Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 22nd, 2018
Benefits & Administration
Retirement Program Designs of the Future: Beyond Automatic Plan Features
As it became clear that defined contribution (DC) plan participants were struggling with savings and investing decisions, the use of automatic plan features, encouraged by the Pension Protection Act (PPA), became the new trend in helping participants reach their retirement goals. The 2017 PLANSPOSOR DC survey found that 42.7% of DC plans overall use automatic enrollment, and 35.4% use automatic deferral escalation. This increases to 65.6% and 67.3%, respectively, for the largest plans. In addition, many DC plans are defaulting participants into target-date funds (TDFs) as a set-it-and-forget-it investment strategy—letting professional managers take control of investment diversification decisions. However, as retirement plan sponsors focus on increasing retirement income replacement ratios for participants and new generations enter the workforce, they need to look at enhancing their retirement programs so participant retirement goals are met. Read more >
Study Supports Use of Auto Features in Public-Sector 457 Plans
A follow up to a study done in 2010 finds automatic enrollment and automatic escalation can help public-sector 457(b) plans increase participation and savings rates for employees. The new research from the Center for State and Local Government Excellence shows that the proportion of workers contributing to the SRP among those automatically enrolled declines with additional years of employment; however, it is still significantly higher than for workers in agencies that did not adopt the auto enrollment policy. The study also found of the new hires in 2015 who have automatic escalation, 95.2% kept making a contribution in 2016. Read more >
MOST READ ARTICLES
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New Lawsuit Highlights Importance of Cybersecurity for Retirement Plans
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IRS Releases 2019-2020 Priority Guidance Plan
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DC Plans 3.0 Will Really be Tailored to Individual Situations
Americans’ Appreciation for Guaranteed Retirement Income on the Rise
Seventy-three percent of people surveyed for the Guaranteed Lifetime Income Study from Greenwald & Associates and CANNEX said they view guaranteed income as a valuable addition to Social Security. Two primary reasons why people value guaranteed income are to cover health care costs (cited by 54%) and to prevent running out of money (46%). Fifty-two percent said they view guaranteed income as a hedge against a market downturn. Read more >
Products, Deals and People
BlackRock Unveils Retirement Income Planning Solution
Rather than rely on a simple 4% withdrawal rule, the new BlackRock model seeks to sustain the consumption pattern once labor income ceases. Read more >
Firms Partner to Provide Health Care Cost Transparency
The partnership between Alegeus and ZendyHealth aims to help employees make smarter decisions to manage health care costs. Read more >
Economic Events

Despite consistently low inventory levels and faster price growth, existing-home sales bounced back in February after two straight months of declines, according to the National Association of Realtors. Sizeable sales increases in the South and West offset declines in the Northeast and Midwest. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, grew 3.0% to a seasonally adjusted annual rate of 5.54 million in February from 5.38 million in January. After last month’s increase, sales are now 1.1% above a year ago.

Market Mirror

Wednesday, the Dow closed 44.96 points (0.18%) lower at 24,682.31, the NASDAQ lost 19.02 points (0.26%) to finish at 7,345.28, and the S&P 500 decreased 5.01 points (0.18%) to 2,711.93. The Russell 2000 increased 8.90 points (0.57%) to 1,579.30, and the Wilshire 5000 was down 24.15 points (0.09%) at 28,165.65.

 

The price of the 10-year Treasury note was up 4/32, decreasing its yield to 2.883%. The price of the 30-year Treasury bond increased 14/32, bringing its yield down to 3.110%.

Compliance
District Court Rejects Racketeering Claims Against Prudential, Morningstar
A district court has ruled that the complaint “does not sufficiently plead that the defendants were engaged in the conduct of an association-in-fact enterprise or that each defendant engaged in a pattern of racketeering activity.” Read more >
Investing
Institutional Investors See Chance for Alpha in Focused Strategies
In the past 12 to 18 months, 56% of institutional investors have increased their exposure to focused strategies, defined as 50 or fewer holdings, a survey finds. Read more >
Small Talk

ON THIS DATE: In 1457, Gutenberg Bible became the first printed book. In 1765, the Stamp Act was passed. It was the first direct British tax on the American colonists. In 1767, Joseph Priestley invented carbonated water (seltzer). In 1894, the first playoff competition for the Stanley Cup began. Montreal played Ottawa. In 1903, Niagara Falls ran out of water due to a drought. In 1919, the first international airline service was inaugurated on a weekly schedule between Paris and Brussels. In 1934, the first Masters golf championship began in Augusta, Georgia. In 1948, the United States announced a land reform plan for Korea. In 1954, the first shopping mall opened in Southfield, Michigan. In 1974, the Viet Cong proposed a new truce with the U.S. and South Vietnam. The truce included general elections. In 1980, People for Ethical Treatment of Animals (PETA) was founded by Ingrid Newkirk and Alex Pacheco. In 1993, Intel introduced the Pentium-processor. In 1997, Tara Lipinski, at 14 years and 10 months, became the youngest women’s world figure skating champion.

SURVEY SAYS: The Department of Labor (DOL) has paved the ways for inclusion of environmental, social and governance (ESG)-screened investments to be included in defined contribution (DC) plan menus. This week, I’d like to know, do you invest in socially responsible investments in your DC plan, and do you think the returns on these investments are on par with non-screened investments? You may respond to this week’s survey by 6 p.m. Pacific time today. Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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