Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
June 27th, 2014
Benefit Briefs
Same-Gender Households Are Successful Savers
Same-gender couples with children are emerging leaders when it comes to family financial stability and successful long-term planning, according to a new analysis from financial services provider Allianz. Findings from the Allianz “LoveFamilyMoney Study” suggest nearly four in 10 (37%) same-gender family couples with kids reported feeling a high level of financial security—just a few points below opposite-gender couples (41%). The overall same-gender couple family cohort saved an average of $276,200 for retirement.
More than 80% of companies provide benefits to couples in same-gender marriages, civil unions or domestic partnerships, according to a survey from the International Foundation of Employee Benefit Plans (IFEBP). This figure is a 34% increase over 2013, says the foundation, following the U.S. Supreme Court ruling that Section 3 of the Defense of Marriage Act (DOMA) was unconstitutional. The survey reveals 55% of employers are approaching same-gender benefits with an inclusive view, recognizing the changing dynamics of what constitutes a family. This often includes not only same-gender couples who are married, but also same-gender couples who are in civil unions and domestic partnerships.
Workers Are Redefining Retirement
Half of defined contribution (DC) participants plan to work in retirement, according to State Street Global Advisors (SSgA). A more mature workforce will present a challenge to employers and inevitably prompt them to be more proactive about helping their employees to be better prepared for retirement, according to State Street Global Advisors (SSgA). “There has been a major shift in the past 10 to 15 years, and retirement plan participants are expecting to continue to earn in their retirement years,” says Fredrik Axsater, global head of defined contribution at SSgA. “The desire to continue working is not restricted by gender, age, savings, current income or education. This signals a big change in attitude toward retirement and is indicative of the survey results showing that 40% of participants anticipate working well past retirement age because they want to work, not because they have to work.”
Buyer's Market
Sarah Coxe Lange has joined Pentegra Retirement Services as National Sales Director, Institutional Investments. Lange will be tasked with leading business development for Pentegra’s Outsourced Chief Investment Officer (OCIO) Services.
London Stock Exchange Group to Acquire Russell
The London Stock Exchange Group (LSEG) announced its proposed acquisition of the Frank Russell Company from Northwestern Mutual and other, minority shareholders. The exchange already owns FTSE Group, the operator of indexes including the FTSE 100, which tracks the top 100 stocks traded in London. The deal will bring together $5.2 trillion of assets benchmarked to Russell and an estimated $4 trillion of equities benchmarked to FTSE. Russell Investment Management has $256 billion of global assets under management (AUM) and $2.4 trillion of assets under advisement through its Consulting division.
Pam Popp will join Lockton as president of retirement services operation, effective September 2. “Retirement plan sponsors face complex, specialized challenges in a highly regulated environment,” Popp says. “I look forward to working with Lockton’s clients to mitigate risks for sponsors and identify opportunities to help participants achieve their retirement goals.”
Northern Trust Asset Management has named Mamadou-Abou Sarr as global head of Environmental, Social and Governance (ESG) Asset Management. The newly created role is designed to meet increasing demand for responsible investing strategies in markets worldwide. Sarr will lead ESG innovation and product development across Northern Trust’s array of asset class capabilities. Building on the company’s success with ESG strategies in passive equity internationally, he will focus on expanding into new opportunities for ESG growth in the global institutional and wealth management markets.
Recordkeepers Report Participants Opting for E-Delivery
PLANSPONSOR’s 2014 Recordkeeping Survey finds recordkeeping firms say 42% of participants have opted for e-delivery of participant statements. Three-quarters of respondents’ participants opted for e-delivery of fund prospectuses/reports, and 63% chose e-delivery for trading and investment confirmations.
The Oppenheimer Emerging Markets Innovators Fund (EMIAX) will be available to retirement plans at the end of June. EMIAX will invest in small- and mid-cap companies in the emerging markets with disruptive products, brands, business models or other strategic differentiators.
Economic Events
In the week ending June 21, the advance figure for seasonally adjusted initial claims for unemployment insurance was 312,000, a decrease of 2,000 from the previous week’s revised level, the Labor Department reported. The previous week’s level was revised up by 2,000 from 312,000 to 314,000. The four-week moving average was 314,250, an increase of 2,000 from the previous week’s revised average. The previous week’s average was revised up by 500 from 311,750 to 312,250. The average interest rate for a 30-year fixed-rate mortgage is 4.14%, down from 4.17% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.22%, down from 3.30%.
Market Mirror
Yesterday, the Dow was down 21.38 points (0.13%) at 16,846.13, the NASDAQ decreased by 0.71 (0.02%) to 4,379.05, and the S&P 500 slipped 2.31 points (0.12%) to 1,957.22. The Russell 2000 lost 1.97 points (0.17%) to finish at 1,180.71, and the Wilshire 5000 closed 20.64 points (0.10%) lower at 20.789.38. On the NYSE, 3.2 billion shares changed hands, with a slight lead for advancers. On the NASDAQ, 2.7 billion shares traded, with a slight lead for declining issues. The yields for the 10-year Treasury note and 30-year Treasury bond were 2.532% and 3.358%, respectively. 
Rules & Regulators
A summary of recent guidance/actions from regulators and the courts.
The Social Security Administration (SSA) has published new instructions that allow the agency to process more claims in which entitlement or eligibility is affected by a same-gender relationship.
