Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 12th, 2017
Benefits & Administration
‘OOP’ Health Care Spending Chipping Away at Retirement Income
The high cost of Medicare is significantly reducing retirement income for a large portion of Americans, according to a study by the Center for Retirement Research (CRR) at Boston College. The organization found that, in 2014, average out-of-pocket (OOP) spending—excluding long-term care—was $4,274 per year. Approximately two-thirds of that, or $2,965, was spent on premiums. Thus, the average retiree had only 65.7% of his Social Security benefits remaining after OOP spending and only 82.2% of total income. Read more >
Federal Reserve Data Shows Strengthening Economy’s Impact on the DC Space
“The release of the Federal Reserve’s 2016 Survey of Consumer Finances (SCF) is a great opportunity to see how a strengthening economy, the continued maturation of the 401(k) system, and steady stock market returns have affected workers’ retirement wealth,” say researchers with the Center for Retirement Research (CRR) at Boston College. The Fed’s analysis concludes that 401(k) plans “could work much better and balances would be higher if all plans were fully automatic.” Read more >
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Compliance
The Thrust of Fiduciary Liability Insurance
In recent years, the defined contribution (DC) plan space has seen a wave of litigation surrounding the management of retirement plans. Fiduciary liability insurance is a very important tool. Read more >
Settlement Agreement Reached in Church Plan Challenge
A federal judge has preliminarily approved a settlement agreement between participants of the St. Joseph’s Hospital and Medical Center pension plan and St. Joseph’s Hospital. As with many similar complaints, the lawsuit challenges whether the plan was really a “church” plan and not subject to Employee Retirement Income Security Act (ERISA) funding rules. Under the terms of the agreement, the defendants are obligated to contribute an aggregate amount of $42.5 million to the plan no later than 60 days after the agreement is executed or at any time prior. Other terms of the settlement agreement are similar to provisions of the Employee Retirement Income Security Act (ERISA). Read more >
Sponsored message from Vanguard
Target-Date Funds: Built to Weather Volatility
Uncertainty is often the cause of knee-jerk reactions by investors. Many DC plan sponsors select target-date funds (TDFs) as their plan’s qualified default investment alternative to curb emotional investing. Read more >
Market Mirror

Wednesday, the Dow gained 42.21 points (0.18%) to finish at 22,872.89, the NASDAQ increased 16.30 points (0.25%) to 6,603.55, and the S&P 500 was up 4.60 points (0.18%) at 2,555.24. The Russell 2000 decreased by 1.08 (0.07%) to 1,506.92, and the Wilshire 5000 closed 40.77 points (0.15%) higher at 26,602.12.

 

The price of the 10-year Treasury note and the 30-year Treasury bond each were up 1/32, decreasing their yields to 2.346% and 2.881%, respectively.

Investing
Income Uncertainty Makes Women More Risk Averse
The reason why many women are more risk averse with investments than men is primarily due to income uncertainty, says Rui Yao, associate professor at the University of Missouri in Columbia, Missouri. More conservative portfolios can result in women not being adequately prepared for retirement. Robert Massa, director of retirement at Ascende in Houston, says in his experience, women are more receptive to working with a financial adviser than men are, and once they do, they understand the importance of preparing adequately for retirement. Read more >
Small Talk

ON THIS DATE: In 1492, Christopher Columbus, an Italian explorer, sighted Watling Island in the Bahamas. He believed that he had found Asia while attempting to find a Western ocean route to India. The same day he claimed the land for Isabella and Ferdinand of Spain. In 1792, the first monument honoring Christopher Columbus was dedicated in Baltimore, Maryland. In 1920, construction of the Holland Tunnel began. The tunnel links Jersey City, New Jersey, and New York City. In 1933, the U.S. Department of Justice acquired Alcatraz Island from the U.S. Army. In 1945, Private First Class Desmond T. Doss was presented with the Congressional Medal of Honor for outstanding bravery as a medical corpsman. He was the first conscientious objector in American history to win the award. In 1989, the U.S. House of Representatives approved a statutory federal ban on the destruction of the American flag. In 1994, the Magellan space probe ended its four-year mission to Venus for the purpose of mapping. In 1998, the U.S. House of Representatives passed the Online Copyright Bill. In 1999, Rob Reiner received a star on the Hollywood Walk of Fame.

 

 

SURVEY SAYS: Not this week.

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

Advertising: Paul Zampitella paul.zampitella@strategic-i.com

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