Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
September 16th, 2014
Benefit Briefs
ESOP Companies Report Economic Growth
Employee stock ownership plan (ESOP) companies continue to have increased share value, report high productivity among employee owners, and have overwhelming support for ESOPs among leaders of the companies, according to the results of a survey of more than 1,500 members of the ESOP Association. Since the Employee Ownership Foundation’s annual economic survey began 23 years ago, a very high percentage (93%) of survey respondents have consistently agreed that creating employee ownership through an ESOP was “a good business decision that has helped the company.”Read more >
How Best to Implement Fee Equalization
To adviser Jim O’Shaughnessy, sponsors’ reactions to fee equalization sometimes remind him of the early days of automatic enrollment. “The initial response from sponsors to automatic enrollment was, ‘There’s no way I could do that. There would be a backlash from participants,’” says O’Shaughnessy, a managing partner at Sheridan Road Advisors in Northbrook, Illinois. He gets a similar reaction when he talks to some sponsors now about fee equalization—implementing a system to ensure that all participants pay a fair share of administrative costs. “Some people are resistant to it because it’s different and it’s new,” he says. Others, he says, realize that, as a fiduciary, “you don’t want to have certain employees pay more for services than others and not understand [why].”Read more >
Buyer's Market
To help U.S. public pension funds comply with the GASB 67 requirements—for example, Statements of Net Assets and Net Changes—BNY Mellon has developed customizable reports that will support plan sponsors as they compile this information.Read more >
Putnam Names Head of Global Institutional Business
Putnam Investments announced the appointment of Jeffrey L. Gould as head of Putnam global institutional management to lead the firm’s response to growing marketplace interest. Putnam Investments President and CEO Robert L. Reynolds says Gould will be joining the company when there’s been increased interest in their various institutional investment strategies, including multi-asset absolute return, unconstrained fixed-income and domestic and international equities.Read more >
The Guardian Life Insurance Company of America appointed Michael Reis to the newly created position of field director of retirement plan sales. In his new role, he will support Guardian Retirement Solutions’ 401(k) national sales team as it expands in the small-plan market.Read more >
Industry Voice
Industry Voice: Helping Women Take Charge of Their Future
Stephanie Bell-Rose, senior managing director and head of the TIAA-CREF Institute, discusses women’s financial challenges and how to overcome them.Read more >
Market Mirror
Monday, the Dow was up 43.63 points (0.26%) at 17,031.14, the NASDAQ fell 48.70 points (1.07%) to 4,518.90, and the S&P 500 decreased by 1.41 (0.07%) to 1,984.13. The Russell 2000 lost 14.09 points (1.21%) to finish at 1,146.52, and the Wilshire 5000 was down 62.51 points (0.30%) at 20,978.92. On the NYSE, 3.2 billion shares changed hands, with declining issues outnumbering advancing issues nearly 2 to 1. On the NASDAQ, 2.8 billion shares traded, with a more than 3 to 1 lead for decliners. The 10-year Treasury note increased 6/32, decreasing its yield to 2.591%. The 30-year Treasury bond’s price was virtually unchanged, with its yield down to 3.341%.
Rules & Regulators
CalPERS Suit Against Ratings Agencies Survives
A lawsuit brought by the California Public Employees Retirement System (CalPERS) against the three major ratings agencies has ultimately survived motions for dismissal. On September 10, the California Supreme Court declined to review the latest ruling allowing the lawsuit to proceed. The lawsuit, filed in 2009, focuses on a form of debt called structured investment vehicles (SIVs), complex packages of securities made up of a variety of assets, including subprime mortgages. CalPERS invested $1.3 billion in them in 2006, only to see their value collapse in 2007 and 2008.Read more >
Financial Sense
Wilshire Consulting estimates that the ratio of pension assets to liabilities, or funding ratio, for the city and county pension plans it studied was 73% in 2013, up 4 percentage points from 2012. “Of the 105 city and county retirement systems which reported actuarial data for 2013, 90% have market value of assets less than pension liabilities or are underfunded,” says Russ Walker, vice president, Wilshire Associates, and an author of the report.Read more >
The Feeling’s Mutual
Long-term fund types attracted $29 billion last month, lifting year-to-date net inflows to $319 billion. August saw a $15.3 billion net inflow to equity products, attributable to a $15.1 billion net intake to international equity funds. Flow-leading international equity strategies included international emerging market equity ($2.7 billion), international equity alternative – other ($1.3 billion) and international total return ($1.2 billion).Read more >
Small Talk
ON THIS DATE: In 1620, The Mayflower departed from Plymouth, England. In 1893, the largest land run in history began with more than 100,000 people pouring into the Cherokee Strip of Oklahoma to claim valuable land that had once belonged to Native Americans. With a single shot from a pistol the mad dash began, and land-hungry pioneers on horseback and in carriages raced forward to stake their claims to the best acres. In 1908, General Motors was founded by William Crapo “Billy” Durant. The company was formed by merging the Buick and Olds car companies. In 1940, U.S. President Roosevelt signed into law the Selective Training and Service Act, which set up the first peacetime military draft in U.S. history. In 1998, Meryl Streep received a star on the Hollywood Walk of Fame. In 2013, a 34-year-old man went on a rampage at the Navy Yard in Washington, D.C., killing 12 people and wounding several others over the course of an hour before he was fatally shot by police.   TUESDAY TRIVIA: The first Swanson TV dinner sold in 1954 cost $0.98.
TRIVIAL PURSUITS: What were entrée and sides in Swanson’s first TV dinner?Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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