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Insight on Plan Design & Investment Strategy
Updated: 4 hours 5 min ago

Excessive Fee Cases Continue With Lawsuit Against Cerner Corporation

Thu, 2020-01-23 13:49

An excessive fee lawsuit has been filed against Cerner Corporation, its Foundations Retirement Plan, several committees and various other alleged fiduciaries.

Repeating a number of excessive fee lawsuits filed, the complaint says the plan, which has more than $2 billion dollars in assets, qualifies as a large plan in the defined contribution (DC) plan marketplace, and, therefore, has substantial bargaining power regarding the fees and expenses charged. The lawsuit says the defendants did not try to “reduce the plan’s expenses or exercise appropriate judgment to scrutinize each investment option that was offered in the plan to ensure it was prudent.”

The plaintiffs allege that from January 21, 2014, to the present, the defendants breached their Employee Retirement Income Security Act (ERISA) fiduciary duties by failing to objectively and adequately review the plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost; and maintaining certain funds in the plan despite the availability of identical or similar investment options with lower costs and/or better performance histories.

In an effort to avoid the timing or standing issues that have hindered other such suits from going forward, the complaint states that the plaintiffs did not have knowledge of all material facts necessary to understand that the defendants breached their fiduciary duties and engaged in other unlawful conduct in violation of ERISA until shortly before the suit was filed. In addition, it says the plaintiffs did not have and do not have actual knowledge of the specifics of the defendants’ decision-making process with respect to the plan “because this information is solely within the possession of defendants prior to discovery.”

“Having never managed a large 401(k) plan such as the Plan, Plaintiffs lacked actual knowledge of reasonable fee levels and prudent alternatives available to such plans. Plaintiffs did not and could not review the Committee meeting minutes or other evidence of Defendants’ fiduciary decision making, or the lack thereof,” the complaint adds.

In the complaint, the plaintiffs argued that passively managed funds cost less than actively managed funds, institutional share classes cost less than investor share classes, and collective trusts and separate accounts cost less than their “virtually identical” mutual fund counterparts. They claim that the defendants knew or should have known of the existence of cheaper share classes and/or collective trusts, and should have immediately identified the prudence of transferring the plan’s funds into these alternative investments.

The complaint states that as a large plan, it had sufficient assets under management at all times during the class period to qualify for lower share classes which often have a million dollars as the minimum for a particular fund. “Investment minimums for [collective trusts] are often $10 million, but will vary,” the complaint notes.

It also accuses the defendants of failing to monitor or control the plan’s recordkeeping expenses. The lawsuit alleges the plan fiduciaries failed to track the recordkeeper’s expenses by demanding documents that summarize and contextualize the recordkeeper’s compensation, such as fee transparencies, fee analyses, fee summaries, relationship pricing analyses, cost-competitiveness analyses, and multi-practice and standalone pricing reports.

It accuses the defendants of failing to identify all fees, including direct compensation and revenue sharing being paid to the plan’s recordkeeper. “To the extent that a plan’s investments pay asset-based revenue sharing to the recordkeeper, prudent fiduciaries monitor the amount of the payments to ensure that the recordkeeper’s total compensation from all sources does not exceed reasonable levels, and require that any revenue sharing payments that exceed a reasonable level be returned to the plan and its participants,” the plaintiffs claim.

The suit alleges the defendants failed to remain informed about overall trends in the marketplace regarding the fees being paid by other plans, as well as the recordkeeping rates that are available by not conducting a request for proposals (RFP) process at reasonable intervals, and immediately if the plan’s recordkeeping expenses have grown significantly or appear high in relation to the general marketplace.

“As a direct and proximate result of the breaches of fiduciary duties alleged herein, the Plan suffered millions of dollars of losses due to excessive costs and lower net investment returns,” the complaint says.

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Categories: Industry News

The Case for TDFs That Mix Active and Passive Management

Thu, 2020-01-23 13:33

It used to be that retirement plan sponsors only primarily considered active target-date funds (TDFs) for the lineups of qualified default investment alternatives (QDIAs), as these funds captured 90% of the market in the early 2000s, according to a white paper from PIMCO. However, because of concerns about fees and litigation risk, three years ago, passive TDFs surpassed active TDFs in market share.

Erin Browne, managing director at PIMCO, tells PLANSPONSOR that there is a third option that to consider, particularly because this option “is, by and large, what plan sponsors and consultants are looking for.”

The option? “Blend” TDFs that combine both active and passive management. “We poll the largest plan sponsors and consultants each year,” Browne says. “By and large, mid-size and large plans are looking for a blended strategy.”

A PIMCO survey found that 60% of plans with $1 billion or more in assets are looking for custom TDFs, which typically use a mix of active and passive investments. Only 25% of plans in this size range are looking for off-the-shelf blend TDFs.

