Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 10th, 2014
Benefits & Administration
Health System Offers to Cash Out Pensions Early
Realizing its pension plan is unsustainable, the Singing River Health System in Mississippi is offering employees the option to cash out now. Employees were sent an email offering them the option to receive a lump sum payment equal to their total prior contributions, with interest calculated at the three month treasury rate over the life of their contributions. They were also presented with the option of rolling their prior contributions into a new defined benefit pension plan that will provide a defined benefit which is lower than the one in the old plan.Read more >
Research
2014 403(b) Buyer’s Guide: Notable Distinctions
Since the passage of Internal Revenue Service (IRS) rules in 2007, many 403(b) plans have evolved to look more like their 401(k) counterparts. Still, differences and distinctions remain, and providers that are knowledgeable about those variables and can supply appropriate services and guidance are valuable to the 403(b) marketplace.Read more >
Products, Deals & People
Managed account and investment services provider Financial Engines announced Lawrence Raffone will succeed Jeffrey Maggioncalda as chief executive officer of the firm, effective January 1, 2015.Read more >
Economic Events
Total nonfarm payroll employment rose by 214,000 in October, and the unemployment rate edged down to 5.8%, the U.S. Bureau of Labor Statistics reported. Employment increased in food services and drinking places, retail trade, and health care. THE ECONOMIC WEEK AHEAD: Wednesday, the Census Bureau will report about wholesale inventories for September. Thursday, the Department of Labor will issue its initial claims report. Friday, the Census Bureau will report about retail sales for October and business inventories for September.
Market Mirror
Friday, the Dow was up 19.46 points (0.11%) at 17,573.93, the NASDAQ slipped 5.94 points (0.13%) to 4,632.53, and the S&P 500 increased by 0.71 (0.03%) to 2,031.92. The Russell 2000 increased by 1.46 (0.12%) to 1,173.32, and the Wilshire 5000 closed 22.02 points (0.10%) higher at 21,381.83. On the NYSE, 3.2 billion shares traded, with 1.6 advancing issues for every declining issue. On the NASDAQ, 2.7 billion shares changed hands, with a slight lead for decliners. The yields for the 10-year Treasury note and 30-year Treasury bond were 2.301% and 3.027%, respectively. WEEK’S WORTH: For the week ending November 7, the Dow climbed 1.05%, the NASDAQ increased 0.04%, and the S&P 500 closed 0.69% higher. The Russell 2000 decreased 0.02%, and the Wilshire 5000 was up 0.59%.
Compliance
DOL Secures $2M in Health Benefit Restorations
The U.S. Department of Labor has secured a nearly $2 million voluntary correction by Cox Enterprises Inc. after the Atlanta, Georgia-based company violated the Employee Retirement Income Security Act. Cox Enterprises has voluntarily restored $1,986,918 to 4,564 affected participants. The company reprocessed all adult preventive care services claims that had previously been denied because they exceeded the plan’s annual limit of $500 in plan years 2011 and 2012 or $750 in 2013.Read more >
Investing
Risk Tolerance Profiles Miss Key Questions
Measuring risk tolerance is critical, say experts in the field of risk tolerance and decisionmaking, but few retirement plan sponsors and advisers in the U.S. do it correctly. Most retirement plan advisers and plan sponsors are not getting at the investor’s real risk profile because they do not ask the right questions, contends Tyler Nunnally, a U.S. strategist for the Australian financial services company FinaMetrica.Read more >
Professionally managed assets of U.S. investors reached $36.8 trillion in 2013, according to a new analysis from investment analytics firm Cerulli Associates. Institutional client assets grew at a strong rate (10.6%) in 2013, with a 5.5% growth rate over the last 10 years. The growth in professionally managed institutional client assets has in large part been driven by strong growth in participation at employer-sponsored defined contribution (DC) retirement plans.Read more >
A Researcher’s Argument Against TDFs
Baby Boomers and Millennials stand at opposite ends of the career pathway. Does this mean their retirement investments should be opposites as well? Not necessarily, says Noah Beck, who conducts quantitative equity research and portfolio support for investment services firm Research Affiliates. In a recent analysis, Beck suggests the plethora of portfolio risks confronting Millennials and Boomers are not so different, meaning both demographics may benefit from sticking to more conventional portfolio strategies invested in mainstream stocks, mainstream bonds, and diversifying inflation hedges.Read more >
Small Talk
Last week’s FRIDAY FILES links did not work for the majority of readers. We apologize for the technical problems. You can find last week’s FRIDAY FILES, including a video of Jim Carrey’s take on the Matthew McConaughey Lincoln ads and what your handwriting says about you, here.Read more >
ON THIS DATE: In 1775, the Continental Congress approved a resolution creating the Continental Marines, giving birth to the United States Marine Corps. In 1903, the patent office awarded U.S. Patent No. 743,801 to a Birmingham, Alabama, woman named Mary Anderson for her “window cleaning device for electric cars and other vehicles to remove snow, ice or sleet from the window.” In 1958, Conway Twitty scored his very first No. 1 hit on the pop charts, with the rock-and-roll ballad “It’s Only Make Believe.” In 1969, “Sesame Street,” a pioneering TV show that would teach generations of young children the alphabet and how to count, among other things, made its broadcast debut. In 1982, in Washington, D.C., the Vietnam Veterans Memorial was opened to visitors. In 1999, Ted Danson received a star on the Hollywood Walk of Fame.
SURVEY SAYS: Real Estate Investments
Last week, I asked NewsDash readers, “Does your plan include real estate investments? Are you considering them? If not, why not?” Sixty percent of respondents said they use real estate investments in their DB plans, and 30% who are not, are considering using them. Fifty-eight percent of respondents offer a stand-alone (not part of an asset allocation fund) real estate investment in their DC plans, and only 8% who don’t are considering offering one. Among those who do not offer and are not considering adding real estate investments in their plans, more than 28% cite the lack of participant interest as the reason, while 43% cite concerns about liquidity of the investment(s). “Other” responses (42.8%) include that real estate investments are too complex for DC plans, the recordkeeper does not allow it due to the difficulty in valuing real estate, and “We believe a diversified Real Asset offering is better for participants.” Thanks to all who participated in our survey!Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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