Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 16th, 2015
Benefits & Administration
Most States Meeting Commitments to Fund Pensions
An analysis of the experience of 112 state-sponsored and statewide public pension plans in the U.S. for fiscal years 2001 through 2013 finds most states are meeting their commitments to fund their plans, with only a few conspicuously failing. The National Association of State Retirement Administrators (NASRA) examined the performance of state governments in meeting the annual required contribution (ARC)—as defined by the Government Accounting Standards Board (GASB)—of their public employee retirement plans. The 112 plans account for more than 80% of all public pension assets and participants.Read more >
Among all working households—not just households with retirement accounts—the median retirement account balance is $2,500, according to an analysis by the National Institute on Retirement Security (NIRS). The median retirement account balance was $3,000 for all working-age households as reported in a 2013 report from NIRS. The organization examined the readiness of working-age households, based primarily on an analysis of the Survey of Consumer Finances from the U.S. Federal Reserve System. Nearly 40 million working-age households (45%) do not own any retirement account assets, in either an employer-sponsored 401(k)-type plan or an individual retirement account (IRA).Read more >
‘Integrated’ Well-Being Programs Yield Better Results
‘Integrated’ wellness programs produced more positive results for employers than did traditional wellness programs, according to a study by WorldatWork. Supporting workers both at the office and beyond can have positive results for an employer in terms of increased productivity, engagement levels and employee satisfaction, as well as positive changes in employee behaviors. This differs from organizations that limit employee well-being to more traditional wellness offerings with the sole purpose of lowering health care costs, WorldatWork says in its survey report, “Total Rewards and Well-Being.”Read more >
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Building Inclusivity Into Employee Benefits
Boosting Plan Participation Without Auto-Enrollment
Automatic enrollment is being touted as a must-use feature for defined contribution (DC) retirement plan sponsors to increase plan participation and help more employees get on track for retirement, but many plan sponsors cannot use this feature, and some may not believe in forcing employees into their plans. Specifically, most 403(b) plans that are not governed by the Employee Retirement Income Security Act (ERISA) cannot use automatic enrollment. John Kevin, vice president for the K-12 market at VALIC in Houston, says most K-12 public school systems’ hands are tied by state anti-garnishment laws which say amounts may not be deducted from employee paychecks without written permission. Ellie Lowder, of TSA Consulting and Training Services in Tucson, Arizona, which provides consulting for PlanMember Securities Corp., the National Tax-Deferred Savings Association (NTSA) and other clients in the industry, points out that for 501(c)(3) tax-exempt entities that want to maintain the non-ERISA status of their 403(b)s, ERISA says they must have limited involvement with the plan, and auto-enrollment would run afoul of the law.Read more >
Products, Deals & People
Retirement plan administrator Fifth Third Bank announced the availability of Dave Ramsey’s new SmartDollar financial wellness program for its clients’ retirement plan participants. “We continue to see employers augment their retirement education efforts and overall corporate wellness programs with a component of financial education,” says Sheri Kehren, vice president and program manager of financial workplace wellness at Fifth Third Bank.Read more >
Economic Events

The Producer Price Index for final demand fell 0.5% in February. Final demand prices moved down 0.8% in January and 0.2% in December. In February, the index for final demand services decreased 0.5% and prices for final demand goods declined 0.4%.

THE ECONOMIC WEEK AHEAD: Tomorrow, the Census Bureau will report about housing starts in February. Thursday, the Labor Department will issue its initial claims report.

Market Mirror

The price of oil took another sharp turn lower Friday and the dollar moved higher against the euro, threatening to pinch the profits of big U.S. exporters, according to the Associated Press. The Dow fell 145.91 points (0.82%) to 17,749.31, the NASDAQ decreased 21.53 points (0.44%) to 4,871.76, and the S&P 500 lost 12.65 points (0.61%) to finish at 2,053.30. The Russell 2000 was down 4.53 points (0.37%) at 1,232.11, and the Wilshire 5000 closed 122.87 points (0.56%) lower at 21,746.76.

On the NYSE, 3.2 billion shares traded, with a more than 2 to 1 lead for decliners. On the NASDAQ, 2.8 billion shares changed hands, with 1.6 declining issues for every advancing issue.

The price of the 10-year Treasury note was unchanged, with its yield at 2.119%. The price of the 30-year Treasury bond was up 1/32, bringing its yield down to 2.699%.

WEEK’S WORTH: For the week ending March 13, the Dow was down 0.60%, the NASDAQ fell 1.13%, and the S&P 500 lost 0.80%. The Russell 2000 climbed 1.20%, and the Wilshire 5000 finished 0.64% lower.

Compliance
GOP Tells OMB to Proceed with Caution on Fiduciary Rule
A group of Republican senators, led by Chairman Lamar Alexander (R-Tennessee), from the  Committee on Health, Education, Labor and Pensions (HELP) outlined their concerns about a fiduciary re-definition—concerns based mostly on the 2010 proposal—in a letter to Shaun Donovan, director of the Office of Management and Budget (OMB). The senators cited a seeming lack of coordination between the Securities and Exchange Commission (SEC) and the DOL and expressed concern that a re-definition of fiduciary would result in a number of unintended consequences for consumers. “[The] individuals who provide investment advice should be trained, transparent, ethical, and represent the financial best interests of their clients,” they wrote. “However, we are concerned that the proposed rule may harm consumer access to crucial retirement education or services, ultimately disserving the very people it seeks to aid—working and middle class Americans.”Read more >
Investing
Net new investment to stock and bond funds totaled $56.7 billion in February, according to Strategic Insight, an Asset International company. Net intake to equity products totaled $32.2 billion during the month, driven by a $23.1 billion inflow to international equity.Read more >
Small Talk
ON THIS DATE: In 1751, James Madison, the fourth president of the United States, was born at a plantation in Virginia. In 1802, the United States Military Academy at West Point, New York–the first military school in the United States–was founded by Congress. In 1850, Nathaniel Hawthorne’s “The Scarlet Letter” was published. In 1915, the Federal Trade Commission began operation. In 1984, William Buckley, the CIA station chief in Beirut, was kidnapped by gunmen. He died while in captivity. In 1985, Terry Anderson, an Associated Press newsman, was taken hostage in Beirut. He was released December 4, 1991. In 1995, NASA astronaut Norman Thagard became the first American to visit the Russian space station Mir.
SURVEY SAYS: Most Wanted Benefit Boosts
Last week, I asked NewsDash readers, “Aside from a salary increase, what workplace benefit boost would you most like this year?” ‘Richer retirement benefits’ was the top selection of responding readers, garnering 31.2% of the vote. This was followed by ‘more vacation days,’ selected by 21.9% of respondents. Among posts from readers who chose to make comments were some new benefit ideas—“And a sabbatical every five years would be nice,” “I suppose I can’t hope for a full bar on Friday afternoons?” A few readers indicated there’s nothing aside from a salary increase they want, and a few said they would want all or most of the choices listed.  However, there seems to be a handful satisfied with the benefits/perks at their workplace. Editor’s Choice goes to the reader who said: “I believe that after years of hard work all individuals deserve a fully funded defined benefit plan that will allow them the right to enjoy their years of retirement.” A big thank you to everyone who participated in the survey!Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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