Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 28th, 2014
2015 Plan Sponsor of the Year Nominations
Looking for Award-Worthy Plan Sponsors!
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 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 >
Benefit Briefs
Plan Participation Rates Restart Slow Climb
The percentage of workers participating in an employment-based retirement plan increased in 2013 for the first time since 2010, according to the Employee Benefit Research Institute (EBRI). The increased participation rate was noted both among all workers and among private-sector workers, EBRI says. Specifically, the percentage of all workers participating in an employment-based retirement plan increased to 41% in 2013, up from 40% in 2010. The number of workers participating rose to 64.2 million in 2013, the highest number since 2007. In general, EBRI found, each category of workers was at its highest level of participation since the economic recession began in 2008.Read more >
Analyze This: Know Thy Adviser Fees
A startling observation from data supporting the “2014 PLANSPONSOR Plan Benchmarking Report” is that about 25% of respondents are unsure of how—let alone how much—they compensate their adviser.Read more >
Buyer's Market
Investment Manager MacKay Shields LLC is expanding into the U.S. retirement market by delivering new investment opportunities for qualified defined contribution retirement plan sponsors. MacKay will act as adviser to two SEI Trust Company sponsored collective investment trusts (CITs), implementing MacKay’s Core Plus Bond and Unconstrained Bond strategies. “As the retirement market and the investment landscape continue to evolve, we see participants and sponsors looking for key ways to diversify their portfolios with well-established core fixed income strategies along with alternatives to traditional fixed income strategies. To help defined contribution investors meet their objectives, we believe that our Core Plus and Unconstrained Bond strategies are well-positioned to deliver attractive risk-adjusted returns,” MacKay told PLANSPONSOR.Read more >
Insurance Exchange Provider SelectQuote Senior and technology firm Acclaris have partnered to offer a defined contribution health care benefit employers may offer to retirees. “Employers are looking for ways to manage the cost of providing retiree health coverage, and the retiree community needs solutions that are easy to understand and manage to ensure they get the full value of their benefits packages,” says Acclaris CEO Dean Mason. “Defined contribution plans help employers minimize costs while easing the reimbursement burden on retirees and giving them a broader choice of carriers.”Read more >
Market Mirror
Yesterday, the Dow was up 12.53 points (0.07%) at 16,817.94, the NASDAQ increased 2.22 points (0.05%) to 4,485.93, and the S&P 500 slipped 2.95 points (0.15%) to 1,961.63. The Russell 2000 decreased by 1.35 (0.12%) to 1,117.48, and the Wilshire 5000 closed 35.97 points (0.17%) lower at 20,654.16. On the NYSE, 3.2 billion shares traded, with 1.3 declining issues for every advancing issue. On the NASDAQ, 2.7 billion shares changed hands, with a slight lead for decliners. The price of the 10-year Treasury note ended unchanged, with its yield up to 2.263%. The price of the 30-year Treasury bond slipped 1/32, increasing its yield to 3.041%.
Rules & Regulators
PBGC Announced Benefit Maximum Increase
The Pension Benefit Guaranty Corporation (PBGC) increased the annual maximum guaranteed benefit for a 65-year-old retiree in a single-employer plan to $60,136 for 2015. This is up slightly from the 2014 limit of $59,318, according to the PBGC. The increase is not retroactive; payments to retirees whose plans terminated before 2015 will not change. In addition, the guarantee for multiemployer plans has not changed, PBGC says.Read more >
Regulators Doing More to Ensure Compliance, Outcomes
Recent actions from regulators show a focus on compliance and improved outcomes for participants. The Internal Revenue Service’s (IRS) latest area of interest, according to Ilene H. Ferenczy, an attorney with Ferenczy Benefits Law Center, is processes. Processes could include policies, systems, computer programs and activities of the plan sponsor, she explains. “The IRS believes plans with proper internal controls are better administered; maybe they won’t have to review as much and can get out of reviews faster,” she told attendees of the 2014 Association of Pension Professionals and Actuaries (ASPPA) Annual Conference.Read more >
Industry Groups Endorse In-Plan Annuity Guidance
Recent guidance from the Internal Revenue Service and the Department of the Treasury on in-plan annuity use has received a warm response from some in the retirement plan industry. Treasury Department and Internal Revenue Service (IRS) guidance published earlier in October seeks to expand the use of income annuities in 401(k) plans. The Department of Labor (DOL) also threw its hat into the game via an explanatory letter, confirming that target-date funds (TDFs) that include annuities among their underlying fixed-income investments satisfy qualified default investment alternative (QDIA) rules. The flurry of regulatory activity around in-plan annuity use has received positive marks from a number of industry advocacy groups—most of which seem to agree that it’s important to find ways to expand the use of annuities in defined contribution (DC) plans. For example, calling the guidance an “important step to promote retirement security,” the Institutional Retirement Income Council (IRIC) says it fully endorses the move by Treasury and the IRS to bring more certainty to the process of folding annuities into qualified retirement plans.Read more >
Small Talk
ON THIS DATE: In 1636, Harvard College was founded in Massachusetts. The original name was Court of Massachusetts Bay Colony. It was the first school of higher education in America. In 1793, Eli Whitney applied for a patent for his cotton gin. In 1886, the Statue of Liberty, a gift of friendship from the people of France to the people of the United States, was dedicated in New York Harbor by President Grover Cleveland. In 1919, Congress passed the Volstead Act over President Woodrow Wilson’s veto. The Volstead Act provided for the enforcement of the 18th Amendment to the U.S. Constitution, also known as the Prohibition Amendment. In 1965, construction was completed on the Gateway Arch, a spectacular 630-foot-high parabola of stainless steel marking the Jefferson National Expansion Memorial on the waterfront of St. Louis, Missouri. In 1998, President Bill Clinton signs the Digital Millennium Copyright Act into law, explicitly authorizing copyright holders to issue “takedown” notices to individuals or companies believed to be engaging in infringing use of a copyrighted work on the Internet.   TUESDAY TRIVIA: The annual Guinness Book of World Records holds a record itself as the best-selling copyrighted title of all time.
TRIVIAL PURSUITS: What sparked the idea for the Guinness Book of World Records?Read more >
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