Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
June 9th, 2014
Webcast Event
Companies with pension plans are effectively managing an insurance business along with their core business. As an industrial, health care, technology, pharmaceutical or any other noninsurance company, does making the continued investment in the pension plan align with your core model for continued growth? In general, companies with pension obligations may not be fully educated about the risks. When considering all those risks—which are rewarded, which the company needs to hold, and the proper size and scale of those risks—the pension plan becomes an important part of that analysis. Buy-in and buy-out solutions become appropriate for firms as they continue to examine their overall risk profile, and may be part of the solution set for a company determining how to manage its overall risk position. Join us for a webcast that will provide details about the current pension de-risking landscape; the value of an actuarial appraisal of the pension obligations when considering risk transfer; beginning the actuarial appraisal process and the types of information insurance companies will use to address the purchase of a block of pension obligations; market trends toward pension annuitization, including partial or full obligation transfer and timing considerations; and solutions available to the market.
Benefit Briefs
Where There Is Room for Improvement in 403(b)s
While 403(b) plan sponsors are continuing to improve upon their plans to create better outcomes for participants, there are still a few areas in which they can improve. The Plan Sponsor Council of America’s (PSCA) 2014 403(b) Plan Survey found organizations that sponsor 403(b) plans are simplifying investment platforms by streamlining the options available for participants. However, Aaron Friedman, national tax-exempt practice leader at The Principal based in Shelton, Connecticut, tells PLANSPONSOR, while 403(b)s have made great strides in reducing the number of investments in their plans, there are still too many.
Employers need to think about how they can reduce health care costs, using options such as exchanges and consumer-driven health plans (CDHPs), said Evolution1, Inc. “There are many market drivers occurring: health care costs are increasing, more regulatory changes are being enacted to contain health care costs; employees require more communications about public and private exchanges; and more technology solutions are being developed to address regulatory changes and to improve self-service capabilities for employees,” said Heather Andrews, vice president of Enterprise Partner Development for Evolution1, during its recent “Health Plan Essentials for Private Exchange and Defined Contribution Strategies” webinar.
Public Sector Needs More Retirement Readiness Help
The retirement readiness levels of employees in the public sector may not be as high as their private sector counterparts, according to a new white paper. “Improving Retirement Readiness for State and Local Government Employees,” released jointly by the National Association of Government Defined Contribution Administrators, Inc. (NAGDCA) and the International Foundation for Retirement Education (InFRE), says public sector employers have started to adjust their retirement plan benefits offerings and shift more of the risk of saving and investing for retirement to their employees. With factors such as increased longevity of retirees and increasing medical expenses in the mix, public sector employers are “facing a significant challenge to ensure employees recognize their new retirement readiness responsibilities.”
Trustworthiness Important in Selecting Plan Provider
According to the “Plan Sponsor Trust and Confidence Study” from the National Association of Retirement Plan Participants (NARPP), among all of the factors that influence plan sponsors in the plan provider selection process, trustworthiness ranks as the most important. The study also reveals a great deal of pessimism about the trustworthiness of financial institutions in general. Only 9% of plan sponsors say they can “always trust financial institutions to do the right thing for plan sponsors and participants.” Sixty-five percent of plan sponsors say they can “always” trust their current providers to do what is right.
Buyer's Market
Retirement plan sponsors and advisers have a new solution available from Allovest for plan participants who lack access to advice. Allovest, a registered independent investment adviser (RIA) in Huntington Beach, California, offers affordable online retirement planning services and professional investment advice to help individuals set and reach retirement goals. The service is available for $29.95, a smaller fee than is typical for professional financial services, and can be used by individuals who do not meet minimum account balance requirements to work with a financial adviser.
Industry Voices
Industry Voice: What to Know About Revenue Sharing
What do you know about revenue sharing? If your answer is anything other than, “a lot”, it’s really important that you read on. Almost all retirement plans participate in some form of revenue sharing, so don’t think this doesn’t apply to you.  Without a good understanding of the revenue sharing taking place in your plan, you cannot possibly be fulfilling all of your fiduciary obligations.
Economic Events
Total nonfarm payroll employment rose by 217,000 in May, and the unemployment rate held at 6.3, the Bureau of Labor Statistics reported. Employment increased in professional and business services, health care and social assistance, food services, and transportation and warehousing. THE ECONOMIC WEEK AHEAD: Tomorrow, the Census Bureau will report about wholesale inventories for April. Thursday, the Labor Department will issue its initial claims report, and the Census Bureau will report about business inventories for April. Friday, we’ll learn the producer price index (PPI) for May from the Bureau of Labor Statistics.
Market Mirror
Friday, the Dow closed 88.17 points (0.52%) higher at 16,924.28, the NASDAQ increased 25.17 points (0.59%) to 4,321.40, and the S&P 500 gained 8.98 points (0.46%) to finish at 1,949.44. The Russell 2000 climbed 11.26 points (0.98%) to 1,165.20, and the Wilshire 5000 was up 104.34 points (0.51%) at 20,661.86. On the NYSE, 3.2 billion shares traded, with a near 3 to 1 lead for advancers. On the NASDAQ, 2.7 billion shares changed hands, with 2.4 advancing issues for every declining issue. The price of the 10-year Treasury note decreased 3/32, increasing its yield to 2.593%. The price of the 30-year Treasury bond was down 1/32, bringing its yield up to 3.438%. WEEK’S WORTH: For the week ending June 6, the Dow was up 1.24%, the NASDAQ gained 1.86%, and the S&P 500 increased 1.34%. The Russell 2000 climbed 2.71%, and the Wilshire 5000 finished 1.54% higher.
Rules & Regulators
PSNC 2014: Your Fiduciary Checklist
At the close of the 2014 PLANSPONSOR National Conference five items rose to the top from the content covered during the conference that should be on plan sponsors’ fiduciary checklist. “To begin with create a committee charter. Go through a formal process determining the criteria for who should be on the committee,” Jed Graham, retirement plan consultant and partner at CapTrust Advisors LLC said.
The Department of Labor (DOL) has filed a lawsuit to recover 401(k) plan assets mismanaged by a lumber company in Kennett Square, Pennsylvania. The DOL alleges plan assets were used for bad real estate deals and personal expenses for the company’s owner.
The World at Large
In the UK, unions may have the final say over whether collective defined contribution (DC) schemes will catch on.
Small Talk
ON THIS DATE:  In 1934, Donald Duck made his debut in the Silly Symphonies cartoon “The Wise Little Hen.” In 1943, the withholding tax on payrolls was authorized by the U.S. Congress. In 1973, with a spectacular victory at the Belmont Stakes, Secretariat became the first horse since Citation in 1948 to win America’s coveted Triple Crown—the Kentucky Derby, the Preakness, and the Belmont Stakes. In 2011, the world’s first artificial organ transplant was performed. It was an artificial windpipe coated with stem cells.
SURVEY SAYS REWIND: How Much Change Would You Pick Up?
Nearly five years ago, we asked NewsDash readers, “If you saw coins in the street, what value would they have to be for you to stop and pick them up?” More interesting than the amounts were the reasons for picking up change or not.
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News from PLANSPONSOR.com   Copyright © Asset International, Inc., 2014. All rights reserved.  No reproduction without prior authorization.
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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