Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 7th, 2014
Second Opinions
SECOND OPINIONS: Final Regs on Shared Responsibility Rules
On February 12, 2014, Treasury and the Internal Revenue Service (IRS) published long-awaited final regulations on the Patient Protection and Affordable Care Act’s (ACA’s) Code Section 4980H employer shared responsibility provisions. Experts from Groom Law Group address recent questions received about the employer shared responsibility provisions and final regulations.
Benefit Briefs
Health Benefits Landscape Morphing Due to ACA
Reactions to new costs and lingering unknowns from the Patient Protection and Affordable Care Act (ACA) are creating a metamorphosis of traditional employer health benefits designs. For one thing, according to Frasier Ives, senior vice president and Employee Benefits Compliance leader in the East area for Wells Fargo Insurance Services, the ACA will create employee migration in or out of employer health plans. The individual mandate may drive them into plans, while the cost of unsubsidized coverage and employer changes to benefit plan designs may drive them out. Employers need to understand how these drivers affect their employees to understand the risks to their own costs, Ives 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.
While more workers are satisfied with their retirement benefits now compared with five years ago, the number of employees who are satisfied with their health care benefits has declined from 69% in 2007 to 59% in 2013. According to a Towers Watson survey, the downward trend is most pronounced among older workers and those in poor health. The survey cites rising costs as a key factor fueling the decline, with only 38% of employees saying they are satisfied with costs they must pay (including premium and out-of-pocket expenses) for health benefits in 2013 versus 53% in 2007.
Millennial Investing Habits: Balancing Risk and Returns
Millennials’ retirement savings may suffer if they maintain a conservative investment outlook over the long term. A recent international survey by financial advisers The deVere Group finds Millennial employees and their Baby Boomer counterparts share common ground when it comes to keeping the risk level of their investments low. There is a reason for this common ground, Fredrik Axsater, senior managing director and head of Global Defined Contribution at State Street Global Advisors, tells PLANSPONSOR.
Three-quarters of large employers polled are fully committed to providing an array of employer-sponsored benefits as a part of their total rewards program. They said they will continue to actively look at all potential tactics to manage the costs associated with their health benefits plans including exchanges, wellness programs and other strategies, according to a survey conducted by Pacific Resources, with question design and response analysis assistance provided by Milliman. However, while nearly all large employers (91%) believe they have a “good to excellent” understanding of the opportunities, challenges and decisions required to move to a private health care exchange, their levels of confidence and interest are varied.
Buyer's Market
BOK Financial launched a new website for retirement plan sponsors and participants using BOK’s Start Right retirement plan program, offering an updated look and user experience, as well as mobile access through the Start Right Retire Right application for Apple and Android smartphones. Among the improved tools is the My RetireRight Planner, through which users can set up personalized goals for their retirement.
Industry Voices
Industry Voice: Investment Policy Statement Best Practices
Which statement is true: Having an investment policy statement (IPS) can increase liability, or having an IPS can decrease liability?
Market Mirror
Tuesday, the Dow ended 129.53 points (0.78%) lower at 16,401.02, the NASDAQ fell 57.30 points (1.38%) to 4,080.76, and the S&P 500 decreased 16.94 points (0.90%) to 1,867.72. The Russell 2000 took an 18.29-point (1.62%) dive to 1,108.01, and the Wilshire 5000 lost 199.69 points (1.00%) to close at 19,796.97. On the NYSE, 3.2 billion shares traded, with a more than 2 to 1 lead for decliners. On the NASDAQ, 2.6 billion shares changed hands, with 3.6 declining issues for every advancing issue. The price of the 10-year Treasury note was up 4/32, bringing its yield down to 2.595%. The price of the 30-year Treasury bond increased 13/32, decreasing its yield to 3.387%.
Rules & Regulators
Court Moves Forward Interference of Health Benefits Suit
A federal district court has moved forward a lawsuit claiming an employer refused to advance a part-time employee to a full-time position to avoid paying for health coverage. Amerimed, Inc. argued that former employee John K. Sanders was never a participant or beneficiary in its group health plan and was not entitled to benefits as a part-time employee, and as such, he does not have statutory standing to bring a claim of interference of benefits under the Employee Retirement Income Security Act (ERISA), Section 510. However, U.S. District Judge Timothy S. Black of the U.S. District Court for the Southern District of Ohio, found ERISA’s definition of participant and evidence by Sanders’ shows he does have standing to sue.
Financial Sense
For April, the funded status of the typical U.S. corporate defined benefit plan declined 1.1% to reach 91% as projected liabilities increased faster than assets for the second consecutive month, according to an analysis from the BNY Mellon Investment Strategy and Solutions Group (ISSG).
The California Public Employees’ Retirement System (CalPERS) has reached a settlement with Ernst & Young LLP, the former auditor of the now-defunct Lehman Brothers. The settlement of $12.75 million ends a lawsuit that CalPERS had filed regarding its purchases of Lehman stock and bonds prior to Lehman’s 2008 collapse. CalPERS opted out of a class action against Lehman’s former top executives, directors, Ernst & Young and various underwriters and filed its own action in February 2011 over allegedly false statements about Lehman’s financial condition, which caused Lehman securities to trade at artificially inflated prices.
Sponsored message from PLANSPONSOR
PLANSPONSOR Interview with Charles P. Nelson
Charles P. Nelson, President of Retirement Services for Great-West Financial, discusses the keys to a successful participant experience with Stephen Moylan, SVP of Sales for PLANSPONSOR.
Small Talk
Potential “Mom” Salary Keeps Growing
Moms are priceless, but has put a number on what they do. Being a Mom is more than a full-time commitment, according to the 14th annual Mom Salary survey from The survey asked mothers to report how they divide their time each week. By applying the hours per week—broken down by stay-at-home and employed mothers—to the median annual income of those positions, was able to estimate what these women would earn if paid for their efforts. Stay-at-home moms spent 96.5 hours parenting each week this year, up from 94 hours last year. If compensated for a 40-hour work week plus 56.5 hours of overtime, these women would take home $118,905 in 2014, a more than $5,000 increase from 2013.
ON THIS DATE:  In 1789, the first U.S. Presidential Inaugural Ball was held in New York City. In 1800, the U.S. Congress divided the Northwest Territory into two parts. The western part became the Indiana Territory and the eastern section remained the Northwest Territory. In 1847, the AMA (American Medical Association) was organized in Philadelphia, Pennsylvania. In 1945, the German High Command, in the person of General Alfred Jodl, signed the unconditional surrender of all German forces, East and West, at Reims, in northwestern France. In 1946, Tokyo Telecommunications Engineering Corp. was founded. The company was later renamed Sony. In 1984, a $180 million out-of-court settlement was announced in the Agent Orange class-action suit brought by Vietnam veterans who claimed they had suffered injury from exposure to the defoliant while serving in the armed forces.   WEDNESDAY WISDOM: “The single biggest problem in communication is the illusion that it has taken place.”—George Bernard Shaw, Irish playwright and a co-founder of the London School of Economics

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