Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 19th, 2017
Benefits & Administration
DC Plans Need a Framework for Managing Operational Risks
When a retirement plan has challenges, what comes to mind most often are shortcomings in the oversight of investment, market or longevity risks. But, Segal Marco Advisers says, as public sector defined contribution (DC) plans continue to grow in size and complexity, sponsors need to look closer at operational risks: the risk of loss resulting from external events or failed internal processes. A public sector letter from Segal Marco, “Operational Risk Is the Achilles’ Heel of Defined Contribution Plans,” offers a framework for identifying and managing these risks. Julian Regan, public sector market leader and senior vice president with Segal Marco in Boston, says even though the insight is given for public sector DC plans, it could apply to corporate DC plans, as well. Read more >
Best Practices for Retirement Plan Committees
Callan Institute took a look at the practices of retirement plan committees to find out what they are doing right and what they could be doing better. Its report makes suggestions for size, staffing and training for investment and administration committees. Read more >
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Some Help for Women’s Retirement Savings Gap May Be Coming
Participant Knowledge of HSAs Reveals Gaps
A large number of individuals who consider themselves well-versed on health savings accounts (HSAs) are in for a surprise, as a recent LIMRA report found a disconnect between consumers’ subjective and actual knowledge about the plans. The research reveals that while 51% of American consumers consider themselves very or somewhat knowledgeable about the features and benefits of HSAs, almost half (49%) of that group wrongly believe an account holder must spend the total HSA balance by year end or risk losing it. Additionally, only 39% of consumers surveyed know the distinction between an HSA and a flexible spending account (FSA). Read more >
Economic Events

Privately owned housing starts in September were at a seasonally adjusted annual rate of 1,127,000, the Census Bureau reported. This is 4.7% below the revised August estimate of 1,183,000, but is 6.1% above the September 2016 rate of 1,062,000. Single-family housing starts in September were at a rate of 829,000; this is 4.6% below the revised August figure of 869,000. The September rate for units in buildings with five units or more was 286,000.

Market Mirror

Wednesday, the Dow climbed 160.16 points (0.70%) to 23,157.60, the NASDAQ was virtually unchanged at 6,624.22, and the Wilshire 5000 increased by 1.90 (0.07%) to 2,561.26. The Russell 2000 gained 7.65 points (0.51%) to finish at 1,505.14, and the Wilshire 5000 was up 24.16 points (0.09%) at 26,635.38.

 

The price of the 10-year Treasury note decreased 12/32, bringing its yield up to 2.342%. The price of the 30-year Treasury bond fell 30/32, increasing its yield to 2.851%.

Compliance
ERISA Suit Targeting MIT Partially Dismissed in District Court
The district court decision spells out a number of caveats impacting Employee Retirement Income Security Act (ERISA) litigation against big-ticket universities, explaining why it is dismissing some claims while permitting others to go to a full trial. Read more >
PBGC Tries Mediation for Certain DB Plan Cases
The Pension Benefit Guaranty Corporation (PBGC) announced a new pilot program to offer mediation in certain Termination Liability Collection and Early Warning Program cases for defined benefit (DB) plans. “By providing an alternative dispute resolution option for employers who sponsor ongoing and terminated plans, we expect to save time and money for both the government and our stakeholders,” says PBGC Director Tom Reeder. Read more >
Phillips 66 Retirement Plan Faces Suit Over Inclusion of Former Parent Stock
Not only does the lawsuit claim ConocoPhillips stock does not meet ERISA’s definition of “employer securities,” but it says participants suffered millions of dollars in losses as the stock price dropped dramatically. Read more >
Appellate Decision Backs U.S. Bank in Pension Dispute
The case has a long procedural history and involves multiple underlying allegations of mismanagement on the part of U.S. Bank’s defined benefit plan fiduciaries. In a district court opinion, U.S. District Judge Joan N. Ericksen noted that the plan had, during the early course of the litigation, moved from an 84% funded ratio to become overfunded by ERISA measures, and citing other court cases, she determined that the case is therefore moot. Discussion in the new appellate decision lays out some important distinctions regarding the initial district court’s decision to dismiss the lawsuit, weighing arguments of standing and mootness. Read more >
Small Talk

ON THIS DATE: In 1765, in the U.S., The Stamp Act Congress met and drew up a declaration of rights and liberties. In 1781, British General Charles Lord Cornwallis surrendered to U.S. General George Washington at Yorktown, Virginia. It was to be the last major battle of the American Revolutionary War. In 1814, in Baltimore, Maryland, the first documented performance of “The Defence of Fort McHenry” with music took place at the Holliday Street Theatre. The work was later published under the title “The Star-Spangled Banner.” In 1914, government owned vehicles were first used to pick up mail in Washington, D.C. In 1933, basketball was introduced to the 1936 Olympic Games by the Berlin Organization Committee. In 1937, “Woman’s Day” magazine was published for the first time. In 1951, U.S. President Harry Truman signed an act officially ending the state of war with Germany. In 1960, the United States imposed an embargo on exports to Cuba covering all commodities except medical supplies and certain food products. In 1983, the U.S. Senate approved a bill establishing a national holiday in honor of Martin Luther King Jr. In 1989, the U.S. Senate rejected a proposed constitutional amendment that barred the desecration of the American flag.

SURVEY SAYS: Suppose you were taking a vacation to travel across the United States. Which mode of transportation do you think would be the most enjoyable way to travel across the country, and how long would you like your trip to be to give time to stop at desired destinations? 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

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

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