Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 23rd, 2014
Retirement Plan Sponsors and Advisers 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 defined contribution (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. You can nominate a plan, or yourself, here.Read more >
Has your plan been improved by the help of a skilled professional? Has an adviser or consultant helped with defined benefit (DB) plan funding or plan maintenance? What about helping design a defined contribution (DC) plan to improve focus on fulfilling fiduciary requirements and achieving successful outcomes for participants? If you know a superb retirement plan adviser you think is worthy of the 2015 PLANSPONSOR Retirement Plan of the Year awards, please nominate him or her! Nominations can be made here.Read more >
Benefit Briefs
Employees Misunderstand the Impact of a Savings Delay
The fifth annual Wells Fargo Middle Class Retirement study finds that 41% of middle class Americans between the ages of 50 and 59 are not currently saving for retirement. More than one-third of middle class Americans (34%) contribute nothing at all to a 401(k) or other retirement account. People often say they’re too financially squeezed to save, says Joe Ready, director of institutional retirement and trust at Wells Fargo, but delaying retirement savings is not a great strategy and can have devastating consequences that participants do not realize. Sixty-eight percent of all respondents say saving for retirement is “harder than I anticipated.” The difficulty has caused more than half (55%) to say they plan to save “later” for retirement in order to “make up for not saving enough now.” Nearly six in 10 (59%) middle class Americans between the ages of 30 and 49 say they plan to save later to make up for missed retirement savings, and 27% are not currently contributing savings to a retirement plan or account. “People really underestimate what that does to their retirement savings,” Ready tells PLANSPONSOR.Read more >
A Good Score for Retirement and Health Savings
Saving for retirement and health care expenses was a priority for employees of all ages during the first half of 2014, a new report shows. Millennials in particular seem to be more energized about saving and investing for the long term, according to the Bank of America Merrill Lynch 401(k) Wellness Scorecard. The semiannual report suggests increased mobile access, 401(k) auto-features, and more personalized advice have made employee benefit plans more valuable and easier to use for the typical participant. The shifting 401(k) landscape seems to be drawing in younger employees with the most success. The Scorecard shows nearly 40,000 Millennials enrolled in their employer’s 401(k) plan for the first time during the first half of the year—a 55% rise from the same six-month period last year.Read more >
Who Is More Prepared for Retirement?
In 2013, 19.7% of employees indicated they were on track to meet their income-replacement goal in retirement, up from 17.4% in 2012 and 16.6% in 2011, according to Financial Finesse. The firm’s annual research on the state of U.S. employees’ retirement preparedness found retirement readiness varies significantly by demographics, with women in lower income and age demographics at higher risk of not meeting retirement goals. In addition, repeat users of financial wellness programs show significantly more progress in retirement preparedness than non-users or one-time users.Read more >
Economic Events
On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1% in September after declining 0.2% in August, the Bureau of Labor Statistics reported. The index for all items less food and energy rose 0.1% in September after being unchanged in August. Real average hourly earnings fell 0.2% in September, seasonally adjusted. Average hourly earnings were unchanged and the CPI-U rose 0.1%. Real average weekly earnings rose 0.2% over the month.
Market Mirror
Yesterday, the Dow fell 153.49 points (0.92%) to 16,461.32, the NASDAQ decreased 36.63 points (0.83%) to 4,382.85, and the S&P 500 was down 14.17 points (0.73%) at 1,927.11. The Russell 2000 lost 15.98 points (1.44%) to finish at 1,096.87, and the Wilshire 5000 closed 175.49 points (0.86%) lower at 20,307.95. On the NYSE, 3.3 billion shares traded, with declining issues outnumbering advancing issues more than 2 to 1. On the NASDAQ, 2.7 billion shares changed hands, with a near 3 to 1 lead for decliners. The price of the 10-year Treasury note slipped 1/32, increasing its yield to 2.222%. The price of the 30-year Treasury bond was down 3/32, bringing its yield to 2.995%.
Rules & Regulators
CPAs Ask EEOC to Leave Retirement Policies Intact
The American Institute of Certified Public Accountants (AICPA) has asked the Equal Employment Opportunity Commission (EEOC) to reject staff appeals to investigate and litigate against accounting firms regarding partner retirement provisions. In a letter to EEOC commissioners, the AICPA said it understands the EEOC is seeking to expand the scope of the Age Discrimination in Employment Act (ADEA) by requiring that partners in such firms be treated as “employees” for purposes of the ADEA. The institute noted that partners agree to compensation, benefits and retirement terms when signing their firm’s partnership agreement, and they have the option of choosing to remain employees rather than becoming partners.Read more >
Social Security Announces COLA, Wage Base Increase
The Social Security Administration (SSA) has announced a 1.7% benefit increase for 2015. In addition, based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $118,500 from $117,000.Read more >
Small Talk
Small Talk: Most Employers Support Minimum Wage Hike
A nationwide survey by CareerBuilder found a majority of employers (62%), including 58% of company senior leaders, think the minimum wage in their state should be increased. Twenty-seven percent of employers are hiring minimum wage workers in 2014, including 51% of retailers and 58% of leisure and hospitality firms. Of those employers who currently employ minimum wage workers, 45% are hiring more minimum wage workers today than they did pre-recession. Employers currently hiring minimum wage workers are more likely to support a minimum wage increase than those who are not by an 11-point margin (70% vs. 59%). Only 7% think a minimum wage of $15 per hour or more would be fair, and 9% do not think there should be a set minimum wage. But, nearly half (48%) of respondents think a fair minimum wage should be set between $10 and $14 per hour.Read more >
ON THIS DATE: In 1890, President Benjamin Harrison issued a proclamation that extended the northern boundary of Nebraska into the Dakota territory. In 1915, the first U.S. championship horseshoe tourney was held in Kellerton, Iowa. In 1915, approximately 25,000 women demanded the right to vote with a march in New York City. In 1921, in the French town of Chalons-sur-Marne, an American officer selected the body of the first “Unknown Soldier” to be honored among the approximately 77,000 United States servicemen killed on the Western Front during World War I. Once back in the United States, the Unknown Soldier was buried in Arlington National Cemetery, near Washington, D.C. In 1929, the Dow Jones Industrial Average plunged, starting the stock-market crash that began the Great Depression. In 1956, NBC broadcasted the first videotape recording. The tape of Jonathan Winters was seen coast to coast in the U.S. In 1958, Russian poet and novelist Boris Pasternak was awarded the Nobel Prize for literature. He was forced to refuse the honor due to negative Soviet reaction. Pasternak won the award for writing “Dr. Zhivago.” In 1976, the rock band Chicago had its first No. 1 hit with “If You Leave Me Now.” In 1989, Hungary became an independent republic, after 33 years of Soviet rule.
SURVEY SAYS: The CareerBuilder survey mentioned above inspires me to ask, do you think the state in which you work should increase its minimum wage? If so, what do you think is a fair minimum wage? 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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