Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 31st, 2014
Industry Insights
Plan Level Investment Selection/De-Selection
Maintaining an investment menu is a somewhat different task than building one from scratch. Jim Phillips and Patrick McGinn of Retirement Resources discuss the practical aspects of managing an existing menu.
Plan Sponsor of the Year and Finalists: Small 401(k)
Meet Our Plan Sponsor of the Year Winner: Small 401(k)
Looking at employees’ health holistically is second nature for Draper, Inc., a manufacturer of projection screens, window shades and gymnasium equipment. Not only has the company been honored as the healthiest company in the state of Indiana by Healthiest Employers LLC last August, but in January it topped the list of 100 companies recognized by Healthiest Employers, a national organization dedicated to helping improve the wellness of American workers. In the same vein, Danny Thomas, the human resources (HR) generalist in charge of the 401(k) plan at Draper, thinks about the financial health of the company’s retirement plan participants: “We have a great 401(k) plan design, but how do we help employees truly know if they are on the right path?”
From the participant’s viewpoint, the part of the Cox Smith 401(k) plan revamp that paid the greatest dividend was one-on-one advice for the firm’s 500 employees. “The consultants came in and answered individual questions about participants’ retirement plans and their retirement planning. That added a lot in terms of tightening awareness of the plan and conveying the message as to why it’s important,” says Jamie Smith, chairman of the Austin-based law firm, which is involved in all aspects of business law and litigation.
“Our founder was adamant about taking care of family and employees so they could have sufficient funds to leave this place to be able to play with their grandchildren,” says James “Jim” A. Goff, CEO of Landsman Development Corp., a real estate developer of primarily affordable housing, in Rochester, New York.
Benefit Briefs
Could Auto-Escalation Help Public Employees Save More?
As state and local governments continue to modify their retirement packages, public employees may need to save more for retirement, says a new study. The study from the Center for State and Local Government Excellence, “Using Automatic Escalation in Public Sector Retirement Plans to Increase Savings,” suggests one way supplemental retirement savings plans for public employees could be enhanced is by including automatic deferral escalation. The study report highlights the challenges and opportunities state and local governments face as they consider instituting automatic escalation plan features.
Buyer's Market
Play Money: Financial Literacy as a Game
Participants might respond better to education if it’s more like a game, says Chris Whitlow of edu(k)ate, an app developer that delivers gameified financial education. The online startup, based in Orlando, Florida, says it can boost plan participants’ financial literacy using a combination of game-like techniques and motivations, such as prizes and sponsored contests, and by drawing on the work of behavioral finance. In short, motivational techniques boost financial wellness activity. Gameification has gained a definite foothold over the past five or six years, Whitlow tells PLANSPONSOR.
Economic Events
THE ECONOMIC WEEK AHEAD: Tomorrow, the Census Bureau will report about construction spending for February, and Wednesday, it will report about factory orders for February. Thursday, the Labor Department will issue its initial claims report. Friday, we’ll see a report about March nonfarm payrolls and learn the unemployment rate for March.
Market Mirror
Friday, the Dow was up 58.83 points (0.36%) at 16,323.06, the NASDAQ increased 4.53 points (0.11%) to 4,155.76, and the S&P 500 gained 8.58 points (0.46%) to finish at 1,857.62. The Russell 2000 increased 0.37 (0.03%) to 1,151.81, and the Wilshire 5000 closed 83.25 points (0.42%) higher at 19,809.28. On the NYSE, 3.2 billion shares traded, with 2.5 advancing issues for every declining issue. On the NASDAQ, 2.7 billion shares changed hands, with a slight lead for advancers. The price of the 10-year Treasury note was down 10/32, bringing its yield up to 2.720%. The price of the 30-year Treasury bond decreased 12/32, increasing its yield to 3.548%. WEEK’S WORTH: For the week ending March 28, the Dow inched up 0.12%, the NASDAQ lost 2.83%, and the S&P 500 was down 0.47%. The Russell 2000 fell 3.49%, and the Wilshire 5000 decreased 0.99%.
