Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
September 10th, 2014
Benefit Briefs
Preparing for Derailed Plans to Work Longer
Current workers should factor uncertainty about labor market outcomes into their retirement planning, a research paper concludes. Whether it is to remain active or to supplement income, more individuals say they plan to work past the traditional retirement age of 65. Yet, research shows pre-retirees’ plans to work longer often fall short. In “The Changing Nature of Retirement,” published by the Pension Research Council, Julia Coronado from Graham Capital Management, L.P., notes the finding that a fairly large proportion of retirees exits the labor force earlier than planned, as well as the reasons for these exits—many people do a poor job planning for the many contingencies that end up affecting their ability to continue working at older ages.Read more >
Actuaries Weigh Income Options for DC Plans
Income should be a part of defined contribution (DC) retirement plans, according to a paper from the Stanford Center on Longevity and the Society of Actuaries’ Committee on Post-Retirement Needs and Risks, and they suggest a qualified default retirement income alternative (QDRIA) is one possibility. “Foundations in Research for Regulatory Guidelines on the Design and Operation of Retirement Income Solutions in DC Plans” gives an overview of existing and proposed regulatory guidance, including background on Employee Retirement Income Security Act (ERISA) 404(c) requirements. Researchers also examine safe harbor guidance on programs that offer retirement income. The paper considers three distinct core retirement income options, along with details on systematic withdrawals and annuity purchases.Read more >
Industry Voices
Industry Voice: Why You Should Get to Know myRA
Have you been introduced to myRA? With her upcoming debut expected in late 2014, you may wish to get acquainted with her key features now. Introducing myRA (pronounced my-R-A), a new retirement savings program for savers who do not have access to an employer-sponsored retirement savings plan, such as a 401(k) or 403(b). We encourage you and your employees to understand this new savings program. It provides a benefit to both the employer and employee, with no fees and little effort.Read more >
Market Mirror
Tuesday, the Dow was down 97.55 points (0.57%) at 17,013.87, the NASDAQ fell 40.00 points (0.87%) to 4,552.29, and the S&P 500 closed 13.10 points (0.65%) lower at 1,988.44. The Russell 2000 lost 13.70 points (1.17%) to finish at 1,158.61, and the Wilshire 5000 decreased 146.64 points (0.69%) to 21,075.32.   On the NYSE, 3.2 billion shares traded, and on the NASDAQ, 2.8 billion shares changed hands, with declining issues outnumbering advancing issues more than 3 to 1 on both exchanges.   The price of the 10-year Treasury note fell 7/32, bringing its yield up to 2.498%. The price of the 30-year Treasury bond was down 2/32, increasing its yield to 3.229%.
Rules & Regulators
Employer Claims Against Fiduciary Liability Insurer Can Proceed
A retirement plan sponsor’s breach of contract claims against its fiduciary liability insurer have been moved forward by a federal court. U.S. District Judge Robert C. Jones, of the U.S. District Court for the District of Nevada, ultimately concluded that the Fiduciary Liability Section’s Securities Exclusion in the fiduciary liability policy Federal Insurance Co. provided to International Game Technology (IGT) was not sufficiently clear that it related to remaining claims in a lawsuit against IGT by its retirement plan participants. The federal court in Nevada previously applied the now-defunct “Moench” presumption in dismissing claims that IGT continued to offer employer stock as an investment option in the plan when it was no longer prudent to do so, but let stand other claims regarding IGT’s monitoring of plan committee member actions and communications provided to participants.Read more >
Financial Sense
Financial analytics firm Cerulli Associates finds that nearly four in 10 exchange-traded fund (ETF) providers (37.5%) anticipate strong growth for taxable bond asset class ETFs. Jennifer Muzerall, a senior analyst at Cerulli, explains that many ETF sponsors predict heightened interest from institutional investors—including defined benefit (DB) retirement plans—in using fixed-income ETFs over investing in individual bond securities. Their interest is primarily due to the challenges of navigating the fixed-income markets in an unfamiliar and challenging interest-rate environment, according to Cerulli.Read more >
The World at Large
‘Financial mathematics’ will see the next generation enter the work force with the knowledge of how an annuity works, as part of a UK government-backed education initiative.  Read more >
Small Talk
Relief for Retiring Workers Skills Gap May Be Coming
A new survey tries to gauge how a high school senior’s career aspirations may fill the skills gap that stem from large numbers of workers retiring. CareerBuilder says several occupations in the U.S. have a large number of workers on the brink of retirement and a growing deficit of skilled talent in the coffers. Research from CareerBuilder and Economic Modeling Specialists Intl. (EMSI) shows nearly three in four high school seniors know what career they want to pursue, and STEM-related fields (science, technology, engineering and math) top their choices.Read more >
ON THIS DATE:  In 1608, English adventurer John Smith was elected council president of Jamestown, Virginia—the first permanent English settlement in North America. In 1794, America’s first non-denominational college was charted. Blount College later became the University of Tennessee. In 1846, Elias Howe received a patent for his sewing machine. In 1897, British police arrest George Smith for drun.ken driving. It was the first DWI. In 1913, the Lincoln Highway opened. It was the first paved coast-to-coast highway in the U.S. In 1921, the Ayus Autobahn in Germany opened near Berlin. The road is known for not having a speed limit. In 1935, “Popeye” was heard on NBC radio for the first time. In 1977, at Baumetes Prison in Marseille, France, Hamida Djandoubi, a Tunisian immigrant convicted of murder, was the last person executed by guillotine. In 1953, Swanson began selling its first “TV dinner.” In 1955, “Gunsmoke” premiered on CBS. In 1991, Nirvana’s “Smells Like Teen Spirit” was released as a single.
WEDNESDAY WISDOM: “I can’t change the direction of the wind, but I can adjust my sails to always reach my destination.” —Jimmy Dean, country music singer and founder of Jimmy Dean Foods.
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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