Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 16th, 2014
Plan Sponsors of the Year Nominations
More Time to Nominate Plan Sponsors of the Year
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. The deadline for nominations is November 7. You can nominate a plan, or yourself, here.Read more >
Benefit Briefs
Step One to Get Participants Focused on Retirement Planning
Three types of participant—underfunded, funded and unsure—can all benefit from a simple retirement readiness projection, a key part of holistic financial wellness, according to Financial Finesse. A number of variables make it difficult to gauge retirement readiness: future market returns, for one, and inability to predict economic cycles that create or destroy wealth. But one thing that is within people’s control—both retirement plan sponsors and plan participants—is what employees do to prepare themselves, said Liz Davidson, founder and CEO of Financial Finesse during a webcast hosted by the firm.Read more >
While all of the major asset classes suffered losses during the month of September, Aon Hewitt’s 401(k) Index shows light trading by 401(k) plan participants. Only about 0.021% of 401(k) balances transferred in September, marking the 11th consecutive month that trading activity was below 0.03%. Total transfer activity was $297 million, with two days having above normal trading activity, according to Aon Hewitt. Plan participants favored equity funds over fixed-income funds for 55% of the trading days in September, a reversal from August.Read more >
Late-Career Workers Very Worried About Health Care
Americans nearing retirement are deeply concerned over projected health care costs, but few are taking financial actions in response, Ameriprise says. The overwhelming majority (86%) of Baby Boomers express concerns about the affordability of health care in retirement, according to the “Health, Wealth and Retirement” study, which surveyed people ages 50 to 64 who are preparing for retirement with at least $100,000 in investable assets. When asked what they’ve done to prepare for funding health care costs in retirement, only one in five (19%) surveyed say they have taken one or more steps to prepare.Read more >
Buyer's Market
The Newport Group and Verisight Become One
The Newport Group, Inc. and Verisight, Inc. are joining forces to increase the size, scale and reach of their respective businesses. Under the terms of the agreement, the holding company of Verisight will be renamed Newport Group Holdings, Inc. and will acquire The Newport Group and Newport Group Securities. “As operating entities, Verisight and Newport will continue to operate under their respective brands,” Verisight CEO Greg Tschider tells PLANSPONSOR. The transaction is expected to close by the end of the year, subject to regulatory approval. “As a market leader in non-qualified plans, we will continue to serve the mid- to large-size markets,” says Newport CEO Peter Cahall. “In the qualified market, where we are also a leader, we serve clients of all sizes—simple and complex. Both Verisight and Newport will continue to serve the 403(b) marketplace.”Read more >
Providers Recognized for Communications
The MFEA Star Awards program announced the first winners of the STAR Retirement Awards—a new awards category covering the retirement plan services marketplace. The newest addition to the program, launched in conjunction with PLANSPONSOR, recognizes best-in-class marketing and communications to the multi-faceted and highly competitive retirement marketplace. “Clear, concise education in a creative and user-friendly format are best practices reflected most by winners,” says MFEA Director Kimber Lintz. Top winners are Putnam Investments and J.P. Morgan Asset Management.Read more >
It’s All About (Fiduciary) Processes
Michael Woomer is among the chorus of retirement plan professionals telling plan sponsors that managing fiduciary risk is about having processes in place. Woomer, senior vice president of institutional and retirement plan services at Fort Pitt Capital Group in Pittsburgh, Pennsylvania, tells PLANSPONSOR, “Clearly I think the highest risk for plan sponsors is not having a fiduciary process in place. If plan sponsors are ever audited, regulators look at their processes more so than a specific result.” According to Woomer, Fort Pitt Capital found both internal and external clients had no fiduciary processes in place because they were dealing with either advisers who were not experienced in retirement plans or advisers who were predominantly investment experts. “Plan sponsors need advisers focused on the fiduciary responsibilities of plan sponsors,” he says.Read more >
Economic Events
The U.S. Census Bureau announced that the combined value of distributive trade sales and manufacturers’ shipments for August, adjusted for seasonal and trading-day differences but not for price changes, was estimated at $1,353.4 billion, down 0.4% from July, but up 4.5% from August 2013. Manufacturers’ and trade inventories, adjusted for seasonal variations but not for price changes, were estimated at an end-of-month level of $1,752.3 billion, up 0.2% from July and up 5.7% from August 2013. 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 $442.7 billion, a decrease of 0.3% from the previous month, but 4.3% above September 2013. Total sales for the July through September 2014 period were up 4.5% from the same period a year ago. Retail trade sales were down 0.4% from August, but 4.0% above last year. Auto and other motor vehicle dealers were up 10.4% from September 2013, and food services and drinking places were up 7.1% from last year. The Producer Price Index for final demand decreased 0.1% in September. Final demand prices were unchanged in August and advanced 0.1% in July. In September, the index for final demand goods fell 0.2% and prices for final demand services declined 0.1%.
