Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 26th, 2018
Benefits & Administration
More DC Plan Sponsors Offering Roth Accounts to Participants
Roth availability has doubled in the past decade, the Plan Sponsor Council of America (PSCA) found. In 2016, 63.1% of plans offered a Roth, up from 30.3% in 2007. In 2016, 7.2% of plans added Roth as an option. Among plans with more than 5,000 participants, 11.2% added a Roth. Among those eligible to participate in their plan in 2016, 18.1% of participants made Roth contributions. The highest percentage of participants making Roth contributions was in plans with one to 49 participants (29.2%). PSCA Executive Director Jack Towarnicky outlines scenarios for which Roth accounts could be beneficial for defined contribution plan participants. Read more >
Gen X Needs Retirement Planning Help
The majority of Gen Xers believe their retirement savings will cover basic expenses as well as leisure and travel, but the fact of the matter is, 40% have no retirement savings, the Insured Retirement Institute (IRI) learned in a survey. This is up from 35% in 2016. In addition, 66% have not tried to figure out how much they will need to save in order to retire. The top three retirement risks Gen Xers are most concerned about are changes to Social Security, high health care costs and running out of money. Read more >
Products, Deals and People
Empower Adds Account Aggregation Capabilities to Retirement Planning Platform
Data services supplied by Quovo will enable Empower to further provide participants with a comprehensive view of all their financial accounts from a variety of outside institutions. Read more >
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Open MEPs Not for Every Plan Sponsor
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Employers Encouraged to Offer Multi-Dimensional Wellness Programs
Retirement Industry People Moves
First Eagle and CRR partner to develop tools to help retirement savers; John Hancock Adds Regional VP for Taft-Hartley Practice; Ascensus acquires Chard Snyder for Health Division; and more. Read more >
Economic Events

Sales of new single-family houses in February were at a seasonally adjusted annual rate of 618,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 0.6% below the revised January rate of 622,000, but is 0.5% above the February 2017 estimate of 615,000.

 

New orders for manufactured durable goods in February increased $7.4 billion or 3.1% to $247.7 billion, the U.S. Census Bureau announced. This increase, up three of the last four months, followed a 3.5% January decrease. Excluding transportation, new orders increased 1.2%. Excluding defense, new orders increased 2.5%. Transportation equipment, also up three of the last four months, led the increase, $5.5 billion or 7.1% to $83.5 billion.

 

THE ECONOMIC WEEK AHEAD: Tomorrow, the Conference Board will release its Consumer Confidence Index. Thursday, the Labor Department will issue its initial claims report.

Market Mirror

Friday, the Dow closed 424.69 points (1.77%) lower at 23,533.20, the NASDAQ lost 174.01 points (2.43%) to finish at 6,992.67, and the S&P 500 shed 55.43 points (2.10%) to end at 2,588.26. The Russell 2000 fell 33.79 points (2.19%) to 1,510.08, and the Wilshire 5000 lost 564.27 (2.05%) to finish at 26,912.64.

 

The price of the 10-year Treasury note was increased 3/32, bringing its yield down to 2.815%. The price of the 30-year Treasury bond was up 2/32, decreasing its yield to 3.061%

 

WEEK’S WORTH: For the week ending March 23, the Dow decreased 5.67%, the NASDAQ fell 6.54%, and the S&P 500 lost 5.95%. The Russell 2000 was down 4.79%, and the Wilshire 5000 finished 5.72% lower.

From the Magazine
Insights: Happy 25th!
Birthdays and anniversaries. We celebrate them annually and, for most, milestone birthdays and anniversaries are something extra special. This year, at PLANSPONSOR, we celebrate a milestone—25 years since our debut issue, in 1993. The inaugural issue included a cautionary note that, while “defined contribution plans are sweeping the nation,” it was “not yet clear whether anyone can save 401(k) investors from themselves.” We still struggle to answer that question amid lower than necessary savings rates and asset accumulation. Only time will tell whether we’ll still be asking that question in another 25 years. Read more >
Small Talk

ON THIS DATE: In 1776, the Provincial Congress of South Carolina approved a new constitution and government. In 1864, General James B. McPherson assumed command of the Union Army of the Tennessee after William T. Sherman was elevated to commander of the Division of the Mississippi, the overall leader in the West. In 1920, “This Side of Paradise” was published, immediately launching 23-year-old F. Scott Fitzgerald to fame and fortune. In 1941, Italy attacked the British fleet at Suda Bay, Crete, using detachable warheads to sink a British cruiser. This was the first time manned torpedoes had been employed in naval warfare, adding a new weapon to the world’s navies’ arsenals. In 1953, American medical researcher Dr. Jonas Salk announced on a national radio show that he successfully tested a vaccine against poliomyelitis, the virus that causes the crippling disease of polio. In 1969, a group called Women Strike for Peace demonstrated in Washington, D.C. in the first large antiwar demonstration since President Richard Nixon’s inauguration in January. In 2008, the Ford Motor Company announced the sale of its Jaguar and Land Rover divisions to the Tata Group, one of India’s oldest and largest business conglomerates, for some $2.3 billion—less than half of what Ford originally paid for the brands.

SURVEY SAYS RESPONSES: Last week, I asked NewsDash readers, “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?” Two-thirds of respondents reported they do not care if their retirement plan investments are in socially responsible companies, and one-third do care. Three-quarters said their company’s DC plan does not offer ESG-screened investment options, while there was an even split (12.5% each) of plans that do and respondents who don’t know if their plans offer ESG-screened investment options. The majority (87.5%) of responding readers do not invest in socially responsible investments in thier DC plans, and 12.5% said they do. Asked whether they think ESG-screened investment returns are on par with non-screened investments, 58.3% said some are and some aren’t, 20.8% don’t know, 16.7% said no and 4.2% said yes. In verbatim comments, some pointed out that their plan’s objective was just to provide an appropriate mix in their investment menus. Some were for and some were against using ESG factors in considering fund options. Editor’s Choice goes to the reader who said: “ESG-screened funds should be subject to the same process to determine if they are appropriate for our DC plans as are all other funds.” A big thank you to all who participated in the survey! Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

Advertising: Paul Zampitella paul.zampitella@strategic-i.com

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