Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 7th, 2014
Editor’s Note
In a recent article, “Self-Funding Health Benefits Another Cost-Saving Strategy,” we stated that self-insured plans are not Employee Retirement Income Security Act (ERISA) plans. The sentence should have said self-insured plans are Employee Retirement Income Security Act (ERISA) plans. We apologize for the confusion.Read more >
Retirement Plan Sponsors and Advisers of the Year
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 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 >
Nominations Open for Retirement Plan Adviser of the Year
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
Data from 2012 Form 5500 filings of retirement plans provides evidence of the increasing coverage of employees by defined contribution (DC) rather than defined benefit (DB) plans. The number of DB plans slipped in 2012, by 3.4%, according to “Private Pension Plan Bulletin Abstract of 2012 Form 5500 Annual Reports” by the Department of Labor’s Employee Benefit Security Administration (EBSA). The number of active participants in DB plans decreased for the 13th straight year, by 4.2% in the same year. Meanwhile, although the total number of DC plans declined by 0.8%, the number of 401(k)-type plans rose in 2012, from 513,000 to 516,000. The number of active participants in 401(k)-type plans grew by 3%.Read more >
Employees Not Thinking Long-Term About Equity Awards
Fewer employees who receive equity compensation are placing a high value on those awards, in part due to the long-term view of their companies. A survey from UBS Wealth Management Americas finds employees become increasingly engaged with their equity awards within three years of retirement, likely because the awards will be used to fund participants’ lives after work. Thirty-three percent of those nearing retirement say they have become more engaged with their company stock, while only 10% feel they have become less engaged. Other research has found equity compensation plans are earmarked for eventual retirement savings. However, the latest “Participant Voice” survey from UBS found 18% of equity compensation plan participants view their equity award merely as a lottery ticket and seven in ten participants do not create or follow a long-term planning for managing company stock holdings.Read more >
Buyer's Market
James Napoli has joined Seyfarth Shaw LLP as a partner in the law firm’s employee benefits and executive compensation practice. Napoli has more than 20 years of experience counseling employers about various aspects of employee benefit programs, including health care reform implementation and litigation, Employee Retirement Income Security Act (ERISA) litigation and other matters affecting tax-qualified retirement plans.Read more >
John Hancock Reduces Fees for Retirement Portfolios
John Hancock Investments lowered expenses across its suite of Retirement Living Portfolios, pledging up to 31% in fee savings for shareholders. The firm says the move is meant to position the portfolio suite for use in the growing target-date market. The Retirement Living Suite comprises 10 portfolios with target retirement dates spanning from 2010 to 2055.Read more >
Industry Voice
How the Government Helped the Growth of 401(k)s
Fred Reish discusses the most important governmental guidance for 401(k) plans in the 40-year history of the Employee Retirement Income Security Act (ERISA). Here’s his list—and his reasoning.Read more >
Market Mirror
Yesterday, the Dow slipped 17.78 points (0.10%) to 16,991.91, the NASDAQ was down 20.82 points (0.47%) at 4,454.80, and the S&P 500 decreased 3.08 points (0.16%) to 1,964.82. The Russell 2000 climbed 8.36 points (0.76%) to 1,104.74, and the Wilshire 5000 closed 50.49 points (0.24%) lower at 20,665.04. On the NYSE, 3.2 billion shares traded, with a slight lead for advancers. On the NASDAQ, 2.7 billion shares changed hands, with declining issues outnumbering advancing issues nearly 2 to 1. The price of the 10-year Treasury note increased 6/32, decreasing its yield to 2.416%. The price of the 30-year Treasury note was up 3/32, with its yield down to 3.121%.
Rules & Regulators
EEOC Files Another Lawsuit over Wellness Program
The Equal Employment Opportunity Commission (EEOC) is charging another company with violating the Americans with Disabilities Act (ADA) by its wellness program practices. The agency says threats of insurance cancellation and discipline make the program involuntary and violate the ADA. The lawsuit was filed against Flambeau, Inc., a Baraboo, Wisconsin-based plastics manufacturing company.Read more >
Big Stakes in Supreme Court Review of Tibble
The U.S. Supreme Court’s decision to review parts of Tibble v. Edison International could have broad ramifications for plan sponsors and fiduciaries of defined contribution retirement plans. The case is considered by industry observers to be the first “excessive fee” litigation to reach the country’s top court. Nancy Ross, a partner at corporate and employee benefits law firm Mayer Brown, tells PLANSPONSOR that Tibble v. Edison should be followed closely by plan sponsors, advisers and service providers throughout the retirement planning industry—indeed, by all who carry a fiduciary status for the plans they serve.Read more >
Financial Sense
The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies remained at 84% at the end of September, according to Mercer. Increases in interest rates used to calculate corporate pension plan liabilities offset falling equity markets, holding funded status constant. The collective estimated deficit of $352 billion as of September 30, 2014, is down $17 billion from the estimated deficit of $369 billion as of August 31—the largest monthly decrease in pension liabilities this year, Mercer says. The September deficit is up $116 billion from the beginning of the year.Read more >
Sponsored message from MetLife
De-Risking Actions for Defined Benefit Pension Plans
There are several actions plan sponsors can take to de-risk their plans. View our short video to see how these actions may help you.Read more >
Small Talk
ON THIS DATE: In 1868, Cornell University was inaugurated in Ithaca, New York. In 1913, for the first time, Henry Ford’s entire Highland Park, Michigan automobile factory was run on a continuously moving assembly line when the chassis—the automobile’s frame—was assembled using the revolutionary industrial technique. In 1968, the Motion Picture Association of America adopted the film-rating system that ranged from “G” to “X.” In 1984, Chicago Bears running back Walter Payton became the NFL’s all-time rushing leader, breaking the record Cleveland’s Jim Brown set in 1965. Payton carried the ball 154 yards and finished the game with a new career rushing record—12,400 yards, 88 more than Brown. In 2001, the U.S. and Great Britain began airstrikes in Afghanistan in response to that state’s support of terrorism and Osama bin Laden. The act was the first military action taken in response to the terrorist attacks on the U.S. on September 11, 2001. In 2003, Randy Quaid received a star on the Hollywood Walk of Fame. In 2003, actor Arnold Schwarzenegger was elected governor of California. In 2004, Billy Bob Thornton got a star on the Hollywood Walk of Fame.   TUESDAY TRIVIA: The assembly line cut the man-hours required to complete one “Model T” Ford from 12-1/2 hours to six.
TRIVIAL PURSUITS: From what industry did The Ford Motor Company get his inspiration for using assembly lines?Read more >
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