Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
September 5th, 2014
Benefit Briefs
Decades-Old DB Benefit Payments Being Questioned
Law firms say they are seeing a growing number of claims for pension benefits that were paid or rolled over decades ago by former employees who either do not recall receiving or rolling over their benefits or who are questioning the amount of benefits they received. Pat DiCarlo, counsel with Alston & Bird’s Employee Retirement Income Security Act (ERISA) Litigation group in Atlanta, explains that the claims his firm is seeing are brought through defined benefit (DB) plans’ formal administration process and have not yet reached litigation. He tells PLANSPONSOR the trend is new but is becoming more prevalent. “There are at least three different iterations of the claims,” he says.
Shift from DB to DC Stabilizing
A new analysis of retirement plan offerings at Fortune 500 companies suggests the shift from defined benefit (DB) plans to defined contribution (DC) plans may be slowly stabilizing. Towers Watson says fewer companies today are actively moving away from DB plans and establishing DC plans for new salaried employees than at any other point over the past decade. The analysis also suggests a few industry sectors—notably the insurance and utilities sectors—are bucking the general trend of moving from DB to DC retirement plans. More than half of the companies operating in the insurance and utilities sectors still offer DB and DC retirement plans to new salaried employees.
Buyer's Market
Eugene Oppo has joined Sibson Consulting’s New York corporate benefits team as a senior vice president. He reports to Dan Fries, senior vice president and leader of the New York corporate benefits team at Sibson. Sibson Consulting, a member of The Segal Group, provides strategic human resources solutions to corporate and non-profit employers and professional service firms.
Guardian Adds Investment Options to Retirement Platforms
The Guardian Insurance & Annuity Company, Inc. (GIAC) added 21 investment options to The Guardian Choice and The Guardian Advantage group retirement plan products. The additions include offerings from new fund families, such as American Funds, Morgan Stanley Investment Management, Natixis Funds, OppenheimerFunds and Putnam Investments. New funds are also being added from existing fund families.
Economic Events
In the week ending August 30, the advance figure for seasonally adjusted initial claims for unemployment insurance was 302,000, an increase of 4,000 from the previous week’s unrevised level of 298,000, the Labor Department reported. The four-week moving average was 302,750, an increase of 3,000 from the previous week’s unrevised average of 299,750. The average interest rate for a 30-year fixed-rate mortgage is 4.10%, unchanged from one week ago, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage is 3.24%, down from 3.25% one week ago.
Market Mirror
Thursday, the Dow slipped 8.70 points (0.05%) to 17,069.58, the NASDAQ fell 10.28 points (0.22%) to 4,562.29, and the S&P 500 was down 3.07 points (0.15%) at 1,997.65. The Russell 2000 lost 4.99 points (0.43%) to finish at 1,167.21, and the Wilshire 5000 closed 43.20 points (0.20%) lower at 21,169.98. On the NYSE, 3.2 billion shares traded, with decliners outnumbering advancers 2 to 1. On the NASDAQ, 2.8 billion shares changed hands, with 1.5 declining issues for every advancing issue. The price of the 10-year Treasury note decreased 16/32, increasing its yield to 2.456%. The price of the 30-year Treasury bond climbed 1 12/32, with its yield down to 3.215%.
Rules & Regulators
More Retirement Plans May Invest in CITs
More retirement plans may get the benefits of collective investment trusts (CITs) under a new Internal Revenue Service (IRS) ruling. Revenue Ruling 2014-24 modifies the rules regarding 81-100 group trusts by clarifying that assets held by insurance company separate accounts may be invested in 81-100 group trusts under some circumstances. Louis Mazawey, an attorney with Groom Law Group in Washington, D.C., explains that “81-100 group trusts” is the IRS’ name for CITs. He tells PLANSPONSOR the ruling has implications for 401(a) and governmental 457 plans, including governmental 403(b)s, as well as plans that invest in stable value funds.
Lessons from Spiewacki v. Ford Motor Company
How binding are the calculations of pension benefits in a retirement benefit statement, and what measures can guard a plan from culpability over errors?
Financial Sense
Falling interest rates precipitated by geopolitical tensions led to higher liabilities and a lower funded status for the typical U.S. corporate pension plan in August, according to the BNY Mellon Investment Strategy and Solutions Group (ISSG). Yet, rising asset values benefited public plans, foundations and endowments. The funded status of the typical U.S. corporate pension plan in August fell 0.7 percentage points to 90.1%, as liabilities rose 3.3%, outpacing the 2.6% return for assets, according to the BNY Mellon Institutional Scorecard.
