Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 5th, 2014
Second Opinions
ACA Employer Reporting Requirements – Part II
Experts from Groom Law Group answer additional frequently asked questions about the employer mandate reporting requirements.
Industry Insights
A “Sharpe” Tool in the Shed
How should defined benefit plan investors measure success? For decades, the common approach has been information ratio—return relative to a cap-weighted benchmark, divided by active risk. The problem is that this measure misses the point of what most defined benefit plan sponsors are trying to achieve: absolute return at a risk level that will meet their plan’s objectives. How to measure this, and orient an investment program around achieving it?
Benefit Briefs
A survey shows Millennials are not quite as committed to saving for the long term compared to their Generation X and Baby Boomer counterparts. While Millennials are more likely to be consciously cutting back on expenses, according to the Financial Trade-Offs study by Ameriprise Financial, far fewer Millennials (59%) than Boomers (75%) admit they have a monthly savings plan, and only 57% of Millennials with access to an employer-sponsored retirement plan are contributing enough to take full advantage of their employer’s match.
“Supplemental Retirement Plans Offered by City and County Governments,” from the Center for State and Local Government Excellence, examines 20 municipalities around the United States and finds 457 plans are the dominant supplemental plan type, with almost all plans being locally managed and using a single vendor. Some municipalities offer 401(k) plans, with a few offering 401(a) and 403(b) plans. “With the recent recession and the aging of the Baby Boomer population, there has been a growing concern about the financial status of public pension funds and the financial sustainability of governmental spending on retirement benefits,” say the authors of the brief. “If future generations of public employees are going to have adequate retirement income, they will need to save more, both on their own and through supplemental retirement saving plans.”
Buyer's Market
OneAmerica Partners with Personal Finance Personality
The retirement services division for OneAmerica will work with personal finance broadcaster Peter Dunn to offer participants tips on retirement planning. The tips will be offered in the form of videos, podcasts and other educational materials throughout 2014. Dunn, popularly known as Pete the Planner, is a former financial adviser turned author, talk show host and TV news personality.
Financial services organization TIAA-CREF has named Jennifer Pedigo as head of institutional asset management distribution for the Americas. Pedigo is part of an eight-person institutional sales team responsible for building partnerships with plan sponsors, insurance companies, sovereign wealth funds, foundations and nonprofit organizations in the Americas.
Market Mirror
Major U.S. stock indices rebounded Tuesday, with the Dow climbing 227.85 points (1.41%) to 16,395.88, the NASDAQ gaining 74.67 points (1.75%) to finish at 4,351.97, and the S&P 500 closing 28.18 points (1.53%) higher at 1,873.91. The Russell 2000 shot up 32.29 points (2.75%) to 1,208.65, and the Wilshire 5000 increased 322.29 points (1.63%) to 20,133.02.   On the NYSE, 3.2 billion shares traded, and on the NASDAQ 2.7 billion shares changed hands, with advancing issues outnumbering declining issues more than 4 to 1 on both exchanges.   The price of the 10-year Treasury note decreased 28/32, increasing its yield to 2.701%. The price of the 30-year Treasury bond fell 1 20/32, bringing its yield up to 3.648%.
Financial Sense
Time Is Ripe for Pension Strategy Changes
In a stronger position, new choices are being made in the management of pensions in Russell Investments’ $20 billion club. The $20 billion club consists of 19 corporations that together represent roughly 40% of the pension assets and liabilities of all U.S. publicly-listed corporations. Their combined pension deficit had been growing in recent years as interest rates have fallen. But 2013 saw a sharp reversal of that pattern, with more than $100 billion wiped off of the deficit thanks to strong asset performance and a rise in interest rates of almost 0.9%. “This improved position is affecting how plans are being managed,” says Bob Collie, FIA, chief research strategist of Americas Institutional at Russell. Smaller shortfalls mean smaller contributions, less investment risk and a growing emphasis on defined contribution.
Estimated funding levels of pension plans sponsored by S&P 1500 companies fell 2% in February to 87%. An analysis by consulting firm Mercer found this decrease was primarily due to adjustments based upon information released in year-end financial statements, which indicate asset values were slightly lower than previous estimates as a result of a broad market trend toward higher fixed-income allocations that occurred throughout 2013 as many plan sponsors locked in gains from their equity returns.
Rules & Regulators
Groups Recommend Expansion of Closed-DB Testing Relief
Industry groups have recommended expansions to nondiscrimination testing relief for closed defined benefit (DB) plans. The ERISA Industry Committee (ERIC) contends that because both the temporary relief and the proposals for permanent relief are narrowly construed, the relief will apply only to a limited number of plans.
Sponsored message
PLANSPONSOR Plan Sponsors of the Year – Public Defined Contribution Finalists include State of Tennessee, State of Michigan, Office of Retirement Services, and City of Austin Deferred Compensation Program. Winners in each category will be announced in February and recognized at the Awards for Excellence dinner. View other categories.
Small Talk
Running Late Due to Running Zebra
A recent survey chronicled the best excuses from employees for their lateness, ranging from escaped zebras to must-see TV. Nearly one-quarter (23%) of employees admit to arriving late at least once a month on average, with 15% admitting doing so at least once a week, according to the CareerBuilder survey. Some unusual reasons for lateness were used by employees.
ON THIS DATE:  In 1770, in what resulted in the Boston Massacre, a mob of angry colonists gathered at the Customs House in Boston and began tossing snowballs and rocks at the lone British soldier guarding the building. The protesters opposed the occupation of their city by British troops, who were sent to Boston in 1768 to enforce unpopular taxation measures passed by a British parliament without direct American representation. In 1963, the Hula-Hoop, a hip-swiveling toy that became a huge fad across America when it was first marketed by Wham-O in 1958, was patented by the company’s co-founder, Arthur “Spud” Melin. An estimated 25 million Hula-Hoops were sold in its first four months of production alone. In 1966, American popular-music fans made a No. 1 hit out of a song called “The Ballad Of The Green Berets” by Staff Sergeant Barry Sadler.     WEDNESDAY WISDOM: “You are never too old to set another goal or to dream a new dream.”—C. S. Lewis, author       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   Copyright © Asset International, Inc., 2014. All rights reserved.  No reproduction without prior authorization.
Calling All Plan Sponsors
Would you be willing to share your experiences with peers? Now in its ninth year, the PLANSPONSOR National Conference remains a unique collaboration of plan sponsors, retirement plan advisers and providers who are focused on understanding and applying the most innovative plan design solutions available. If you would like to share your experiences during one of our panel discussions, email Alison Cooke Mintzer at
Is the UAW’s Demand for Return of Pensions a Realistic Ask?
Delay on Catch-Up Provision Allows Employers to Explore Optional SECURE 2.0 Features
Conduent Sells HSA Assets for $425M in Leaving FSA Business

Editorial: Alison Cooke Mintzer


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