Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
June 13th, 2014
Webcast Event
Evaluating target date funds (TDFs) can be a daunting task, and the Department of Labor recommends sponsors do so periodically. Now, there’s help. Join us for a live webinar on June 17 to get a road map for evaluating TDF performance, including a three-step monitoring process. You will learn what metrics to monitor, how to spot a problem fund, and why a road map matters.
Benefit Briefs
Seeking Out the Right DB Provider
Defined benefit (DB) plan sponsors need a process for selecting plan services providers that best fits their plans’ needs. In a recent blog post for The Principal Financial Group, Scott Ruba, director of defined benefit retirement plans at The Principal, emphasizes how working with the right provider can be instrumental in helping DB plan sponsors meet the goals and objectives of their plans. Ruba offers a few tips for conducting a DB provider search. Janet Kubik, assistant vice president of retirement and investor services, The Principal Financial Group, tells PLANSPONSOR, “Choosing a provider for a defined benefit plan is definitely different than choosing one for a defined contribution plan.”
Retirement Timing Affects Estimated Health Care Costs
Fidelity Investments estimates couples retiring this year at age 65 will $220,000 for health care costs during retirement. However, this year’s Retiree Health Care Cost Estimate shows couples can reduce the cost by delaying retirement just a couple of years.
Participants Still Need Basic Retirement Plan Education
401(k) plan participants still do not understand some of the basics about saving and investing in their plans, a survey suggests. According to MFS Investment Management’s (MFS) 2014 DC Pulse survey, nearly three-quarters (74%) of participants say having a little bit invested in each option of a 401(k) plan is the best way to diversify. More than 20% say they have no idea how best to diversify a retirement account.
Buyer's Market
In order to meet demand for a multi-factor approach, State Street Global Advisors (SSgA) unveiled a suite of advanced beta SPDR exchange-traded funds (ETFs). The nine SPDR MSCI funds seek to combine the performance of quality, value and low volatility strategies to provide the potential diversification benefits of a multi-factor approach in an objective, transparent and consistent manner, the firm said in a statement. Advanced beta, also known as alternative or smart beta, refers to a set of approaches that deviate from the traditional cap-weighted model and instead weight indices or securities based on alternative rules-based methodologies.
OneAmerica has relaunched its retirement plan participant website. Participants with the companies of OneAmerica can log in from , and the firm says the site has a clean design, intuitive navigation, and offers self-directed, online transaction capabilities. Participants can check the value and performance of their retirement assets and perform popular actions on the My Summary page.
MassMutual Added to Pension Risk Transfer Database
Massachusetts Mutual Life Insurance Company is participating in Penbridge Advisors’ Pension Risk Transfer (PRT) Database. MassMutual currently services more than 100,000 annuitants on behalf of approximately 500 pension buyout contracts that represent $3.0 billion of assets under management (AUM), according to Penbridge.
Economic Events
Private employers spent an average of $29.99 per hour worked for compensation in March 2014, according to the Bureau of Labor Statistics. Health insurance was the largest individual employer benefit cost at $2.36, accounting for 7.9% of total compensation costs. In the week ending June 7, the advance figure for seasonally adjusted initial claims for unemployment insurance was 317,000, an increase of 4,000 from the previous week’s revised level, the Labor Department reported. The previous week’s level was revised up by 1,000 from 312,000 to 313,000. The four-week moving average was 315,250, an increase of 4,750 from the previous week’s revised average. The previous week’s average was revised up by 250 from 310,250 to 310,500. The average interest rate for a 30-year fixed-rate mortgage is 4.20%, up from 4.14% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.31%, up from 3.23% one week ago. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,728.3 billion, up 0.6% from March 2014 and up 5.0% from April 2013.
Market Mirror
Thursday, the Dow was down 109.69 points (0.65%) at 16,734.19, the NASDAQ fell 34.30 points (0.79%) to 4,297.63, and the S&P 500 closed 13.78 points (0.71%) lower at 1,930.11. The Russell 2000 decreased 7.31 points (0.63%) to 1,159.40, and the Wilshire 5000 lost 142.37 points (0.69%) to finish at 20,469.86. On the NYSE, 3.2 billion shares traded, with 1.4 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares changed hands, with a near 2 to 1 lead for decliners. The prices of the 10-year Treasury note and 30-year Treasury bond each decreased 2/32, increasing their yields to 2.605% and 3.415%, respectively.
