Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 14th, 2014
Webcast Event
The concerns associated with maintaining a defined contribution (DC) plan are just as great, if not greater than, those of a defined benefit (DB) plan or nonprofit endowment. Why then, as more institutional investors worldwide continue to take advantage of outsourced-CIO (OCIO) models and increased fiduciary partners, has the DC marketplace been the slowest of these groups to utilize this approach? Join us for a live, interactive webcast, which will show how an OCIO model can provide improved fiduciary oversight and better investment options for participants; provide examples of customized OCIO options including target-date funds and menu simplification; present case study examples of how plan sponsors implemented OCIO solutions for their DC plans; and industry research around outsourcing trends in DC.Read more >
Benefits & Administration
A Plan Sponsor Makes the First Step Easier
“We’ve had good participation [in our 401(k) plan], and we have people enrolling at a pretty good deferral rate above what we match, so we weren’t interested in implementing auto-enrollment,” Sonja Kellen, Microsoft’s director of global retirement, based in Redmond, Washington, tells PLANSPONSOR. “But one of things we like about auto-enrollment is that it incentivizes savings behavior regardless of whether there’s a company match. It’s an indication of what employees should do.” One issue Microsoft noted was how long it took new employees to enroll in the plan. Kellen adds that Microsoft’s goal was not only to drive optimization of benefits use, but to get more employees into the plan’s target-date funds to improve investment diversification.Read more >
After plan design changes and vendor negotiations, the average health care premium rate increase for mid-size and large companies in 2014 was 4.4%, up from 3.3% in 2013. In 2015, Aon Hewitt projects average health care premium increases will be 5.5% after plan design changes and vendor negotiations. Employees will be asked to contribute 23.6% of the total health care premium.Read more >
Gens X and Y Turn to Employers for Financial Products
Three-quarters (75%) of workplace life insurance customers belong to either Generations X or Y, according to a LIMRA study. “Younger, less experience buyers typically do not have financial advisers, so they tend to look to different information sources compared to older customers,” Ron Neyer, assistant research director, LIMRA Distribution Research, says. “Many rely on their employers’ expertise for carrier selection.”Read more >
Data & Research
Offering ESPPs Can Reduce 401(k) Loans
Fiduciaries often cite asset leakage as a major challenge in running a 401(k) plan, but one provider says there may be a straightforward solution to slowing loan-related leakage. And what is that solution? Offer a company stock plan, says Fidelity Investments. New research released by the firm finds a strong negative correlation between the availability of employer stock and the likelihood that an employee will take a loan from their 401(k) account.Read more >
PLANSPONSOR Research
The 403(b) Buyer’s Guide includes profiles of the providers who service 403(b) plans, which market segments they serve, and the services specific to 403(b) plans they provide.Read more >
Products, Deals & People
Northern Trust Asset Management launched a new fund for institutional investors that encompasses quality small capitalization stocks across global developed equity markets. The global small cap fund builds on Northern Trust Asset Management’s Engineered Equity strategies and is designed to efficiently capture the premium associated with high quality small capitalization stocks while minimizing uncompensated risk factors.Read more >
Economic Events
In the week ending November 8, the advance figure for seasonally adjusted initial claims for unemployment insurance was 290,000, an increase of 12,000 from the previous week’s unrevised level of 278,000, the Labor Department reported. The four-week moving average was 285,000, an increase of 6,000 from the previous week’s unrevised average of 279,000. The average interest rate for a 30-year fixed-rate mortgage is 4.01%, down from 4.02% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.20%, down from 3.21%.
Market Mirror
Thursday, the Dow was up 40.59 points (0.23%) at 17,652.79, the NASDAQ added 5.01 points (0.11%) to finish at 4,680.14, and the S&P 500 increased by 1.08 (0.05%) to 2,039.33. The Russell 2000 fell 11.05 points (0.93%) to 1,175.42, and the Wilshire 5000 closed 12.10 points (0.06%) lower at 21,456.02. On the NYSE, 3.2 billion shares changed hands, with a near 2 to 1 lead for decliners. On the NASDAQ, 2.8 billion shares traded, with declining issues outnumbering advancing issues more than 2 to 1. The price of the 10-year Treasury note was up 6/32, decreasing its yield to 2.343%. The price of the 30-year Treasury bond increased 20/32, bringing its yield down to 3.073%.
