Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 14th, 2014
Last Chance for Nominations
Last Week for Plan Sponsor of the Year Nominations
Is your company’s retirement plan run exceptionally well? Is your pension plan well-funded and/or pursuing interesting strategies (whether active or frozen)? Is your DC plan committee focused on fulfilling fiduciary requirements and achieving successful outcomes for participants? We are now 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.  You can nominate a plan, or yourself, here.Read more >
PLANSPONSOR Retirement Plan Adviser of the Year
Has your plan been improved by the help of a skilled professional? Has an adviser or consultant helped with DB plan funding or plan maintenance? What about helping design a DC plan to improve focus on fulfilling fiduciary requirements and achieving successful outcomes for participants? If you know a superb retirement plan adviser you think is worthy of the 2015 PLANSPONSOR Retirement Plan of the Year awards, please nominate him or her! Nominations can be made here.Read more >
Benefit Briefs
Sponsor Focus on Retirement Plan Fees Continues
Recordkeeping fees continue to include some element of revenue sharing for most defined contribution plans, according to NEPC’s Defined Contribution Plan & Fee Survey. Recordkeeping fees for the majority of workplace retirement plans are still calculated using pricing models based on assets within the plan, according to NEPC. However, the setting of recordkeeping fees based on a fixed-dollar amount per participant—which NEPC says is widely acknowledged as the most transparent and fair approach—appears to be gaining traction. Overall for 2014, the estimated median plan fee for employers stood at 0.52%, or 52 cents for every $100 in fund assets—down slightly from 2013.Read more >
The University of Minnesota has added a third retirement option to help faculty ease into retirement. According to the Minnesota Daily, with the new “tenure trade” retirement policy, some faculty—in exchange for their tenure status—will be able to gradually retire while working part-time or completing any ongoing work, allowing them to leave the school without abandoning any of their long-term projects or research.Read more >
Passive Investing May Not Optimize Participant Outcomes
Does choosing only low-cost, passive investments for retirement plan fund menus optimize the outcomes for participants? Not according to recently released research from American Funds. “We see plan sponsors are really focused on passive management and think that’s a safe fiduciary choice,” Mark Steburg, senior vice president in American Funds’ retirement plan services business, tells PLANSPONSOR. “But, plan sponsors are also concerned about participant outcomes.” He contends the retirement plan industry is not thinking enough about the how the right active managers can really help participants maximize investment returns. In a comprehensive study, American Funds sought to identify active manager traits associated with a track record of outpacing indexes over long periods.Read more >
Buyer's Market
Kidder Benefits Consultants will provide Employee Retirement Income Security Act (ERISA) Section 3(16) plan-level, discretionary fiduciary services to its clients, beginning immediately.Read more >
Abigail Johnson Takes Lead at Fidelity
Abigail P. Johnson, the granddaughter of Fidelity’s founder, has agreed to accept the position of chief executive officer (CEO) of FMR, LLC. As president and CEO, Johnson, who was named president of the firm in 2012, “will continue to be responsible for executive management of all the firm’s diversified businesses,” according to Fidelity. Johnson takes the helm from her father, Edward C. Johnson 3d, who will remain chairman of the firm and will provide strategic oversight.Read more >
Covariance Capital Management appointed Kevin Nee as Chief Executive Officer (CEO). Covariance Capital Management is a wholly-owned subsidiary of TIAA-CREF that provides outsourced endowment management services to educational, health care and other nonprofits.Read more >
MassMutual Reintroduces Small Employer 401(k) Solution
MassMutual Retirement Services is targeting employers with less than $15 million in retirement plan assets with the MassMutual Aviator 401(k) solution. MassMutual Aviator is designed to offer small plans ease of administration; reduction of fees as assets increase; educational tools and support to help employees save and prepare for retirement; and an expanded selection of highly rated investment options.Read more >
Janus Capital Group Inc. has agreed to acquire VS Holdings Inc., the parent company of institutionally-focused exchange-traded fund (ETF) provider VelocityShares LLC. VelocityShares, launched in 2009, specializes in funds that aim to deliver sophisticated volatility management.Read more >
Market Mirror
Starting the new week off on a bad note, the Dow was down 223.03 points (1.35%) at 16,321.07, the NASDAQ tumbled 62.58 points (1.46%) to 4,213.66, and the S&P 500 31.39 points (1.65%) to finish at 1,874.74. The Russell 2000 slipped 4.02 points (0.38%) to 1,049.30, and the Wilshire 5000 fell 323.63 points (1.62%) to 19,652.02. On the NYSE, 3.2 billion shares traded with a 2 to 1 lead for decliners. On the NASDAQ, 2.7 billion shares changed hands, with 1.3 declining issues for every advancing issue. The bond markets were closed Monday for Columbus Day.
Rules & Regulators
Court Upholds Elimination of DC to DB Transfer Feature
The 9th U.S. Circuit Court of Appeals ruled that eliminating retirement plan transfer provisions allowing employees to move assets from a defined contribution (DC) plan to a defined benefit (DB) plan does not violate the Employee Retirement Income Security Act’s (ERISA) anti-cutback rules, which prohibits any amendment to an employee benefit plan that would reduce a participant’s “accrued benefit.” Andersen v. DHL Retirement Pension Plan came to the 9th Circuit on appeal from the U.S. District Court for the Western District of Washington, which also upheld the employer’s right to eliminate the DC to DB transfer provision. In a decision handed down in 2012, the district court noted that the Department of Treasury has ultimate authority in determining overlapping provisions of ERISA’s anti-cutback rule and the Internal Revenue Code, and has disseminated a regulation that directly addresses the transfer right at the center of the case. That regulation says plainly that “a plan may be amended to eliminate provisions permitting the transfer of benefits between and among defined contribution [DC] plans and defined benefit [DB] plans.”Read more >
Small Talk
ON THIS DATE: In 1890, future President Dwight D. Eisenhower was born near Abilene, Texas. In 1912, before a campaign speech in Milwaukee, Wisconsin, Theodore Roosevelt, the presidential candidate for the Progressive Party, was shot at close range by saloonkeeper John Schrank while greeting the public in front of the Gilpatrick Hotel. In 1926, the book “Winnie-the-Pooh,” by A.A. Milne, made its debut. In 1936, the first SSB (Social Security Board) office opened in Austin, Texas. From this point, the Board’s local office took over the assigning of Social Security Numbers. In 1943, the Radio Corporation of America finalized the sale of the NBC Blue radio network. Edward J. Noble paid $8 million for the network that was renamed American Broadcasting Company. In 1947, U.S. Air Force Captain Chuck Yeager became the first person to fly faster than the speed of sound. In 1957, “Wake Up Little Susie” became the Everly Brothers’ first No. 1 hit. In 1962, the Cuban Missile Crisis began when U.S. reconnaissance aircrafts photographed Soviet construction of intermediate-range missile sites in Cuba. In 1964, civil rights leader Dr. Martin Luther King, Jr., was awarded the Nobel Peace Prize for his nonviolent resistance to racial prejudice in America. At 35 years of age, he was the youngest person ever to receive the award. In 2012, Austrian daredevil Felix Baumgartner jumped from a capsule attached to a helium balloon approximately 24 miles above Earth and became the first person to break the sound barrier without the protection or propulsion of a vehicle.   TUESDAY TRIVIA: Ailurophobia is the fear of cats.
TRIVIAL PURSUITS: What name was Martin Luther King, Jr. given at birth?Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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