Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 13th, 2014
Benefit Briefs
Setting Attainable Goals for Your Retirement Plan
“If you don’t set it, you’ll never get it,” Philip Altschuler says. That goal-setting philosophy explains why the senior vice president of human resources (HR) and learning and development at Gables Residential decided, in 2010, to set an ambitious goal of increasing participation in the company’s 401(k) plan, from 49.6% to 80% within two years. Many plan sponsors apparently do not set goals as Altschuler has. Asked at a 2013 PLANSPONSOR National Conference session whether they have a goal for their retirement plan, 49% of attending sponsors said yes and 51% said no. Asked whether they have a definition of success for their plan, 18% said yes and 82% said no. Adviser Jim Phillips attended that session, and the responses did not surprise him. “A lot of plan sponsors have never thought about the plan in that light,” says Phillips, president of Retirement Resources in Peabody, Massachusetts. “They do what they need to do to maintain it. But most haven’t rethought it from the grass roots.”
Aftereffects of PBGC Premium Increase
The bottom line is this: The increase in Pension Benefit Guaranty Corporation (PBGC) premiums, pushed through as part of the end-of-2013 budget compromise, is a disgrace. The PBGC’s entire project to headline its “deficit” and use it as a pretext for an increase in single-employer plan premiums is arguably fraudulent. That Congress bought into it as a way to “solve” its deficit problem is deeply disappointing.
Buyer's Market
Nationwide Financial named Kent Morris as its new western regional vice president of the Nationwide Retirement Solutions business. Morris is responsible for public sector retirement solutions, sales and client relationship management across the western United States. He leads a team of 60 representatives in 11 states.
Economic Events
Private industry employers spent an average of $29.63 per hour worked for employee compensation in December 2013, according to the Bureau of Labor Statistics. Private industry costs averaged $2.05 per hour worked for paid leave benefits and $2.43 for legally required benefits.
Market Mirror
The Dow slipped again Wednesday by 11.7 points (0.07%) to 16,340.08, while the NASDAQ was up 16.14 points (0.37%) at 4,323.33, and the S&P 500 increased by 0.57 (0.03%) to 1,868.20. The Russell 2000 gained 4.32 points (0.36%) to finish at 1,191.37, and the Wilshire 5000 closed 18.90 points (0.09%) higher at 20,034.81. On the NYSE, 3.2 billion shares changed hands, with 1.4 advancing issues for every declining issue. On the NASDAQ, 2.6 billion shares traded, with a 1.2 to 1 lead for advancers. The price of the 10-year Treasury note was up 12/32, bringing its yield down to 2.727%. The price of the 30-year Treasury bond increased 22/32, decreasing its yield to 3.671%.
Financial Sense
Sale of Pension Risk Buyout Products Up in 2013
Sales of pension risk buyout products topped $3.8 billion in 2013, according to a LIMRA Secure Retirement Institute (SRI) survey. This represents the best sales year for these products since 1999, with the exception of 2012 when General Motors and Verizon transferred their group pension obligations to Prudential, causing sales to spike to $35.9 billion for the year.
The Commonfund Investor Outlook Survey gauged the sentiments of more than 200 respondents, representing a broad range of nonprofit institutional investors and pension funds with combined assets of $163 billion. Overall, investor expectations for 2014 are reasonably strong with an average forecast for the S&P 500 Index of 6.5% and a median forecast of 7%. This represents a slight decrease from last year’s average forecast of 7.9% and a median forecast of 8%.
Rules & Regulators
Texas Wal-Mart Sued for Age Discrimination
The U.S. Equal Employment Opportunity Commission (EEOC) has initiated a lawsuit against Wal-Mart Stores of Texas, LLC, alleging a store manager was subjected to harassment, unequal treatment and discharge because of his age. David Moorman, the manager of a Keller, Texas, Walmart store, who was 54 at the time, was allegedly ridiculed with frequent taunts, about his age, from his direct supervisor. The supervisor called Moorman “old man” and the “old food guy” and derided him with ageist comments such as, “You can’t teach an old dog new tricks.”
Health System and Providers Sued Over Plan Fees
The St. Louis-based law firm of Schlichter, Bogard & Denton filed a class action on behalf of participants in the retirement plans of Novant Health Inc., seeking the repayment of millions in fees and losses. The suit names Novant’s administrative and retirement plan committees as defendants, and also implicates Great-West Life & Annuity Insurance Company, D.L. Davis & Company and MassMutual as collecting excessive compensation for services provided to Novant’s two defined contribution retirement plans. The complaint alleges that Novant, which is a hospital and physician office system based in Winston-Salem, North Carolina, breached its fiduciary duties by causing plan participants to pay millions of dollars in excessive recordkeeping and administrative fees to third-party service providers.
Small Talk
ON THIS DATE:  In 1781, the German-born English astronomer William Hershel discovered Uranus, the seventh planet from the sun. In 1868, for the first time in U.S. history, the impeachment trial of an American president got underway in the U.S. Senate. President Andrew Johnson, reviled by the Republican-dominated Congress for his views on Reconstruction, stood accused of having violated the controversial Tenure of Office Act, passed by Congress over his veto in 1867. In 1969, “The Love Bug,” a Walt Disney movie about the adventures of a Volkswagen Beetle named Herbie, opened in theaters across the United States. In 1942, the Quartermaster Corps (QMC) of the United States Army began training dogs for the newly established War Dog Program, or “K-9 Corps.”
SURVEY SAYS: In a recent survey, executives said non-business related Internet use, including social media, is the biggest time-waster for employees. Assuming you don’t use the Internet during work time for personal tasks (ah-hem), what wastes your time at work? You may respond to this week’s survey by 6 p.m. Pacific time today.
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