Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
September 26th, 2014
Benefit Briefs
Total Retirement Assets Reach $24 Trillion
Total U.S. retirement assets reached $24 trillion as of June 30, up 2.8% from $23.4 trillion measured on March 31. According to an analysis from the Investment Company Institute (ICI), $5.1 trillion is in government defined benefit (DB) plans, $3.2 trillion in private-sector DB plans, and $6.6 trillion in defined contribution (DC) plans. The analysis also found unfunded liabilities are a larger issue for government DB plans than for private-sector DB plans.Read more >
Industry Voices
Insights: Problems, Solved?
My vision of retirement as I grew up was provided to me by my grandfathers; both were beneficiaries of long tenures at large companies—one in pharmaceuticals, and one in book publishing. Both grandfathers not only received generous pensions (and one, a marvelous retiree medical package) but had been good savers, truly having a three-legged stool on which to sit during their golden years. They had what I might refer to now as “brochure” retirements—two residences, one in their traditional home location in the Northeast and one in warmer climates, and they had time to pursue activities they loved. Did my grandfathers know that the life they led in retirement was due in large part to a 1974 law called the Employee Retirement Income Security Act (ERISA)?Read more >
Economic Events
New orders for manufactured durable goods in August decreased $54.5 billion or 18.2% to $245.4 billion, the U.S. Census Bureau announced. This decrease, down following two consecutive monthly increases, followed a 22.5% July increase. Excluding transportation, new orders increased 0.7%. Excluding defense, new orders decreased 19.0%. Transportation equipment, also down following two consecutive monthly increases, drove the decrease, falling $55.6 billion or 42.0% to $76.8 billion. In the week ending September 20, the advance figure for seasonally adjusted initial claims for unemployment insurance was 293,000, an increase of 12,000 from the previous week’s revised level, the Labor Department reported. The previous week’s level was revised up by 1,000 from 280,000 to 281,000. The four-week moving average was 298,500, a decrease of 1,250 from the previous week’s revised average. The previous week’s average was revised up by 250 from 299,500 to 299,750. The average interest rate for a 30-year fixed-rate mortgage is 4.20%, down from 4.23% one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.36%, down from 3.37%.
Market Mirror
Major U.S. stock indices suffered big losses Thursday, as the Dow fell 264.26 points (1.54%) to 16,945.80. The NASDAQ lost 88.47 points (1.94%) to finish at 4,466.75, and the S&P 500 declined 32.31 points (1.62%) to 1,965.99. The Russell 2000 dropped 18.07 points (1.60%) to 1,110.24, and the Wilshire 5000 tumbled 330.85 points (1.57%) to 20,707.32. On the NYSE, 3.3 billion shares traded, with a near 5 to 1 lead for decliners. On the NASDAQ, 2.8 billion shares changed hands, with declining issues outnumbering advancing issues more than 4 to 1. The price of the 10-year Treasury note was up 16/32, bringing its yield down to 2.508%. The price of the 30-year Treasury bond increased 1 6/32, decreasing its yield to 3.215%.
Rules & Regulators
IRS Expands Rules for Health Coverage Changes
The Internal Revenue Service (IRS) has added to the list of events for which employer health plan participants can change their coverage election at a time other than open enrollment. Notice 2014-55 addresses two specific situations in which an Internal Revenue Code (IRC) Section 125 cafeteria plan participant may wish to revoke, during a period of coverage (commonly a plan year), his or her election for employer-sponsored health coverage under the cafeteria plan in order to purchase a qualified health plan through the federal exchange or a health insurance marketplace established by the Patient Protection and Affordable Care Act (ACA).Read more >
PLANSPONSOR magazine’s September summary of the latest from Washington and the courts—what’s coming, what’s contemplated and what’s critical to plan sponsors.Read more >
Financial Sense
Motorola Announces Pension Transfer, Lump-Sum Window
Motorola Solutions, Inc. has reached an agreement with The Prudential Insurance Company of America under which Prudential will assume responsibility for the monthly pension benefits of Motorola retirees. Motorola also will offer eligible U.S. pension plan participants the opportunity to apply for lump-sum pension payments. In total, these actions are expected to reduce Motorola Solutions’ ongoing U.S. pension obligation by $4.2 billion. The company plans to contribute $1.1 billion in cash to its U.S. pension plans in 2014.Read more >
The Securities and Exchange Commission (SEC) is said to be investigating the pricing of PIMCO’s $3.6 billion Total Return exchange-traded fund (ETF) in the latest blow for the manager. The Wall Street Journal reported that the SEC was looking into whether PIMCO had misstated the ETF’s returns, which is designed to be a low-cost alternative to founder and CIO Bill Gross’ flagship PIMCO Total Return fund. The newspaper reported that the investigation “has been underway for some months”, and claimed Gross had been interviewed by the SEC.Read more >
