| Benefit Briefs | Plan Sponsors Moving to Retirement Income Mindset | More retirement plan sponsors are adopting a
culture of retirement income, according to the 2014 MetLife Qualified
Retirement Plan Barometer (QRPB). The Barometer was created by MetLife to
assess whether and to what extent a retirement income culture is taking hold
among plans sponsors at FORTUNE 1000 companies—the higher the value on the
Barometer, the stronger the overall culture of retirement income. While the
high score of 89 remains the same from the inaugural study in 2011, the range
of scores has narrowed significantly, driven by improvement in the lowest
scores, rising from 19 to 30. Cynthia Mallett, vice president of Industry
Strategies and Public Policy in MetLife’s Corporate Funding Division in Boston,
explains that a retirement income culture is a set of practices that connect
savings to income. “Part of it is communications and the way employers talk
about their retirement plans to employees, but it also shows up in plan design
and employers’ benefits objectives,” she tells PLANSPONSOR. This year’s QRPB
highlighted the differences in attitudes and practices among companies that
offer only DC plans, and those that provide broad coverage defined benefit (DB)
plans combined with DC plans. | DC Plans Focus on Streamlining Investments | Defined contribution plan sponsors tend to offer
far more investment fund options than the number actually used by the average
participant, according to new research from SEI. A vast majority of defined
contribution (DC) plan participants face an investment menu with at least 16
fund options, an SEI report says, and many are forced to choose from 36 funds
or more. At the same time, the average workplace retirement investor uses less
than five funds while participating in a DC plan, setting the stage for
participant confusion and inertia in the face of complicated core fund lineups. | | Buyer's Market | Eduardo Jauregui has joined Mercer’s Chicago
office as leader of its international consulting group (ICG) for the Midwest
market. Jauregui will focus on leading an experienced team of consultants who
work with multinational companies located in the Midwest. | Sage Advisory Services Launches Custom LDI Solution | Sage Advisory Services, an Austin, Texas-based
asset manager, released a liability-driven investing (LDI) solution tailored
for small pension plans. Providers of LDI strategies have historically focused
their services on major pension plan sponsors, the firm says. But the
increasing use of exchange-traded funds (ETFs) has expanded the opportunity for
smaller pension funds to create asset mixes that closely resemble their
liability streams. The strategy can minimize the volatility of plan funded
status, an important risk measure for the plan sponsor. | Mutual of Omaha Retirement Services is now
offering 401(k) Admin Advantage, an Employee Retirement Income Security Act
(ERISA) 3(16) administration service. The service is designed to ease
day-to-day demands of retirement plan administration, while minimizing risks
for plan sponsors and supporting the independent services of plan advisers and
third-party administrators (TPA). Plan sponsors can choose one or both of the
available service levels. | | Market Mirror | Yesterday, the Dow ticked up 5.27 points
(0.03%) to 16,781.01, the NASDAQ was up 10.45 points (0.24%) at 4,321.11, and
the S&P 500 increased by 1.62 (0.08%) to 1,937.78. The Russell 2000 added
4.14 points (0.36%) to finish at 1,166.82, and the Wilshire 5000 closed 22.83
points (0.11%) higher at 20,555.81.
On the NYSE, 3.2 billion shares traded,
with a nearly even split between advancing issues and declining issues. On the
NASDAQ, 2.7 billion shares changed hands, with a slight lead for advancers.
The price of the 10-year Treasury note was up 2/32,
bringing its yield down to 2.599%. The price of the 30-year Treasury bond increased
11/32, decreasing its yield to 3.397%.
