Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 7th, 2015
Benefits & Administration
Gen X Feeling Hopeless About Retirement
Baby Boomers are in the throes of retirement, and Generation X is only steps behind. According to Generations Apart—a new study from Allianz Life Insurance Company of North America—the vast majority of both groups believe the traditional definition of retirement is a “romantic fantasy of the past.” More than eight in 10 (84%) from both generations said they feel that a retirement starting at age 65 and spent “doing exactly what you want” is now unrealistic. Gen X respondents were much more hopeless about their ability to achieve retirement goals and about their overall financial situation than their Boomer counterparts, the study found.Read more >
Public pension plans will begin asking their service providers to commit to a new set of ethical guidelines designed to protect the interests of plan participants and beneficiaries, the National Conference on Public Employee Retirement Systems (NCPERS) announced. “The code of conduct is a valuable tool to ensure that fiduciaries and plan providers are working together in the best interests of participants and beneficiaries,” says Hank Kim, Esq., NCPERS executive director and counsel.Read more >
Products, Deals & People
Penbridge Advisors announced the release of an advanced pension risk transfer (PRT) index charting tool that improves plan sponsor and adviser understanding of annuity buy-out pricing, as well as other elements of PRT transactions.Read more >
Sponsored message from Aberdeen
Frontier Market Bonds: The Next Chapter
Learn why frontier markets strong growth dynamics, coupled with historically low correlations to U.S. Treasuries make a compelling case to diversify your fixed income approach with emerging and frontier market debt.Read more >
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Market Mirror

U.S. stocks are closing mostly lower as investors worry about the economy, interest rates and stock valuations, according to the Associated Press. The Dow lost 86.22 points (0.48%) to finish at 17,841.98, the NASDAQ decreased 19.68 points (0.40%) to 4,919.64, and the S&P 500 closed 8.98 points (0.43%) lower at 2,080.48. The Russell 2000 was up 3.96 points (0.33%) at 1,219.38, and the Wilshire 5000 was down 78.79 points (0.36%) at 21,967.10.

On the NYSE, 3.2 billion shares traded, with a near 3 to 1 lead for decliners. On the NASDAQ, 2.8 billion shares changed hands, with 1.5 declining issues for every advancing issue.

The price of the 10-year Treasury note decreased 15/32, bringing its yield up to 2.243%. The price of the 30-year Treasury bond fell 1 14/32, increasing its yield to 2.996%.

Compliance
PBGC Will Pay Pilots for Delayed Pension Payments
A U.S. District Court has given final approval to a settlement between the Pension Benefit Guaranty Corporation (PBGC) and a class of retired U.S. Airways pilots who claimed their pension benefits were unreasonably delayed. The case originally filed in 2007, noted that U.S. Airways pilots who chose to receive their retirement benefits as a monthly annuity began to receive retirement payments the first day of the month after they retired (the Benefit Commencement Date). However, pilots who chose the lump-sum payment typically were not paid until 45 days after the Benefit Commencement Date and did not receive interest for that period.Read more >
Employees of small independent businesses would especially benefit from an expansion of accessibility and a simplification of rules applying to multiple employer plans (MEPs), according to a report from Prudential Retirement. Not to be confused with multiemployer plans, which are generally run by an independent board on behalf of labor unions or other related employee groups, MEPs are established under Employee Retirement Income Security Act (ERISA) Section 413(c). MEPs historically have been used by companies that share a common industry or payroll provider—primarily professional associations and other related employer organizations. However, as interest in outsourced fiduciary solutions has grown in recent years, a new generation of “open” MEPs for unrelated companies has also sprung up.Read more >
From the Magazine
Are You Acting in Accordance with Plan Documents?
Retirement plan sponsors have a clear incentive to regularly check whether their plan complies operationally with the plan documents: If a plan does not, the Internal Revenue Service (IRS) could uncover the lapse before the plan sponsor does.Read more >
How Are Your Plan Participants Faring?
It does not have to be challenging for plan sponsors to answer the question: “How are your plan participants faring?” says Tom Kmak, CEO and co-founder of Fiduciary Benchmarks, a benchmark provider service in Scottsdale, Arizona. He says the benchmarks sponsors should care about in terms of participant outcomes are “pretty darn simple.”Read more >
Investing
Institutional assets tracked by the Wilshire Trust Universe Comparison Service (TUCS), saw a median return of 2.13% in the first quarter. “What’s noteworthy for this quarter is that all plan type median returns were higher than the 1.61% return for the classic 60/40 portfolio, which demonstrates that diversification into other asset classes like international equity and real estate paid off for the quarter,” says Robert J. Waid, managing director at Wilshire Associates.Read more >
Money Market Reform Likely to Change Plan Investments
Money market fund reforms, which take effect in October 2016, will require retirement plan sponsors to review the money market funds in their lineups and possibly replace their funds, experts say. This will affect nearly two-thirds of plans, as 63.5% have money market funds in their lineup, according to the 2014 PLANSPONSOR Defined Contribution (DC) Survey. The rule amendments require investment managers to establish a floating net asset value (NAV) for institutional prime money market funds. The rule also allows non-government money market funds to use liquidity fees and redemption gates. “Institutional clients in endowments and pension plans are going to be greatly affected because of the floating NAV,” says Jay Sommariva, vice president and senior fixed income portfolio manager at Fort Pitt Capital Group in Pittsburgh.Read more >
Small Talk
ON THIS DATE: In 1789, the first U.S. Presidential Inaugural Ball was held in New York City. In 1847, the American Medical Association (AMA) 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, ending World War II. In 1975, U.S. President Ford declared an end to the Vietnam War.
SURVEY SAYS: Moms do lots of fun, caring, wonderful things. But, one of my favorite childhood memories of my Mom is how she would sing all the time—when she awoke my brother and me, when we rode in the car, when she would put us to bed, and especially during the Christmas season—just about every day was filled with song. In honor of Mother’s Day this weekend, I’d like to know, what is your favorite childhood memory of your Mom—it could be rituals, quirks, sayings or a specific event. You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
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