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Industry Insights |
A Lesson About Investment Disclosures |
A recent case, Bidwell vs. University Medical Center, details the obligations of
disclosure on investment lineups, particularly qualified default investment
alternatives (QDIAs) for defined contribution plans. The University Medical
Center selected a conservative stable value fund to be the default fund for its
403(b) plan. If plan participants did not make any choices for their retirement
plan, they were defaulted into the stable value option. However, participants
could also choose to actively invest their assets into the same stable value
fund. This is what appears to have started the confusion when University
Medical Center changed their default fund and elected the safe harbor
provisions under a QDIA. |
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Benefit Briefs |
Retiree Confidence Boosts Wells Fargo/Gallup Index |
In just three months, the retirees in the Wells
Fargo/Gallup Investor and Retirement Optimism Index survey went from +6 to +41
in the index, which Joe Ready, director of Wells Fargo institutional retirement
and trust, calls a surprise—and one that obviously drove a big part of the
overall increase in optimism. Ready says two key points in the survey are of
particular interest to plan sponsors. First, investors really value the pre-tax
savings and the savings habits created by the workplace retirement plan. “An
overwhelming majority (91%) said they would favor an increase in the amount
they can defer above today’s limits,” he says. |
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Economic Events |
THE ECONOMIC WEEK AHEAD: Tomorrow,
the Conference Board will release its Consumer Confidence Index for March, and
the Census Bureau will report about new home sales for February. Wednesday, the Census Bureau will
report about durable goods orders for February, and Thursday, the Labor Department will issue its initial claims
report. |
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Market Mirror |
Friday, the Dow slipped 28.35 points
(0.17%) to 16,302.70, the NASDAQ fell 42.50 points (0.98%) to 4,276.79, and the
S&P 500 was down 5.61 points (0.30%) at 1,866.40. The Russell 2000 closed
5.53 points (0.46%) lower at 1,193.47, and the Wilshire 5000 decreased 63.39
points (0.32%) to 20,007.07.
On the NYSE, 3.2 billion shares traded,
with 1.4 advancing issues for every declining issue. On the NASDAQ, 2.7 billion
shares traded, with a 1.4 to 1 ratio of decliners to advancers.
The price of the 10-year Treasury note
was up 9/32, bringing its yield down to 2.743%. The price of the 30-year
Treasury bond increased 31/32, decreasing its yield to 3.612%.
WEEK’S
WORTH: For the week ending March 21, the Dow climbed
1.48%, the NASDAQ was up 0.74%, and the S&P 500 gained 1.37%. The Russell
2000 increased 1.02%, and the Wilshire 5000 finished 1.20% higher. |
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Financial Sense |
The Dietrich Pension Risk Transfer Index, which
tracks the relative attractiveness of annuitizing pension liabilities, remained
basically unchanged through February and into March. As of March 1, the index sits
at 95.27, falling slightly due to continued slides in interest rates. The
index’s annuity discount rate proxy of 3.12% lost six basis points from the
previous month. |
The California Public Employees’ Retirement
System (CalPERS) will allocate additional money to its emerging manager program
in the private equity asset class, using a new fund-of-funds to deploy the
capital. “This new $200 million allocation is a reflection of CalPERS ongoing
commitment to emerging and diverse managers,” says Ted Eliopoulos, CalPERS’
interim chief investment officer, based in Sacramento, California. “Our goal is
to generate appropriate, risk-adjusted investment returns by identifying early
stage funds with strong potential for success.” |
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The World at Large |
This week’s UK budget announcement lifting the
punitive tax regime on accessing whole defined contribution (DC) pension pots
at retirement will take a significant bite out of an annuities market worth
more than £10 billion in annual new business to its largest participants. |
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Rules & Regulators |
Retirement Plans Need Access to Death Master File |
A group of retirement industry representatives
recently sent a comment letter to the National Technical Information Service
(NTIS) emphasizing the need for uninterrupted access to the Social Security Administration’s
Death Master File (DMF). The NTIS, a federal agency under the Department of
Commerce, recently released a request for information (RFI) about the
establishment of a certification program by the agency to ensure DMF
