Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 3rd, 2014
Benefit Briefs
Baby Boomers, Millennials Should Switch Investing Goals
Maximizing growth is the number one priority Baby Boomers have for their retirement assets, according to the MFS Investing Sentiment Insights Survey. The survey finds one-third (32%) of Baby Boomer investors say maximizing growth is their most important criterion when making decisions about their retirement assets. This aggressive stance points to the lasting impact the Great Recession has had on Baby Boomers’ efforts to save for retirement, MFS says. Meanwhile, younger investors are surprisingly focused on other objectives.Read more >
They’re scarce now, but the rise of the account-specific tablet application (app) for retirement plans will come, says Corporate Insight. Apps that are created for use on tablets offer the potential for greater functionality than a typical mobile app, Corporate Insight says in its recent report “Retirement on the Move: Tablet Edition,” an overview of retirement plan tablet apps. In the defined contribution (DC) world, users could view account balances and analyze fund data or asset allocations on the move, and the larger screens of tablets would make certain tools easier to use and multimedia resources more accessible. Yet only three out of the 17 plan providers Corporate Insight follows offer an account-specific app, according to the report.Read more >
Five Misconceptions of Retirement Plan Participants
Retirement plan participants subscribe to a variety of wrong ideas about retirement and their retirement plans, but there are ways to set them on the right track. For example, a common misconception about target-date funds (TDFs) can be righted with education. About one-third of participants surveyed by AllianceBernstein said they believe their account balance in a TDF will never go down. In addition, AllianceBernstein found that 37% believe it guarantees lifetime income. Fearful thinking is responsible for a common misconception among participants, according to Michael Fein, managing partner of CIC Wealth Management in Owings Mills, Maryland, who says the big misconception his firm sees is participants’ belief that they’re never going to retire because they won’t be able.Read more >
Sibson Consulting’s Fall 2014 College & University Benefits Study found changes from last year occurred mostly to health benefits rather than retirement benefits at higher education institutions. However, Norm Jacobson, a senior vice president at Sibson Consulting, tells PLANSPONSOR a comparison between last year and this year is difficult because the database of participating institutions has doubled in size. Jacobson notes one difference Sibson found this year in higher education benefit offerings is the percentage of institutions offering high-deductible health plans (HDHPs) has increased. He says higher education institutions are looking at plan design alternatives to mitigate the 2018 excise tax on high-cost plans imposed by the Patient Protection and Affordable Care Act (ACA), and they want to encourage more consumerism in health care among employees.Read more >
Buyer's Market
ADP Offers ACA Compliance Support Solution
A new health benefits compliance solution from ADP helps employers navigate requirements included in the Patient Protection and Affordable Care Act (ACA). ADP Health Compliance offers assistance with determining employee eligibility and plan affordability, as well as reporting and notice requirements.Read more >
Economic Events
New orders for manufactured goods in August, down following two consecutive monthly increases, decreased $56.1 billion or 10.1% to $502.0 billion, the U.S. Census Bureau said. This followed a 10.5% July increase. Excluding transportation, new orders decreased 0.1%. Shipments, down following two consecutive monthly increases, decreased $5.0 billion or 1.0% to $503.1 billion. This followed a 1.4% July increase. Unfilled orders, up sixteen of the last seventeen months, increased $7.0 billion or 0.6% to $1,164.5 billion. This was at the highest level since the series was first published on a NAICS basis in 1992 and followed a 5.3% July increase. In the week ending September 27, the advance figure for seasonally adjusted initial claims for unemployment insurance was 287,000, a decrease of 8,000 from the previous week’s revised level, the Labor Department reported. The previous week’s level was revised up by 2,000 from 293,000 to 295,000. The four-week moving average was 294,750, a decrease of 4,250 from the previous week’s revised average. The previous week’s average was revised up by 500 from 298,500 to 299,000. The average interest rate for a 30-year fixed-rate mortgage is 4.19%, down from 4.20% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is unchanged from one week ago, at 3.36%.
Market Mirror
Thursday, the Dow slipped 3.66 points (0.02%) to 16,801.05, the NASDAQ increased 8.11 points (0.18%) to 4,430.19, and the S&P 500 was virtually unchanged at 1,946.17. The Russell 2000 climbed 10.97 points (1.01%) to 1,096.38, and the Wilshire 5000 closed 23.92 points (0.12%) higher at 20,500.46. On the NYSE, 3.3 billion shares traded, with a slight lead for advancers. On the NASDAQ, 2.8 billion shares changed hands, with 1.8 advancing issues for every declining issue. The price of the 10-year Treasury note was down 12/32, increasing its yield to 2.427%. The price of the 30-year Treasury bond decreased 32/32, bringing its yield up to 3.143%.