Market Mirror
After being down 460 points earlier in the day, Dow rebounded Tuesday to close 173.45 points (1.06%) lower at 16,141.74. The NASDAQ slipped 11.85 points (0.28%) to 4,215.32, and the S&P 500 lost 15.21 points (0.81%) to finish at 1,862.49. The Russell 2000 fell 10.85 points (1.02%) to 1,072.45, and the Wilshire 5000 was down 90.07 points (0.46%) at 19,617.56. On the NYSE, 3.3 billion shares traded, with a slight lead for decliners. On the NASDAQ, 2.8 billion shares changed hands, with 1.2 advancing issues for every declining issue. The price of the 10-year Treasury note was up 16/32, bringing its yield down to 2.140%. The price of the 30-year Treasury bond increased 22/32, decreasing its yield to 2.921%.
Rules & Regulators
PBGC Outlines Instructions for Premium Payments
The Pension Benefit Guaranty Corporation (PBGC) has issued certain instructions for ensuring premium payments are received and posted accurately. The PBGC reminds pension plan sponsors that they can use the My Plan Administration Account (My PAA) system to electronically submit pension plan premium filings and payments to the agency. However, payment outside of My PAA is permitted for any filing and is required if multiple filings are uploaded at the same time (i.e., a batch upload).Read more >
The Feeling’s Mutual
Long-term mutual funds experienced net outflows of $900 million in September, according to Strategic Insight (SI), an Asset International Company. SI’s monthly report on mutual fund asset flows shows net intake for equity products totaled $18.8 billion in September. International equity funds showed strong and persistent demand during the month, attracting $13 billion. U.S. Equity funds attracted $5.8 billion in September on continued demand for natural resources (up $2.1 billion) and income-mixed funds ($1 billion), according to SI.Read more >
Small Talk
ON THIS DATE: In 1701, The Collegiate School was founded in Killingworth, Connecticut. The school moved to New Haven in 1745 and changed its name to Yale College. In 1829, in Boston, Massachusetts, the first modern hotel in America opened. The Tremont Hotel had 170 rooms that rented for $2 a day and included four meals. In 1928, Marvin Pipkin received a patent for the frosted electric light bulb. In 1964, China detonated its first atomic bomb becoming the world’s fifth nuclear power. In 1973, Henry Kissinger and North Vietnamese diplomat Le Duc Tho were awarded the Nobel Peace Prize for negotiating the Paris peace accords. Kissinger accepted, but Tho declined the award until such time as “peace is truly established.” In 1976, “Disco Duck” hit the No. 1 spot on the U.S. pop chart. In 1995, the “Million Man March” took place in Washington, D.C.
SURVEY SAYS: This week marks the 15th anniversary of our NewsDash email newsletter. We’d like to know how you read NewsDash and get your thoughts about formatting and content. Or, you can just leave a comment about NewsDash’s 15-year anniversary. 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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