Rules & Regulators
A final judgment was entered against Saul Meyer in the enforcement action that arose from New York’s retirement fund corruption scandal. Meyer, a founder of the now-defunct Aldus Equity, pled guilty to felony securities fraud charges for his involvement—his firm advised the pension fund—in the pay-to-play kickback schemes at the New York State Office of the Comptroller and the Common Retirement Fund, but was able to avoid prison time for cooperating with law enforcement authorities.
Washington Update
Summaries of the latest from Washington and the courts—what’s coming, what’s contemplated and what’s critical to plan sponsors.
Financial Sense
NCR Corporation is offering a second defined benefit plan lump-sum window—this time to retirees and beneficiaries already receiving monthly benefits. In 2012, the company offered a lump-sum window to terminated, vested participants in an effort to reduce defined benefit (DB) plan risk (see “Another Company Offering Lump Sums to De-Risk Pension”). “This offer is part of our pension transformation and is consistent with our overall de-risking strategy,” says John Boudreau, NCR Treasurer.
Small Talk
ON THIS DATE:  In 1966, the Supreme Court handed down its decision in Miranda v. Arizona, establishing the principle that all criminal suspects must be advised of their rights before interrogation. In 1967, President Lyndon Johnson appointed U.S. Court of Appeals Judge Thurgood Marshall to fill the seat of retiring Supreme Court Associate Justice Tom C. Clark—making him the first African American in history to sit on America’s highest court. In 1975, Linda Ronstadt had her first No. 1 hit on the country-music charts with “When Will I Be Loved.” In 1983, after more than a decade in space, Pioneer 10, the world’s first outer-planetary probe, left the solar system. The next day, it radioed back its first scientific data on interstellar space.   And now it’s time for FRIDAY FILES!
Ever been stuck at an airport overnight? Did it feel like this?
Can you tell which dog is the guilty one?
On, a free classified ad site in the UK, a Sydney man is selling his ex-wife’s wedding dress after she cheated on him with his supposed best friend. The Huffington Post reports that in the advert for ‘Bride Seeking Eventual Infidelity’, the Sydney-based man labels his wife an “adulterous, deceitful, double-crossing and traitorous ‘soulmate’,” before adding: “Cosmetically, the garment is in better condition than the marriage – not looking for much. Make an offer.” In Semenov, Russia, a moose apparently became into.xicated eating berries that had fallen from trees or bushes and become fermented on the ground before making an excursion into the city. It fell into a pond and had to be rescued. “The beast was bonkers on booze,” said officer Pavel Mihachkov, according to the UK’s Metro. “It was a magnificent specimen but he was so sozzled he could barely stand.” He added: “We managed to rope him and get him transported to an animal shelter for the night where he slept it off.”
In Addis Ababa, Ethiopia, you can see the strangest things on bicycles.
In Wenzhou, China, two women and a man were getting randy in a vehicle when one accidentally released the hand brake. The car rolled down a hill into a tree. The half-dressed man escaped unharmed, but the undressed women were injured and had to be cut from the vehicle. In Decatur, Indiana, officers from the Adam’s County Sheriff’s Department responded to a report of vandalism. When they pulled up to the location, police found a man they said drove away from the area on a tractor. They tried to get him to pull over, but he refused, WISH TV reports. The man eluded police in a chase that started in Decatur and crossed the state line into Ohio. At 18 miles per hour, the tractor drove over several sets of stop sticks and even crossed the state line. Video posted online shows several of the tires either flat or completely gone.
In Hamilton, Ohio, a man was arrested for simulating s.ex with a pool float for the third time since 2011. He was wearing an appropriate shirt for his mug shot.
In Mostar, Bosnia, a man had an operation to treat an ulcer in his stomach in 2003, and has suffered problems since then. According to the UK’s Daily Star, the man suffered from agonizing pains in his stomach and had other health problems all these years. He finally went to the hospital again and an x-ray revealed a pair of scissors had been left in his abdomen. Have a wonderful weekend, and Happy Father’s Day to all the dads and dad figures!
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