Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 8th, 2014
Benefit Briefs
Evaluating Participant Benefit Security in Pension Buyouts
Are defined benefit (DB) plan participants’ benefits more or less secure after the plan sponsor transfers its pension obligations to an insurance company? Over the past several years, a number of companies have purchased annuities to move the responsibility for certain participants’ benefits to insurance companies, including big names like GM, Verizon, and most recently, Motorola. During a recent Mercer webcast discussing these transactions, when asked whether participants’ benefits were more or less secure after the move to an insurer, Duane Bollert, a partner in Region Market Development at Mercer in New York City, said participant benefit security is one of the key things plan sponsors and fiduciaries evaluate when selecting an insurance company.Read more >
Survey Finds Employers Rejecting Private Exchanges
Private health insurance exchanges have gotten more attention recently as a potential solution for controlling health benefit costs, but a recent survey finds the majority of employers reject private exchanges as a cost-control option. The 2014 Inside Benefits Communication Survey from Benz Communications, in collaboration with the National Business Coalition on Health, found more than half (55%) of respondents say they will “never” have employees purchase health coverage through a private exchange. The survey also found, despite the potential impact of health care reform, status quo is the rule—not exception—when plotting future health plan design.Read more >
Americans Face a Diversity of Retirement Risks
There is considerable variation in the challenges workers face in preparing for retirement, according to the Bipartisan Policy Center (BPC), making effective employer-provided support difficult. Professionals involved in the retirement planning industry generally understand that workers in the U.S. need to save more of their annual earnings to ensure successful retirement outcomes, but there is less concern about the specific factors that prevent workers from saving more. Even the retirement plan sponsors and advisers who make a living worrying about retirement planning issues tend to oversimplify the particular challenges faced by workers and retirement plan participants, BPC claims, often lumping individuals into imprecise groups and offering less-than-optimal support.Read more >
Starting with Short-Term Savings for Younger Workers
Move over, retirement, younger adults ages 18 to 34 have other financial concerns to save for, according to a survey from the nonprofit Consumer Federation of America. Young adults’ interest in accumulating savings—and their effort to do so—tumbled between September 2013 and September 2014, according to data from the federation’s America Saves campaign. During this period, interest in personal savings for young adults fell, from 77% to 68%, and the reported savings effort of these young adults also slipped, from 66% to 57%. Reported savings effectiveness for this group was also lower: 60% a year ago but only 57% last month. “What we would like is for more people to split their pay to a savings type account to offset emergencies that consistently arise,” George Barany, director of financial education for America Saves, tells PLANSPONSOR.Read more >
Buyer's Market
Fiduciary Investment Advisors Hires Financial Educator
Fiduciary Investment Advisors (FIA) has taken steps to enhance its employee communication and education services within its defined contribution business. The company has hired Mary Legg as a Financial Educator. In this role, Legg will provide perspective on participant communication and education. She will help redesign all of FIA’s programs and materials in this area, and help enhance FIA’s offering in the participant services space.Read more >
Industry Voices
Industry Voice: Hedge Funds as Fixed Income Replacements?
Should hedge funds replace fixed income investments? This question has been top-of-mind for many corporate defined benefit (DB) plan sponsors as they await the rise of interest rates.Read more >
Market Mirror
Tuesday, the Dow fell 272.52 points (1.60%) to 16,719.39, the NASDAQ lost 69.60 points (1.56%) to finish at 4,385.20, and the S&P 500 closed 29.74 points (1.51%) lower at 1,935.08. The Russell 2000 tumbled 10.09 points (0.91%) to 1,094.65, and the Wilshire 5000 took a 314.08-points (1.52%) dive to 20,350.96. On the NYSE, 3.2 billion shares traded, with a more than 3 to 1 lead for decliners. On the NASDAQ, 2.8 billion shares changes hands, with 3.7 declining issues for every advancing issue. The price of the 10-year Treasury note was up 23/32, bringing its yield down to 2.339%. The price of the 30-year Treasury bond increased 1 19/32, decreasing its yield to 3.047%.
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How America Saves
Jean Young, Senior Research Analyst at the Vanguard Center for Retirement Research, shares insights into a report on Vanguard 2013 defined contribution plan data.Read more >
Small Talk
Administrative professionals can be a necessary and useful resource for bosses and employees, and sometimes they are asked to perform some odd tasks. A survey by OfficeTeam revealed some administrative professionals have been held responsible for animal control. One reported being asked to get a snake out of the women’s bathroom, while another was asked to take care of the office’s pet snails, and yet another was tasked with removing nesting geese from the front door area.Read more >
ON THIS DATE: In 1871, flames sparked in the Chicago barn of Patrick and Catherine O’Leary, igniting a two-day blaze that killed between 200 and 300 people, destroyed 17,450 buildings, left 100,000 homeless and caused an estimated $200 million (in 1871 dollars; $3 billion in 2007 dollars) in damages. In 1944, “The Adventures of Ozzie and Harriet” debuted on CBS radio. In 1956, Donald James Larsen (New York Yankees) pitched the first perfect game in the history of the World Series. In 1998, the U.S. House of Representatives voted to proceed toward impeaching President Bill Clinton on charges of perjury and obstruction of justice. In 2001, Tom Ridge, former Governor of Pennsylvania, was sworn in as director of the new U.S. department of Homeland Security. WEDNESDAY WISDOM: “If you do not change direction, you may end up where you are heading.”—Lao Tzu, Chinese philosopher
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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