Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 15th, 2015
Benefits & Administration
Using Recordkeeper Proprietary TDFs Not a Given
Retirement plan recordkeepers can no longer count on selling their target-date funds (TDFs) to the plans they serve. Market Strategies International’s Cogent Report, “Retirement Plan Adviser Trends,” finds that almost half of the advisers who sell defined contribution (DC) plans now go shopping for clients’ TDFs, netting them the best fund for the best price—and often from a competitor.Read more >
Schwab Retirement Plan Services, Inc. has introduced a new managed account program for 401(k) plans. Steve Anderson, executive vice president and head of Schwab Retirement Plan Services, tells PLANSPONSOR the Advisor Managed Account program leverages Morningstar managed account technology to build a series of customized investment portfolios for retirement plans with $20 million or more in assets and a dedicated retirement specialist adviser. “Access to 401(k) advice is vitally important and adviser managed accounts can help more people receive that advice within their plan,” he says.Read more >
2022 Recordkeeping Survey
TRIVIAL PURSUITS: How Many States Are in More Than One Time Zone?
TRIVIAL PURSUITS: Meaning and Origin of the Idiom “Watershed Moment?”
TRIVIAL PURSUITS: Which are the most northern, southern, eastern and western U.S. States?
More TDF Underperformance Lawsuits Emerge Across US
From the Magazine
Barry’s Pickings: Death and Interest Rates
Democratic Party political commentator James Carville famously said, “If there was reincarnation, … I[’d] want to come back as the bond market.” The word on the exchange is that even as the Fed is expected to raise short-term interest rates later this year, medium- and long-term rates may hold steady or, indeed, may possibly go lower. Whatever this says about the economy, it’s not particularly good news for defined benefit (DB) plans.Read more >
Economic Events

The Producer Price Index (PPI) for final demand declined 0.5% in September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. Final demand prices were unchanged in August and rose 0.2% in July. On an unadjusted basis, the final demand index fell 1.1% for the 12 months ended in September, the eighth straight 12-month decline.

The U.S. Census Bureau announced that U.S. total business end-of-month inventories for August were $1,811.0 billion, virtually unchanged from last month. U.S. total business sales were $1,320.5 billion, down 0.6% from last month.

Advance estimates of U.S. retail and food services sales for September, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $447.7 billion, an increase of 0.1% from the previous month, and 2.4% above September 2014. Total sales for the July 2015 through September 2015 period were up 2.3% from the same period a year ago. Retail trade sales were virtually unchanged from August, and 1.7% above last year. Motor vehicle and parts dealers were up 8.8% from last year and food services and drinking places were up 7.9% from September 2014.

Sponsored message from Vanguard
Retirement distribution decisions among DC participants
This Vanguard research paper discusses the implications of recent retirement distribution decisions on target-date funds and retirement income.Read more >
Market Mirror

Though the Fed reported steady consumer spending and an improving housing market following modest U.S. economic growth late this summer, stocks finished down Wednesday, according to the Associated Press. The Dow dropped 157.14 points (0.92%) to reach 16,924.75, the NASDAQ fell 13.76 points (0.29%) to 4,782.85, and the S&P 500 lost 9.45 points (0.47%) to finish at 1,994.24. The Russell 2000 decreased 10.87 points (0.95%) to 1,136.97, and the Wilshire 5000 fell 121.47 points (0.58%) to 20,880.10.

On the NYSE, 3.2 billion shares traded, with 3 declining issues for every 2 advancing issues. On the NASDAQ, 2.7 billion shares changed hands, with nearly twice as many decliners as advancers.

The price of the 10-year Treasury note rose 19/32, decreasing its yield to 1.975%. The price of the 30-year Treasury bond increased 32/32, bringing its yield down to 2.836%.

Court Finds No Fault with Top-Hat Plan Termination Payment
A participant in NCR Corp.’s supplemental plan for executives filed a lawsuit claiming that the conversion of his monthly retirement benefit to a lump-sum payment upon the plan’s termination violated the terms of the plan document and that he was due relief under the Employee Retirement Income Security Act (ERISA). However, a federal court has ruled that a top-hat plan’s calculation and distribution of a lump sum in place of a retiree’s monthly installments after plan termination did not violate ERISA.Read more >
GASB Proposes Amendment to Include Multiple-Employer Plans
The Governmental Accounting Standards Board (GASB) today proposed new guidance intended to assist governments that participate in certain multiple-employer pension plans to meet the reporting requirements of GASB Statement No. 68, “Accounting and Financial Reporting for Pensions.” The guidance would establish separate standards for note disclosures of descriptive information about the plan, among other requirements.Read more >
Managing Investment Risk in Cash Balance Plans
Cash balance plans differ from traditional defined benefit (DB) plans in several ways. While a cash balance defined benefit DB plan design can be simpler and less risky than a traditional DB plan, it is not inherently a low-risk strategy, Segal Rogerscasey points out.Read more >
Equity markets ended the month lower again in September, data from Strategic Insight, an Asset International company, shows. While small and mid-cap stocks were hardest hit during the month, the declines sent one-month average fund returns negative for U.S. equity (-3.2%) and international equity (-3.6%).Read more >
Small Talk

ON THIS DATE:  In 1883, the U.S. Supreme Court struck down part of the Civil Rights Act of 1875. It allowed for individuals and corporations to discriminate based on race. In 1939, New York Municipal Airport was dedicated. The name was later changed to La Guardia Airport. In 1951, “I Love Lucy” premiered on CBS-TV. In 1966, U.S. President Lyndon B. Johnson signed a bill creating the Department of Transportation. In 1989, Wayne Gretzky, while playing for the Los Angeles Kings, surpassed Gordie Howe’s NHL scoring record of 1,850 career points. In 1993, South Africa’s President F.W. de Klerk and African National Congress President Nelson Mandela were named winners of the Nobel Peace Prize for their efforts to end the apartheid system in South Africa. In 1997, British Royal Air Force pilot Andy Green broke the land-speed record by driving a jet-powered car faster than the speed of sound. In 1997, The Cassini-Huygens mission was launched from Cape Canaveral, Florida. On January 14, 2005, a probe sent back pictures of Saturn’s moon Titan during and after landing. In 2001, NASA’s Galileo spacecraft passed within 112 miles of Jupiter’s moon Io. 

SURVEY SAYS: The Democratic presidential candidate debate introduced three candidates that I had heard nothing about beforehand. This week, I’d like to know, which candidates in the running for the Republican and Democratic nominations are you familiar with, and if you could ask the candidates one question, what would it be? You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy.Read more >

Editorial: Alison Cooke Mintzer


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