PLANSPONSOR Weekend Newsdash
Week ending June 2nd, 2017
Happy Friday, PLANSPONSOR readers! An analysis this week contends that continuing public pension reforms could ultimately hurt the economy, while another found investors who leave investments alone—such as those in target-date funds (TDFs) offered by defined contribution (DC) retirement plans—get better investment returns than do-it-yourself investors who try to time the market. While there is much media coverage about Millennials and Baby Boomers, sometimes Generation X gets left out, but an article this week discusses how to help Gen X with their unique financial wellness needs. Also, providers weigh in about how technology is changing participant communications and why DC plan sponsors should not fear adoption of collective investment trusts (CITs). All this and more in this edition of PLANSPONSOR Weekend!
Editor's choice
Continuing Public Pension Reforms Could Hurt the Economy
In the wake of the financial crisis of 2008, public pension plans made several reforms, including benefit cuts, and increases in the age and tenure required to claim benefits. And, some state and local governments have contemplated moving to a defined contribution (DC) plan structure. A report from the National Conference on Public Employee Retirement Systems (NCPERS) suggests that if these reforms continue, it will result in economic losses. Read more >
Automatic Savings Plans Drive Better Investment Returns
In the U.S., TDFs have consistently had positive gaps from state returns because U.S. investors contribute to their 401(k) savings with every paycheck, and TDFs reduce bad market timing decisions. Read more >
Helping Gen X With Financial Wellness
While Millennials and Baby Boomers get much attention, it could be argued that Generation X is the most in need of financial wellness help. For Gen Xers, according to Larisa Terkeltaub, senior director of LearnVest at Work, aside from credit card and student loan debt and saving for emergencies and retirement, there’s an additional layer when it comes to prioritizing competing goals.  Read more >
Technology Reshaping Participant Communications
A new study finds plan providers are turning to cloud-based technology and other solutions to enhance targeted communications toward different age groups. Read more >
Plan Sponsors Should Not Have Concerns About Adopting CITs
The lower cost of collective investment trusts (CITs) is attracting the attention of plan sponsors, retirement executives say. Compared to mutual funds, CITs are priced 10 to 30 basis points lower, according to a DST white paper, “Collective Investment Trusts—A Perfect Storm.” While some plan sponsors may worry that CITs have a tracking error against their benchmarks, it is typically quite small and can sometimes be smaller than the tracking error found in a mutual fund, because CITs are designed exclusively for retirement plans, says Jeffrey McConnell, chief investment officer at Graystone Consulting in Purchase, New York. Read more >
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J.P. Morgan Agrees to Settle Stable Value Funds Suit

The firm has agreed to pay $75 million to settle litigation brought by multiple retirement plan participants alleging J.P. Morgan invested its stable value funds in risky assets.

Individuals, Employers and Government All Play a Part in Retirement Readiness

A new research report and Catherine Collinson, with Transamerica Center for Retirement Studies, lay out steps all three can take to improve retirement confidence and readiness in America.

Participant Loans: A Fiduciary Storm Brewing?
Bruce Ashton, with Drinker Biddle & Reath, discusses the fiduciary risk defined contribution (DC) plan sponsors could face when participants default on plan loans.
What to Know About Financial Audits Filed with Form 5500s
Plan sponsors required to file a financial audit along with their Form 5500 should know how regulators use the information and how to pick the best auditor.
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Editorial: Alison Cooke Mintzer

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