Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 4th, 2014
Editor’s Note
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Plan Sponsor of the Year Nominations
We are still accepting nominations for the 2015 PLANSPONSOR Plan Sponsor of the Year awards. This is an excellent opportunity for you to tell your story and share you successes with peers. We are looking for plans of all types (pension, 401(k), 403(b), 457, public DC, etc) and of all sizes. The deadline for nominations is November 7. You can nominate a plan, or yourself, here.Read more >
Benefits & Administration
Blended Families Face Savings Challenges
Parents who are married or living together with children from a previous relationship face a challenging financial outlook, especially when it comes to retirement savings. According to the Allianz LoveFamilyMoney Study, blended families average only $158,600 in savings and investable assets, compared with $264,300 for traditional families (those married to someone of the opposite sex with at least one child younger than 21 living at home). Moreover, a majority (55%) of blended families say they “currently live paycheck to paycheck,” and nearly one-third (30%) cite one of their worst financial habits as “not saving any money,” versus 41% and 20%, respectively, for traditional families.Read more >
Improving the retirement plan participant experience is an important step in addressing the nation’s retirement savings shortfall, according to Broadridge Research. Broadridge released a new white paper examining the impact of targeted participant communications programs on the retirement readiness of three generations in the work force—Baby Boomers, Generation X and Millennials. The research finds that effective communications can offer a competitive edge for retirement providers and plan sponsors, but the costs run high if communications programs aren’t implemented efficiently.Read more >
GE Sued for Moving to DC Model for Retiree Health
One current and one former General Electric (GE) employee have sued the company for moving to a defined contribution (DC) model for retiree health care benefits. According to a lawsuit filed in the U.S. District Court for the Eastern District of Wisconsin, “By terminating the Plans for plaintiffs and tens of thousands of other current or retired salaried employees, GE is in breach of a promise to participants in the summary plan description (SPD), restated and reaffirmed in July 2012, that GE ‘expects’ and ‘intends’ to continue the GE Medicare Plans ‘indefinitely.’”Read more >
Products, Deals & People
Sandy McCarthy has been named benefits administration leader at Mercer. McCarthy joined Mercer in 2009 as retirement business leader for its U.S. benefits administration business.Read more >
Houston Firm Unveils C-Suite Advice Service
Kanaly Trust’s Corporate Executive Financial Counseling program aims to help with employee retention and with analysis of company benefit decisions. The program uses a team approach to financial planning with unbiased, objective advice, without the constraints of a product sales environment, Drew Kanaly, chairman and president of Kanaly Trust, tells PLANSPONSOR.Read more >
Jeff Passmore has joined investment manager Barrow, Hanley Mewhinney & Strauss LLC to focus on liability-driven investing solutions. Passmore has 24 years of industry experience and takes the role of director, client portfolio manager, and LDI strategist to focus on the firm’s liability-driven investing (LDI) solutions.Read more >
Economic Events
The U.S. Census Bureau of the Department of Commerce announced that construction spending during September 2014 was estimated at a seasonally adjusted annual rate of $950.9 billion, 0.4% below the revised August estimate of $955.2 billion. The September figure is 2.9% above the September 2013 estimate of $924.2 billion. During the first nine months of this year, construction spending amounted to $710.1 billion, 6.1% above the $669.3 billion for the same period in 2013.
Market Mirror
Yesterday, the Dow slipped 24.28 points (0.14%) to 17,366.24, the NASDAQ was up 8.16 points (0.18%) at 4,638.91, and the S&P 500 decreased by 0.24 (0.01%) to 2,017.81. The Russell 2000 closed 3.30 points (0.28%) lower at 1,170.20, and the Wilshire 5000 ticked up 3.52 points (0.02%) to 21,260.26. On the NYSE, 3.3 billion shares traded, with a slight lead for decliners. On the NASDAQ, 2.8 billion shares changed hands, with 1.3 declining issues for every advancing issue. The price of the 10-year Treasury note slipped 1/32, bringing its yield up to 2.341%. The price of the 30-year Treasury bond was up 3/32, decreasing its yield to 3.063%.
Plan Fiduciaries Liable for Mispriced Stock Purchase
The owner of Bruister and Associates and trustees of its employee stock ownership plans (ESOPs) were found responsible for causing the plan to pay too much for employer stock. A U.S. District Court judge has issued a judgment and order requiring fiduciaries to pay more than $6.48 million to the two employee stock ownership plans sponsored by Bruister and Associates Inc. (BAI).Read more >
A Review of PBGC Reportable Events
There are certain events that defined benefit (DB) plan sponsors are required to report to the Pension Benefit Guaranty Corporation (PBGC) before they happen. The PBGC wants to make sure funding for DB plans does not deteriorate and tries to catch problems ahead of time by asking for plans to fill out PBGC Form 10 for reportable events, according to Kurt Piper, owner and chief actuary of Piper Pension and Profit Sharing. A reportable event notice must be filed within 30 days of knowledge of the event, or the plan sponsor could be subject to a penalty of up to $1,100 per day it’s late.Read more >
Court Says Plan Can Dictate Where Lawsuits Filed
A federal appellate court found that a clause in a retirement plan document restricting the venue of lawsuits filed against the plan is enforceable. The 6th U.S. Circuit Court of Appeals ruled an amicus brief filed by the U.S. Secretary of Labor was not entitled to deference in determining whether a district court was correct in dismissing a plan participant’s lawsuit because it was not filed in the venue dictated by the plan document. The court found the venue selection clause is not in conflict with the Employee Retirement Income Security Act (ERISA).Read more >
Small Talk
ON THIS DATE: In 1846, a patent for an artificial leg was granted to Benjamin Palmer. In 1847, Scottish obstetrician James Young Simpson discovered the anethestic qualities of chloroform. In 1880, James and John Ritty patented the first cash register. In 1922, British archaeologist Howard Carter and his workmen discovered a step leading to the tomb of King Tutankhamen in the Valley of the Kings in Egypt. In 1939, at the 40th National Automobile Show the first air-conditioned car was put on display. In 1948, T.S. Eliot won the Nobel Prize in literature, for his profound effect on the direction of modern poetry. In 1952, in the United States, the National Security Agency (NSA) was established. In 1978, Anne Murray earned a No. 1 pop hit with “You Needed Me.” In 2008, Senator Barack Obama of Illinois defeated Senator John McCain of Arizona to become the 44th U.S. president, and the first African American elected to the White House.   TUESDAY TRIVIA: George Washington was the first president elected under the U.S. Constitution, but after the Revolutionary war, John Hanson was the first president under the Articles of Confederation.
TRIVIAL PURSUITS: Why do we vote on a Tuesday in November?Read more >
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