Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 18th, 2014
Benefits & Administration
Many Leave Employer Match Dollars on the Table
While participation in employer-provided 401(k) plans is strong among younger workers, data from Aon Hewitt shows many are not taking full advantage of matching 401(k) contributions. Simply put, many workers in their 20s and 30s are not saving enough of their own salary to receive the full company match for their retirement account contributions—potentially leaving thousands of dollars on the table and negatively impacting their long-term financial health.Read more >
The vast majority of workers rate employer-sponsored benefits as an important consideration when deciding to take a job, according to a survey by the Employee Benefit Research Institute (EBRI). High take-up rates are usually seen whenever benefits are offered to workers, the survey reveals. Results show 75% of respondents state the benefits package an employer offers prospective workers is extremely or very important in their decision to accept or reject a job.Read more >
Can Delayed Social Security Claiming Be Incentivized?
Reduced benefits for life doesn’t sound like much of a deal, but that’s what most people opt for when they decide to take Social Security benefits early. Can incentives change the minds of these early claimants? The Social Security Administration thinks they might. “Incentivizing Delayed Claiming of Social Security Retirement Benefits Before Reaching the Full Retirement Age” takes a look at the psychological and behavioral research and explores some ideas to change the current incentive structure to encourage people to delay taking benefits before the full retirement age.Read more >
A new report suggests multiemployer defined benefit (DB) plans are rebounding after a turbulent decade. A report from the International Foundation of Employee Benefit Plans (IFEBP) and Horizon Actuarial Services, LLC shows investment returns for multiemployer pension plans over the past decade were unstable due to the economic recession in 2008 and a decrease in the number of actively working participants. Despite these challenges, multiemployer plans remained resilient and have started to improve in recent years, IFEBP says.Read more >
Products, Deals & People
Laura Ramanis has joined Verisight’s leadership team as chief operating officer, effective November 17. Ramanis, reporting to Greg Tschider, will work alongside Nancy Worth to oversee recordkeeping and compliance, operations and client services for both the DailyAccess and Verisight brands. In this role, she will unify Verisight’s and DailyAccess’ processes.Read more >
Craig Anzlovar has joined Boston-based Pioneer Investments as fixed-income client portfolio manager. Prior to joining Pioneer, Anzlovar was a fixed-income institutional portfolio manager at Fidelity Investments, and a member of the firm’s liability-driven investing (LDI) strategy team.Read more >
Special Request from the GAO
If you are a defined contribution (DC) plan fiduciary who has considered adopting or has adopted a qualified default investment alternative (QDIA) for your plan, please consider answering a short questionnaire sponsored by PLANSPONSOR and the U.S. Government Accountability Office(GAO). Please note: GAO is not auditing or analyzing the policies or practices of any individual plan sponsor. All responses provided in this questionnaire will remain confidential. GAO will not attribute any provided information to any individual or company. GAO will accept responses to this questionnaire through December 19.Read more >
Market Mirror
Yesterday, the Dow was up 13.01 points (0.07%) at 17,647.75, the NASDAQ was down 17.54 points (0.37%) at 4,671.00, and the S&P 500 increased by 1.50 (0.07%) to 2,041.32. The Russell 2000 fell 9.57 points (0.82%) to 1,164.23, and the Wilshire 5000 slipped 5.86 points (0.03%) to 21,461.91. On the NYSE, 3.2 billion shares changed hands, with 1.2 declining issues for every advancing issue. On the NASDAQ, 2.8 billion shares traded, with a near 2 to 1 lead for decliners. The yields for the 10-year Treasury note and 30-year Treasury bond were 2.343% and 3.065%, respectively.
Compliance
PBGC Deficit Balloons Due to Multiemployer Program
The Pension Benefit Guaranty Corporation’s (PBGC) annual report shows improvement in its single-employer program, but deterioration in its multiemployer program. The Pension Benefit Guaranty Corporation released its 2014 Annual Report, which shows the agency’s deficit increased to about $62 billion in fiscal year 2014, largely due to the declining condition of a few multiemployer plans. This is a 72% increase over the $36 billion deficit reported last year. During a media call, agency officials said this deficit increase is not a surprise, as shown in its projections report issued in June.Read more >
IRS Webinar to Discuss Definitions of Compensation
The Internal Revenue Service (IRS) is hosting a webinar about the definitions of compensation used in retirement plans. The webinar, “Properly Defining Retirement Plan Compensation,” will include discussions about Internal Revenue Code Sections 414(s) and 415 compensation, which definition may be used for each plan purpose, and common plan failures involving compensation.Read more >
Investing
October Brought Heavy Trading in 401(k)s
October saw seven days of “moderate” or “high” trading activity within workplace 401(k) accounts—the most days of elevated trading volume since May 2013, according to Aon Hewitt. Overall for October, nearly $400 million of 401(k) balances transferred, representing roughly 0.25% of total assets—both record highs for the year. All but one of the above-normal days had participants favoring fixed-income funds over equities.Read more >
Long-term fund type net inflows totaled $29.6 billion for the month of October, according to Strategic Insight, an Asset International company. Inflows to U.S. Equity totaled $20 billion, leading net intake to equity products, which amounted to $16.8 billion. October was the first month of 2014 which saw outflows from international equity funds, SI notes. However, net redemptions were limited to $3.2 billion.Read more >
Asset Management Fees Matter for Performance
A Segal Rogerscasey report concludes that fees paid to asset managers matter, and higher fees tend to result in lower net results. The October 2014 Investment Insight from Segal Rogerscasey analyzed active U.S. equity managers to determine whether higher fees are indicative of above-average performance or a prelude to, or even a cause of, below-benchmark returns.Read more >
Small Talk
ON THIS DATE: In 1883, American and Canadian railroads began using four continental time zones to end the confusion of dealing with thousands of local times. In 1886, former President Chester Alan Arthur succumbed to complications from a debilitating and fatal kidney ailment known as Bright’s Disease. In 1928, the first successful sound-synchronized animated cartoon premiered in New York. It was Walt Disney’s “Steamboat Willie,” starring Mickey Mouse. In 1969, Apollo 12 astronauts Charles “Pete” Conrad Jr. and Alan L. Bean landed on the lunar surface during the second manned mission to the moon. In 1978, Peoples Temple founder Jim Jones led hundreds of his followers in a mass murder-suicide at their agricultural commune in a remote part of the South American nation of Guyana. In 1978, Billy Joel earned his first No. 1 album when “52nd Street” topped the Billboard pop chart.   TUESDAY TRIVIA: Even though the railroads established time zones in 1883, it was not until 1918 that the U.S. Congress officially adopted the railroad time zones and put them under the supervision of the Interstate Commerce Commission.
TRIVIAL PURSUITS: What was the first federal minimum wage?Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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