| | Benefit Briefs | | Stronger Education, Stronger Outcomes | | It’s a phenomenon unique to the retirement
planning advice industry that even those participants who make good investment
decisions often don’t know they’re making good decisions. And those who make
bad investment decisions in employer sponsored plans are in a similar, if
somewhat more precarious position, says Stig Nybo, president of pension sales
and distribution at Transamerica Retirement Solutions. In other words, there are
substantial hurdles to overcome in terms of basic financial literacy among
participants in defined contribution retirement plans before advisers can
ensure workers accrue adequate assets for retirement. | | No Shortage of Challenges or Chances | | Issues confronting retirement plan sponsors and
others providing financial services to workers and retirees range from
mushrooming “retirement crisis deniers” to a new federal focus on tax treatment
of 401(k) plans, says Brian Graff, executive director of the National
Association of Plan Advisers (NAPA). Should sponsors and the various industry
groups that lobby for their interests fail to act and influence lawmakers,
Graff warns, the results could be disastrous for both the industry and the tens
of millions of workers who invest and save through workplace retirement plans. Graff
sounded the familiar-but-dire warning at the opening of the 2014 NAPA 401(k)
Summit, hosted by the National Associate of Plan Advisors (NAPA), in New
Orleans. He wasted no time at the start of the annual conference in attacking
some specific proposals floated in recent months by various parties in the
federal government, as well as the Obama administration. | | Alternative Investments of Growing Interest to DC Plans | | Alternative assets have been granted a crucial
role in the portfolio strategies of defined benefit (DB) pension plans over the
last 15 to 20 years, as plan sponsors have called on the higher returns and
diversification potential of commercial real estate, private equity and hedge
funds to meet their long-term obligations to participants. Greenwich
Associates’ tally of public sector defined benefit plans for 2012—the firm’s
most recent such tally—showed a total of 18% of aggregate assets devoted to
these asset classes. In the defined contribution (DC) world, however, even
though the benefit liabilities are much the same, alternatives have not gained
much traction. But fund managers have been adapting alternatives to a defined
contribution format, so interest from sponsors and participants may not be far
behind. | | | Market Mirror | | Yesterday, the Dow slipped 26.08 points
(0.16%) to 16,276.69, the NASDAQ fell 50.40 points (1.18%) to 4,226.39, and the
S&P 500 was down 9.08 points (0.49%) at 1,857.44. The Russell 2000 lost
15.50 points (1.30%) to finish at 1,178.23, and the Wilshire 5000 closed 128.75
points (0.64%) lower at 19,878.32.
On the NYSE, 3.2 billion shares traded,
with 1.7 declining issues for every advancing issue. On the NASDAQ, 2.7 billion
shares changed hands with a nearly 3 to 1 lead for decliners.
The price of the 10-year Treasury note was down 2/32,
bringing its yield up to 2.736%. The price of the 30-year Treasury bond
decreased 3/32, increasing its yield to 3.567%.
| | | Financial Sense | | According to a recent news report from The
Detroit News, the funded status of the Detroit Police and Fire Retirement
System decreased from 96.1% to 89% as of June 30, 2013. Similarly, the funded
status of the Detroit General Retirement System declined from 78% to 70% in
2013. These declines in funding appear to be the result of millions of dollars
in unpaid employer contributions from the city. While the city goes through its
bankruptcy proceedings, it will not be able to make its contributions to the
plans, according to the news report. | | | Rules & Regulators | | Reporting and Disclosure Requirements for Non-ERISA Plans | | Financial and retirement services provider
Prudential has created its Compliance Checklist 2014 for qualified governmental
and nonelecting church plans, non-ERISA 403(b) plans, 457 plans and
nonqualified executive benefit plans that are not subject to ERISA. The
checklist offers sponsors of non-ERISA plans information about the materials
that need to be filed, as well as filing due dates and the agencies to which these
materials need to be routed. | | Richard Sippola, the fiduciary of the
Cleveland-based Carnegie Body Company 401(k) Retirement Plan, has agreed to
restore losses to participants in the amount of $9,396.03—the full amount of
unremitted contributions and loan repayments for the March 13, 2009 to January
10, 2010. | | How to Avoid (or Survive) a Plan Audit | | Aggregate qualified retirement plan audit data
from the Department of Labor (DOL) shows that, of the 3,677 investigations closed
in 2013, violations were found nearly 73% of the time. Beyond plan violations,
DOL investigators closed some 320 criminal investigations in 2013, with 88
indictments and 70 guilty pleas or convictions. Taken together, plan sponsors
paid a collective $1.7 billion in plan reimbursements and fines to settle the
criminal cases and violations last year alone. Bruce Ashton, an attorney with
the law firm of Drinker Biddle & Reath LLP, says those numbers contain a
clear message for plan fiduciaries and financial advisers working with
retirement plans—the best way to survive an audit unscathed is to avoid an
audit in the first place. | | | Small Talk | | ON
THIS DATE: In
1634, the first colonists to
Maryland arrived at St. Clement’s Island on Maryland’s western shore and found
the settlement of St. Mary’s. In 1911,
the Triangle Shirtwaist Company factory in New York City burned down, killing
145 workers. The tragedy led to the development of a series of laws and
regulations that better protected the safety of factory workers. In 1933, President Herbert Hoover accepted
the newly commissioned USS Sequoia as
the official presidential yacht. For 44 years, the Sequoia served as an occasional venue for recreation and official
gatherings for eight U.S. presidents. In 1957,
France, West Germany, Italy, the Netherlands, Belgium, and Luxembourg signed a
treaty in Rome establishing the European Economic Community (EEC), also known
as the Common Market. The EEC, which came into operation in January 1958, was a
major step in Europe’s movement toward economic and political union. In 1958, Sugar Ray Robinson defeated
Carmen Basilio to regain the middleweight championship. It was the fifth and
final title of his career.
TUESDAY
TRIVIA: Upon learning the name given to his reality TV
series, the star of Duck Dynasty said, “That sounds like a Chinese food place.”
| | TRIVIAL PURSUITS: The
elephant is the mascot of the Republican Party. The donkey is the mascot of the
Democratic Party. What animal became the mascot of the Prohibition Party in
1908? | | Share the good news with a friend! Pass the Dash along – and tell your
friends/associates they can sign up for their own copy. | | News from PLANSPONSOR.com
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