Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 8th, 2014
Benefit Briefs
Economy Affected Retirement Security for Women
Due to the economy, many women are still facing financial challenges that impair their retirement readiness and outlook. According to a survey by the Insured Retirement Institute (IRI), the economy has had a detrimental effect on Generation X women: 35% have experienced difficulties paying their rent or mortgage, 19% stopped contributing to a retirement account, and 13% prematurely withdrew funds from a retirement account. Baby Boomer women also have been affected, although to a lesser extent.
Research from financial services provider Fidelity Investments reveals a significant increase in the number of health savings accounts (HSAs) opened during 2013. Fidelity found a 48% increase in HSAs opened during 2013 compared with 2012 as more and more companies offer the tax-advantaged accounts together with high-deductible health plans (HDHPs). Fidelity, which itself administers HSAs, found HSA-related assets increased 39% to $653 million in 2013, up from $471 million in 2012.
Many Believe ACA Will Increase Health Care Costs
More than half of benefits decisionmakers believe health care costs will increase due to the Patient Protection and Affordable Care Act (ACA). PlanSource’s first annual Private Healthcare Exchange Survey shows 60% of senior-level benefit decisionmakers feel the cost of health care will rise as a direct result of the ACA. The survey also finds only 2% of decisionmakers have chosen a private exchange for their employee benefits, with another 2% opting for a public health care exchange.
In-Plan Guarantees on the Rise
In-plan guarantee features are growing in number and in assets, survey results from the LIMRA Secure Retirement Institute (SRI) indicate. Total assets covered by an in-plan guarantee increased 31% since 2012 to reach $2.9 billion. The number of plans offering in-plan guarantees increased to 23,500 in 2013, a 10% increase compared with 2012. In addition, the survey finds eight out of 10 employees believe employers should provide ways to convert savings into sustained retirement income.
Buyer's Market
T. Rowe Price, a provider of investment management services, has launched the new Credit Opportunities Fund. The ongoing evolution and increasing complexity of capital markets have created opportunities in credit that extend beyond traditional fixed-rate bonds, the firm says. To this end, T. Rowe Price has constructed the new fund to take advantage of an array of credit instruments that offer compelling risk/return trade-offs. It will also take a total return approach that balances capital appreciation and income.
Industry Voices
Industry Voice: A Surprise Obstacle to Lump-Sum Windows
It’s easy these days to find articles about defined benefit (DB) plan lump-sum windows and plan termination. But surprisingly little has been written about a serious problem that often interferes with these pursuits—participant benefits that have yet to be precisely and finally calculated (aka “certified”).  The considerable time required to correct this deficiency can be an unexpected and burdensome obstacle to lump-sum windows or plan termination, as these activities require certified benefits for all affected participants.
Market Mirror
The Dow rebounded Wednesday, closing 117.52 points (0.72%) higher at 16,518.54. The NASDAQ was down 13.09 points (0.32%) at 4,067.67, and the S&P 500 was up 10.49 points (0.56%) at 1,878.21. The Russell 2000 increased by 0.54 points (0.05%) to 1,108.55, and the Wilshire 5000 added 87.26 points (0.44%) to finish at 19,884.23.   On the NYSE, 3.2 billion shares traded, with advancing issues outnumbering declining issues nearly 2 to 1. On the NASDAQ, 2.7 billion shares changed hands, with 1.25 decliners for every advancer.   The price of the 10-year Treasury note was unchanged, with its yield at 2.594%. The price of the 30-year Treasury bond fell 11/32, bringing its yield up to 3.402%.
Rules & Regulators
The Weirton Medical Center, based in Weirton, West Virginia, will pay $12,500 and furnish significant equitable relief to resolve a lawsuit filed by the Equal Employment Opportunity Commission (EEOC). According to the EEOC’s lawsuit, Paul Ayers had successfully performed as a linen technician at the center for more than 24 years and was well-qualified for a multi-craftsman position for which he applied. However, the center’s maintenance director, who interviewed Ayers for the position, made various oral and written statements indicating he did not select Ayers for the job because of Ayers’ age (48) and a perceived disability in the form of a back impairment.
Fiduciary Standard Should Clear the Air
Most investors do not know if they are receiving investment advice or being sold a product, according to the Consumer Federation of America. As the Department of Labor (DOL) and the Securities and Exchange Commission (SEC) prepare to address the issue of who is bound to act in the best interests of an investor, the federation hosted a discussion with four personal finance advocates and experts about retirement security. Individual investors are at risk when they don’t understand the specific fiduciary obligations of financial professionals.
The World At Large
Just 16% of people in the U.K. know exactly how much is in their pension accounts, according to research from Capita Employee Benefits.
Small Talk
ON THIS DATE:  In 1541, south of present-day Memphis, Tennessee, Spanish conquistador Hernando de Soto reached the Mississippi River—one of the first European explorers to ever do so. In 1884, Harry S. Truman was born in Lamar, Missouri. In 1945, both Great Britain and the United States celebrated Victory in Europe Day. Cities in both nations, as well as formerly occupied cities in Western Europe, put out flags and banners, rejoicing in the defeat of the Nazi war machine. In 1963, with the release of Dr. No, moviegoers got their first look at the super-spy James Bond (Codename: 007), the immortal character created by Ian Fleming in his now-famous series of novels and then portrayed onscreen by the relatively unknown Scottish actor Sean Connery. In 1976, the theme song from the TV show “Welcome Back, Kotter” was the No. 1 song in America. In 2010, 88-year-old actress Betty White, known for her former roles on “The Golden Girls” and “The Mary Tyler Moore Show,” became the oldest person to host the long-running, late-night TV sketch comedy show “Saturday Night Live” (SNL).
SURVEY SAYS: Sunday is Mother’s Day. Last year I asked NewsDash readers to share best Mother’s Day gifts, and the year before I asked readers to share Mom’s words of wisdom. I’ve put a little more of a fun spin to the Mother’s Day survey this year. This week I’d like to know, which TV mom is your mom like, and why? You may respond to this week’s survey by 6 p.m. Pacific time today.
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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