| | Rules & Regulators | Merrill Lynch Ordered to Restore Sales Charges to Plans | The Financial Industry Regulatory Authority
(FINRA) fined Merrill Lynch $8 million for failing to waive mutual fund sales
charges for certain charities and retirement accounts. The agency also ordered
Merrill Lynch to pay $24.4 million in restitution to affected customers, in
addition to $64.8 million the firm has already repaid to harmed investors. Most
mutual funds available on Merrill Lynch’s retail platform offered waivers to
retirement plan accounts and disclosed those waivers in their prospectuses; however,
FINRA found that at various times since at least January 2006, Merrill Lynch
did not waive the sales charges for affected customers. | The Internal Revenue Service (IRS) announced an
enforcement transition period for the Foreign Account Tax Compliance Act
(FATCA). A Towers Watson update notes that recently, the IRS issued Notice
2014-33, announcing calendar years 2014 and 2015 will be regarded as a
transition period for purposes of IRS enforcement and administration with
respect to the implementation of FATCA by withholding agents, foreign financial
institutions (FFIs), and other entities with withholding responsibilities that
make a “good faith” effort to comply with the final FATCA regulations and the
temporary regulations coordinating FATCA with certain preexisting reporting and
withholding requirements. | Galvin Argues for Better Disclosures of Match Changes | In a report sent to Congress and the Department
of Labor, the Massachusetts Securities Division (MSD) is asking for improved
disclosures to retirement plan participants of company match contribution
changes. In the report, the office of the Secretary of the Commonwealth of
Massachusetts William F. Galvin argues that existing Employee Retirement Income
Security Act (ERISA) rules do not mandate that employees receive meaningful and
timely disclosure of such changes. The report notes that current disclosure
obligations only require the employer to inform the employee that a change
occurred, not information about how that change might detrimentally impact her
overall retirement plans. Earlier
this year, Galvin’s office sent a letter to the largest 401(k) plan providers
seeking the number of plans they administer that have shifted to year-end
lump-sum matches, the number of affected employees, and the date of the change,
as well as the disclosure of information provided to plan participants about
the potential risks associated with the change. | The Governmental Accounting Standards Board
(GASB) has released exposure drafts on other post-employment benefits (OPEB). Approved
on May 28, two of the exposure drafts cover proposals for improvements to
accounting and financial reporting for non-pension benefits that U.S. state and
local governments provide to their retired employees. A third exposure
draft proposes requirements for pensions and pension plans that are outside the
scope of the pension standards the GASB released in 2012. | | Financial Sense | Global asset manager Russell Investments
announced the annual realignment of its global equity indexes to reflect market
change from the past year. Done each June, this year’s rebalance will impact
approximately $5.2 trillion in assets benchmarked to and nearly $800 billion in
assets invested in institutional and retail investment products based on the
Russell Indexes. Russell has released the lists of companies set to join or
leave the Russell Global Index, Russell 3000 Index and Russell Microcap Index
when the annual reconstitution for its U.S. equity indexes concludes on June
27. | | The Feeling’s Mutual | Long-term funds netted $39.2 billion in May,
increasing the year-to-date intake to $215 billion, according to Strategic
Insight (SI). SI, an Asset International company, also finds that for May, U.S.
Equity funds (-$2 billion) experienced their first aggregate net outflows since
January, while International Equity ($16 billion) saw another month of
consistent net investment. | | Small Talk | ON
THIS DATE: In
1885, the dismantled State of
Liberty, a gift of friendship from the people of France to the people of
America, arrived in New York Harbor after being shipped across the Atlantic
Ocean in 350 individual pieces packed in more than 200 cases. In 1972, five men were arrested for
breaking into the Democratic National Committee offices at the Watergate Hotel
in Washington, D.C. Senate investigations eventually revealed that President
Richard Nixon had been personally involved in the subsequent cover-up of the
break-in; additional investigation uncovered a related group of illegal
activities that included political espionage and falsification of official documents,
all sanctioned by the White House. The Watergate scandal led to Nixon’s
resignation. In 1989, “I’ll Be
Loving You Forever” by New Kids on the Block reached No. 1 on the
Billboard pop chart. In 1994, TV
viewers watched as a fleet of black-and-white police cars pursued a white Ford
Bronco along Interstate-405 in Los Angeles, California. Inside the Bronco was
Orenthal James “O.J.” Simpson, a former professional football player,
actor and sports commentator, whom police suspected of involvement in the recent
murders of his former wife, Nicole Brown Simpson and her friend Ronald Goldman.
In 2008, Cyd Charisse, who shot to
Hollywood stardom as the graceful, long-legged dancing partner of Gene Kelly
and Fred Astaire in classic Metro-Goldwyn-Mayer musicals such as “Singin’ in
the Rain” (1952), “Brigadoon” (1954) and “Silk Stockings” (1957), died of a
heart attack in Los Angeles at the age of 86.
TUESDAY
TRIVIA: Prior to its being marketed as a breath
freshener, Listerine was used to sterilize gauze bandages, clean floors,
irrigate nasal passages, and touted as a cure for both baldness and gonor.rhea.
| TRIVIAL PURSUITS:
Where did the phrase, “Always a bridesmaid but never a bride,” originate? | Share the good news with a friend! Pass the Dash along – and tell your
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