Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 2nd, 2015
Benefits & Administration
More than 57% of Catholic dioceses are planning to freeze or terminate their pension plans, according to a survey from USI Consulting Group. Eighty percent of the dioceses that responded to the survey indicated they offer lay employees a 403(b) plan—half offer a plan with a diocesan contribution and nearly three in 10 offer one without a diocesan contribution. Nearly 15% offer lay employees a 401(k) plan.Read more >
Economic Events
THE ECONOMIC WEEK AHEAD: Today, the Census Bureau will report about construction spending for January. Thursday, the Labor Department will issue its initial claims report and the Census Bureau will report about factory orders for January. Friday, we’ll learn the unemployment rate for February.
Market Mirror
News that U.S. economic growth slowed more sharply than previously estimated in the final three months of the year brought major U.S. stock indices down Friday. The Dow closed 81.72 points (0.45%) lower at 18,132.70, the NASDAQ fell 24.36 points (0.49%) to 4,963.53, and the S&P 500 was down 5.76 points (0.27%) at 2,104.98. The Russell 2000 lost 5.83 points (0.47%) to finish at 1,233.28, and the Wilshire 5000 decreased 65.90 points (0.30%) to 22,212.34. On the NYSE, 3.2 billion shares traded, with a slight lead for advancers. On the NASDAQ, 2.7 billion shares changed hands, with 1.4 declining issues for every advancing issue. The price of the 10-year Treasury note was up 9/32, decreasing its yield to 1.997%. The price of the 30-year Treasury bond increased 23/32, bringing its yield down to 2.596%. WEEK’S WORTH: For the week ending February 27, the Dow was down 0.04%, the NASDAQ gained 0.15%, and the S&P 500 lost 0.25%. The Russell 2000 gained 0.12%, and the Wilshire 5000 fell 0.30%.
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Compliance
Lack of Notice Leads to Double Payment of Pension
A federal district court judge ruled employees whose pension assets from a former employer’s plan were transferred to a new plan are entitled to benefits from the former employer because they were not notified of the transfer. U.S. District Judge Tena Campbell of the U.S. District Court for the District of Utah said that because Southwestern Portland Cement Company (now known as CEMEX, Inc.) failed to give the statutorily required notice of the plan changes, it abused its discretion by denying benefits in the face of this lack of notice. Campbell cited previous court cases that recognized the purpose of Employee Retirement Income Security Act (ERISA) disclosure provisions is “to ensure that the individual participant knows exactly where he stands with respect to the plan.”Read more >
The Internal Revenue Service (IRS) has issued a publication, “Choose a Retirement Plan,” which offers a comparison of plan types available to employees of tax-exempt and governmental entities. The publication includes a plan feature comparison chart with highlights of eight types of retirement plans—noting the latest tax laws specific to each plan.Read more >
Hospital Employees Sue Colorado Springs for Pension
Employees of Memorial Health System, owned by the City of Colorado Springs, Colorado, have sued the city, claiming they were unlawfully removed from the state’s Public Employees Retirement Association (PERA) and subsequently not given promised benefits. According to the lawsuit filed in the U.S. District Court for the District of Colorado, the city did not follow the state’s PERA statute providing a process for an employer such as Memorial Health System to terminate its affiliation with PERA. In addition, the lawsuit alleges the new employee pension benefit plan for Memorial employees is inferior to the benefits they would have accrued under PERA.Read more >
Some plan sponsors, under limited circumstances, may submit requests for voluntary correction to the Internal Revenue Service (IRS) for their 457(b) retirement plans. In an update on its website the IRS reminds plan sponsors that its Employee Plans Voluntary Compliance (VC) team will not consider any issue relating to the form of a written 457(b) plan document. Also, governmental plan sponsors do not have to make a submission to VC to voluntarily fix problems with their 457(b) plans.Read more >
Advisers Gain Allies in Fiduciary Definition Debate
A number of elected officials have emerged on the side of financial advisers in opposing the Department of Labor’s fiduciary redefinition effort—introducing ambitious legislation to block changes to the fiduciary standard.Read more >
From the Magazine
TDF Focus: 2014 Notable Performers
Even though 2014 marked another bull market for U.S. equities, with the Standard & Poor’s (S&P) 500 returning 13.7% for the year, target-date funds (TDFs) returned a weighted average of 6% to investors. This difference in performance may be attributed to target-date mutual funds’ weighted average exposures of 21% to non-U.S. stock—the MSCI EAFE posted losses of 4.5% in 2014—and of 20% to U.S. bonds—the Barclays U.S. Aggregate Bond Index returned 6% for the year.Read more >
Small Talk
ON THIS DATE: In 1836, Texas declared its independence from Mexico and an ad interim government was formed. In 1861, the U.S. Congress created the Territory of Nevada. In 1899, Mount Rainier National Park in Washington was established by the U.S. Congress. In 1917, President Woodrow Wilson signed the Jones-Shafroth act, granting U.S. citizenship to the residents of Puerto Rico. In 1925, state and federal highway officials developed a nationwide route-numbering system and adopted the familiar U.S. shield-shaped, numbered marker. In 1933, the motion picture King Kong had its world premiere in New York. In 1962, Philadelphia Warriors center Wilt Chamberlain scored 100 points against the New York Knicks. It was the first time that a professional basketball player had scored 100 points in a single game. In 1985, “Sugar Walls” reaches No. 9 on Billboard magazine’s R&B Singles chart, making Sheena Easton the first and still only recording artist to score top-10 singles on all five major Billboard singles charts: Pop, Country, Dance, Adult Contemporary and R&B. In 2004, NASA announced that the Mars rover Opportunity had discovered evidence that water had existed on Mars in the past.
SURVEY SAYS: Asleep on the Job
Last week, I asked NewsDash readers, have you fallen asleep on the job? What other work mistakes have you made because you were tired? And, how do you refresh yourself when tired at work? Nearly six in ten respondents (58.5%) admitted they have fallen asleep at their desk, in their car or in another work area due to being tired at work, and 29.3% said they have fallen asleep in a meeting, during a presentation or on a phone call. Fifty-six percent of responding readers reported being tired at work caused them to make typos in a written communication. Asked how they refresh themselves when tired at work, 53.7% of responding readers selected “coffee” and 4.9% selected “energy drink.” Thirty-four percent said they snack, 78% said they stretch, take a walk, or exercise, and 22% have a non-work-related conversation with a coworker. Many of those who chose to make general comments noted that big lunches, warm rooms and boring people lead to sleepiness at work. One suggested an office sofa just for catnaps. One reader said, “This was such a huge problem for me it had a somewhat significant influence on the timing of my retirement,” while another said it was such a worrisome problem he/she went to the doctor—and was diagnosed with sleep apnea. Editor’s Choice goes to the reader who said: “Mostly I am just tired of being at work! Some days, I think a walk…all the way home…would be the right idea!” Thanks to everyone who responded to the survey!Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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