Presumption of Prudence Ruling Not a Total Win for Anyone
The U.S. Supreme Court this week ruled employee stock ownership plan (ESOP) fiduciaries are not entitled to a presumption of prudence for keeping company stock in the plans, but it didn’t just leave it at that. “There’s no presumption, but plaintiffs have to specifically articulate whether it’s public or inside information they think fiduciaries should have used and what the fiduciaries could have done in the alternative that would have helped the plan and not been a detriment,” Dean Schaner, founder of Haynes and Boone LLP’s Houston Labor and Employment Practice group, tells PLANSPONSOR. “They really heightened the pleadings requirement.”
Financial Sense
The relative attractiveness of annuitizing pension liabilities fell for the second month in a row, according to Dietrich & Associates, Inc.’s Pension Risk Transfer Index. As of June 1, the index moved to 90.32, down almost two points from May. The annuity discount rate proxy lost a little ground (3%). The index’s change is due in most part to continued erosion in defined benefit (DB) pension plan funding levels as a result of low interest rates. “Early movers have been the big winners so far in 2014 and I see this continuing to be the case,” says Geoff Dietrich, vice president of Dietrich & Associates, Inc., based in Plymouth Meeting, Pennsylvania.
The World at Large
People should continue saving throughout their retirement to reflect the likely pattern of their essential expenditure in old age, according to Age Concern. The charity’s report into “financial resilience in later life” urges older people to “consider how their spending is likely to vary over retirement”, with a view to “alleviating the risks of overspending in early retirement.”
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Small Talk
ON THIS DATE:  In 1844, Joseph Smith, the founder and leader of the Mormon religion, was murdered along with his brother Hyrum when an anti-Mormon mob broke into a jail where they were being held in Carthage, Illinois. In 1922, the American Library Association (ALA) awarded the first Newbery Medal, honoring the year’s best children’s book, to “The Story of Mankind” by Hendrik Willem van Loon. In 1950, President Harry S. Truman announced he was ordering U.S. air and naval forces to South Korea to aid the democratic nation in repulsing an invasion by communist North Korea. In 1955, the state of Illinois enacted the first automobile seat belt legislation. In 1985, the American Association of State Highway and Transportation Officials decertified the iconic Route 66 after 59 years, and voted to remove all its highway signs. In 1988, heavyweight champion Mike Tyson knocked out challenger Michael Spinks 91 seconds into the first round, leaving the boxing world wondering if anyone could beat “Iron Mike” Tyson.   And now it’s time for FRIDAY FILES!
6 of the germiest everyday items.
In Minneapolis, Minnesota, a woman heard someone trying to break into her apartment and dialed 911. But, instead of being connected to the Minneapolis emergency service, she reached a 911 operator in New York City. Once the woman and operator discovered the issue, the woman hung up and dialed 911 again, but again reached New York City. According to the New York Post, while all this was happening, the man who was trying to break into the woman’s apartment was moving down the hallway of the apartment building trying to get into other apartments. The New York operator called police in Minneapolis, which finally arrived at the woman’s apartment 30 minutes later. If you make a call from inside your home, the cell phone signal does not always have a clear path. This makes it possible for a call to skip cell phone towers and bounce to a different state, according to CBS Minnesota. In Minot, North Dakota, a man was driving when he fell out of his car onto the street. Police say his vehicle continued forward, striking him. He was able to get back in the vehicle and drive away, but officers tracked him down, finding him into.xicated. He was treated for injuries at the local hospital then transported to the Ward County Jail where he was charged with DUI.
How not to water ski.
In New York, New York, a police officer was rewarded at a Medal Ceremony with the Police Combat Cross—the New York police department’s second-highest honor. After the ceremony, he hit the town hard before crashing at a friend’s Bronx apartment. According to the NY Daily News, at some point after the party ended, the officer wandered out of the residence wearing only his briefs then couldn’t find his way back. He instead wound up in another apartment on the same floor of the building, sources said. The woman who lives there claims he roughed her up. Now he’s been stripped of his gun and badge while the department is investigating the incident. In Leominster, Massachusetts, a man locked himself out of his car one morning and called 911 for help. But, Leominster’s policy is to not help with lockouts unless it is an emergency situation, and the operator told the man there was no one to help him. According to CBS Boston, surveillance cameras show the man walking around for a couple of hours and fishing in a dumpster or two before strolling over to the rear of a bakery. Roughly 40 minutes later the bakery erupted in flames. The man denies setting the fire, but police, who arrested him, believe he did so because they wouldn’t help him unlock his car.
The most entertaining pre-flight safety instructions you’ll see.
In Berlin, New Jersey, a woman who says rush hour traffic worsens her anxiety is suing her employer. The woman took a medical leave in 2012 saying she felt great anxiety and depression which was especially aggravated by crowded roadways during rush hour. When she returned, she asked for a work schedule where she came in after the morning rush hour and left before the afternoon rush hour. According to the Courier-Post, her lawsuit claims her job was reduced to “clerical work” and she was later fired. In Juneau, Alaska, a couple were expecting guests at any minute to their son’s first birthday party when they heard a crashing sound in the living room. They found a bear had climbed on the roof of their home and fell through the skylight in the living room. They fled to adjoining rooms and the bear roamed the house for several minutes, finding the birthday cupcakes and licking frosting off some of them. The father deployed bear spray and the bear finally left. In Saint Gervais, France, police found a 12-year-old boy hiding and questioned him about what he was doing. He told police a man had abducted him from a neighboring town. He described the man in detail, including the clothing the man was wearing and the car he was driving. The police got suspicious about the story though when they scoured all CCTV from the neighboring town and did not see such a person or vehicle. The boy then admitted that he was hiding to get out of going to a dentist appointment. Have a great weekend!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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