Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 10th, 2015
Benefits & Administration
Affluent May Need Savings Other Than Employer Plan
A recent Legg Mason survey finds affluent U.S. investors predict their average net retirement expenses could top $2.5 million without significant lifestyle changes. Legg Mason finds its sample has an average retirement plan savings of $385,000 and is close to age 58. Seventy percent of respondents said they had a defined contribution plan holding substantial portions of their net savings, Legg Mason says. “Given their ambitious goals, investors hopefully have considerable savings elsewhere, such as significant equity in their home or other investment accounts, where their asset allocation is designed to help them achieve their long-term goals,” says Matthew Schiffman, global head of marketing for Legg Mason.Read more >
U.S. Representative Bruce Westerman, R-Arkansas, introduced legislation (H.R. 1230) that would adjust the calculation of federal civilian pensions. “This bill would simply change the formula for determining pension benefits for civilian federal employees from the best-earning three years to the best-earning five years of service,” Westerman says. “The bill ensures that the program employees of the federal government have paid into for their careers is available in retirement and sustainable for future generations.”Read more >
Captive Arrangements Can Rein in Health Benefit Costs
“If you look at some of the biggest players—oil and gas, or energy—the business model is focused on assuming risk,” notes Gerry Winters, senior international consultant at Towers Watson. Rising health care costs are an unmistakable pattern, Winters says, which have emerged as a significant risk, especially in the last seven to eight years. One way to rein in long-term costs is by assuming the insurance risk by setting up an in-house insurance program, called a captive arrangement. Originally the arrangement—in which a firm establishes its own insurance program—was just for property/casualty insurance, but in the last 15 years, firms have been starting to look at captives for health benefits.Read more >
TRIVIAL PURSUITS: How Many Phils Have There Been?
2022 Recordkeeping Survey
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Products, Deals & People
Sibson Offers DC Plan Scorecard
Sibson Consulting has created a DC Plan Scorecard that provides a framework for reviewing all aspects of defined contribution (DC) plans. The Scorecard is a tool for identifying which measurements to use for a particular plan because it requires selecting a level of importance for each metric according to a five-point scale. Sibson’s DC plan experts work with organizations and their retirement committees to help determine which metrics are most important for a given plan. Individual committee members likely prioritize these metrics differently and the Scorecard helps to align the fiduciary committee as a whole.Read more >
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Market Mirror

Yesterday, the Dow climbed 138.94 points (0.78%) to 17,995.72, the NASDAQ was up 15.07 points (0.31%) at 4,942.44, and the S&P 500 closed 8.17 points (0.39%) higher at 2,079.43. The Russell 2000 gained 6.07 points (0.50%) to finish at 1,223.59, and the Wilshire 5000 increased 74.26 points (0.34%) to 21,960.69.

On the NYSE, 3.2 billion shares traded, with a slight lead for advancers. On the NASDAQ, 2.8 billion shares changed hands, with 1.2 advancing issues for every declining issue.

The price of the 10-year Treasury note was up 16/32, bringing its yield down to 2.188%. The price of the 30-year Treasury bond increased 31/32, decreasing its yield to 2.793%.

The Department of Labor’s (DOL) Employee Benefits Security Administration is holding a Voluntary Fiduciary Correction Program in March. Attendees will receive instructions about how to make corrections and use the Voluntary Fiduciary Correction Program (VFCP).Read more >
From the Magazine
Drawing Down
Defined benefit (DB) plans never had a bad value proposition. Rather, the move toward defined contribution (DC) plans resulted from onerous regulations and increased costs, contends Bob Melia, vice president of product strategy for Lincoln Financial Group’s retirement plan services business in Radnor, Pennsylvania. Evidence of the original plans’ advantages can be seen in the adoption of more DB-like features—such as automatic enrollment and “do-it-for-me” investing solutions—in the defined contribution marketplace. Along with these features, defined benefit plans offer systematic and guaranteed withdrawals after retirement—something defined contribution plans have begun to explore, as well. “It makes sense for plan sponsors to offer a variety of withdrawal options within plans, and we’re seeing sponsors more open to that,” Melia says.Read more >
Is Glide Path-Investing Right for Everyone?
Ralph Segall, chief investment officer at investment management firm Segall Bryant & Hamill, admits target-date funds (TDFs) have been a helpful retirement industry innovation for the average, unengaged retirement saver in a defined contribution plan. However, more affluent investors are not necessarily best served by the prepackaged strategies, he says, which generally assume the individual plans to spend all assets prior to death and must limit risk as much as possible as one surpasses the retirement date.Read more >
Small Talk

ON THIS DATE: In 1864, President Abraham Lincoln signed a document officially promoting then-Major General Ulysses S. Grant to the rank of lieutenant general of the U.S. Army, tasking the future president with the job of leading all Union troops against the Confederate Army. In 1876, Alexander Graham Bell made the first successful call with the telephone. He spoke the words “Mr. Watson, come here, I want to see you.” In 1926, “Lolly Willowes,” or “The Loving Huntsman,” the first Book-of-the-Month Club selection, written by English novelist Sylvia Townsend Warner, was published. In 1969, James Earl Ray pleaded guilty to the assassination of Dr. Martin Luther King, Jr. and was sentenced to 99 years in prison. In 1988, disco sensation Andy Gibb died from an inflammatory heart virus at the age of 30.


TUESDAY TRIVIA: Margaret Hamilton, who played the Wicked Witch of the West in The Wizard of Oz, was a kindergarten teacher before turning to acting.

TRIVIAL PURSUITS: You may know that America gets its name from Italian merchant Amerigo Vespucci, but do you know why it was named after someone who had nothing to do with its discovery or settlement?Read more >
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Copyright © Asset International, Inc., 2015.

All rights reserved.  No reproduction without prior authorization.

Editorial: Alison Cooke Mintzer


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