Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
June 17th, 2015
Benefits & Administration
Challenges of Retirement Plans for Union Members
Sponsors of retirement plans at organizations where the work force is made up of union members have the unique challenge of being obligated to negotiate with the union, and that process can be very burdensome, experts say. When a retirement plan is run at an organization with a union, the collective bargaining agreements trump the retirement plan document, as specified by the National Labor Relations Act, according to David Kern, partner with the labor and employment practice and chair of the National Labor Relations Act team at Quarles and Brady LLP in Milwaukee. “Any changes to the plan need to be bargained with the union,” Kern says.  Read more >
Nearly 80% of employees view benefits such as a retirement plan as being key considerations when accepting a new position, the ADP Research Institute found. However, only 50% of companies provide a retirement option.Read more >
GAO Finds Overactive Participant Trading Is Rare
A report from the U.S. Government Accountability Office (GAO) finds 401(k) plan participants often face trading policies that restrict frequent or collective trading in mutual funds. A new report on in-plan trading restrictions suggests current regulation “strikes an appropriate balance between a participant’s ability to manage his or her retirement investments and the duty of plan fiduciaries to operate and manage their plans prudently, at low cost and solely in the interest of participants, and the obligations of mutual funds with respect to all their investors.”Read more >
Hispanic workers polled by MassMutual revealed a concerning lack of knowledge about Social Security. Nearly half missed more than half of the correct answers to a quiz about Social Security facts.Read more >
Sponsored message from PLANSPONSOR
PLANSPONSOR’s 2015 Recordkeeping Survey: Our 2015 Recordkeeping Survey profiles 66 providers seeking to capture sponsor attention with the right balance of value and service. Read more >
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Products, Deals & People
MainStay Investments has hired two senior regional vice presidents in its defined contribution investment only (DCIO) practice.Read more >
Pensionmark Introduces Custom TDFs
Pensionmark Financial Group has launched a suite of custom target-date funds (TDFs), the Pensionmark SmartLifecycle Funds. The funds were created by Wilmington Trust, which will act as trustee, and BlackRock will serve as the manager of the portfolios and their glide paths. The goal of the fund is to provide returns in line with market indexes, but with a lower risk profile.Read more >
LifeLock, a provider of identity theft protection, has created a product specifically to protect 401(k) investors from fraudulent withdrawals and transfers. The service is available through employers and brokers, and is funded through payroll deduction.Read more >
EPIC Insurance Brokers and Consultants unveiled its private exchange, coined EXP (The EPIC Exchange Platform) in partnership with Atlanta-based Hodges-Mace LLC. The offering includes benefits administration and enrollment, advocacy through a licensed call center and actuarially based decision support tools.Read more >
Ask the Experts
Do We Have to Hire an Outside Adviser?
“I work at an Employee Retirement Income Security Act (ERISA) 403(b) plan sponsor. We currently do NOT engage an investment adviser for the plan. Instead, we review the investments on our own. Does ERISA require us to engage an outside adviser? Or is it a recommendation as a best practice?”Read more >
Economic Events
Privately owned housing starts in May were at a seasonally adjusted annual rate of 1,036,000, the U.S. Census Bureau and the Department of Housing and Urban Development jointly announced. This is 11.1% below the revised April estimate of 1,165,000, but is 5.1% above the May 2014 rate of 986,000. Single-family housing starts in May were at a rate of 680,000—5.4% below the revised April figure of 719,000. The May rate for units in buildings with five or more units was 349,000.
Market Mirror

As the U.S. economy rebounds, the Federal Reserve may this week signal an interest-rate hike, the Associated Press reports. The Dow went up 112.84 points (0.63%) to 17,904.01, the NASDAQ increased 25.58 points (0.51%) to 5,055.55, and the S&P 500 was up 11.16 points (0.54%) to finish at 2,095.59.

The Russell 2000 rose 8.24 points (0.65%) at 1,269.27, and the Wilshire 5000 closed 117.22 points (0.53%) higher at 22,196.57.

On the NYSE, 3.2 billion shares traded, with roughly 2 advancing issues for every declining issue. On the NASDAQ, 2.9 billion shares changed hands, with nearly 1.6 advancers for every decliner.

The price of the 10-year Treasury note increased 12/32, bringing its yield down to 2.314%. The price of the 30-year Treasury bond increased 28/32, bringing its yield down to 3.043%.

Compliance
The Department of Labor (DOL)’s Employee Benefits Security Administration (EBSA) announced it will hold a public hearing August 10, 11 and 12—continuing through August 13, if necessary, to consider issues attendant to adopting a regulation concerning its proposed conflict of interest rule and related proposed prohibited transaction exemptions. The announcement also includes the official notice of an extended comment period.Read more >
Lawmakers Move to De-fund Fiduciary Rule Effort
The House Appropriations Committee released a draft fiscal year 2016 funding bill, which includes funding for programs within the Department of Labor (DOL), the Department of Health and Human Services (HHS), the Department of Education and other related agencies. In a section called “Reducing Harmful Red Tape,” the committee proposes a “provision prohibiting regulatory changes to the definition of the term ‘fiduciary.’”Read more >
From the Magazine
Insights: The Duty to Know
I’ve long understood that, when it comes to running retirement plans, if something is written down somewhere, plan sponsors need to know what it calls for and do that. Take, for example, an investment policy statement (IPS). The document isn’t required by the Employee Retirement Income Security Act (ERISA), nor by the Department of Labor (DOL). In fact, it isn’t a mandated document for any retirement plan. However, having and using one is considered a best practice. The problem with such documents occurs when committees or plan sponsors are unaware of what policies are included and whether those policies are being followed.Read more >
Investing
Implementing a best practices process for investment selection and ongoing monitoring can mitigate fiduciary liability and will ensure that participants have a better chance of reaching their retirement goals. Offering fewer investment options on the plan menu is better for participants, said Richard A. Davies, senior managing director –  defined contribution (DC) and co-head of the Institutions North American Client Group at AllianceBernstein, speaking at the annual PLANSPONSOR National Conference in Chicago.Read more >
Small Talk
A survey from CareerBuilder reveals smartphones, chatty co-workers and social media distract employees from doing actual work. Employers were also asked to reveal the most unusual or most memorable things they have found an employee doing when they should have been working.Read more >
ON THIS DATE: In 1856, the Republican Party opened its first national convention in Philadelphia. In 1885, the dismantled Statue of Liberty, a gift of friendship from the people of France to the people of America, arrived in New York Harbor. In 1950, Dr. Richard H. Lawler performed the first kidney transplant in a 45-minute operation in Chicago. In 1963, the U.S. Supreme Court banned the required reading of the Lord’s prayer and Bible in public schools. In 1972, five burglars were arrested in the Democratic National Committee headquarters at the Watergate office and apartment complex in Washington, D.C. In 1989, “I’ll Be Loving You Forever” by New Kids on the Block reached No. 1 on the Billboard pop chart. In 1994, former NFL football player O.J. Simpson led Los Angeles police on a low-speed chase after police suspected him of involvement in the recent murders of his former wife, Nicole Brown Simpson, and her friend Ronald Goldman. In 2008, Cyd Charisse, dancing partner of Gene Kelly and Fred Astaire in classic Metro-Goldwyn-Mayer musicals such as “Singin’ in the Rain,” died of a heart attack in Los Angeles at the age of 86.
WEDNESDAY WISDOM: “When I was 18, I thought my father was pretty dumb. After a while, when I got to be 21, I was amazed to find out how much he’d learned in three years.” —Frank Butler, journalist
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Copyright © Asset International, Inc., 2015.

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

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