Financial Sense
Total U.S. retirement assets reached $23 trillion at year-end 2013, growing 15.6% during the year, according to an analysis from the Investment Company Institute (ICI). Retirement savings accounted for 34% of all household financial assets in the United States at the end of the fourth quarter of 2013.
The Securities and Exchange Commission (SEC) has recently made analyses related to money market fund reform available to the public. The analyses, conducted by the SEC’s Division of Economic and Risk Analysis, examine: (1) The spread between same-day buy and sell transaction prices for certain corporate bonds from January 2, 2008, to January 31, 2009; (2) The extent of government money market fund exposure to non-government securities; (3) Academic literature reviewing recent evidence on the availability of “safe assets” in the U.S. and global economies; and (4) The extent various types of money market funds are holding in their portfolios guarantees and demand features from a single institution.
The World at Large
The removal of the strong tax incentives for almost all UK defined contribution members to take an annuity in retirement will prompt some savers to continue chasing investment returns into later life, with research suggesting this can yield more than four times the retirement income of an annuity. With traditional insurer annuity providers still coming to terms with what the changes mean for their business models, the race is on for them, along with fund managers and consultants, to create a wider range of products for people when they leave work.
Rules & Regulators
DOL Says 401(k) Trustee Failed to Perform Duties
The Department of Labor (DOL) has filed a lawsuit to remove and replace a 401(k) plan trustee for failing to perform his duties. The DOL says the trustee failed to administer the plan on behalf of anyone but himself, failed to provide the plan’s third party administrator with the information necessary to calculate the employer matching funds due to each participant in 2012, and failed to file a Form 5500.
Sponsored message from NYLM
PLANSPONSOR interviews Scott Francolini, from New York Life Retirement Services
National Practice Leader Scott Francolini shares how New York Life Retirement Plan Services is thinking differently about retirement plan strategy and success, and how the company is combatting today’s industry challenges.
Small Talk
ON THIS DATE:  In 1889, the Eiffel Tower was dedicated in Paris. In 1943, Oklahoma! premiered on Broadway and went on to set a Broadway record of 2,212 performances before finally closing more than 15 years later. In 1959, the Dalai Lama, fleeing the Chinese suppression of a national uprising in Tibet, crossed the border into India, where he was granted political asylum. In 1991, after 36 years in existence, the Warsaw Pact—the military alliance between the Soviet Union and its eastern European satellites—came to an end. The action was yet another sign that the Soviet Union was losing control over its former allies and that the Cold War was falling apart. In 1995, Major League Baseball players were sent back to work after the longest strike in baseball history ended. Because of the strike, the 1994 World Series was cancelled; it was the first time baseball did not crown a champion in 89 years.
SURVEY SAYS: Is Your Resume Updated?
Last week, we covered a survey about catch-phrases used on resumes. I asked NewsDash readers if they keep their resumes updated, and how many of those catch-phrases identified as turn-offs by hiring managers surveyed are on their resumes. The majority (56.3%) of responding readers indicated their resumes are updated, while the rest said they are not. More than one-quarter (26.7%) of respondents reported their resumes are updated both online and on paper. As for the turn-off catch phrases, nearly one-half (48.1%) of responding readers admitted their resumes contain the phrase “detail-oriented.” More than one-quarter (25.9%) each indicated their resumes include “team player” and “self-motivated.” All but one catch-phrase was used by some respondents. In the verbatim comments, of course, quite a few respondents couldn’t resist the opportunity to use those catch phrases in very clever and amusing ways in their responses: “I will be retiring soon, so my resume is not getting updated. However, I did tell my wife that after I retire I will definitely be self-motivated, a team player and her go-to person,” is an example. Editor’s Choice goes to the reader who said: “I once worked for a company that was in trouble (regulatory) and during an employee meeting, one (very brave) person asked a senior exec if they should update their resume. The answer was priceless and I will always remember it, and apply it. The answer was ‘I annually update my resume, regardless of the situation. That way, I can take stock of where I am in my career and ensure I’m on track with my goals, and also be ready for any situation or opportunity that arises.’ Great advice.” Thanks to everyone who participated in our survey!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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