Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 17th, 2014
Benefit Briefs
Excise Tax Driving Change for Health Benefits
A significant number of U.S. employers are taking immediate steps to avoid triggering the excise tax on high cost health plans in 2018, Aon Hewitt finds. According to an Aon Hewitt pulse survey of 317 U.S. employers, 40% expect the excise tax to affect at least one of their current health plans in 2018, and 14% expect it to immediately impact the majority of their current health benefit plans. However, one-quarter of employers said they still have not yet determined the impact of the tax on their health plans, and more than one-third reported that their executive leadership and finance teams have limited or no knowledge of the implications of the tax for their organizations.Read more >
Two Accounts May Be Better Than One
Maybe a workplace retirement plan alone does not best meet the needs of younger workers, Research Affiliates says in a new white paper. In “What Are We Doing to Our Young Investors?” Rob Arnott, chairman and CEO of Research Affiliates, and Lillian Wu, researcher at Research Affiliates and co-author of the report, suggest that since younger workers sometimes treat their retirement accounts as rainy day funds, they should be able to put some savings into an account separate from a 401(k) or other retirement plan that could be accessed to meet emergency needs without penalties. One reason is the timing of the investor’s entry into the market can be a critical factor in how the investor comes to view savings and the market, Wu explains.Read more >
Buyer's Market
Voya Financial Chairman and CEO Rodney Martin Jr. has taken over direct leadership of the company’s retirement solutions business. Martin will manage operations in Voya’s retirement services and annuities segments, the firm explains. In connection with this change, Maliz Beams, most recently the CEO of Voya Financial’s retirement solutions business, is leaving the company to pursue other opportunities.Read more >
The Appeal of an 8-Basis Point TDF
The recent evolution of target-date funds (TDFs), like other investing programs popular with qualified retirement plan investors, has been a story of falling fees. Jake Gilliam, managing director and portfolio manager at Schwab Advisor Services, says investment providers active in the retirement planning space are quite aware of the unfolding fee story. At Schwab, one particular point of emphasis is the qualified default investment alternative (QDIA), and the TDFs that often serve as a plan’s default option.Read more >
Legal & General Investment Management America, Inc. (LGIMA) announced that it has hired four executives to support its expanding liability-driven investing (LDI) business. Matthew Cohen, Shawn Fan, Ciaran Carr, and Jeff Eberhardt are joining the Chicago-based registered investment adviser’s LDI business. LGIMA specializes in fixed-income strategies with an emphasis on LDI and de-risking solutions.Read more >
Principal Funds has premiered two funds designed to meet client demand for flexible fixed-income strategies. The Principal Credit Opportunities Explorer Fund (PCEAX) and the Principal Dynamic High Yield Explorer Fund (PDYAX) are both are available to institutional investors.Read more >
The Principal Unveils Retirement Wellness Scores
The Principal Financial Group has introduced a personalized, at-a-glance retirement wellness scoring system for retirement plan participants. The Principal says the personalized Retirement Wellness Score is one feature of a broad new participant digital experience it is bringing to retirement plan clients. As explained by the firm, the score represents the percentage of a participant’s pre-retirement income that they will likely be able to maintain in retirement, ranging from 0% to 100% or higher. The score is based on account balances; contribution levels in defined contribution, defined benefit and nonqualified plans; an estimate of income from Social Security; outside savings entered by the participant; and other assumptions and data.Read more >
Industry Voice
Barry’s Pickings: An ERISA Report Card
I began practicing law in 1976, the year the Employee Retirement Income Security Act (ERISA) became effective, and spent my first 12 months puzzling through things such as ERISA’s hours-of-service rules. It was a strange adventure, going from studying torts and constitutional law to trying to get my head around the idea that if you worked 1,000 hours in a plan year—what was a plan year?—you got a “year of service.”Read more >
Economic Events
In the week ending October 11, the advance figure for seasonally adjusted initial claims for unemployment insurance was 264,000, a decrease of 23,000 from the previous week’s unrevised level of 287,000, the Labor Department reported. This is the lowest level for initial claims since April 15, 2000, when it was 259,000. The four-week moving average was 283,500, a decrease of 4,250 from the previous week’s unrevised average of 287,750. This is the lowest level for this average since June 10, 2000, when it was 283,500. The average interest rate for a 30-year fixed-rate mortgage is 3.97%, down from 4.12% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.18%, down from 3.30%.
Market Mirror
Thursday, the Dow was down 24.50 points (0.15%) at 16,117.24, the NASDAQ ticked up 2.07 points (0.05%) to 4,217.39, and the S&P 500 increased by 0.27 (0.01%) to finish at 1,862.76. the Russell 2000 climbed 13.36 points (1.25%) to 1,085.81, and the Wilshire 5000 closed 65.27 points (0.33%) higher at 19,682.83. On the NYSE, 3.3 billion shares changed hands, with 2.3 advancing issues for every declining issue. On the NASDAQ, 2.8 billion shares traded, with a more than 2 to 1 lead for advancers. The price of the 10-year Treasury note slipped 4/32, increasing its yield to 2.153%. The price of the 30-year Treasury bond was down 11/32, bringing its yield up to 2.937%.
