Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
September 3rd, 2014
Benefit Briefs
White Labeling DC Plan Investments May Offer Advantages
Among approximately 75 large employers, nearly one-quarter (24%) are currently using a white label approach to naming defined contribution (DC) plan investment options, Aon Hewitt finds. Nearly half (46%) are using this approach for their entire fund lineup, while the remainder white label only some of their funds. Rob Austin, director of Retirement Research at Aon Hewitt, in Charlotte, North Carolina, tells PLANSPONSOR there are two main strategies for white labeling. The first is to take a singular fund and make the name generic. “For example, instead of listing the BlackRock U.S. Aggregate Bond Index, the fund would be presented to participants as the U.S. Bond Index fund,” he explains. This lets participants know the goals of fund and what it invests in, but makes it simpler for participants, he says. The second strategy is like a fund-of-funds approach, when a plan sponsor offers a single fund option to participants called the Large-Cap Equity fund, for example, but assets in the fund are directed to several underlying funds.
Executive Retirement Benefits Switched from DB to DC Too
As companies froze or closed their qualified defined benefit (DB) plans, they often did the same with their DB plans for executives. Towers Watson looked at Fortune 200 companies that froze or closed their qualified DBs and found most companies switched from DB to defined contribution (DC) nonqualified retirement benefits for newly hired executives, and used the same transition approaches for both executive and qualified DB plans. Most of the Fortune 200 companies that closed or froze their qualified DB plans now provide DC-style retirement benefits to executives in the form of restoration plans.
Buyer's Market
Safe harbor 401(k) plans require an initial plan year at least three months long, making October 1 the effective deadline for establishing a new safe harbor plan in 2014. ShareBuilder 401k, a subsidiary of Capital One Financial Corporation, is marking the upcoming deadline with a discount promotion for small business owners looking to establish a safe harbor plan. The firm specializes in digitally enabled exchange-traded fund (ETF)-based 401(k) plans.
Plan Strategies Introduces Portfolio Allocation Solutions
Retirement plan investment adviser Plan Strategies Inc. (PSI) launched three portfolio allocation offerings. The Allo(k)ation Plan simplifies asset allocation by offering five portfolio models corresponding to varying levels of risk tolerance, which participants determine by completing a questionnaire. The Allo(k)ation Plus Plan offers the same models as the Allo(k)ation Plan with the addition of an individual core fund lineup. PSI also offers the Tailored Solution for companies that want a more customized plan.
Moira Hagy has joined Assurance Financial Services’ retirement plan services team as a vice president. Hagy specializes in helping retirement plan sponsors navigate the challenges inherent to their fiduciary responsibilities, according to the firm. Specifically, she will provide client support on plan fee and design benchmarking, investment guidance, compliance, education strategies and overall plan sponsor best practices.
Firms Unite Fiduciary Consulting Practices
PSA Insurance & Financial Services Inc. has established a strategic partnership with The PFE Group that unites the companies’ fiduciary consulting practices. The alliance merges two retirement plan consulting businesses to create a combined client portfolio of employer-sponsored retirement plans with assets exceeding $10 billion. Through the partnership, PFE and PSA’s Fiduciary Consulting Group (FCG) clients will gain access to expanded plan administration and support resources delivered with greater efficiency, according to the firms.
MassMutual has named Aruna Hobbs as head of institutional investments for retirement plans. The firm says Hobbs’ hiring is part of a strategy to more aggressively promote its mutual funds and stable value investments to retirement plan sponsors and their financial advisers.
John Krieg has been appointed global head of institutional distribution at Northern Trust Asset Management. This is a new role created to lead the development and implementation of investment solutions for clients spanning regions and markets.
Industry Voices
Industry Voice: Owning It and Moving Forward
Wouldn’t it be nice to know from what success will come, before it actually does? To know what products will thrive and thus what stocks to buy or which solution will solve a given problem, to appropriately focus our energy. Despite the best of information, however, we so seldom have this insight. Even those exceedingly talented futurists among us are actually quite challenged in this regard.
Economic Events
The U.S. Census Bureau of the Department of Commerce announced that construction spending during July was estimated at a seasonally adjusted annual rate of $981.3 billion, 1.8% above the revised June estimate of $963.7 billion. The July figure is 8.2% above the July 2013 estimate of $906.6 billion. During the first seven months of this year, construction spending amounted to $535.4 billion, 7.9% above the $496.3 billion for the same period in 2013.
Market Mirror
Yesterday, the Dow slipped 30.89 points (0.18%) to 17,067.56, the NASDAQ was up 17.92 points (0.39%) at 4,598.19, and the S&P 500 decreased by 1.09 (0.05%) to 2,002.28. The Russell 2000 climbed 5.12 points (0.44%) to 1,179.47, and the Wilshire 5000 closed 10.54 points (0.05%) higher at 21,244.43.   On the NYSE, 3.2 billion shares traded, with a slight lead for decliners. On the NASDAQ, 2.8 billion shares changed hands, with 1.6 advancing issues for every declining issue.   The price of the 10-year Treasury note was down 22/32, bringing its yield up to 2.424%. The price of the 30-year Treasury bond fell 1 29/32, increasing its yield to 3.178%.
Rules & Regulators
The Pension Benefit Guaranty Corp. (PBGC) will pay retirement benefits for workers covered by a plan sponsored by the Los Angeles Urban League Inc. The Los Angeles Urban League is a local chapter of the National Urban League, a nonprofit civil rights organization. The chapter ran a Head Start program, which provided early education for pre-kindergarten students, and the PBGC is stepping in because the organization is unable to fund the plan that covers Head Start employees.
IRS Announces Hot Topics Webinar
The Internal Revenue Service (IRS) is holding a “Retirement Plan Hot Topics” webinar September 11. Topics will include the myRA program, individual retirement account (IRA) tax-free rollovers, the Windsor Supreme Court ruling, invalid Social Security numbers, Form 5500-EZ filing pitfalls and related relief programs, and tips for self-employed plan sponsors.
Sponsored message from MetLife
De-Risking Actions for Defined Benefit Pension Plans There are several actions plan sponsors can take to de-risk their plans. View our short video to see how these actions may help you.  
Small Talk
More than eight in 10 respondents to a survey by Accountemps (85%) said being courteous to coworkers has an impact on a person’s career prospects. However, 70% of workers think people become less courteous as they climb the corporate ladder. From a list provided, using a speakerphone or talking loudly on the phone ranked as the biggest breach of workplace etiquette when working in an open office space.
ON THIS DATE:  In 1777, the American flag was flown in battle for the first time during a Revolutionary War skirmish at Cooch’s Bridge, Delaware. Patriot General William Maxwell ordered the “Stars and Stripes” banner raised as a detachment of his infantry and cavalry met an advance guard of British and Hessian troops. In 1783, the American Revolution officially came to an end when representatives of the United States, Great Britain, Spain and France signed the Treaty of Paris. In 1954, “The Lone Ranger” was heard on radio for the final time after 2,956 episodes over a period of 21 years. In 1966, the television series “The Adventures of Ozzie and Harriet” ended after 14 years. In 1967, the TV game show “What’s My Line?” broadcast its final episode. The show aired over 17 years on CBS. In 1976, the U.S. spacecraft Viking 2 landed on Mars. The unmanned spacecraft took the first close-up, color photos of the planet’s surface.
WEDNESDAY WISDOM: “People may hear your words, but they feel your attitude.”—John C. Maxwell, author
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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