Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 24th, 2014
Benefit Briefs
Employer ACA Readiness Checkup
There are several Patient Protection and Affordable Care Act (ACA) provisions that employers need to act on now. In a webinar entitled, “Health Plans – Plan Sponsor Readiness Check-Up for 2015,” Summer Conley, an Employee Retirement Income Security Act (ERISA) attorney specializing in health and welfare benefits at Drinker Biddle & Reath in Los Angeles, noted that employers face two potential penalties for 2015. Attorneys from Drinker Biddle shared issues they have seen with clients and steps employers should take now.Read more >
Lifetime Income Costs Up Sharply Since 2013
Retirement savings for older workers racked up impressive investment gains in the past 12 months, but the price of securing lifetime retirement income is up significantly too. This is the state of affairs described by the latest update of BlackRock’s CoRI Retirement Indexes—which track the cost of purchasing lifetime retirement income by estimating how much an investor needs to have saved today to generate a single dollar of income in retirement, starting at age 65. Despite increased savings for workers in their 50s, the indexes suggest most retirement savers are worse off overall than they were 12 months ago, due to the significant increase in price for lifetime income.Read more >
Small Employers May Face High Health Plan Renewal Rates
Employer health care costs remained stable for 2014, but the number of employers delaying renewal to delay the effects of health care reform increased 322%. Thirty-two percent of all employers postponed their renewal date, according to the 2014 United Benefit Advisors Health Plan Survey. Of this 32%, a vast majority (94%) were small businesses with less than 100 employees. Based on current renewal rates coming in from carriers, in the states that did not allow renewal of pre-Patient Protection and Affordable Care Act (ACA) plans, many small employers are facing rate increases of 30% to 160%.Read more >
Buyer's Market
Drew Miyawaki and Aodhagan Byrne, both members of the U.K. operations of Legal & General Investment Management America Inc. (LGIMA), have joined the U.S. division. Miyawaki, head of global equity trading, will oversee equities trading and be directly responsible for execution of all North American equities. Byrne, an index portfolio manager, will manage North American Index strategies at LGIMA.Read more >
Economic Events
In the week ending October 18, the advance figure for seasonally adjusted initial claims for unemployment insurance was 283,000, an increase of 17,000 from the previous week’s revised level, the Labor Department reported. The previous week’s level was revised up by 2,000 from 264,000 to 266,000. The four-week moving average was 281,000, a decrease of 3,000 from the previous week’s revised average. This is the lowest level for this average since May 6, 2000, when it was 279,250. The previous week’s average was revised up by 500 from 283,500 to 284,000. The average interest rate for a 30-year fixed-rate mortgage is 3.92%, down from 3.97% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.08%, down from 3.18%.
Market Mirror
The Dow climbed 216.58 points (1.32%) Thursday to 16,677.90, the NASDAQ gained 69.95 points (1.60%) to finish at 4,452.79, and the S&P 500 increased 23.71 points (1.23%) to 1,950.82. The Russell 2000 closed 19.61 points (1.79%) higher at 1,116.49, and the Wilshire 5000 was up 256.04 points (1.26%) at 20,563.99. On the NYSE, 3.3 billion shares traded, with advancing issues outnumbering declining issues more than 3 to 1. On the NASDAQ, 2.8 billion shares changed hands, with a near 3 to 1 lead for advancers. The price of the 10-year Treasury note was up 10/32, decreasing its yield to 2.238%. The price of the 30-year Treasury bond increased 16/32, bringing its yield down to 3.021%.
