Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 21st, 2014
Calling on Plan Sponsors
Would you be willing to share your experiences with peers? Now in its ninth year, the PLANSPONSOR National Conference remains a unique collaboration of plan sponsors, retirement plan advisers and providers who are focused on understanding and applying the most innovative plan design solutions available. If you are a plan sponsor and would like to share your experiences during one of our panel discussions, email Alison Cooke Mintzer at acooke@assetinternational.com.
Buyer's Market
Great-West, Putnam to Combine Retirement Businesses
Great-West Lifeco Inc., which owns investment services firms Great-West Financial and Putnam Investments, will combine the retirement businesses of both subsidiary companies. Putnam Investments and Great-West Financial will remain distinct entities after the move for other lines of business, but the combined retirement entity will operate solely under the Great-West Financial organization. The retirement-related staff at both firms will remain in their respective home-office locations—Denver for Great-West and Boston for Putnam.
Pensionmark Retirement Group recently launched its Employer Document Vault, an enterprise-level document storage system that can manage thousands of client records and millions of documents. The system is designed to offer clients the ability to access key retirement plan documentation anywhere and anytime via the cloud.
Database Helps Higher Ed. Plan Sponsors Benchmark Plans
PlanPilot, a retirement plan consulting firm, is now offering a plan design database for higher education retirement plans. The database includes the plan designs for more than 250 higher education institutions spread across 40 states, which includes a variety of recordkeepers.
The ADP Mobile Solutions application, which allows people to access their retirement account information via smartphones, is now available in the Amazon Appstore. The app will allow employees who work for an ADP client to access not only retirement information, but information about pay statements, attendance, benefits and flexible spending accounts.
IFEBP Offers Materials for Employee Benefits Day
The International Foundation of Employee Benefit Plans (IFEBP) will recognize the importance of financial wellness and retirement security on the 10th annual National Employee Benefits Day, April 2. IFEBP is helping retirement plan sponsors motivate participants to actively engage in their financial wellness by offering a number of resources designed to cut through the clutter and provide simple tools sponsors can use to help participants take control of their retirement future.
Economic Events
Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, declined 0.4% to a seasonally adjusted annual rate of 4.60 million in February from 4.62 million in January, and 7.1% below the 4.95 million-unit level in February 2013, according to the National Association of Realtors. February’s pace of sales was the lowest since July 2012, when it stood at 4.59 million. In the week ending March 15, the advance figure for seasonally adjusted initial claims for unemployment insurance was 320,000, an increase of 5,000 from the previous week’s unrevised figure of 315,000, the Labor Department reported. The four-week moving average was 327,000, a decrease of 3,500 from the previous week’s unrevised average of 330,500. The average interest rate for a 30-year fixed-rate mortgage is 4.32%, down from 4.37% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.32%, down from 3.38%.
Market Mirror
Major U.S. stock indices bounced back from Wednesday’s dip during the trading day Thursday. The Dow closed 108.88 points (0.67%) higher at 16,331.05, the NASDAQ was up 11.68 points (0.27%) at 4,319.29, and the S&P 500 increased 11.24 points (0.60%) to 1,872.01. The Russell 2000 increased 3.31 points (0.28%) to 1,198.97, and the Wilshire 5000 gained 99.45 points (0.50%) to finish at 20,070.46. On the NYSE, 3.2 billion shares traded, with a slight lead for decliners. On the NASDAQ, 2.7 billion shares changed hands, with a slight lead for advancers. The price of the 10-year Treasury note slipped 1/32, bringing its yield up to 2.776%. The price of the 30-year Treasury bond was down 6/32, increasing its yield to 3.667%.
Financial Sense
The financial health of the largest U.S. corporate defined benefit (DB) pension plans improved during 2013, says a new analysis. Professional services firm Towers Watson finds that in 2013, DB funding improved to a level not seen since the start of the financial crisis. The analysis cites rising interest rates lowering liabilities, as well as moderate investment returns, as the primary reasons for the overall improvement.
For the United States, the estimated cost, as a percentage of accounting liability, of a retiree annuity purchase remained level during January at 108.5%, according to the Mercer Global Pension Buyout Index. In addition, the index findings for the U.S. mention the release of the Society of Actuaries new mortality tables, which predict longer life expectancy than those usually used to determine a plan’s accounting liability. Mercer expects this to cause a larger increase in accounting liabilities than insurer pricing, causing a decrease in buyout premiums.