CalPERS Gets $88M from Citigroup Settlement
The California Public Employees’ Retirement System (CalPERS) has $88 million more in its investment portfolio thanks to a payment received as part of a global settlement reached by government officials with Citigroup in July. The global settlement required Citigroup to pay $7 billion, based on its conduct in packaging, issuing and selling residential mortgage-backed securities prior to 2009. California received a total of $102 million in damages and $90 million in consumer relief.Read more >
Small Talk
ON THIS DATE: In 1580, English seaman Francis Drake returned to Plymouth, England, in the Golden Hind, becoming the first British navigator to sail around Earth. In 1789, Thomas Jefferson was appointed America’s first Secretary of State; John Jay was appointed the first chief justice of the U.S.; Samuel Osgood was appointed the first Postmaster-General; and Edmund Jennings Randolph was appointed the first Attorney General. In 1820, the pioneering frontiersman Daniel Boone died quietly in his sleep at his son’s home near present-day Defiance, Missouri. He was 86. In 1914, the U.S. Federal Trade Commission was established. In 1957, West Side Story, composed by Leonard Bernstein, opened at the Winter Garden Theatre on Broadway. In 1962, “The Beverly Hillbillies” premiered on CBS-TV. In 1964, “Gilligan’s Island” premiered on CBS-TV. In 1969, “The Brady Bunch” premiered on ABC. In 1990, the Motion Picture Association of America announced that it had created a new rating. The new NC17 rating was to keep moviegoers under the age of 17 from seeing certain films. In 2008, Paul Newman, one of the leading movie stars of the 20th century, died at the age of 83 from cancer at his home in Westport, Connecticut.   And now it’s time for FRIDAY FILES!
Ever suffered a “brain freeze” while eating or drinking something cold? Do you want to know why?Read more >
In Auckland, New Zealand, a man is facing sentencing for stealing more than $100,000 after his bank mistakenly transferred the money into his account. Eight days after the bank transferred $141,991 into his account in error, it froze his spending, but that was not before he had spent a significant chunk of it, The New Zealand Herald reports. The man, a 32-year-old qualified chef, admitted stealing $106,217. “It was his addiction to gambling and an unwise series of decisions,” his attorney told a court. The judge said he will sentence the man in November, but in the meantime, the bank added the debt to his account, meaning he has a six-figure overdraft. In Melbourne, Australia, a veterinarian said a 10-year-old goldfish named George underwent surgery last week to remove a brain tumor that was “affecting his quality of life” and the fish is now “swimming happily in the pond.” According to UPI, the procedure took about 45 minutes and cost the goldfish’s owner about $180. The vet said goldfish surgeries are uncommon, but he has performed about 10 similar procedures in his career.
Luckily, these pee wee football players are young and have plenty of time to master the art of busting through a banner.Read more >
In Tiverton, Devon, England, a family that has produced only male offspring since 1913 has welcomed its first female arrival in a century. The all-boy run was finally broken when Jeremy Silverton, 43, and partner Danielle Andrews, 36, welcomed a daughter called Poppy, the Daily Mail reports. She is the first Silverton female since her late great aunt Jessie Silverton who was born 101 years ago when King George VI was on the throne, women had no vote and WWI was still a year away. In Lauderdale Lakes, Florida, a Broward sheriff’s deputy noticed a headlight was out on a silver 2005 Dodge Stratus driven by the latest nominee for mother of the year—NOT. The deputy watched as the 19-year-old woman traveled 15 feet into an intersection at a red light and then backed up, disrupting traffic. When the deputy initiated a traffic stop, the woman went through the green light and turned down another street, driving for about a quarter-mile before pulling over. Another deputy heard crying coming from inside the trunk, opened it and found the woman’s five-month-old baby inside. According to the Sun Sentinel, the infant had been sitting in a passenger’s lap, but the woman didn’t want to get ticketed for not having a car seat, so she told the 14-year-old passenger to put the baby in the trunk through an opening in the back seat. The woman was charged with child abuse, resisting an officer and five traffic-related offenses, including driving without a license and failure to have a child restraint. In Sallanches, France, a woman went to the tax authority’s office to make her final payment on a bill that originally totaled $1,434, and she handed over $268—in coins. UPI reports she was angry because she had to sell her car to pay the taxes on time. Audrey said office workers initially seemed annoyed by her stunt, but they were able to see the humorous side of things while counting the coins—a task that took more than two hours. Have a great weekend!
Share the good news with a friend! Pass the Dash along – and tell your friends/associates they can sign up for their own copy.Read more >
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