Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 30th, 2014
Benefit Briefs
Younger, Newer Employees the Plan Participation Challenge
Millennials continue to be the big challenge for retirement plan participation, Wells Fargo Institutional Retirement and Trust finds. Wells Fargo’s quarterly analysis of key trends among the four million eligible employees for whom it provides an employer-sponsored 401(k) plan shows about one-third (34%) of Millennial workers participate in their 401(k) plans on average. However, this number jumps up to 70% for Millennials who are automatically enrolled in their 401(k) plans. There is good news, however, as younger and newer employees who are participating in their 401(k) plans are saving at better levels and more diversified in their investments.
401(k) account balances have increased 93% since the economic downturn of 2009, according to research from The Principal Financial Group. While much of the increase reflects a rebounding market, the study found a significant increase in participation and savings rates since the market collapse, with account balances rising 17% in 2013 alone to an average of $54,000.
Complete Stats Paint Rosier Retirement Savings Picture
Some of the statistics on 401(k) balances and coverage commonly tossed around are flawed, feels Drew Carrington of Franklin Templeton. The defined contribution (DC) system is in much better shape than the headlines that blare, “The U.S. retirement system is a failure,” says Carrington, Franklin Templeton’s head of defined contribution, investment only (DCIO) institutional. Average balance statistics in 401(k) plans are among Carrington’s least favorite. “It’s completely meaningless,” he tells PLANSPONSOR.
Buyer's Market
Qualified Plans, LLC (QP) has acquired Benefits Administration Services, LLC (BAS), in Birmingham, Alabama. According to QP, BAS is a plan administrator of defined contribution retirement plans in the small and mid-market. The acquisition will increase QP’s client base by about 15%. “The acquisition complements our internal growth and follows two previously successful acquisitions in Illinois and Connecticut. Additionally, the highly experienced staff of Benefits Administration Services increases our depth of experienced plan administrators and relationship managers,” a QP spokesperson told PLANSPONSOR.
Consultant Releases Fiduciary Responsibilities Refresher
A new white paper helps plan fiduciaries understand their responsibilities and adhere to the standards of conduct that apply to them. “Fiduciary Roles and Responsibilities Under ERISA Defined Contribution Retirement Plans,” from Strategic Benefit Services, presents an overview of Employee Retirement Income Security Act (ERISA) and Department of Labor (DOL) requirements for plan fiduciaries and others with direct responsibility for retirement plans.
Industry Voices
Same-Gender Marriage Benefits: What Plan Sponsors Should Know
In U.S. v. Windsor, the U.S. Supreme Court issued a clear message: Same-gender marriages should be equal to opposite-gender marriages in the eyes of federal law. Most important for retirement plan sponsors, this applies to the federal Internal Revenue Code (the Code) and the Employee Retirement Income Security Act (ERISA). However, from the boots-on-the-ground perspective of a retirement plan sponsor, this decision presented several shades of gray as far as implementation.
Economic Events
In the week ending May 24, the advance figure for seasonally adjusted initial claims for unemployment insurance was 300,000, a decrease of 27,000 from the previous week’s revised level, the Labor Department reported. The previous week’s level was revised up by 1,000 from 326,000 to 327,000. The four-week moving average was 311,500, a decrease of 11,250 from the previous week’s revised average. This is the lowest level for this average since August 11, 2007 when it was 311,250. The previous week’s average was revised up by 250 from 322,500 to 322,750. The average interest rate for a 30-year fixed-rate mortgage is 4.12%, down from 4.14% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.21%, down from 3.25%.
Market Mirror
Thursday, the Dow was up 65.56 points (0.39%) at 16,698.74, the NASDAQ increased 22.87 points (0.54%) to 4,247.95, and the S&P 500 closed 10.25 points (0.54%) higher at 1,920.03. The Russell 2000 ticked up 3.39 points (0.30%) to 1,140.07, and the Wilshire 5000 closed at 20,332.99, up 103.08 points (0.51%). On the NYSE, 3.2 billion shares changed hands, with a more than 2 to 1 lead for advancers. On the NASDAQ, 2.7 billion shares traded, with 1.4 advancing issues for every declining issue. The price of the 10-year Treasury note was up 1/32, bringing its yield down to 2.463%. The price of the 30-year Treasury bond increased 3/32, decreasing its yield to 3.321%.
Rules & Regulators
Court Deems MassMutual a Fiduciary for Setting Compensation
A plan sponsor’s lawsuit over revenue sharing payments has moved forward as a court found the sponsor’s plan provider became a functional fiduciary by setting fees. Saris found MassMutual exercises the discretionary authority to determine its own compensation by setting separate investment account management fees (up to a maximum), which in combination with revenue sharing payments (RSPs), make up the provider’s compensation package. “A reasonable fact-finder could determine that MassMutual functions as an ERISA functional fiduciary … to the extent it determines its own compensation, takes fees out of the separate accounts, and has the discretion to offset some or all of the RSPs against management fees as its compensation,” she wrote.
