Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
September 14th, 2015
Benefits & Administration
Employer Tactics Delay ACA Cost Impact
Employers in states that allowed “grandmothering”—the extension of non-Patient Protection and Affordable Care Act (ACA)-compliant plans—are now seeing proposed health plan rate increases of 11%, on average, according to the 2015 United Benefit Advisors Health Plan Survey. Many employers, particularly small to mid-size, are still delaying the effects of the ACA by delaying renewal dates. Seventy-three percent of plans in the survey have a renewal date on or after December 1, 65.4% of which were small businesses in the fewer than 100 employee market.Read more >
Milliman’s analysis of the 100 largest U.S. corporate pension plans showed a $22 billion slide in funded status, based on a $42 billion fall in asset values and a $20 billion decrease in pension liabilities. The funded status for these pensions decreased, from 84.9% to 83.4%.Read more >
MOST READ ARTICLES
1
2021 Target-Date Fund Survey
2
Rush of Litigation Against Retirement Plans Expected to Continue
3
The DOL Has Begun Retirement Plan Cybersecurity Audits
4
2020 Recordkeeping Survey
5
Essential Considerations for DC Plan Investment Lineups
Products, Deals & People
Betterment, an automated investing service, announced the upcoming launch of Betterment for Business. The new 401(k) platform will offer personalized investment advice for all participants. For plan sponsors, it will provide streamlined administration and fiduciary support. It will launch in Q1 2016. Betterment founder and CEO Jon Stein tells PLANSPONSOR Betterment for Business is the only full-service platform providing recordkeeping and advice.Read more >
Legal & General Investment Management America Inc. (LGIMA), a Chicago-based investment adviser specializing in index, fixed-income and liability driven investment (LDI) strategies for the U.S. institutional market, has announced several promotions in its index funds division.Read more >
Sponsored message from Vanguard
Spending and saving in retirement Learn more about how the expansion of defined contribution plans is affecting the spending and saving behaviors of U.S. retired households. Read more >
Economic Events

The Producer Price Index (PPI) for final demand was unchanged in August, seasonally adjusted, the U.S. Bureau of Labor Statistics reported. Final demand prices rose 0.2% in July and 0.4% in June. On an unadjusted basis, the final demand index moved down 0.8% for the 12 months ended in August, the seventh straight 12-month decline.

THE ECONOMIC WEEK AHEAD: Tomorrow, the Census Bureau will report about retail sales for August and business inventories for July. Wednesday, the Bureau of Labor Statistics will reveal the consumer price index for August. Thursday, the Labor Department will issue its initial claims report, and the Census Bureau will report about housing starts for August.

Market Mirror

Friday, the Dow climbed 102.69 points (0.63%) to 16,433.09, the NASDAQ gained 26.09 points (0.54%) to finish at 4,822.34, and the S&P 500 increased 8.40 points (0.43%) to 1,960.69. The Russell 2000 was up 4.79 points (0.42%) at 1,157.81, and the Wilshire 5000 closed 81.50 points (0.40%) higher at 20,691.66.

On the NYSE, 3.2 billion shares traded, with a small lead for advancers. On the NASDAQ, 2.8 billion shares changed hands, with 1.3 advancing issues for every declining issue.

The price of the 10-year Treasury note increased 11/32, bringing its yield down to 2.187%. The price of the 30-year Treasury bond climbed 21/32, decreasing its yield to 2.953%.

WEEK’S WORTH: For the week ending September 11, the Dow gained 2.05%, the NASDAQ climbed 2.96%, and the S&P 500 finished 2.05% higher. The Russell 2000 was up 1.90%, and the Wilshire 5000 increased 1.91%.

From the Magazine
Barry’s Pickings: DOL’s Fiduciary Proposal
I’ve done a lot of thinking about the Department of Labor (DOL) fiduciary redefinition, and here’s where I’ve come out: What will it do? It generally won’t affect employers with 100 or more employees—the so-called “seller’s carve-out” will, for the most part, allow advisers to continue advising them. And it won’t affect the employers’ working participants while they are active in a plan. Advice has never been that important to participants. Sponsors are moving to defaults—e.g., to target-date funds (TDFs)—as the way to get participants invested in the right asset allocation. Where it will matter for the employer plan world is at employee termination.Read more >
Investing
Fiduciary Duty and the ESG Catch 22
Today, much of the opposition to environmental, social and governance (ESG) investing is still caught up in its initial association with stock screening, including the Department of Labor’s stance that ESG factors can be considered as nothing more than a potential tie-breaker by qualified retirement plan fiduciaries. “Frankly, that outlook is completely outdated,” says David Richardson, managing director and head of institutional business development at Impax Asset Management.Read more >
Reasons Most Plan Sponsors Use TDFs as QDIA
In 2013, up to 72% of defined contribution (DC) plan sponsors used a target-date fund (TDF) as their qualified default investment alternative (QDIA), according to an analysis of three industry surveys by the Government Accountability Office (GAO). In its report, “401(k) Plans: Clearer Regulations Could Help Plan Sponsors Choose Investments for Participants,” the GAO identified several factors that led the majority of plan sponsors to select TDFs over other QDIAs.Read more >
Bond Ladders a Prudent Approach to Fixed Income
Bond ladders are a prudent way to invest in fixed income, says Josh Gonze, portfolio manager with Thornburg Investment Management in Santa Fe, New Mexico. To create a bond ladder, you select a timeframe, be it months or years, and build a portfolio of bonds with evenly staggered maturities so that a portion of the portfolio will mature each year, he explains. They perform well in all interest rate environments.Read more >
Small Talk
ON THIS DATE: In 1807, former U.S. Vice President Aaron Burr was acquitted of a misdemeanor charge. Two weeks earlier Burr had been found innocent of treason. In 1866, George K. Anderson patented the typewriter ribbon. In 1901, U.S. President William McKinley died of gunshot wounds inflicted by an assassin. Vice President Theodore Roosevelt, at age 42, succeeded him. In 1960, the Organization of the Petroleum Exporting Countries (OPEC) was founded. The core members were Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. In 1972, “The Waltons” premiered on CBS-TV. In 1978, “Mork & Mindy” premiered on ABC-TV.
Last week, I asked NewsDash readers, “Which childish behaviors have you witnessed in the workplace, and can you share a specific example?” Every childish behavior listed has been witnessed by the majority of responding readers, except starting a rumor, which has been witnessed by 40%. Whining was the most frequently cited childish behavior witnessed in the workplace (75.6%), followed by tattling and refusing to share or help (64.4% each). A good number of respondents shared specific examples of childish behavior they have witnessed in the office. Here’s just one of my favorites: “An employee copied our VP on a string of e-mails. The other employee was concerned she was ‘tattling’ on her so an argument ensued that ended with the following: ‘You’ve messed with the wrong manager.’ ‘Are you threatening me? Is that a threat???’ And then pencils were thrown…” In verbatim comments about childish behaviors at work, all agreed that childish behaviors are bad for the workplace, but several said harmless pranks were not immature, but fun ways to get some comic relief from stress. A few noted they we all, or they, act childish sometimes: “Respectfully, I invoke my 5th amendment right to not incriminate myself.” Editor’s Choice goes to the reader who said, “Sooner or later, you come realize that your workplace is a preschool, an elementary school or a high school. Sometimes all three with a little of insane asylum thrown in for good measure!” A big thank you to all who participated in our survey!Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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