Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 18th, 2016
Benefits & Administration
Curbing plan costs is becoming an increasingly difficult task for many corporate pension plan sponsors, especially in light of challenging market and regulatory environments including low interest rates, longer life expectancies, and rising premiums, according to new research by Vanguard. The firm’s latest survey of Defined Benefit Plan Sponsors found that plan costs were the No.1 concern among the more than 175 pension managers questioned. It was closely followed by funded status risk.Read more >
Plan Engagement Among Millennials Increases
As 401(k) plan engagement continue to rise, so does participation among Millennials. The “Plan Wellness Scorecard,” a recent report by Bank of America Merrill Lynch, finds that among the 24% increase in employees that enrolled and contributed to their company’s retirement savings plan during the first half of 2016, Millennial participants (those aged 21 to 34) produced more contribution rates than any other age group. Read more >
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Products, Deals and People
BenefitGuard announced partnerships with Utah healthcare benefit providers, Spectra Benefits and Miller & Wade Group, with the intent to simplify small business access for the two most popular employee benefits, health insurance and retirement savings. A new solution helps employees view health savings accounts (HSAs) more like retirement accounts for their health. Read more >
The Washington Technology Industry Association (WTIA), an advocacy group for the technology community in Washington State, announced its benefits suite has expanded to include a new 401(k) multiple employer plan (MEP). The WTIA’s partnership with Empower Retirement enables employers to offload virtually all administrative tasks. Read more >
Investment Products and Services Launches
Charles Schwab Updates CTF Prices; Northern Trust Asset Management Strengthens Liquidity Solutions Team. Read more >
Economic Events

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,323,000, the Census Bureau reported. This is 25.5% above the revised September estimate of 1,054,000 and is 23.3% above the October 2015 rate of 1,073,000. Single-family housing starts in October were at a rate of 869,000; this is 10.7% above the revised September figure of 785,000. The October rate for units in buildings with five units or more was 445,000.

On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in October after rising 0.3% in September, according to the Bureau of Labor Statistics (BLS). The index for all items less food and energy rose 0.1%, the same increase as in September.

Real average hourly earnings increased 0.1% in October, seasonally adjusted. Average hourly earnings increased 0.4%, and CPI-U increased 0.4%. Real average weekly earnings were about unchanged over the month.

In the week ending November 12, the advance figure for seasonally adjusted initial claims for unemployment insurance was 235,000, a decrease of 19,000 from the previous week’s unrevised level of 254,000. This is the lowest level for initial claims since November 24, 1973, when it was 233,000. The four-week moving average was 253,500, a decrease of 6,500 from the previous week’s revised average of 260,000.

The average interest rate for a 30-year fixed-rate mortgage is 3.94%, up from 3.57% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.14%, up from 2.88%. 

Market Mirror

Thursday, the Dow closed 35.68 points (0.19%) higher at 18,903.82, the NASDAQ gained 39.39 points (0.74%) to finish at 5,333.97, and the S&P 500 increased 10.18 points (0.47%) to 2,187.12. The Russell 2000 was up 7.28 points (0.56%) at 1,309.48, and the Wilshire 5000 climbed 116.91 points (0.52%) to 22,840.27.

On the NYSE, 3.1 billion shares traded, with a slight lead for advancing issues. On the NASDAQ, 2.9 billion shares changed hands with 3 advancers for every 2 decliners.

The price of the 10-year Treasury note decreased 20/32, bringing its yield up to 2.294%. The price of the 30-year Treasury bond fell 1 18/32, increasing its yield to 3.002%. 

