Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
October 9th, 2014
Benefit Briefs
Some Millennials Do Not Trust Any Finance Advice
The results of Fidelity’s “Millennial Money Study” show one in four Millennials trust no one when it comes to financial advice. But are Millennials as complacent about their financial futures as some tend to presume? Fidelity says many Millennials are fully engaged in their financial futures, and some of the results of its study challenge the common stereotypes about how this generation approaches planning for the future. To set the scene, Fidelity explains that the average age of Millennials is 30 years, and 43% have already established a 401(k). Another 23% have an individual retirement account (IRA), and 40% have children.Read more >
Montgomery County (Maryland) Public Schools approved changes to the school system’s 403(b) and 457(b) defined contribution (DC) plans for employees. The system is moving from nine plan providers to one provider. About 12,000 employees currently participate in plans from the nine vendors. The Gazette reports that Susanne DeGraba, chief financial officer (CFO) for the school system, explained to the school board that the current providers offer some of the same services, and each vendor is spreading the cost of its service over only a subset of school employees who have chosen those plans. With a single provider, she said, a service will come from one source and the costs will be spread out over more people.Read more >
Wellness Programs Incomplete without Financial Component
Employers are increasingly adopting wellness programs in an attempt to pare down health benefit costs, but the missing ingredient for most wellness programs is a financial wellness component, according to Four Seasons Financial Education (FSFE). During a webcast, Travis Freeman, board certified financial planner and current president of FSFE in St. Louis, Missouri, noted that employer wellness programs include physical wellness initiatives and perhaps even a mental wellness component. However, Freeman cited an Associated Press/AOL Health Poll, “Debt Stress: The Toll Owing Money Takes on the Body,” which found people with high levels of financial stress suffered more from migraines, severe depression, severe anxiety, muscle tension and back pain, high blood pressure and stomach ulcers than those with low levels of financial stress. “You need all three components—physical, mental and financial—for a complete wellness program,” he asserted. Freeman pointed out that employees are often dependent on employers for financial education because it is through employers they get most of their financial assets or tools—income, insurance, retirement savings plans, health savings accounts, etc.Read more >
Health care cost worries continue to nag at American workers as they approach retirement, a survey says. More than half of working Americans over age 50 (55%) don’t think they’ll have enough money to pay for health care in retirement, according to a survey by AARP. While Medicare covers only about half of health care costs for the average recipient, four in ten (38%) say they haven’t saved anything at all for health-related expenses.Read more >
Buyer's Market
Five new indices created by Wilshire Associates Inc. are designed to provide critical benchmarking support to investors seeking exposure to liquid alternatives. Together, these five sub-strategy indices comprise the Wilshire Liquid Alternative Index, which was designed to serve as an industry standard for measuring aggregate performance of the liquid alternative mutual fund universe. The new indices aim to provide relevant and precise performance assessment metrics for the most common liquid alternative investment strategies that are implemented in mutual fund vehicles.Read more >
OneAmerica Opens Honolulu Retirement Services Branch
The companies of OneAmerica have opened a new regional office for retirement services in Honolulu. The branch office will give the companies of OneAmerica an important presence on Oahu and throughout Hawaii, the company said in a statement. Ilan Amir has been named client services manager for the branch.Read more >
Paychex Inc. introduced a newly expanded service offering, Paychex Flex, which delivers access to payroll, human resources (HR) and benefits information. The new service initiative offers clients the flexibility of choice for their service needs through a new multi-tiered approach that gives clients access to a variety of customer service options based on their size and complexity. Paychex Flex scales to meet the needs of small- and medium-sized businesses and offers users a variety of service options for how they prefer to work.Read more >
Market Mirror
Wednesday, the Dow bounced back 274.83 points (1.64%) to finish at 16,994.22, the NASDAQ climbed 83.39 points (1.90%) to 4,468.59, and the S&P 500 increased 33.67 points (1.74%) to 1,968.77. The Russell 2000 gained 18.34 points (1.68%) to finish at 1,076.31, and the Wilshire 5000 closed 326.62 points (1.60%) higher at 20,677.58.   On the NYSE, 3.2 billion shares traded, with a near 4 to 1 lead for advancers. On the NASDAQ, 2.7 billion shares changed hands, with 2.5 advancing issues for every declining issue.   The price of the 10-year Treasury note increased 7/32, decreasing its yield to 2.315%. The price of the 30-year Treasury bond was down 4/32, bringing its yield up to 3.055%.
Rules & Regulators
Fiduciary Responsibility of Investment Committee Members
When it comes to understanding their legal and fiduciary responsibilities, members of retirement plan investment committees must focus on two basic concepts, according to Employee Retirement Income Security Act (ERISA) experts: process and prudence. These two ideas are intertwined in almost every step committee members should take if they are to act in accordance with their fiduciary mandates. Plan fiduciaries can be held legally responsible for breaches of conduct and missteps in the way they select and monitor investments and make other decisions for retirement plans. Thus, committee members must act prudently and should adhere to certain processes, as established by their own plan and required by the Department of Labor (DOL).Read more >
Financial Sense
Report Warns Against Moving N.J. Public Workers to DC Plan
A new report claims closing New Jersey’s defined benefit (DB) retirement plan for public employees and offering a defined contribution (DC) plan instead would be costly and would not solve the underfunding problem. In “How to Dig an Even Deeper Pension Hole,” published by the New Jersey Policy Perspective, Stephen Herzenberg, executive director of the Keystone Research Center, says phasing out the state’s traditional pension plans and replacing them with 401(k)-type accounts would burden taxpayers with transition costs currently estimated at $42 billion, as well as fail to reduce the state’s unfunded pension liability. In addition, moving employees from defined benefit to defined contribution plans has failed in three states that have tried it and was rejected by 13 other states after research concluded that the change would hurt taxpayers and pension recipients, the report observes.Read more >
Small Talk
ON THIS DATE: In 1701, the Collegiate School of Connecticut was chartered in New Haven. The name was later changed to Yale. In 1855, Isaac Singer patented the sewing machine motor. In 1888, the public was admitted to the Washington Monument for the first time. In 1936, harnessing the power of the Colorado River, the Hoover Dam began sending electricity over transmission lines spanning 266 miles of mountains and deserts to run the lights, radios and stoves of Los Angeles. In 1946, the first electric blanket went on sale in Petersburg, Virginia. In 1974, German businessman Oskar Schindler, credited with saving 1,200 Jews from the Holocaust, died at the age of 66. In 1975, Andrei Dmitriyevich Sakharov, the Soviet physicist who helped build the USSR’s first hydrogen bomb, was awarded the Nobel Prize for Peace in recognition of his struggle against “the abuse of power and violations of human dignity in all its forms.” Sakharov was forbidden by the Soviet government from personally traveling to Oslo, Norway, to accept the award. In 1976, disco/classical hybrid “A Fifth Of Beethoven” was the No. 1 song on the U.S. pop charts.
SURVEY SAYS: There is so much going on in the world and our lives that we can’t all possibly think about work all the time. This week, I’d like to know, which “water-cooler” topics are dominating conversations in your workplace right now? You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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