Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 6th, 2016
Benefits & Administration
Employer, Employee Decisions Can Change Retirement Savings Picture
Simulations performed by the Government Accountability Office (GAO) show that households, on average, would save enough in their DC plans over their careers to generate monthly lifetime income at retirement, as measured by an annuity equivalent, of about $2,970 in 2015 dollars. Households in the low-earnings group would accumulate DC plan savings equivalent to an average annuity of about $560 per month in retirement, while households in the high-earnings group would save enough to receive about 11 times more annuity income from DC plans than low-earning households, on average. However, the GAO found many decisions, some within the control of workers and some within the control of plan sponsors, can have significant effects on projected balances of DC savings.Read more >
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Best Practices for 403(b) Plans
403(b)s are still catching up with plan design and fiduciary best practices.Read more >
The Employer’s Role in Retirement Advice
“Most Americans don’t get retirement advice other than what employers make available, and among those who do get advice from other sources, some do not get unbiased advice,” Anna Rappaport, chair of the Society of Actuaries Committee on Post-Retirement Needs and Risks, told attendees of the Plan Sponsor Council of America (PSCA) Annual Conference in Nashville, Tennessee. She noted that retirement plan sponsors have a role to lead and inspire employees and provide good resources. Carol Bogosian, member of the Society of Actuaries Committee on Post-Retirement Needs and Risks, suggested there is a pyramid of providing advice from the least personalized to the most personalized and plan sponsors should start at the bottom and add layers they feel comfortable with.Read more >
Products, Deals and People
Macquarie Group’s Delaware Investments announces the availability of new retirement share classes; Baird’s Chautauqua Capital launches global and international mutual funds available in institutional shares.Read more >
Strategic Benefit Services’ (SBS) retirement plan business expanded its offerings to include a focus on mergers and acquisitions (M&A). SBS will add the requisite layer of due diligence to retirement plan administration that is often missing from merger and acquisition projects.Read more >
Economic Events

In the week ending April 30, the advance figure for seasonally adjusted initial claims for unemployment insurance was 274,000, an increase of 17,000 from the previous week’s unrevised level of 257,000, the Labor Department reported. The four-week moving average was 258,000, an increase of 2,000 from the previous week’s unrevised average of 256,000.

The average interest rate for a 30-year fixed-rate mortgage is 3.61%, down from 3.66% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 2.86%, down from 2.89%.
Market Mirror

Major U.S. stock indices ended mostly lower Thursday. Utilities and consumer stocks fell the most, according to the Associated Press. The Dow was up 9.45 points (0.05%) at 17,660.71, the NASDAQ decreased 8.55 points (0.18%) to 4,717.09, and the S&P was virtually unchanged at 2,050.62. The Russell 2000 closed 5.19 points (0.47%) lower at 1,107.94, and the Wilshire 5000 was down 17.61 points (0.08%) at 21,179.65.

On the NYSE, 3.1 billion shares traded, with a slight lead for decliners. On the NASDAQ, 2.7 billion shares changed hands, with 1.7 declining issues for every advancing issue.

The price of the 10-year Treasury note was up 10/32, decreasing its yield to 1.742%. The price of the 30-year Treasury bond increased 22/32, bringing its yield down to 2.597%.
Compliance
IRS to Discuss Sick and Vacation Pay Deferred to 403(b)s
The Internal Revenue Service (IRS) is hosting a webcast about accumulated sick and vacation pay deferred to 403(b) or 457(b) plans.Read more >
From the Magazine
DC Plan Design: Asset-Allocation Investments
Asset-allocation funds represent a Third Age of sorts for defined contribution (DC) plan menus: At first appearance, 30 years ago, they offered two or three basic investment options; during the 1990s, they were expanded to dozens of core fund options, in the name of “choice”; and then they were simplified to the product most popular today—diversified target-date retirement funds.Read more >
Investing
Low-Cost Funds May be Outperformers
Mornginstar took a look at the survival rates of funds at various fee levels and found that the lower-cost funds had a higher rate of surviving—another indication that these funds outperformed their peers.Read more >
Small Talk

ON THIS DATE: In 1840, the first adhesive postage stamps went on sale in Great Britain. In 1851, the mechanical refrigerator was patented by Dr. John Gorrie. In 1861, Arkansas became the ninth state to secede from the Union. In 1877, Chief Crazy Horse surrendered to U.S. troops in Nebraska. In 1889, the Universal Exposition opened in Paris, France, marking the dedication of the Eiffel Tower. Also at the exposition was the first automobile in Paris, the Mercedes-Benz. In 1937, the German airship Hindenburg crashed and burned in Lakehurst, New Jersey. Thirty-six people (of the 97 on board) were killed. In 1957, U.S. Senator John Fitzgerald Kennedy was awarded the Pulitzer Prize for his book “Profiles in Courage.” In 1960, U.S. President Dwight Eisenhower signed the Civil Rights Act. In 2002, “Spider-Man” became the first movie to make more than $100 million in its first weekend.

 

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

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