| Benefit Briefs | People Regret Taking Social Security Early | Why is Social Security hard for people to
understand? Maybe it’s the 2,700 rules in the Social Security handbook, says
David Giertz, president of Nationwide Financial Services sales and
distribution. A former financial adviser, Giertz says advisers can be reluctant
to bring up a topic unless they’re completely up to speed. But misconceptions
about Social Security benefits abound, Giertz tells PLANSPONSOR, and retirement
plan sponsors have an opportunity to help strengthen their employees’
retirement success by providing information about this critical benefit. A
survey conducted by the Nationwide Financial Retirement Institute found that
more than a third of respondents (38%) felt they had turned on their Social
Security too soon and wish they had delayed the onset of benefits. | Employees More Focused on Overall Financial Wellness | Employees are showing more focus on their
overall financial wellness, according to a Financial Finesse report. Seventy-eight
percent of questions received by Financial Finesse’s team of Certified
Financial Planner professionals during the first quarter of 2014 were proactive
in nature, focusing on what employees could do to improve their financial
wellness rather than what they needed to do in response to an immediate
financial problem. According to the company’s Q1 2014 Research report, the
increased focus and engagement has contributed to improvements in employees’
financial wellness in several key areas. | Total retirement outsourcing (TRO) can benefit
employers that sponsor both a defined benefit (DB) and defined contribution
(DC) plan, said Barbara Best, principal of Capital Strategies Investment Group,
speaking at the PLANSONSOR National Conference. “Plans have traditionally had
an in-house actuary doing administration, trustee and custody work,” Best said.
“The marketplace has moved to TRO with one service provider doing all these
functions. TRO has transitioned because of technology, which allows
participants to see their DB and DC [statements] together.” | Participants Want Plans with a Stable Value Option | Demand for stable value investment options
remains high among retirement plan participants, says a new report from
Transamerica Retirement Solutions. According to “Participant Attitudes Toward
Stable Value Offerings,” respondents surveyed for the report describe stable
value products as a necessity for a retirement savings plan. | | Buyer's Market | United Benefit Advisors released a white paper
that aims to teach employers how to help employees better understand their
benefits. Colonial Life, a UBA strategic partner, conducted a survey that found
three out of four employees say they need more education to understand how
changes in their benefits affect their financial safety net. | Firm Offers 401(k) Fee Comparison Service | Employee Fiduciary LLC is now offering a fee
comparison service for 401(k) plan sponsors. The company will review and
interpret a service provider’s Employee Retirement Income Security Act (ERISA)
Section 408(b)(2) fee disclosure document and plainly summarize its fees in
dollars, both direct fees and indirect fees paid by mutual fund companies. | | Economic Events | In the week
ending May 31, the advance figure for seasonally adjusted initial claims for
unemployment insurance was 312,000, an increase of 8,000 from the previous
week’s revised level, the Labor Department reported. The previous week’s level
was revised up by 4,000 from 300,000 to 304,000. The four-week moving average
was 310,250, a decrease of 2,250 from the previous week’s revised average. This
is the lowest level for this average since June 2, 2007 when it was 307,500.
The previous week’s average was revised up by 1,000 from 311,500 to 312,500.
The average interest rate for a 30-year fixed-rate
mortgage is 4.14%, up from 4.12% one week ago, according to Freddie Mac. The
average interest rate for a 15-year fixed-rate mortgage is 3.23%, up from 3.21%
one week ago.
| | Market Mirror | Yesterday, the Dow increased 98.58
points (0.59%) to 16,836.11, the NASDAQ climbed 44.58 points (1.05%) to
4,296.23, and the S&P 500 was up 12.58 points (0.65%) at 1,940.46. The
Russell 2000 gained 22.72 points (2.01%) to finish at 1,153.94, and the
Wilshire 5000 closed 157.83 points (0.77%) higher at 20,557.52.
On the NYSE, 3.2 billion shares traded,
with 3.5 advancing issues for every declining issue. On the NASDAQ, 2.7 billion
shares traded, with a near 4 to 1 lead for advancers.
