Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 22nd, 2014
Benefit Briefs
Does Your Plan Support Drawdown Strategies?
If one of your retirement plan participants wanted to establish a drawdown strategy for retirement income, could she assemble an appropriate strategy using the tools and resources available to your plan? That is a question posed in a Sibson Consulting Spotlight about new rules for qualifying longevity annuity contracts (QLACs) in defined contribution (DC) plans. Sibson says the issuance of the final rules warrant DC plan sponsors revisiting their plan’s role in helping participants manage the future drawdown of their accumulated savings and the associated longevity risk. A review should start with measuring how well the plan supports the participant drawdown process today. Richard Reed, Defined Contribution Practice Leader with Sibson Consulting in Boston, tells PLANSPONSOR the first place he thinks plan sponsors should start their review is with their recordkeepers.Read more >
Employees can take small steps to boost their retirement savings, says ICMA-RC, a nonprofit independent financial services provider of retirement plans. An online resource, rolled out for National Save for Retirement Week, includes the “Small Change, Big Savings” interactive calculator, which shows how small steps like packing lunch or skipping morning latte can add up over time. Taking lunch to work three times a week instead of eating out could mean savings of more than $9,000 over seven years with a 5% investment return, according to the site.Read more >
Higher Ed. Institutions Focus More on Retirement Readiness
Higher education institutions that offer a 403(b) or Roth 403(b) plan are adopting practices that lead to a greater focus on participants’ retirement readiness, a survey finds. According to a research report released by Transamerica Retirement Solutions, “Retirement Plans for Institutions of Higher Education,” more 403(b) plan sponsors in the higher education market are working with plan advisers, implementing automatic enrollment features and streamlining retirement plans. The research found 55% of institutions with an exclusive arrangement with a single retirement plan provider monitor the retirement readiness of their plan participants, compared to 23% of institutions that work with multiple providers.Read more >
The COUNTRY Financial Security Index, regularly updated with survey data from about 1,000 adults working in the United States, shows nearly half of individuals (47%) do not keep track of their monthly discretionary spending whatsoever. Also, a majority (51%) rate their financial security as just fair or poor. When asked about their biggest financial fear, not being able to retire comfortably was the most common worry.Read more >
Retirement Savings Conversations for Each Generation
National Save for Retirement Week is an opportunity for retirement plan sponsors to get plan participants to focus on retirement savings issues. “[Employees] trust and expect their employers to help them, to get them in a sound financial place, to give them advice, and to provide them debt management tools,” says Christine Lange, head of digital strategy for retirement solutions at Voya Financial. She stresses the importance for employers to help retirees in each generation—Millennials, GenX, and Baby Boomers—prepare for retirement so they can retire with dignity and continue to generate income.Read more >
Buyer's Market
MassMutual Expands Taft-Hartley Service Team
MassMutual’s retirement services group has added several members to its Taft-Hartley retirement plan client service team. The hires include three new relationship managers and two new sales consultants, and MassMutual’s Taft-Hartley staff is now made up of eight relationship managers and five sales staff dedicated to Taft-Hartley plans.Read more >
Industry Voices
Industry Voice: Boosting Retirement Readiness at Career Stages
All plan participants have a unique savings story. Some may be entering the workforce for the first time. Others may be in between jobs or changing jobs. Many are in the middle of their career, advancing in their roles or near retirement. Plan sponsors have the opportunity to take a closer look at their participant base and provide a retirement plan program that encourages savers to take actions through all career stages. Plan sponsors can enhance engagement by connecting with participants at specific stages and help them navigate their career from start to finish.Read more >
Economic Events
After a modest decline last month, existing-home sales bounced back in September to their highest annual pace of the year, according to the National Association of Realtors. All major regions except for the Midwest experienced gains in September. Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 2.4% to a seasonally adjusted annual rate of 5.17 million in September from 5.05 million in August. Sales are now at their highest pace of 2014, but still remain 1.7% below the 5.26 million-unit level from last September.
Market Mirror
Tuesday, the Dow was up 215.14 points (1.31%) at 16,614.81, the NASDAQ climbed 103.40 points (2.40%) to 4,419.48, and the S&P 500 gained 37.27 points (1.96%) to finish at 1,941.28. The Russell 2000 closed 17.88 points (1.63%) higher at 1,112.85, and the Wilshire 5000 increased 394.05 points (1.96%) to 20,483.44. On the NYSE, 3.3 billion shares traded, with advancing issues outnumbering declining issues more than 4 to 1. On the NASDAQ, 2.7 billion shares changed hands, with a more than 3 to 1 lead for advancers. The price of the 10-year Treasury note was down 8/32, bringing its yield up to 2.220%. The price of the 30-year Treasury bond decreased 15/32, increasing its yield to 2.991%.
Rules & Regulators
Saxon Angle: ERISA’s Greatest Achievements
Over the last 40 years, it has become clear that two of ERISA’s greatest achievements are the trust requirement and the applicability of the act’s fiduciary standards. Without these legal requirements, the U.S. retirement system would not be nearly as secure and protective of employee interests as it is today.Read more >
Sponsored message from Vanguard
How America Saves
Jean Young, Senior Research Analyst at the Vanguard Center for Retirement Research, shares insights into a report on Vanguard 2013 defined contribution plan data.Read more >
Small Talk
ON THIS DATE: In 1746, the College of New Jersey was officially chartered. It later became known as Princeton University. In 1797, Andre-Jacques Garnerin made the first recorded parachute jump. He made the jump from about 3,000 feet. In 1836, Sam Houston was inaugurated as the first constitutionally elected president of the Republic of Texas. In 1883, The Metropolitan Opera House held its grand opening in New York. In 1939, the first televised pro football game was telecast from New York. Brooklyn defeated Philadelphia 23-14. In 1950, the Los Angeles Rams set an NFL record by defeating the Baltimore Colts 70-27. It was a record score for a regular season game. In 1961, Chubby Checker appeared on the “Ed Sullivan Show” and performed “The Twist.” In 1962, U.S. President Kennedy went on radio and television to inform the United States about his order to send U.S. forces to blockade Cuba. The blockade was in response to the discovery of Soviet missile bases on the island. In 1986, U.S. President Reagan signed the Tax Reform Act of 1986 into law. The act widened the tax base and eliminated a variety of ways to reduce taxable income, including restricting pension and IRA deductions. It modified the required minimum distribution (RMD) rules to state that participants must begin taking their distribution by April 1 of the year after they reach 70.5 years of age.   WEDNESDAY WISDOM: “The best way to predict the future is to create it.”—Peter Drucker, management consultant who authored several book
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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