Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
November 6th, 2014
Benefits & Administration
Retirement Plan Provisions That May Confuse
Some retirement plan provisions can create headaches for plan sponsors. The Internal Revenue Service (IRS) permits plans to be flexible to satisfy broad employer and employee needs, but this flexibility can come with a cost, according to speakers at the 2014 American Society of Pension Professionals & Actuaries (ASPPA) Annual Conference. For example, plan sponsors have some flexibility in determining age and service requirements for employees to enter the plan.  But, plan sponsors must be careful that the requirements they select match their intent.Read more >
The aggregate funded ratio of U.S. corporate pension plans was relatively unchanged in October. According to Wilshire Consulting, the aggregate funded ratio for U.S. corporate pension plans fell slightly to 85% for the month of October. The decrease in funding was the result of a greater increase in liability value versus a smaller increase in asset value.Read more >
Products, Deals & People
J.P. Morgan Introduces New Share Class for TDFs
J.P. Morgan Asset Management said it will offer R6 share classes of the J.P. Morgan SmartRetirement Mutual Fund series of target-date funds (TDFs). Managed by J.P. Morgan’s Investment Management Solutions-Global Multi Asset Group (GMAG), the new share class provides a non-revenue-sharing option for retirement plans of all sizes and needs.Read more >
Nationwide’s 3(38) investment fiduciary service will now include fiduciary monitoring of Nationwide ProAccount, Nationwide’s managed account service, at the plan level for no additional cost. When a plan sponsor elects the 3(38) service, IRON Financial assumes the responsibility and legal liabilities associated with selecting, monitoring and replacing plan investments under Section 3(38) of the Employee Retirement Income Security Act of 1974 (ERISA).Read more >
From the Magazine
2014 Retirement Plan Adviser of the Year Winners
The 2014 PLANSPONSOR Retirement Plan Adviser of the Year winners—in the individual, team and multioffice team categories—stand out for their overriding concerns for plan sponsor clients and participants, as well as the leading-edge actions they take with respect to plan design and outcomes.Read more >
Market Mirror
Wednesday, the Dow climbed 100.69 points (0.58%) to 17,484.53, the NASDAQ slipped 2.91 points (0.06%) to 4,620.72, and the S&P 500 gained 11.41 points (0.57%) to finish at 2,023.51. The Russell 2000 increased by 1.66 (0.14%) to 1,167.08, and the Wilshire 5000 closed 93.37 points (0.44%) higher at 21,269.72. On the NYSE, 3.2 billion shares traded, with 1.4 advancing issues for every declining issue. On the NASDAQ, 2.7 billion shares changed hands, with a slight lead for advancers. The price of the 10-year Treasury note slipped 1/32, bringing its yield up to 2.339%. The price of the 30-year Treasury bond was down 5/32, increasing its yield to 3.059%.
Compliance
Court Revisits Ruling in Light of Dudenhoeffer
The 9th U.S. Circuit Court of Appeals has revisited its ruling in a retirement plan stock drop suit in light of the U.S. Supreme Court’s decision in Fifth Third Bancorp v. Dudenhoeffer. In Harris v. Amgen, the 9th Circuit again reversed a district court dismissal and remanded the case back to the court, but based its discussion on the U.S. Supreme Court’s finding in Dudenhoeffer that there is no presumption of prudence for employee stock ownership plan fiduciaries. The appellate court said this overrode its previous decision that no presumption of prudence applies if the plan does not require employer stock investments.Read more >
After a lengthy court battle, the Pension Benefit Guaranty Corporation (PBGC) received a pension settlement from a Japanese parent company. The PBGC and Asahi Tec Corp., a Japanese metal casting and forging company, negotiated a settlement over the pension liabilities of the Metaldyne Corp., a former Asahi Tec subsidiary that went into bankruptcy in 2009. In the settlement, Asahi Tec agreed to pay PBGC $39.5 million.Read more >
Investing
The Case for Real Estate in DC Plans
According to the Defined Contribution Real Estate Council (DCREC), which advocates for the use of direct commercial real estate and real estate security investments within defined contribution (DC) plans, an allocation of 10% of participant assets to a mix of listed and unlisted real estate leads to better long-term outcomes. In short, the DCREC suggests real estate can be used to address sequence of return risks that can damage DC retirement savers’ lifetime income prospects when market downturns occur close to the retirement date.Read more >
The California Public Employees’ Retirement System (CalPERS) has received $249.3 million in damages from Bank of America. CalPERS said in total it has recovered more than $500 million on losses the fund sustained from investments in mortgage-backed securities.Read more >
PLANSPONSOR UK
Freezing pay and recruitment, as well as passing on costs to customers, are among the solutions being considered by UK employers to pay for auto enrollment contribution increases.Read more >
Small Talk
ON THIS DATE: In 1789, Pope Pius VI appointed John Carroll bishop of Baltimore, making him the first Catholic bishop in the United States. In 1860, Abraham Lincoln was elected the 16th president of the United States over a deeply divided Democratic Party, becoming the first Republican to win the presidency. In 1861, Jefferson Davis was elected president of the Confederate States of America. In 1894, William C. Hooker received a patent for the mousetrap. In 1923, Jacob Schick was granted a patent for the electric shaver. In 1967, Phil Donahue began a TV talk show in Dayton, Ohio. The show was on the air for 29 years.
SURVEY SAYS: Some defined benefit plan sponsors use real estate investments to hedge volatility in their portfolios, and a study from the Defined Contribution Real Estate Council suggests real estate investments could do the same for defined contribution plan participants. This week, I’d like to know does your plan include real estate investments? Are you considering them? If not, why not? 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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