Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 30th, 2018
Benefits & Administration
More Than $6 Billion in Additional Pension Contributions Made Since Tax Reform
Although increasing pension contributions was not a primary consideration in the decision to lower the corporate tax rate in the Tax Cuts and Jobs Act, it is a positive unintended consequence. Read more >
Groups Offer Blueprint for New Social Contract for Retirement
Nearly half of today’s workers and retirees fear that future generations of retirees will be worse off than those currently in retirement, cited by 49% globally and 46% in the U.S, according to “The New Social Contract: A Blueprint for Retirement in the 21st Century,” a report based on a survey of 16,000 workers and retirees in 15 countries through a collaboration between Aegon Center for Longevity and Retirement, the Transamerica Center for Retirement Studies and Instituto de Longevidada Mongeral Aegon. Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies, says, “[A] new social contract is needed for retirement.” The blueprint calls for nine design features of the new contract. Read more >
Economic Events
The Conference Board Consumer Confidence Index increased in May, following a modest decline in April (after a downward revision). The Index now stands at 128.0 (1985=100), up from 125.6 in April. The Present Situation Index increased from 157.5 to 161.7, while the Expectations Index improved from 104.3 last month to 105.6 this month.
MOST READ ARTICLES
1
IRS Announces 2019 HSA Contribution Limits
2
4% Rule Not a Reliable Retirement Income Withdrawal Strategy for All People
3
Lawsuit Argues MetLife Pension Calculations Use Outdated Mortality Table
4
401(k) Plan Sponsors Enhancing Plan Design
5
Duke University 403(b) Plan Lawsuits Reportedly Settled
Market Mirror

Tuesday, the Dow closed 391.64 points (1.58%) lower at 24,361.45, the NASDAQ fell 37.26 points (0.50%) to 7,369.59, and the S&P 500 decreased 31.47 points (1.16%) to 2,689.86. The Russell 2000 was down 3.28 points (0.20%) at 1,623.65, and the Wilshire 5000 closed 277.73 points (0.98%) lower at 28,057.79.

 

The price of the 10-year Treasury note increased 1 10/32, bringing its yield down to 2.778%. The price of the 30-year Treasury bond climbed 2 17/32, decreasing its yield to 2.962%.

Investing
Sequence Risk at Retirement Can Derail Successful Savers
Talking through the 2018 Guide to Retirement with a small group of financial services trade journalists, Anne Lester, head of retirement solutions for J.P. Morgan Asset Management, highlighted the deep analytical work her team has done regarding the optimal shape of target-date fund (TDF) glide paths during investors’ retirement years. One of the first questions Lester advocates asking is, “What should the glide path look like as participants move from accumulating asset balances to spending down those balances in retirement?” Target-date fund designs should take into account the risks retirement plan participants face—how to correlate and corral the evolving sources of market, event, longevity, inflation and interest rate risks. Read more >
Compliance
Bill Introduced to Create Retirement Benefit Commission
U.S. Senators Todd Young (R-Indiana) and Cory Booker (D-New Jersey) introduced legislation to establish a federal commission charged with reviewing private retirement benefit programs and submitting a report to Congress on how to improve private retirement security in the United States. Read more >
Court Tosses Suit Over Including Former Parent Stock in Phillips 66 Plan
The court found plaintiffs failed to state a claim for relief based on the Employee Retirement Income Security Act’s (ERISA)’s duty to diversify and failed to state a claim for failure to engage in an adequate process for evaluating the prudence of continuing to hold the ConocoPhillips Funds. Read more >
Northwestern University Prevails in ERISA 403(b) Challenge
A new decision handed down by the U.S. District Court for the Northern District of Illinois, Eastern Division, strongly rejects arguments that fiduciaries of the Northwestern University 403(b) retirement program failed to act with the loyalty and diligence required by the Employee Retirement Income Security Act (ERISA). Throughout the text of the compliant, the court points out that participants in the 403(b) plan, and a related supplemental savings plan also being considered, had a large and, over time, increasing amount of choice in terms of what active and passive investment options to use—and whether to purchase what plaintiffs suggested were overly expensive annuities. This degree of choice makes the plaintiffs’ claims that the plan was setting them up to overpay on certain investment options unjustified, the decision concludes. The court also questions the common notion asserted in 403(b) plan lawsuits that employers such as Northwestern are overpaying for recordkeeping. Read more >
Small Talk
Office temperature is causing workers to turn on each other and is also having an impact on productivity, according to a CareerBuilder survey. Nearly half of workers (46%) say their office is either too hot or too cold. Fifteen percent of workers say they have argued with a coworker about office temperature—mostly women. Read more >

ON THIS DATE: In 1539, Hernando de Soto, the Spanish explorer, landed in Florida with 600 soldiers to search for gold. In 1783, the first daily newspaper was published in the U.S. by Benjamin Towner called “The Pennsylvania Evening Post” In 1854, the U.S. territories of Nebraska and Kansas were established. In 1868, Memorial Day was observed widely for the first time in the U.S. In 1879, William Vanderbilt renamed New York City’s Gilmore’s Garden to Madison Square Garden. In 1922, the Lincoln Memorial was dedicated in Washington, D.C. In 1943, American forces secured the Aleutian island of Attu from the Japanese during World War II. In 1958, unidentified soldiers killed in World War II and the Korean conflicts were buried at Arlington National Cemetery. In 1967, daredevil Evel Knievel jumped 16 automobiles in a row in a motorcycle stunt at Ascot Speedway in Gardena, California. In 1971, Mariner 9, the American deep space probe blasted off on a journey to Mars.

 

 

WEDNESDAY WISDOM: “A cloudy day is no match for a sunny disposition.”—William Arthur Ward, inspirational writer

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

Advertising: Paul Zampitella paul.zampitella@strategic-i.com

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