The World at Large
Three in four small defined contribution (DC) schemes in the UK are missing at least 10 of the Pensions Regulator’s quality features for DC schemes, according to a report from the regulator.
Small Talk
ON THIS DATE:  In 1806, Revolutionary war veteran and future President Andrew Jackson killed attorney Charles Dickinson in a duel. In 1868, by proclamation of General John A. Logan of the Grand Army of the Republic, the first major Memorial Day observance was held to honor those who died “in defense of their country during the late rebellion.” Known to some as “Decoration Day,” mourners honored the Civil War dead by decorating their graves with flowers. In 1911, Ray Harroun drove his single-seater Marmon Wasp to victory in the inaugural Indianapolis 500. In 1922, former President William Howard Taft dedicated the Lincoln Memorial on the Washington Mall. In 1971, the U.S. unmanned space probe Mariner 9 was launched on a mission to gather scientific information on Mars, the fourth planet from the sun. The 1,116-pound spacecraft entered the planet’s orbit on November 13, 1971, and circled Mars twice each day for almost a year.   And now it’s time for FRIDAY FILES!
Even five-year-olds may have to make some hard relationship decisions.
In Shellbrook, Saskatchewan, Canada, power crews faced a dilemma when a black bear climbed up a power pole and stretched out for a nap. They were concerned about how to get the bear down without hurting it or causing an outage. But, the Sun News reports the bear climbed down on its own after its “power nap.”
In Winder, Georgia, a woman and her mother went into the Barrow County Sheriff’s office to lodge a complaint against the woman’s ex-husband. The two charged that the younger woman’s former spouse had placed her and her residence “under a spell or spells.” They claimed he did this with the assistance of his mother. According to The Smoking Gun, to support their claim, the women said they believe it because the ex-husband is able to know what they do and where they go. They also allege one of the spells caused the young woman’s health issues that have been going on for the past year since her divorce. In Nottingham, U.K., a woman is in jail after applying for a passport. You see, she applied for a passport in her husband’s name, twice, and he’s been dead since 2007. However, that’s not the only reason she is jailed. Seems the passport application process led officials to discover that she was caught speeding on two occasions in 2008 by speed cameras and paid the fines, but avoided getting points put on her driving record by claiming her husband had been doing the driving. She has been sentenced to six months in jail for two counts of perverting the course of justice and two of making fraudulent applications to get a passport.
In Changsha, Hunan Province, China, an auto parts company owner recently got a patent for his “suitcase scooter.” It can go 12 mph and cover 37 miles on one charge of its lithium battery. I’d love to have this in the airport.
In Fort Lauderdale, Florida, a Circuit Court judge was arrested in the courthouse parking lot when she arrived for work and struck a parked Sheriff’s Office vehicle with her BMW.  She repeatedly hit the gate of the judges’ parking lot with her BMW, the Orlando Sun-Sentinel reports. Deputies said the judge admitted to taking an Am.bien pill the night before, and she did not appear to have been drinking alc.ohol. She was booked into the main jail on one count of driving under the influence and one count of driving under the influence and causing property damage. In Philadelphia, Pennsylvania, an auto body shop owner is accused of running a $5 million insurance scam. According to the Associated Press, the man coached customers who had been involved in crashes to claim they had struck a deer rather than a car. That way, insurance companies would consider them “no fault” accidents and pay the claims without raising the customers’ premiums. Investigators say the man stored deer carcass.ses, blood and fur in the back of his shop to use as props. Also charged are the man’s wife, son and daughter, several insurance adjusters, tow truck drivers, a city official and a police officer—41 people in all. Have a great weekend!
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 PLANSPONSOR.com   Copyright © Asset International, Inc., 2014. All rights reserved.  No reproduction without prior authorization.
MOST READ ARTICLES
1
DuPont Plan Participants Claim Arbitrary Interpretation Reduced Their Pension Benefits
2
2021 Recordkeeping Survey
3
Defined Benefit vs. Defined Contribution: Understanding the Costs of Each
4
Considering the Arguments for and Against Actively Managed Funds in DC Plans
5
TRIVIAL PURSUITS: How Many States Are in More Than One Time Zone?

Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

Advertising: advertise@strategic-i.com

Subscribe to NEWSDash, click here .

To unsubscribe, click here.

BrightScope / CIO / FWW / Investor Economics / LiquidMetrix / Market Metrics / Matrix Solutions / PLANADVISER / Plan For Life / PLANSPONSOR / Simfund