Rules & Regulators
Fidelity Wins Some in Appeal of Tussey Case
Fidelity was able to convince an appellate court to vacate some of the decisions made against it in the widely watched case of Tussey v. ABB, Inc. While the 8th U.S. Circuit Court of Appeals agreed with a district court finding that the ABB fiduciaries breached their duties to the plan by failing to diligently investigate Fidelity and monitor plan recordkeeping costs, it agreed with Fidelity and ABB that the district court relied on hindsight in its ruling that the switch from the Vanguard Wellington fund to Fidelity Freedom funds violated their fiduciary duties under the Employee Retirement Income Security Act (ERISA). Fidelity was also found not liable for breaches concerning its use of “float” income.
DOL Seeks Fiduciary for Abandoned 403(b)
The Department of Labor (DOL) is seeking approval to have an independent fiduciary appointed for the abandoned 403(b) plan of the Council on Economic Priorities. A DOL lawsuit says the company went out of business in or around 1998 and since then, no individual or entity has come forward to assume fiduciary responsibility for the plan or to distribute its assets.
Small Talk
ON THIS DATE:  In 1952, an event now recognized as history’s first major rock-and-roll show—the Moondog Coronation Ball—was held in Cleveland. In 1963, Alcatraz Prison in San Francisco Bay closed down and transferred its last prisoners. In 1965, in the name of African-American voting rights, 3,200 civil rights demonstrators, led by Martin Luther King Jr., began an historic march from Selma, Alabama, to the state capitol at Montgomery. Federalized Alabama National Guardsmen and FBI agents were on hand to provide safe passage for the march, which twice had been turned back by Alabama state police at Selma’s Edmund Pettus Bridge. In 1980, President Jimmy Carter informed a group of U.S. athletes that, in response to the December 1979 Soviet incursion into Afghanistan, the United States would boycott the 1980 Olympics in Moscow. It marked the first and only time the United States has boycotted the Olympics. In 1980, J.R. Ewing, the character millions loved to hate on television’s popular prime-time drama Dallas, was shot by an unknown assailant. The shooting made the season-ending episode one of TV’s most famous cliffhangers, inspired widespread media coverage and left America wondering “Who shot J.R.?” for the next eight months.   And now it’s time for FRIDAY FILES!
Talk about amazing luck, this cyclist was hit by a vehicle, but…
In Tega Cay, South Carolina, a man sat down in a Taco Bell restaurant when another customer asked him if he had belched without saying “Excuse me.” The news report doesn’t say whether the first customer did so or not, but apparently, the second customer was so upset at the idea he walked over to the man, picked up a chair and hit him on the arm. The victim told the police the customer grabbed him by the throat and tried to head-butt him, according to the Associated Press. A restaurant worker told the man to leave, and he did without further incident. In Church Hill, Tennessee, a woman crashed through a church one morning, and when her husband went in the building to check on her, he found her lying in front of the altar with a large kitchen knife, which she planted in his chest, according to news reports. The husband went across the street to their home, removed the knife, and called police for help. Officers found his wife at a hospital, where she told them she had decided to live her life for God, who told her to stop smoking marij.uana all day and night. She also said God told her she needed to “get in the church.” She said she stabbed her husband for “worshipping the NASCAR race at Bristol.”
This poor farmer is having a bad day.
In Newark, Delaware, dozens of passengers were aboard a Greyhound bus traveling from New York to Washington, D.C., when around 4 a.m., the driver of the bus pulled over at a rest stop and got off the bus. Passengers say the driver left the bus idling and showed them the button to open and close the bus’ door before he left. The driver told the local NBC news station that he had reached his government-mandated hours limit, so he went into the rest stop to wait for another driver to show up. A new driver arrived to the rest stop around 12:30 p.m.—eight hours after they first pulled over. Greyhound officials did not admit fault, but told the news station the snowy weather hampered its operations and that the company is working with the angry passengers. In Arlington, Virginia, a 26-year-old woman showed up at the magistrate’s office—na.ked. She was apparently trying to visit her husband who had been arrested earlier in the day. According to ARLnow, she was dru.nk and refused to get dressed or leave in a cab. Officers arrested her for indecent exposure and dru.nk in public, and kept her in jail until she sobered up. In Ridgewood, New Jersey, a former public works inspector confessed to stealing around 1.8 million quarters—or about $460,000—from the village’s coin collection room. Officials said the coins were taken slowly, steadily, and by the fistful from a room in Village Hall, where quarters from Ridgewood’s parking meters are stored, according to The Record. He did not have authorization to enter the meter-collection room, but used a master key he was given “due to the nature of his position” to gain repeated access to it.
This family made the best of the humongous amount of snow this year—a backyard luge.
Have a happy weekend!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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