Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 20th, 2014
Webcast Event
Members of Wells Fargo’s fixed-income team have spotted a trend that you might find disturbing: A number of core bond funds seem to have boosted their total returns by dipping lower in credit quality—potentially adding considerable amounts of high-yield debt to retirement plan portfolios. Join us for a webcast in which you will find out how to avoid the risk of unintended asset class exposure to high-yield debt; identify and select a true core bond strategy; and position core bond effectively in retirement plan portfolios.Read more >
Benefits & Administration
Emerging and Growing Trends in DC Plans
A survey from Towers Watson reveals some emerging and growing trends in defined contribution plan design, investments, fees and communications. Towers Watson says the understanding that active management efficiency is better achieved through multi-manager structures is growing. Participant use of single, stand-alone options has been inefficient, and 40% of companies recognize that combining investment strategies is more effective.Read more >
As defined benefit (DB) plan sponsors try to decrease their risks, offering a lump-sum distribution opportunity for certain participants has become a popular option. Recent accounting, market and regulatory developments make it important for sponsors considering a lump-sum distribution window to look at the option now, speakers suggested in a webcast hosted by PwC.Read more >
Pre-Retirees Worried the Money Will Run Out
Half of employees approaching retirement wish they had started saving sooner, a TIAA-CREF survey finds. The top concern for near-retirees? Running out of money to cover monthly expenses, according to “Ready to Retire.” Regrets wash over many of the figures in TIAA-CREF’s report, with more than half (52%) of people ages 55 to 64, who are approaching retirement, saying they wish they had started saving for the future sooner.Read more >
While 64% of Millennials say they have a financial plan, most believe they are only saving half of what they should be, according to a Nationwide Retirement Institute survey. The survey finds 36% of Millennial investors only guess at how much they need to fund their retirement, and nearly one in four do not know if they even have a 401(k) plan.Read more >
Retirement Readiness Efforts Often Not Optimized
More than three-quarters of large and midsize U.S. employers that sponsor 401(k) and 403(b) defined contribution (DC) plans say retirement readiness has become a major issue for their employees. A survey by Towers Watson shows a vast majority of plan sponsors have taken steps to boost employee retirement readiness through improved plan designs and communications. However, not all plan sponsors are optimizing these strategies.Read more >
More than three-fourths of retirement plan sponsors surveyed give their plans a grade of A or B, but only 61% give their employees’ saving habits similar grades. “These findings suggest that while employers want to help their employees save for retirement, they do not feel their actions or plan design is responsible for their employees’ retirement savings habits,” says Kathleen Rook, assistant research director, LIMRA Secure Retirement Institute.Read more >
Employers Expect Health Plan Cost, Enrollment to Rise
The average total health benefit cost per employee rose 3.9% this year, alongside a 5% enrollment increase in high-deductible, consumer-directed health plans (CDHPs), as revealed in a Mercer survey. Employers predict that cost will rise again next year, by 4.6% on average, reflecting changes they will make to reduce cost. As the Patient Protection and Affordable Care Act (ACA) provision requiring employers to extend coverage to substantially all employees working 30 or more hours per week goes into effect, employers anticipate spending more on coverage in 2015.Read more >
Economic Events
Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,009,000, according to the Census Bureau. This is 2.8% below the revised September estimate of 1,038,000, but is 7.8% above the October 2013 rate of 936,000. Single-family housing starts in October were at a rate of 696,000—4.2% above the revised September figure of 668,000. The October rate for units in buildings with five units or more was 300,000.
Market Mirror
Wednesday, the Dow slipped 2.09 points (0.01%) to 17,685.73, the NASDAQ was down 26.73 points (0.57%) at 4,675.71, and the S&P 500 closed 3.08 points (0.15%) lower at 2,048.72. The Russell 2000 fell 12.60 points (1.08%) to 1,157.69, and the Wilshire 5000 decreased 46.22 points (0.21%) to 21,526.37. On the NYSE, 3.2 billion shares traded, with a 1.6 to 1 ratio of decliners to advancers. On the NASDAQ, 2.8 billion shares changed hands, with 2.5 declining issues for every advancing issue. The price of the 10-year Treasury note was down 13/32, increasing its yield to 2.361%. The price of the 30-year Treasury bond fell 26/32, bringing its yield up to 3.080%.
Investing
Mutual Funds Common Investment for Retirement Savers
Members of the Baby Boom Generation and Generation X had the highest rates of mutual fund ownership in mid-2014, according to a survey by the Investment Company Institute (ICI). The annual survey found three times as many U.S. households owned mutual funds through tax-deferred accounts as owned mutual funds outside such accounts. Among mutual fund–owning households, 43% invested in mutual funds solely inside employer-sponsored retirement plans, which include defined contribution (DC) plans and employer-sponsored individual retirement accounts (IRAs).Read more >
Small Talk
ON THIS DATE:  In 1789, New Jersey ratified the Bill of Rights, becoming the first state to do so. In 1923, the U.S. Patent Office granted Patent No. 1,475,074 to 46-year-old inventor and newspaperman Garrett Morgan for his three-position traffic signal. In 1945, 24 high-ranking Nazis went on trial in Nuremberg, Germany, for atrocities committed during World War II. In 1962, President John F. Kennedy issued Executive Order 11063, which mandated an end to discrimination in housing. In 1998, 46 states agreed to a $206 billion settlement of health claims against the tobacco industry. The industry also agreed to give up billboard advertising of cigarettes. In 2001, the U.S. Justice Department headquarters building was renamed the Robert F. Kennedy building by President George W. Bush. The event was held on what would have been Kennedy’s 76th birthday.
SURVEY SAYS: We covered a survey this week about mishaps and confrontations in parking lots during the holiday season. As we prepare for the holiday shopping season to start, I’d like to know, have you had a parking lot accident during the holiday season? What strategies do you use to find a parking space? And, have you confronted another driver or been confronted by another driver about parking? You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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