| Benefit Briefs | A Plan Sponsor Gets Participants Unstuck | “Two years ago, we noticed a lack of
participants who were on track to replace adequate income in retirement,” says
Ann Gormley, senior vice president of Human Resources at Pinnacle Health in
Harrisburg, Pennsylvania. Gormley tells PLANSPONSOR the organization
implemented automatic enrollment in 2007 with a default 2% employee deferral;
however, a plan design optimization analysis to determine how many participants
would retire with an acceptable income replacement rate performed by Pinnacle’s
plan adviser at Strategic Retirement Group with its provider Prudential, led
the organization to realize many participants were stuck at the 2% deferral and
not increasing their savings. “They were not actively engaged in the plans, and
not saving enough to retire,” she says. With the help of its adviser, Pinnacle
Health decided a reenrollment was in order, and implemented an automatic
deferral increase program. | While nurses spend their lives taking care of
others, they fall behind in taking care of their own financial future, a
Fidelity Investments study suggests. The study report, “Defining Excellence:
Nurses’ Savings Behaviors and Retirement Readiness,” says nurses’ retirement
savings is in need of urgent care, as they are on track to replace only 59% of
their ending income in retirement, a 26 percentage point gap from Fidelity’s
suggested income replacement goal of 85%. Findings for the report suggest many
nurses are well aware they face a retirement shortfall, with 63% concerned they
will never be able to fully retire and four out of five wanting help to better
prepare for retirement. | Recession Decreased Expected Reliance on 401(k)s | Fewer Americans plan to rely on a 401(k) account
as their main source of retirement income than planned to prior to the
recession, according to a recent Gallup poll. The survey found 48% of
nonretired (i.e., working) respondents in 2014 say 401(k) retirement plans will
be their primary source of income during retirement, compared with 54% who said
so in April 2008. In addition, since the recession began, more nonretirees
expect Social Security to be a major source of retirement income than did before
2008. | Pulling Out All the Stops with Retirement Education | Simply measuring the average participant’s
retirement savings shortfall will not help employers improve plan outcomes,
says Kris Gates, vice president of customer experience marketing with
MassMutual. If they’re serious about boosting the retirement readiness of their
workforce, employers also need to help employees understand how a projected
savings gap relates to their day-to-day financial picture, Gates tells
PLANSPONSOR. Without a road map of attainable next steps and basic financial
wellness support, few participants will know how to improve their long-term
financial outlook, he warns, leaving even well-designed plans stuck in neutral.
Gates suggest sponsors and advisers look at the advertising strategies of major
consumer goods companies to “win” more of their participants’ dollars and start
shaping their behavior in positive ways. | | Buyer's Market | Seyfarth Shaw, a law firm specializing in
employment and benefits law, unveiled a new Employee Benefits Administrative
Service Center for retirement plan clients. The center provides Seyfarth Shaw
clients with a suite of administrative services for use in a wide variety of
retirement plans, including defined contribution and defined benefit
arrangements, as well as both qualified and nonqualified plans. | | Industry Voices | Industry Voice: Managing and Mitigating DB Plan Risk | Milliman refers to its framework for pension
plan de-risking strategies as “The Three M’s,” because plan sponsors can handle
risk by managing it, mitigating it, or moving it. In this article, Milliman
focuses on the first two: managing risk by reviewing plan designs and
considering liability-based solutions, and mitigating risk via asset-based
solutions that target the funded status of the plan. | | Market Mirror | Yesterday, the Dow was up 17.66 points
(0.11%) at 16,530.55, the NASDAQ added 14.16 points (0.34%) to finish at
4,138.06, and the S&P 500 increased 3.52 points (0.19%) to 1,884.66. The
Russell 2000 lost 2.50 points (0.22%) to finish at 1,126.30, and the Wilshire
5000 closed 30.68 points (0.15%) higher at 19,996.66.
On the NYSE, 3.2 billion shares traded,
with a slight lead for decliners. On the NASDAQ, 2.7 billion shares changed
hands, with nearly 1.3 declining issues for every advancing issue.
The yield for the 10-year Treasury note was 2.610%,
and the yield for the 30-year Treasury bond was 3.409%.
| | Rules & Regulators | There Is an Exception to Attorney-Client Privilege | The common law of attorney-client privilege is
intended to enable clients to speak with their attorneys in trusted confidence
about work-related issues. But, there is an exception to the attorney-client
privilege in the Employee Retirement Income Security Act (ERISA). “ERISA
fiduciaries cannot assert attorney-client privilege against plan participants,”
Jon T. Coffin, a partner with Johnston, Allison and Hord in Charlotte, North
Carolina, told attendees of the Retirement & Benefits Management Seminar,
hosted by the University of South Carolina Darla Moore School of Business, and
co-sponsored by PLANSPONSOR. Citing a lawsuit decided in the 4th U.S. Circuit
Court of Appeals, he said attorney-client privilege only applies to information
discussed regarding fiduciaries’ own defense in a violation-of-duties case and
information about certain non-fiduciary plan functions. | | Financial Sense | Small plans underperformed large plans for the
first quarter of 2014 which pulled the median return for all institutional
assets tracked by the Wilshire Trust Universe Comparison Service (TUCS) to a
lackluster 1.66%. “While this is the third positive quarter in a row,
returns remain below the classic 1.82% or higher quarterly return target
required for an annualized 7.5% return,” says Robert J. Waid, managing
director, Wilshire Associates, based in Santa Monica, California. | The estimated funded level of defined benefit
(DB) plans sponsored by S&P 1500 companies fell another 1% in April to 84%,
according to Mercer. Equity market gains were not enough to offset the
liability growth of pension plan sponsors in the S&P 1500, Mercer says. The
collective deficit of $360 billion as of April 30 is up $28 billion from the
estimated deficit of $332 billion as of March 31, and up $257 billion from the
beginning of the year. | | Small Talk | ON
THIS DATE: In
1933, President Franklin D.
Roosevelt signed an executive order creating the Works Progress Administration
(WPA)—one of many Great Depression relief programs created under the
auspices of the Emergency Relief Appropriations Act, which Roosevelt had signed
the month before. In 1937, the
German airship Hindenburg, the largest dirigible ever built, exploded as it
arrived in Lakehurst, New Jersey. Thirty-six people died in the fiery accident that
has since become iconic, in part because of the live radio broadcast of the
disaster. In 1940, John Steinbeck was
awarded the Pulitzer Prize for his novel The
Grapes of Wrath. In 1994, in a
ceremony presided over by England’s Queen Elizabeth II and French President
Francois Mitterand, a rail tunnel under the English Channel was officially opened,
connecting Britain and the European mainland for the first time since the Ice
Age.
TUESDAY
TRIVIA: The Hindenburg disaster was iconic in part
because of radio announcer Herb Morrison’s on-the-scene description in which he
emotionally declared, “Oh, the humanity!” However, the recording of
Morrison’s commentary was immediately flown to New York, and was also aired as
part of America’s first coast-to-coast radio news broadcast.
| TRIVIAL PURSUITS: What
band used a picture of the Hindenburg disaster on its debut album? | 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
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