Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 12th, 2014
Second Opinions
SECOND OPINIONS: Questions About the ACA ‘Cadillac Tax’
Internal Revenue Code (IRC) Section 4980I, as enacted by the Patient Protection and Affordable Care Act (ACA), imposes a 40%, nondeductible excise tax on employers, health insurance issuers and/or other entities administering health plan benefits if the aggregate value of applicable employer-sponsored coverage exceeds a specified annual dollar limit. The tax is referred to by some as the “Cadillac Tax.” Experts from Groom Law Group answer questions received regarding the excise tax.Read more >
Benefits & Administration
Paper Advocates for Wider Use of Longevity Annuities
Longevity annuities could help many individuals use their retirement assets most effectively to achieve financial security, according to a new paper. In “Better Financial Security in Retirement? Realizing the Promise of Longevity Annuities,” released by the Retirement Security Project at the Brookings Institution, researchers note that longevity annuities—deferred income annuities that offer a monthly benefit, beginning at some relatively advanced age, and function as an insurance product—cost less than conventional annuities but offer the same pay-outs, and should be a viable retirement option. They suggest ways to improve take-up of these products by addressing obstacles to consumer participation, employer participation and insurance company participation.Read more >
Products, Deals & People
Karen Amato, R.N., joined Lockton’s Washington, D.C., employee benefits operation as the director of Health Risk Solutions. She will work directly with employers and Lockton’s account service teams on the development and implementation of health risk strategies.Read more >
Education and Advice Solution Unveiled
PIEtech Inc. unveiled the new myMoneyGuide financial advice delivery solution, which provides streamlined investor education and one-on-one participant support. Employers can also use the program to help employees calculate retirement needs, decide between a lifetime pension or a lump-sum payout, and evaluate other retirement options.Read more >
Bringing more than 20 years of experience in the health care industry, Ted M. Makowiec has joined The Segal Group’s Midwest region as a vice president and health consultant.Read more >
Jeffrey Johnson has joined Pentegra Retirement Services as a regional director for Pentegra’s qualified plan sales. Johnson, who has more than 25 years of experience in retirement services, is tasked with leading the company’s business development efforts in the Southwest.Read more >
Industry Voices
Industry Voice: Building Better Retirement Incomes
The rise of defined contribution (DC) plans as the primary retirement vehicle for U.S. workers over the past few decades is here to stay. However, the data shows that DC plan performance has persistently lagged that of institutional investment portfolios—endowments, state pensions and other defined benefit (DB) plans. For example, data from Towers Watson shows that DB plans have outperformed DC plans in 12 of the past 17 years (from 1995 to 2011), and by an average of 76 basis points (bps) annually. This differential may seem insignificant, but over a 40-year working career, the impact amounts to a 35% reduction in the participant’s future account value (i.e., what could be the difference between meeting retirement goals and missing the mark).Read more >
Market Mirror
Major U.S. stock indices were little moved Tuesday, with the Dow increasing 1.16 points (0.01%) to 17,614.90, the NASDAQ up 8.94 points (0.19%) at 4,660.56, and the S&P 500 1.31 points higher (0.06%) at 2,039.57. The Russell 2000 increased by 0.50 points (0.04%) to 1,180.06, and the Wilshire 5000 ticked up 15.46 points (0.07%) to 21,462.67.   On the NYSE, 3.2 billion shares traded, with a nearly even split between advancing and declining issues. On the NASDAQ, 2.8 billion shares changed hands, with a small lead for decliners.   The bond markets were closed Tuesday for Veteran’s Day.
Ask the Experts
Should Fund Prospectuses Be Automatically Sent?
“I work at a 501(c)(3) social welfare organization that sponsors an Employee Retirement Income Security Act (ERISA) retirement plan for its employees. I noticed that the new fee disclosure requirements of Section 404(a)(5) appear to only require distribution of prospectuses to plan participants upon request. Does this mean that we are no longer required to automatically distribute prospectuses to plan participants?”Read more >
PLANSPONSOR UK
Insurer Zurich is planning a 12% employer contribution for all members of its defined contribution (DC) plan, after announcing the closure of its defined benefit (DB) plan.Read more >
Sponsored message from Vanguard
Portfolio Construction Trends on the Mind of Investors What portfolio construction issues and themes are on the minds of investors recently? In this brief video, Joe Davis, Vanguard’s chief economist and head of Vanguard Investment Strategy Group, and Catherine Gordon, an Investment Strategy Group principal, discuss emerging trends in client conversations, including the outlook on equity markets and fixed-income tactics. Read more >
Small Talk
It may come as no surprise that California has a high proportion of the country’s actors, but would you have guessed that subway operators are highly concentrated in Maryland? Using a measurement called “location quotient” (LQ), CareerBuilder and Economic Modeling Specialists Intl. (EMSI) reveal the occupation that is most unique to each state through 2013.Read more >
ON THIS DATE: In 1799, Andrew Ellicott Douglass, an early American astronomer born in Vermont, witnessed the Leonids meteor shower from a ship off the Florida Keys. Douglass’ journal entry is the first known record of a meteor shower in North America. In 1859, the first flying trapeze act was performed by Jules Leotard at Cirque Napoleon in Paris, France. He was also the designer of the garment that is named after him. In 1892, William “Pudge” Heffelfinger became the first professional football player when he was paid a $500 bonus for helping the Allegheny Athletic Association beat the Pittsburgh Athletic Club. In 1915, Theodore W. Richards, of Harvard University, became the first American to be awarded the Nobel Prize in chemistry. In 1946, the first drive-up banking facility opened at the Exchange National Bank in Chicago. In 1954, Ellis Island, the gateway to America, shut it doors after processing more than 12 million immigrants since opening in 1892. In 1975, U.S. Supreme Court Justice William O. Douglas retired because of failing health, ending a record 36.5-year term. In 1979, President Jimmy Carter responded to a potential threat to national security by stopping the importation of petroleum from Iran.
WEDNESDAY WISDOM: “Beware the barrenness of a busy life.” —Socrates, Greek philosopher
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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