information is requested by appropriate parties for valid reasons during the
three-calendar-year period following a person’s death. Investigating the
establishment of such a certification program was prompted by the passing of
the Bipartisan Budget Act of 2013, which prohibits the disclosure of DMF
information during the three-calendar-year period following death unless the
requesting party is certified under a program established by the Department of
Commerce. |
Judge Rejects Immediate Appeal for Church Plan Case |
A federal court judge has denied a motion for
immediate review by an appellate panel of one of the ongoing “church plan”
cases. Judge Thelton E. Henderson of the U.S. District Court for the Northern
District of California previously ruled that Dignity Health’s retirement plan
was not a “church plan” as defined by the Employee Retirement Income Security
Act (ERISA). Dignity’s proposed interlocutory appeal challenges the court’s
interpretation of the portions of the ERISA statute governing the church plan
exemption. |
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Sponsored message from PLANSPONSOR |
PLANSPONSOR speaks with Elaine Sarsynksi from MassMutual Retirement Services about what the industry took away from 2013, and what plan sponsors can look forward to in 2014. |
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Small Talk |
March Madness Not the Only Thing Workers Bet On |
The annual NCAA Basketball tournament (a.k.a.,
March Madness) is underway and many U.S. employees are filling out brackets and
competing for accuracy. A CareerBuilder survey finds one in five (19%)
employees say they have participated in a March Madness office pool in the
past, while 11% say they plan to do so this year. But, survey respondents
shared the NCAA tournament is not the only opportunity to make friendly wagers. |
ON THIS DATE: In 1603,
after 44 years of rule, Queen Elizabeth I of England died, and King James VI of
Scotland ascended to the throne, uniting England and Scotland under a single
British monarch. In 1955, Tennessee
Williams’ play “Cat on a Hot Tin Roof” opened in New York, two days before his
44th birthday. The play would win Williams his second Pulitzer Prize. In 1989, the worst oil spill in U.S.
territory began when the supertanker Exxon
Valdez, owned and operated by the Exxon Corporation, ran aground on a reef
in Prince William Sound in southern Alaska. An estimated 11 million gallons of
oil eventually spilled into the water. In 2002,
at the 74th annual Academy Awards ceremony at the Kodak Theatre in Los Angeles,
Halle Berry was presented with the Academy Award for Best Actress for her
performance as the wife of a death row inmate in “Monster’s Ball.” Berry was
the first African-American performer to win in the Best Actress category and
only the second African-American actress ever to be honored by the Academy. Denzel
Washington became only the second African-American man to win in the Best Actor
category, accepting the statuette for his role as a corrupt Los Angeles police
officer in “Training Day.” |
SURVEY SAYS: Offering Participants Advice |
Last week, I asked NewsDash readers if their
companies make available saving and investing advice to retirement plan
participants. Three-quarters of respondents are plan sponsors, while 17% are
TPAs/recordkeepers/investment managers and the rest fall in the “other”
category. The vast majority of readers
who responded (82.9%) reported that their firms do make advice available to
participants. When asked how this advice is made available, nearly all (93.3%)
said through the use of online tools and calculators, while two-thirds (66.7%)
reported it is available during seminars and group meetings. Sixty percent each
indicated their firms made advice available through managed investment accounts
and one-on-one meetings. Nearly half of respondents (47.1%) reported they have
used the advice offering(s) made available by their companies. One in three
(29.4%) have not, and nearly 6% said they use the advice offering(s) regularly.
Nearly 18% of respondents indicated they would use the advice offering(s) if
provided by their companies. The consensus among those making verbatim comments
is advice should be offered and is needed, but most participants don’t use it.
Some contend other efforts by plan sponsors are more important to participant
outcomes, such as automatic plan features. Editor’s Choice goes to the reader
who said: “Advice only goes so far. Auto-enrollment and escalation are much
more effective features. After all, you can lead a horse to water but you can’t
make him save for retirement.” A big
thank you to everyone who participated in the survey! |
Share the good news with a friend! Pass the Dash along – and tell your
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