Rules & Regulators
IRS Posts Reminder About Two Compliance Issues
The Internal Revenue Service (IRS)’s review of Virgin Island plan sponsors signaled a need to remind all plan sponsors about two important issues. The IRS said it found a few plan sponsors in its review that either did not have adequate fidelity bonding or did not deposit contributions by the required deadlines. Under the Employee Retirement Income Security Act (ERISA), plan sponsors are required to secure fidelity bonds to protect the plan against loss because of fraud or dishonesty by any plan fiduciary or someone who handles the plan’s assets.Read more >
The World at Large
Retirement plan providers should do more to explain retirement plans in layman’s terms on websites, according to smaller employers in the UK.Read more >
Small Talk
ON THIS DATE: In 1888, the first issue of “National Geographic Magazine” was released at newsstands. In 1931, gangster Al Capone, one of the most notorious criminals of the 1920s and 1930s, was sentenced to 11 years in prison for tax evasion and fined $80,000. In 1933, “News-Week” appeared for the first time at newsstands. The name was later changed to “Newsweek.” In 1960, R&B group the Drifters earned a No. 1 pop hit with “Save the Last Dance For Me.” In 1973, the Organization of the Petroleum Exporting Countries (OPEC) implemented what it called “oil diplomacy,” prohibiting any nation that had supported Israel in its “Yom Kippur War” with Egypt, Syria and Jordan from buying any of the oil it sells. The ensuing energy crisis marked the end of the era of cheap gasoline and caused the share value of the New York Stock Exchange to drop by $97 billion. This, in turn, ushered in one of the worst recessions the United States had ever seen. In 1979, Mother Teresa of India was awarded the Nobel Peace Prize.   And now it’s time for FRIDAY FILES!
This hamster needs to be taught how to use its running wheel.Read more >
In Riverside, Illinois, police received several calls about a driver who appeared to be in medical distress and had passed out at the wheel of her car. According to the Chicago Tribune, as officers approached the vehicle, they saw a woman who was slumped over the wheel with the keys still in the ignition. They tried to wake the woman by banging on the car’s windows but she did not wake up. All the doors were locked and it appeared her foot was on the brake when she passed out. One of the officers then maneuvered his squad car in front and the other officer parked his in the back of the woman’s car to prevent an accident. The officers then got a lockout tool and attempted to unlock the doors, but as they tried, the woman awoke, slammed on the gas and struck the police vehicle stationed in front of her car. The woman, who was extremely confused and disoriented at the scene, admitted to smoking a small amount of pot and to having two be.ers. In Phoenix, Arizona, a patient badly wanted out of a hospital. So badly, that he highjacked a parked ambulance outside West Valley Hospital. According to the Associated Press, a firefighter sitting in the back was able to jump out safely. Police pursued the patient, who failed to pull over. They later used GPS to locate the vehicle and the patient at his home in the suburb of Avondale. The man was arrested on charges of theft of means of transportation, felony flight, failure to yield to police and disorderly conduct.
An amazing—and a little scary—shark frenzy at a North Carolina beach.Read more >
In LaCrosse, Wisconsin, two men walked up to a woman and attempted to rob her. However, she pointed out the security cameras at the jail nearby, and they let her walk away, according to WKBT. The woman called 911, the police looked at the camera video, and later picked up the men on another street. In Hammock Dunes, Florida, a Missouri couple bought a lot in a gated resort community and hired builders to construct a rental property on the lot. It took six months for the builders to complete the $680,000, 5,300-square-foot rental home with an ocean view. But, the Missouri couple just learned the dream home actually sits on the lot next to the one they own, according to the Daytona Beach News-Journal. The builder has contacted the owner of the lot and is trying to negotiate a settlement.
30 Unusual Wills (This one is kind of long—nine minutes—but interesting.)Read more >
In Guangyuan, China, an 85-year-old woman was washing her false teeth when they slipped out of her hand and fell into her toi.let. She reached in and tried to get the teeth out of the hole . On trying to stand up, she found she had become stuck, the UK’s Mirror reports. An hour later, her daughter-in-law found her on the floor of the bathroom. She couldn’t free the arm, so she phoned emergency services. It took firefighters four hours to free the woman’s arm. Somewhere in Minnesota, on the eve of her 114th birthday, Anna Stoehr decided to join Facebook. However, Anna noticed 1900, the year she was born, was not listed as an option when she registered her date of birth to the site—which only stretches as far back as 1905, the UK’s Metro reports. So, Stoehr lied about her age. She typed a letter—on a typewriter—to Facebook founder Mark Zuckerberg, calling attention to the problem and saying, ‘I’m still here.’ Here’s hoping we all have to similarly lie about our age someday. Have a great weekend, everyone!
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 >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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