Rules & Regulators
John Hancock Not a Fiduciary in Excessive Fee Case
John Hancock has ultimately been found not to be a fiduciary in a case alleging it charged excessive fees for investments offered in two Employee Retirement Income Security Act (ERISA) retirement plans. The 3rd U.S. Circuit Court of Appeals agreed with a federal district court that decisions in previous cases should apply to the argument that John Hancock was acting as a fiduciary “when taking the action subject to complaint.” In Hecker v. Deere, for example, the 7th U.S. Circuit Court of Appeals decided a service provider owes no fiduciary duty to a plan with respect to the terms of its service agreement if the plan trustee exercised final authority in deciding whether to accept or reject those terms. As in the current case, Santomenno v. John Hancock Life Insurance Company, the participants in the Deere case alleged their plan provider had maintained discretion in selecting the funds available for selection on the plan’s fund menu. The court noted that it was ultimately the responsibility of the plan sponsor to decide which options to offer plan participants, so the plan provider lacked the discretion necessary to confer upon it a fiduciary responsibility under ERISA.Read more >
Supreme Court Agrees to Review 401(k) Fee Case
The law firm of Schlichter, Bogard & Denton says the U.S. Supreme Court has agreed to review the closely followed 401(k) fee litigation case, Tibble v. Edison International. The law firm says Tibble will be the first case involving litigation on excessive 401(k) fees heard by the Supreme Court, following a recommendation from the U.S. Solicitor General’s Office urging the top court to agree to review previous district and appellate court findings in the matter. During an initial bench trial, a district court held that utility company Edison International had breached its duty of prudence by offering retail-class mutual funds as retirement plan investments when lower-cost institutional funds were available.Read more >
Financial Sense
Falling liabilities were not enough to offset falling asset levels for defined benefit (DB) plans in September. Falling stock markets drove the funded status for the typical U.S. corporate pension plan to 89.9%, the lowest level since August 2013, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG). Falling asset values also resulted in public plans, foundations and endowments missing their return targets, the BNY Mellon Institutional Scorecard shows.Read more >
Judge Says Bankrupt City Can Dismiss Pension Obligations
A federal judge in California has ruled that the city of Stockton may eschew paying its pension obligations, and treat them just like other debts in its bankruptcy plan. According to news reports, U.S. Bankruptcy Judge Christopher Klein said, “California public employee retirement law … is simply invalid in the face of the supremacy clause of the United States Constitution.” That means federal bankruptcy and contract law applies to the pension fund, “just like anybody else,” Klein said. In the lawsuit brought by creditor Franklin Templeton Investments, Stockton argued that it must make its pension contributions for public employees before its creditors are paid the entire amount they are owed.Read more >
Small Talk
ON THIS DATE: In 1863, expressing gratitude for a pivotal Union Army victory at Gettysburg, President Abraham Lincoln announced that the nation would celebrate an official Thanksgiving holiday on November 26, 1863. In 1893, the motor-driven vacuum cleaner was patented by J.S. Thurman. In 1917, six months after the United States declared war on Germany and began its participation in the First World War, the U.S. Congress passed the War Revenue Act, increasing income taxes to unprecedented levels in order to raise more money for the war effort. In 1922, Rebecca L. Felton became the first female to hold office of U.S. Senator. She was appointed by Governor Thomas W. Hardwick of Georgia to fill a vacancy. In 1967, Woody Guthrie, godfather of the 1950s folk revival movement, died. In 1990, less than one year after the destruction of the Berlin Wall, East and West Germany came together on what is known as “Unity Day.” In 1995, at the end of a sensational trial, former football star O.J. Simpson was acquitted of the brutal 1994 double murder of his estranged wife, Nicole Brown Simpson, and her friend, Ronald Goldman. In 2003, Roy Horn, of the duo “Siegfried & Roy,” was attacked by a tiger during a performance. Roy survived the attack after being dragged offstage. The tiger, a 7-year-old male named Montecore, was debuting in his first show.   And now it’s time for FRIDAY FILES!
Estately, which brought us the most Internet-searched terms by state, has now compiled a list of most common dream themes by state.Read more >
These two sand movers are working hard—or hardly working?Read more >
In Colchester, Vermont, a Jericho farmer has broken the record for the state’s largest pumpkin. The Vermont Giant Pumpkin Growers’ Association Annual Giant Pumpkin Weigh Off took place last weekend, according to WCAX. Richard Squires’ pumpkin weighed in at 1,649 pounds. The previous state record was 1,556 pounds. In Middletown, Pennsylvania, a 31-year-old convicted felon was charged with illegal possession of a fire.arm and discharging a fire.arm into an occupied structure. He shot a bullet through his neighbor’s window, but no one was injured. He initially denied firing the gun, police said, according to Raw Story, but then admitted during his arraignment that he shot the gun to clear the chamber because he wasn’t sure how to unload it.
The dog thinks this glass door is still closed.Read more >
In Coral Gables, Florida, a man went into an office building with intentions of doing wrong. When he got into the elevator lobby, he moved the security cameras in an effort to conceal his actions. He went into a law office of the building and stole around $3,700, according to NBC Miami. However, he failed to notice that he moved the camera toward a wall of decorative mirrors that clearly showed what he looked like and that he broke into the law office. In Wellington County, Ontario, Canada, police were called to a home reporting an invasion. Once there, they discovered a mari.juana grow-op in the home. The residents were arrested for mari.juana production and possession for the purpose of traf.ficking, according to CTV News, but police say they will continue to investigate the home invasion. Have a wonderful weekend!
Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy.Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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