Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 14th, 2014
Benefit Briefs
Retirement Plan “Help” Helps
Retirement plan participants using certain help offered with their plans continue to earn considerably higher returns than those not using help. A study from Financial Engines and Aon Hewitt defines “Help” as access to target-date funds, managed accounts and online advice, and finds across all age ranges and a wide range of market conditions, participants using Help (Help Participants) earned higher median annual returns than those not using Help (Non-Help Participants). The annual investment performance gap between Help Participants’ and Non-Help Participants’ median returns was 3.32%, net of fees over the period from 2006 to 2012.
Putnam Finds Peer Comparisons Boost Deferral Rates
Showing plan participants how well and how much their best-performing peers save is highly motivating, Putnam Investments finds. Putnam Investments says the early results from its new “How Do I Compare” feature, which enables participants in Putnam-administered 401(k) plans to compare their saving and investing progress with the top savers in their peer group, are very encouraging. The results, based on nearly 10,000 workers who have used the feature, found that social comparison helped boost deferral rates by 28%, from 7.5% of annual income to 9.6%.
Buyer's Market
RCH Introduces Missing Participant Search Service
Retirement Clearinghouse LLC (RCH) introduced an Internet-enhanced, comprehensive search service to locate missing retirement plan participants. Retirement Clearinghouse has enhanced its services by combining searches of national change-of-address records and commercial databases with an Internet tracker and social media search capabilities. The service validates and updates participant data, oversees mailings to last known addresses, locates missing participants when possible, and helps plan sponsors meet fiduciary responsibilities.
ShareBuilder 401k Waives Startup Fees
Small business owners and human resources staffers can save nearly $1,000 in waived 401(k) plan startup fees through a promotion from ShareBuilder 401k to mark Small Business Week. ShareBuilder 401k specializes in online-managed 401(k) plans that feature exchange-traded funds as the primary investment vehicle. The firm says it will waive setup costs for all new plans beginning Monday, May 12 (the first day of National Small Business Week) and ending May 23.
Economic Events
The U.S. Census Bureau announced that advance estimates of U.S. retail and food services sales for April, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $434.6 billion, an increase of 0.1%. from the previous month, and 4.0% above April 2013. Total sales for the February through April period were up 3.3% from the same period a year ago. The combined value of distributive trade sales and manufacturers’ shipments for March, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,325.7 billion, up 1.0% from February and up 4.3% from March 2013. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,717.2 billion, up 0.4% from February and up 4.7% from March 2013.
Market Mirror
Tuesday, the Dow was up 19.97 points (0.12%) at 16,715.44, the NASDAQ was down 13.69 points (0.33%) at 4,130.17, and the S&P 500 increased by 0.80 (0.04%) to 1,897.45. The Russell 2000 fell 12.49 points (1.10%) to 1,121.16, and the Wilshire 5000 closed 18.27 points (0.09%) lower at 20,079.53. On the NYSE, 3.2 billion shares traded, with 1.2 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares changed hands, with a nearly 2 to 1 lead for decliners. The price of the 10-year Treasury note increased 15/32, bringing its yield down to 2.610%. The price of the 30-year Treasury bond rose 31/32, decreasing its yield to 3.445%.
Financial Sense
Real Estate Boosts Master Trust Returns in Q1
The median return of the BNY Mellon U.S. Master Trust Universe was 1.94% for the first quarter of 2014, the third straight quarter of positive results. The Universe’s median plan was up 11.65% for the 12 months ending March 31, 2014, driven by strong performance from U.S. equities. Corporate plans recorded the highest median return (2.59%) in Q1, followed by endowments (1.91%), foundations (1.81%), public plans (1.78%), health care plans (1.72%), and Taft-Hartley plans (1.55%).
Small Talk
Jacob Dethroned, Sophia Still on Top
After fourteen years as the king of the popular baby name list for boys, Jacob has been dethroned. Noah and Sophia are America’s most popular baby names for 2013, according to the Social Security Administration. Noah is the first new boy’s name at number one since 1960 other than Jacob or Michael, and this is the third straight year Sophia has topped the girls’ names list.
ON THIS DATE:  In 1796, Edward Jenner, an English country doctor from Gloucestershire, administered the world’s first vaccination as a preventive treatment for smallpox, a disease that had killed millions of people over the centuries. In 1804, one year after the United States doubled its territory with the Louisiana Purchase, the Lewis and Clark expedition left St. Louis, Missouri, on a mission to explore the Northwest from the Mississippi River to the Pacific Ocean. In 1973, Skylab, America’s first space station, was successfully launched into an orbit around the earth. In 1998, the legendary singer, actor and show-business icon Frank Sinatra died of a heart attack in Los Angeles, at the age of 82.   WEDNESDAY WISDOM: “There is only one success—to be able to spend your life in your own way.”—Christopher Morley, American journalist and novelist
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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