30-year fixed-rate mortgage is 4.04%, up from 3.87% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.25%, up from 3.08%.

Market Mirror

Investors were encouraged Thursday by a pickup in retail sales last month, which suggested the economy is continuing to improve, according to the Associated Press. The Dow gained 38.97 points (0.22%) to finish at 18,039.37, the NASDAQ increased 5.82 points (0.11%) to 5,082.51, and the S&P 500 was up 2.26 points (0.11%) at 2,107.46. The Russell 2000 increased 1.98 points (0.16%) to 1,268.91, and the Wilshire 5000 closed 42.79 points (0.19%) higher at 22,310.03.

On the NYSE, 3.2 billion shares changed hands, with 1.6 advancing issues for every declining issue. On the NASDAQ, nearly 2.9 billion shares traded, with a slight lead for advancers.

The price of the 10-year Treasury note increased 29/32, bringing its yield down to 2.379%. The price of the 30-year Treasury bond climbed 2 8/32, decreasing its yield to 3.096%.

Compliance
Court Says It Cannot Force N.J. Pension Payment
The New Jersey Supreme Court has ruled on a case about whether the state violated the law by making pension contributions that were less than what was agreed upon in 2011 pension reform. The court found that the promised contributions are not part of an enforceable contract.Read more >
The U.S. Supreme Court has asked the U.S. Solicitor General to submit the government’s opinion about whether a plan participant’s choice of venue for filing a lawsuit under the venue provisions of the Employee Retirement Income Security Act (ERISA) can be rejected based on a restriction of venue provided for inside the plan document. Last November, the 6th U.S. Circuit Court of Appeals found the venue selection clause in Aegon Companies Pension Plan is not in conflict with ERISA. The appellate court affirmed a lower court’s dismissal of the case because it was not filed in the court dictated by the plan document.Read more >
From the Magazine
Asset Class Focus: Growth Potential
Over their 25-year history, emerging market equities have presented an investment puzzle. Developing economies tend to grow faster than their established counterparts: The International Monetary Fund projects their aggregate gross domestic product (GDP) growth at 4.3% for 2015, versus 2.4% for the advanced economies. They follow an erratic path, however, and in the current investing climate are on the downswing.Read more >
Saxon Angle: When Is a Year Not a Year?
We all owe a debt of gratitude to the Department of Labor (DOL), which last month redefined the term “at least annually” to mean at least once every 14 months. So, a year is now 14 months. I don’t know about you, but I’m certainly feeling quite a bit younger. Now, why did the DOL suddenly unleash the fountain of youth?Read more >
Small Talk

ON THIS DATE: In 1897, Carl Elsener patented his penknife. The object later became known as the Swiss army knife. In 1924, former U.S. president George Herbert Walker Bush, was born in Milton, Massachusetts. In 1939, the National Baseball Hall of Fame and Museum was dedicated in Cooperstown, New York. In 1963, in the driveway outside his home in Jackson, Mississippi, African American civil rights leader Medgar Evers was shot to death by white supremacist Byron De La Beckwith. In 1967, state laws which prohibited interracial marriages were ruled unconstitutional by the U.S. Supreme Court. In 1987, U.S. President Ronald Reagan challenged Soviet Leader Mikhail Gorbachev to “tear down” the Berlin Wall, a symbol of the repressive Communist era in a divided Germany. In 1994, Nicole Brown Simpson, famous football player O.J. Simpson’s ex-wife, and her friend Ron Goldman were brutally stabbed to death outside Nicole’s home in Brentwood, California. In 2003, film actor Gregory Peck died at his home in Los Angeles, at the age of 87.

 

And now it’s time for FRIDAY FILES!

I bet this teacher, who is retiring this year, won’t be spending retirement in a rocking chair.Read more >
Crashing through your garage door is an odd bucket list item, but I can see how this would be fun.Read more >

In Fruitland Park, Florida, a man called 911 to report a harassing phone call he received. While on the phone, he told the dispatcher he had big muscles and asked her if she was single. The Orlando Sentinel reports that the dispatcher commented to the man that he sounded dru.nk, and he hung up. However, he called back two more times and asked if the dispatcher was single. Police found the man and arrested him for making the bogus 911 calls. But, the man was not done. When police placed him in handcuffs, he allegedly told an officer he wanted to head bu.tt the officer and kill him. Then, he spit onto an officer’s head and said he would kill the officer.

In Uniontown, Pennsylvania, a man reported to the police station to be fingerprinted for a charge of drun.ken driving he received for causing an accident in January. According to the Associated Press, he drove there, and was dru.nk.

In Vigo, Galacia, Spain, a woman has been claiming ownership of part of the sun since 2010 when she threatened to bill solar power users. The 54-year-old registered the star in her name at a notary office in Spain, before opening an eBay account selling square-metre plots for one euro each. Two years later, eBay pulled her listings, saying they violated its intangible goods policy, and her account was blocked. She threatened to sue, and now one Spanish court has recognized her claim. According to sky News, a trial will take place next month, with the woman demanding around £7,500 for payments she says she has not received. She has rejected an attempt by eBay to settle the case out of court.

In Cape Coral, Florida, a man climbed atop a marked sheriff’s office SUV and performed a dance routine to songs including Hall & Oates’ “Rich Girl” and Supertramp’s “Goodbye Stranger.” He was arrested on charges of disturbing the peace and criminal mischief. He told deputies a “woman with fangs” came to his door and told him a human sacrifice involving vampires was imminent. “Therefore, [he] made the conscious decision to get the Sheriff of Nottingham to help him stop the slaughter of small children,” the Cape Coral police report of the April 7 incident states, according to UPI.

In Raleigh, North Carolina, a little girl OWNS IT during a dance routine to Aretha Franklin’s “Respect.”Read more >

In New York, New York, a man whose first name is God has settled a lawsuit with a credit reporting agency that had refused to recognize his name as legitimate. Under the agreement reached in Brooklyn federal court, Equifax will enter the man’s name into its database, the Associated Press reports. He now has an impressive 820 credit score. The Russian native is a Brooklyn jewelry store owner who is named after his grandfather. He says it’s a relatively common name in Russia.

In Sargodha, Pakistan, eyewitnesses say two alleged sui.cide bom.bers were sitting on benches in a street close to a roundabout with vests on, and had a discussion that soon turned into an altercation. BGR Media reports that during the fist fight, one of the vests exploded, killing one of the suspected bom.bers and injuring the other. No one else was injured.

In Beijing, China, a man filed a lawsuit against a television show actress who he says stared at him too intensely through his TV set. The man claims the gaze caused him spiritual damage. The Associated Press report about the lawsuit says regulations making it more difficult for courts to reject lawsuits took effect May 1.

In St. Johnsbury, Vermont, a man showed up on time for jury duty and joined other prospective jurors before the start of the selection process. According to the Associated Press, deputies directed him to an empty court room to meet with the judge. The judge told him he could be held in contempt of court, but instructed him to leave, because he was wearing a prisoner costume. The man said the juror instructions do not specify clothing restrictions.

Have a great weekend!
Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy.Read more >

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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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