Small Talk
ON THIS DATE:  In 1774, in response to the British Parliament’s enactment of the Coercive Acts in the American colonies, the first session of the Continental Congress convened at Carpenter’s Hall in Philadelphia. Fifty-six delegates from all of the colonies except Georgia drafted a declaration of rights and grievances and elected Virginian Peyton Randolph as the first president of Congress. In 1877, Oglala Sioux chief Crazy Horse was fatally bayoneted by a U.S. soldier after resisting confinement in a guardhouse at Fort Robinson, Nebraska. A year earlier, Crazy Horse was among the Sioux leaders who defeated George Armstrong Custer’s Seventh Cavalry at the Battle of Little Bighorn in Montana Territory. In 1958, Boris Pasternak’s romantic novel “Dr. Zhivago” was published in the United States. The book was banned in the Soviet Union, but still won the Nobel Prize for Literature in 1958. In 1964, “House of the Rising Sun” by the Animals topped the U.S. pop charts. In 1972, during the Summer Olympics at Munich, in the early morning, a group of Palestinian terrorists stormed the Olympic Village apartment of the Israeli athletes, killing two and taking nine others hostage, and demanding that Israel release more than 230 Arab prisoners being held in Israeli jails as well as two German terrorists. In 1975, in Sacramento, California, an assassination attempt against President Gerald Ford was foiled when a Secret Service agent wrested a semi-automatic .45-caliber pistol from Lynette “Squeaky” Fromme, a follower of incarcerated cult leader Charles Manson. In 1986, Merv Griffin aired his final program for Metromedia Television after 23 years on various talk shows. In 2005, Katie Couric made headlines and TV history with her debut as the first female solo anchor of a weekday network evening news broadcast, “CBS Evening News with Katie Couric.”   And now it’s time for FRIDAY FILES!
I like this promotion from IKEA for the “bookbook.”
Did these people really just steal a cow by stuffing it in the back seat of their car?
In Fayetteville, Arkansas, a woman was arrested for suspicion of stealing $144 worth of eye shadow. Not funny until you see the mug shot.
In London, England, sewer officials found the cause of a flooding problem in a residential neighborhood. They said it was a “fatberg” the size of a 747 plane. According to UPI, Dave Dennis, Thames Water sewer operations manager, said the blockage was comprised of cooking fats that had been poured down the city’s drains and hardened along with debris including wet wipes, tennis balls and pieces of wood. “Fat goes down the drain easily enough, but when it hits the cold sewers, it hardens into disgusting fatbergs that block pipes,” he said. Workers used high-powered jets to break up the fat and clear the blockage beneath the neighborhood. In Austin, Texas, a man stormed into his neighbor’s yard while the neighbor was using his radio to talk to his father and, without saying a word, started to use ‘aggressive’ hand gestures indicating he wanted to fight. The neighbor said the man broke his radio’s antenna and then head-butted him, without speaking, according to the local ABC news station. The neighbor went inside, fearing for his safety. After the neighbor went inside, the man dumped his radio over the fence. An arrest affidavit says the man felt his neighbor was trying to “get into his head.”
Somewhere in Russia, Mickey Mouse, SpongeBob and two other “loveable” characters fought a motorist.
In Jharkhand, India, an 18-year-old girl from a remote village has been forced to marry—a dog. According to the New York Post, a local guru convinced the teenager’s parents she was under an evil spell and that marrying a man would only bring destruction to the family and the community. The village elders believe the evil spell will be passed on to the dog. “After that is done, the man I will marry will have a long life,” the girl said, according to the news report. A traditional Hindu ceremony was performed. Around 70 members of the village and the girl’s family attended the ceremony. Munda will now have to live with the dog and raise him for the next few months, but village customs say she is free to marry again without having to go through a divorce. The girl said many weddings like this have taken place in her village and neighboring villages. In Portland, Oregon, a family’s three-year-old Great Dane was vomi.ting and ga.gging all day one day recently, so they took it to a veterinary hospital. Vets looked at abdominal radiographs and found “a large quantity of foreign material” in the dog’s stomach, the local CBS news station reported. The vets performed an exploratory surgery, and removed 43 and 1/2 socks from the dog’s stomach. The dog is fine and went home one day after the surgery. Have a great weekend, everyone!
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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