Compliance
Form 5500 Filings Can Reveal Prohibited Transactions
Retirement plan sponsors should be on the lookout for prohibited transactions that may or should be revealed on the Form 5500 filing. They are relatively easy to avoid, but could trigger an investigation if they slip through. Schedule H of the form asks the plan sponsor if there were there any nonexempt transactions with any party-in-interest. Leaving the answer to this question blank could be a red flag, according to Linda Fisher, principal of Linda T. Fisher Form 5500 Consulting in Chicago, and answering it (but leaving out a dollar amount) is also a potential red flag. Small plans are more susceptible, Fisher says.Read more >
The U.S. Supreme Court has agreed to review a case about whether premium subsidies are available for individuals who purchase health care insurance on federally-run exchanges. The decision could have implications for employers.Read more >
End of Year Compliance Deadlines
Don’t forget to check out our compliance calendar to take note of important deadlines for reporting and administration as the year comes to a close.Read more >
Investing
The California State Teachers’ Retirement System (CalSTRS) announced the completion of its Investment Branch leadership restructuring with the hiring of its first Chief Operating Investment Officer and two asset class directors. “These three appointments, coupled with our 2010 creation of a deputy chief investment officer, complete a new organizational structure that allows us to bring more assets in-house,” says CalSTRS Chief Investment Officer Christopher J. Ailman.Read more >
PLANSPONSOR UK
The National Employment Savings Trust’s (NEST) new intermediary service ‘NEST Connect’ marks the first stage in the government-sponsored scheme’s plans to target financial advisers and accountants, according to chief executive Tim Jones.Read more >
Small Talk
ON THIS DATE: In 1832, the first streetcar went into operation in New York City. The vehicle was horse-drawn and had room for 30 people. In 1851, Herman Melville’s novel “Moby Dick” was first published in the U.S. In 1882, the gunslinger Franklin “Buckskin” Leslie shot the Billy “The Kid” Claiborne dead in the streets of Tombstone, Arizona. In 1969, Apollo 12, the second manned mission to the surface of the moon, was launched from Cape Canaveral, Florida, with astronauts Charles Conrad, Jr.; Richard F. Gordon, Jr.; and Alan L. Bean aboard. In 1970, a chartered jet carrying most of the Marshall University football team clipped a stand of trees and crashed into a hillside just two miles from the Tri-State Airport in Kenova, West Virginia. The team was returning from that day’s game, a 17-14 loss to East Carolina University. Thirty-seven Marshall football players were aboard the plane, along with the team’s coach, its doctors, the university athletic director and 25 team boosters—some of Huntington, West Virginia’s most prominent citizens. In 1972, the Dow Jones Industrial Average closed above 1,000 (1,003.16) for the first time.   And now it’s time for FRIDAY FILES!
This baby’s reaction to a musical birthday card for her first birthday is adorable!Read more >
I really hope this video is not representative of what our college students know about American history and politics.Read more >
In Oslo, Norway, folks heard screams coming from a neighbor’s apartment and called police. After receiving several calls, police went to the apartment to investigate. Inside they found a lone male, who had screamed each time he was outmoved in a chess game by his own computer. In Sumner, Georgia, a man called 911 saying he had information about a person he said was wanted by police. But, he told the dispatcher he wanted to a make a deal for the information. The dispatcher told the man they were not allowed to make deals, so the man asked for a specific female deputy to come to his house. According to WALB, the dispatcher asked for the man’s address, then he made several inappropriate comments to the dispatcher, telling her she sounded se.xy. She told him he shouldn’t make those comments and he needed to give her his phone number so a deputy could call him, but he asked for the dispatcher’s phone number instead. Police went to the man’s house, suspecting he was into.xicated because of his slurred speech, and found co.caine and mari.juana in his house. He was arrested for unlawful conduct during a 911 call and drug charges.
In Woods Cross, Utah, police have come up with a clever way to encourage folks not to drink and drive. A hybrid police car/taxi offers the option, “Choose Your Ride — $40 or $10,000,” (the difference between a taxi fare and the cost involved in paying for a driving under the influence conviction), according to the Davis Clipper. The car is kept at the Woods Cross Police Department, but is available for promotional use by any police department in the state; it has no markings specific to Woods Cross. We have a picture.Read more >
In Washington, D.C., a woman received a package with a note that said, “There are a lot of chicks out there.” It turns out the note was from her ex-boyfriend, and inside the package were 15 baby chickens. When the woman told the postman she couldn’t keep them, he took them to the humane society which sent them to an animal sanctuary. In Beaumont, California, two friends are preparing early for Black Friday. Earlier this week, with Black Friday more than two weeks away, the two picked spots outside the Best Buy and started camping out. They are stocked with snacks, hot coffee and mittens, and they take turns sleeping at the store overnight. They are hoping to get a 50-inch high-definition TV for $199, the local ABC news station reports. One friend says some people tell them they’re crazy, but then come back and ask if they will save them a spot or get something for them. Have a great weekend!
Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy.Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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