Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 14th, 2015
Benefits & Administration
Pension ‘Hibernation’ Can Be a Bridge to PRT
Pension risk transfer (PRT) remains a huge challenge for many plan sponsors. Even when plans are fully funded, the sponsor will typically have to pay a substantial premium to the insurer taking on the pension benefit risk. Jim Gannon, managing director of asset allocation and risk management for Russell Investments, says “hibernation” can offer a reasonable path forward when risk transfer is desired but still not within reach.Read more >
Though they may face headwinds from health and other factors, middle-income Boomers want to work in retirement and report high levels of satisfaction when they do, according to “New Expectations, New Rewards: Work in Retirement for Middle-Income Boomers,” a study by Bankers Life Center for a Secure Retirement (CSR). Nearly half of non-working, retired American Baby Boomers (48%) would like to work, but can’t. The reasons vary—their own health, or the health of a loved one, or they can’t find a job.Read more >
Intuitive Design Boosts 401(k) Wellness Scores
Automation, mobility and advice are strengthening employee participation in workplace benefit plans, according to the 2015 Bank of America Merrill Lynch 401(k) Wellness Scorecard, with nearly two-thirds more Millennials participating in a 401(k) plan in 2014 than in the previous year. The previous scorecard showed an energized attitude about saving, particularly among Millennials, and a rise in the use of mobile access, automatic features in 401(k) plans and more personalized advice.Read more >
Products, Deals & People
BB&T Retirement and Institutional Services launched a new rollover servicing platform to expand distribution and rollover services for retirement plan participants.Read more >
Sponsored message from Vanguard
Maximizing the match in DC plans
In this new research note, Vanguard examines the effect of plan design on participants’ decision to maximize employer matching contributions.Read more >
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Economic Events

The U.S. Census Bureau announced that 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 $1,309.7 billion, up 0.4% from February, but down 2.1% from March 2014.

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 $436.8 billion, virtually unchanged from the previous month, but 0.9% above April 2014. Total sales for the February through April period were up 1.5% from the same period a year ago.  Retail trade sales were down 0.1% from March, and 0.1% below last year. Food services and drinking places were up 8.5% from April 2014 and nonstore retailers were up 6.3% from last year.

Market Mirror

Stock indices are ending mostly lower as traders considered some corporate earnings and deal news, according to the Associated Press. The Dow was down 7.74 points (0.04%) at 18,060.49, the NASDAQ inched up 5.50 points (0.11%) to 4,981.69, and the S&P 500 slipped 0.59 of a point (0.03%) to 2,098.53. The Russell 2000 decreased by 0.86 of a point (0.07%) to 1,232.27, and the Wilshire 5000 closed 9.43 points (0.04%) lower at 22,159.94.

On the NYSE, 3.2 billion shares traded, with 1.3 advancing issues for every declining issue. On the NASDAQ, 2.8 billion share changed hands, with an even split between advancers and decliners.

The price of the 10-year Treasury note was down 10/32, increasing its yield to 2.290%. The price of the 30-year Treasury bond decreased 1 7/32, bringing its yield up to 3.082%.

Compliance
Courts Split on Definition of Church Plan
The U.S. District Court for the District of Maryland has issued an order granting partial dismissal of claims against Trinity Health Corporation challenging the “church plan” status of its retirement plan for employees. The court says it holds that the Employee Retirement Income Security Act (ERISA) permits an organization that is “controlled by or associated with a church or convention of churches” to establish a “church plan.” The ruling evenly splits district court findings in six circuits, with half finding as the Maryland court did in Lann v. Trinity Health Corporation, and half finding that only a church may establish a “church plan.”Read more >
From the Magazine
Webinars? Online games? Maybe even paper? How does a retirement plan committee know what media will best convey its message to plan participants?Read more >
Does Your Plan Have the Right Investment Lineup?
For most defined contribution (DC) plans, a simple, optimized and cost-effective investment menu makes for a good lineup, experts say—but how do plan sponsors get there? “The first question really is: What is the objective of the plan—what does the plan sponsor want to achieve with the plan?” says Dagmar Nikles, managing director, DC investment strategy, at BlackRock in San Francisco.Read more >
Investing
April was another light trading month for participants in defined contribution (DC) plans, the Aon Hewitt 401(k) Index reveals. On average, 0.026% of 401(k) account balances transferred each day and just three days experienced above-normal trading activity for the month. When participants made trades they preferred fixed income over equities on about two-thirds of trading days.Read more >
Managed Accounts the Next DC Investment Trend?
Mega plan sponsors are pushing the envelope yet again, going beyond target-date funds by offering more personalization to their plan participants through managed account vehicles, according to the DC Investment Manager Brandscape, a Cogent Reports study by Market Strategies International. Cogent Reports notes that actions by mega plans often serve as indicators of new industry trends. The proportion of mega plans offering these customized allocation solutions as their 401(k) plan default investment option has increased from 5% in 2014 to 18% in 2015.Read more >
Small Talk
ON THIS DATE: In 1787, delegates began gathering in Philadelphia for a convention to draw up the U.S. Constitution. In 1796, Edward Jenner, an English country doctor from Gloucestershire, administered the world’s first vaccination as a preventive treatment for smallpox. 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 1980, U.S. President Carter inaugurated the Department of Health and Human Services. In 1985, the first McDonald’s restaurant became the first fast-food business museum. It is located in Des Plaines, Illinois. 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. In 1998, the final episode of the TV series “Seinfeld” aired after nine years on NBC. In 1999, North Korea returned the remains of six U.S. soldiers that had been killed during the Korean War.
SURVEY SAYS: The move away from offering defined benefit (DB) plans has been going on for years now, and likely many of us were affected as participants. This week, I’d like to know, have you ever participated in a DB plan, and how did a move from a DB to a defined contribution (DC) plan affect you? Were you the plan sponsor or working with the plan sponsor to implement the DB to DC change? If so, do you have any tips to share? You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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