Compliance
The Arizona Supreme Court has ruled that reforms to the Public Safety Personnel Retirement System (PSPRS) made in 2011 are unconstitutional. According to the Arizona Republic, the decision means hundreds of PSPRS members whose employee contributions were increased will receive refunds, while some retirees will receive retroactive benefit increases.Read more >
Bill Would Fix DB Plan Nondiscrimination Issues
U.S. Senators Ben Cardin (D-Maryland) and Rob Portman (R-Ohio), both members of the Senate Finance Committee, and U.S. Representatives Pat Tiberi (R-Ohio) and Richard E. Neal (D-Massachusetts), both members of the House Ways & Means Committee, introduced the Retirement Security Preservation Act of 2016 (RSPA), which amends the nondiscrimination rules that apply to qualified retirement plans to protect older, longer-service participants whose defined benefit (DB) plans have been closed or frozen. Read more >
From the Magazine
Chasing Expectations
What drives plan sponsor satisfaction with retirement plan recordkeepers? According to the latest PLANSPONSOR Defined Contribution (DC) Survey, such satisfaction stems from having the staff and processes in place to help simplify their job as a plan sponsor and to keep the retirement plan in compliance. Plan sponsors want their recordkeeper to support them in their administrator role. According to Brian O’Keefe, director of research and surveys for PLANSPONSOR, in Boston, and manager of the DC Survey for the past six years, “Account/service teams and services related to federal/regulatory requirements are the No. 1 and No. 2 highest areas of satisfaction in this year’s survey and have become the basic ‘blocking and tackling’ that sponsors have now come to expect.”Read more >
Investing
Plan Sponsors of All Sizes and Types Embracing OCIO Service
A new report from Cerulli Associates, “U.S. Outsourced CIO Function 2016: Opportunities for Providers to Support Institutions Across Client Segments,” highlights the very strong growth experienced by outsourced chief investment officer (OCIO) providers in recent years. “Institutions of all size cohorts are using the OCIO model,” adds Michele Giuditta, associate director at Cerulli. “To date, smaller investors with less than $250 million in assets have been the most frequent adopters of an OCIO solution; however, several OCIO providers indicated there is a trend of outsourcing mandates moving upmarket.” In fact, Cerulli says some providers believe that this is partly due to new client segments, such as defined contribution (DC) plans and health care institutions showing greater interest in OCIO services. Read more >
Small Talk

ON THIS DATE: In 1820, Captain Nathaniel Palmer became the first American to sight the continent of Antarctica. In 1883, the U.S. and Canada adopted a system of standard time zones. In 1903, the U.S. and Panama signed a treaty that granted the U.S. rights to build the Panama Canal. In 1928, the first successful sound-synchronized animated cartoon premiered in New York. It was Walt Disney’s “Steamboat Willie,” starring Mickey Mouse. In 1966, U.S. Roman Catholic bishops did away with the rule against eating meat on Fridays. 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 1987, CBS Inc. announced it had agreed to sell its record division to Sony Corp. for about $2 billion. In 1997, First Union Corp. announced its purchase of CoreStates Financial Corp. for $16.1 billion. To date it was the largest banking deal in U.S. history.

 

And now it’s time for FRIDAY FILES

Can opener broken or you’re out and forgot to bring one? Here’s how to open a can with a spoon. Read more >
This dog can’t figure out why he can’t eat the bone at the bottom of his water bowl. Read more >

In Lino Lakes, Minnesota, a woman was arrested for driving while intoxicated after she rear-ended a vehicle, causing it to crash into the back of another car. According to the Huffington Post, police said she was unable to spell her name, but she was able to give an excuse for her crime— “I am upset over the outcome of the election and you should let me go home.”

In Broomall, Pennsylvania, a teacher went to her doctor for a physical. While there, the doctor criticized protests over Trump’s election. The teacher responded that people had a right to protest. That’s when, the Associated Press reports, the doctor replied that if she didn’t believe what he believed, his practice wasn’t for her and she needed to go. So she left. The doctor says he didn’t kick her out, and that he sent her a letter of apology and won’t talk politics with patients anymore, according to the news report. However, the teacher says she has a new doctor.

In Bray, Berkshire, England, a man combined his passions for biscuits and bungee jumping by setting a strange Guinness World Record. He plunged 75 meters to successfully dunk a biscuit into a cup of tea, the BBC reports. His technique involved clasping one wrist over the other to offer greater stability and precision as the biscuit surged towards its small target. According to the news report, the man, who attempted the feat as part of Guinness World Records Day, said: “It was pretty difficult. The team helped by getting me roughly in there in the right place, but going down and having to nail that cup of tea was pretty tricky.”

 

Have a nice weekend, everyone!

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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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