The prices of the 10-year Treasury note and 30-year
Treasury bond decreased 1/32, increasing their yields to 2.581% and 3.434%,
respectively.
| | Rules & Regulators | Fiduciary Status Not Triggered by Contribution in Company Stock | A federal appellate court ruled Morgan Stanley
& Co. and its CEO were not acting in a fiduciary capacity when deciding to
make company contributions to two retirement plans in the form of company
stock. The 2nd U.S. Circuit Court of Appeals noted that the case was dismissed
by the U.S. District Court for the Southern District of New York for failure to
rebut the Moench presumption of prudence U.S. courts typically give to
fiduciaries of employee stock owner ship plans. But, the 2nd Circuit did not
rule on this issue, as it found the defendants of the case were not
fiduciaries. | The Department of Labor (DOL) reached a $5.25
million settlement with GreatBanc Trust Co., resolving allegations the Lisle,
Illinois-based company violated the Employee Retirement Income Security Act
(ERISA). In 2006, GreatBanc, as trustee to the Sierra Aluminum Co. Employee
Stock Ownership Plan (ESOP), allegedly allowed the plan to purchase stock from
Sierra Aluminum’s co-founders and top executives for more than fair market
value. | | Financial Sense | PSNC 2014: DB Plan De-Risking | The effort to de-risk defined benefit (DB)
pension plans is an immensely complex task that presents no shortage of
challenges or opportunities to retirement plan sponsors and consultants. De-risking
is part art and part science, said Matthew Gnabasik, managing director at Blue
Prairie Group, leading a panel discussion at the 2014 PLANSPONSOR National
Conference, in Chicago. The panelists, who represented a number of insurance
and consulting firms active in the pension de-risking market, suggested that
de-risking requires a significant amount of planning and a sensitive trigger
finger. It’s a double matter of first putting the plan in the position to
de-risk, and then monitoring conditions for the best moment to transact. | An analysis by consulting firm Mercer finds that
funding for defined benefit (DB) pension plans sponsored by S&P 1500
companies remained relatively unchanged in May at 84%. According to Jonathan
Barry, a partner in Mercer’s Retirement business, “A fairly modest decline in
interest rates was enough to mostly wipe out a pretty positive month of equity
returns, highlighting the volatility to which many U.S. plan sponsors are
exposed. However, plan sponsors who have implemented risk management strategies
have likely cushioned the blow significantly.” | The BNY Mellon Investment Strategy &
Solutions Group (ISSG) finds that the funded status of the typical U.S.
corporate pension plan fell 0.4 percentage points in May to 90.6%, a new low
for 2014, as liabilities increased faster than assets for the third consecutive
month. | | Sponsored message from Vanguard | PLANSPONSOR Interviews Chris McIsaac Click here to watch Stephen Moylan, SVP for PLANSPONSOR, interview Chris McIsaac, Managing Director for Vanguard. | | Small Talk | ON THIS DATE: In 1933,
motorists parked their automobiles on the grounds of Park-In Theaters, the
first-ever drive-in movie theater, located on Crescent Boulevard in Camden, New
Jersey. In 1944, the Allied powers
crossed the English Channel and landed on the beaches of Normandy, France,
beginning the liberation of Western Europe from Nazi control during World War
II—known as D-Day. In 1949, George Orwell’s novel of a dystopian future, Nineteen Eighty-four, was published. The
novel’s all-seeing leader, known as “Big Brother,” became a universal
symbol for intrusive government and oppressive bureaucracy. In 1971, 23 years after its 1948 premiere,
The Ed Sullivan Show had its final
broadcast. | FRIDAY FILES REWIND: This
Friday Files from four years ago features a hamster on a piano, a car magnet
prank, and mag.gots on a plane. | Have a happy weekend,
everyone! | Share the good news with a friend! Pass the Dash along – and tell your
friends/associates they can sign up for their own copy. | News from PLANSPONSOR.com
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