Rules & Regulators
Retirement Plan Deferral Limit Increases in 2015
The Internal Revenue Service (IRS) announced cost of living adjustments affecting dollar limitations for retirement plans, as well as other retirement-related items for tax year 2015. The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,500 to $18,000.Read more >
President Obama has appointed Donald J. Butt to serve as a member of the Advisory Committee of the Pension Benefit Guaranty Corporation, charged with representing the interests of the general public. Butt serves on the Board of the Defined Contribution Institutional Investment Association, and is active with the Committee for the Investment of Employee Benefit Assets (CIEBA).Read more >
Another Church Plan Lawsuit Is Filed
Employees and retirees of Daughters of Charity Health System filed a class action lawsuit alleging that Daughters evaded federal pension law requirements by claiming its plan is a church plan. The complaint alleges the plan does not qualify as a church plan under the plain language of the Employee Retirement Income Security Act (ERISA) because the plan was not established by a church, so it should not be exempt from ERISA’s funding and fiduciary requirements for defined benefit pension plans. The plaintiffs in the suit, filed in the U.S. District Court for the Northern District of California, cite the court’s previous decision in Rollins v. Dignity Health as demonstrating the Daughters plan is not a church plan.Read more >
The World at Large
Manufacturer Caterpillar is planning to change its defined contribution (DC) plan lifestyle investment strategy to use different glidepath corresponding to employees’ distribution choices at retirement.Read more >
Small Talk
ON THIS DATE: In 1901, a 63-year-old schoolteacher named Annie Edson Taylor became the first person to take the plunge over Niagara Falls in a barrel. In 1929, in the U.S., investors dumped more than 13 million shares on the stock market. The day is known as “Black Tuesday.” In 1931, eight months ahead of schedule, President Franklin D. Roosevelt dedicated the George Washington Bridge over the Hudson River. In 1940, in the U.S., the 40-hour workweek went into effect under the Fair Labor Standards Act of 1938. In 1945, less than two months after the end of World War II, the United Nations was formally established with the ratification of the United Nations Charter by the five permanent members of the Security Council and a majority of other signatories. In 1992, the Toronto Blue Jays beat the Atlanta Braves in the sixth game of the World Series to win the championship. It was the first time a Canadian team had ever won the trophy.   And now it’s time for FRIDAY FILES!
This guy should have made sure he was in the right place to take the picture before lifting the camera to his eye (video).Read more >
A light show to get you in the mood for Halloween (with music).Read more >
Five neat Halloween pumpkin decoration ideas (video).Read more >
In Lawton, Oklahoma, a woman entered Comanche County Memorial Hospital claiming she had a fever and may have contracted Ebola. She said an African exchange student had stayed with her. The hospital called in extra staff, but then found the woman did not have Ebola, but was extremely into.xicated. According to local news stations, it was discovered there was no exchange student that stayed with the woman; she made up the story. She was charged with disturbing the peace. In Olympia, Washington, a man went to Intercity Transit to try to retrieve a bag he left on a city bus from the Lost and Found. Intercity Transit had found the bag on one of its buses and opened it to figure out who it belonged to. Inside, they reportedly found mari.juana and mushrooms packaged for sale, small baggies and scales. KOMO reports the bag also contained a large amount of cash and multiple pieces of identification for the man. When he showed up at the Transit Customer Service Desk to see if they had found his bag, staff notified police, and he was arrested. In Paw Paw, Michigan, a woman was trying to drive to a bar to retrieve her boyfriend. However, she confused another place for the bar. New York magazine reports a police officer who noticed her backing into the jail’s parking lot found that “she smelled of alcohol and appeared intoxicated.” Her blood alcohol level turned out to be .17. In Ventura County, California, a man called police to report that someone was stuck in his chimney. Deputies who responded to the scene said they found that a woman had been stuck in the chimney for about two hours. The flue was lubricated with dish soap, and she was lifted out of the chimney, placed in a Stokes basket and hoisted from the roof by a ladder truck. The Sheriff’s Department said the man recognized the woman as someone he met online and went on about six dates with. The woman was charged with illegally entering a residence. “Before you have somebody come in your house really check them out … really give it some time before you let somebody in, because they might want to stay,” the man told local news station KTLA. Have a great weekend!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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