What becomes interesting is that most plans below that size are looking for blend TDFs, probably because their assets are not large enough to command a custom TDF. Forty-seven percent of plans in the $500 million to less than $1 billion space are looking for blend TDFs, and this is true for 50% of those in the $200 million to less than $500 million bracket, for 47% of those in the $50 million to less than $200 million bracket, and 44% of those with less than $50 million in assets. Clearly, sponsors are looking for blend TDFs.

While the amount of TDF assets that are in blend TDFs now is small, Morningstar data shows that blend TDF assets have grown 485% since 2013. “While it is a small segment of the market today, we think it will be the largest growth opportunity in the TDF market,” Browne says.

The reason sponsors are looking for a blended strategy is because “selecting active management on equity is not the best decision,” Browne says. “The percentage of active equity funds that outperform their benchmark is only 20%, whereas 70% of fixed income active managers are able to outperform their benchmark.”

As PIMCO says in its white paper, “In our view, the pendulum has swung too far from active to passive, and a compromise that incorporates investment considerations may be warranted. … A blend TDF typically carries lower fees than fully active options. In addition, blend TDFs offer alpha potential from active management, which over the long term may translate into higher income-replacement ratios or improved longevity of assets in retirement versus a fully passive TDF, typically for only a modest fee premium.”

The reason actively managed fixed income funds are able to outperform their benchmarks so much more often than actively managed equity funds is there are only about 1,000 equities on the market but tens and even hundreds of thousands of fixed income options traded over the counter, Browne says. This creates inefficiencies that active fixed income managers can exploit.

Additionally, “within fixed income, you have non-economic buyers: sovereign wealth funds, treasury managers, pension managers, currency managers, central banks,” she adds. “This creates additional alpha opportunities and is a big component” of why actively managed fixed income makes more sense than actively managed equities.

On top of this, according to PIMCO, actively managed equities cost an average of 61 basis points, versus only 33 basis points for actively managed fixed income.

PIMCO’s mantra, Browne says, is, “Go active where it matters [fixed income] and passive where it saves [equity].”

Finally, PIMCO notes that as investors approach or enter retirement, a greater portion of their TDF glide path is allocated to fixed income. Since actively managed fixed income has borne out to be superior to equities, doesn’t a blend TDF make even more sense?

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Categories: Industry News

Investment Product and Service Launches

Thu, 2020-01-23 12:47
Lincoln Financial Group and Capital Group Combine TDFs and Annuities

Lincoln Financial Group and Capital Group have launched the new American Legacy Target Date Income variable annuity. This solution combines the features and benefits of an annuity with a target-date fund (TDF).

“Today, we are announcing American Funds target-date investing with Lincoln’s protected lifetime income solution to help investors fund the life they desire in retirement when facing increasingly longer lifespans,” says Will Fuller, executive vice president, president of Annuities, Lincoln Financial Distributors and Lincoln Financial Network.

American Legacy Target Date Income features a design offered in both fee- and commission-based options. The TDF invests in a mix of stocks and bonds that automatically adjust over time, becoming more conservative and tailored to the needs of the investor, not just to retirement, but through retirement. Product features include Lincoln Financial Group’s highest amount of level protected lifetime income, 5.7% for life at age 65; guaranteed growth for future income at a minimum of 6% each year, with higher results allowing a higher amount of growth; joint life options; and beneficiary protection.

Federated Investors, Inc. to Rename Brand and Ticker Symbol

Federated Investors, Inc. will change its name to Federated Hermes, Inc., and  its New York Stock Exchange (NYSE) ticker symbol will change from FII to FHI. 

The name change will be effective as of January 31, and Federated’s Class B Common Stock will begin trading on the NYSE under the FHI ticker symbol on February 3. These changes follow Federated’s July 2018 acquisition of a majority interest in London-based Hermes Fund Managers Limited, which operates as Hermes Investment Management, a provider for integrated environmental, social and governance (ESG) investing. 

Federated will provide more information about these changes in February.

MSCI Publishes Principles of Sustainable Investing

MSCI has published a report calling investors to integrate environmental, social and governance (ESG) considerations throughout their investment processes, to promote an effective transition towards a sustainable economy.

“The MSCI Principles of Sustainable Investing,” is a framework designed to illustrate specific, actionable steps that investors can and should undertake to improve practices for ESG integration across the investment value chain.

The framework includes three core pillars to full ESG integration: investment strategy; portfolio management; and investment research.

“The world is rapidly evolving due to dramatic environmental, social and governance shifts, including the effects and implications of climate change and the move to a low carbon economy, which will significantly impact the pricing of financial assets and the risk and return of investments, and lead to a large-scale re-allocation of capital over the next few decades,” says Henry Fernandez, chairman & CEO at MSCI.  

“Sustainable investing is a critically important part of the long-term investment process and our framework is designed to help investors understand approaches to effectively integrate ESG criteria as a core component of building a resilient portfolio,” says Remy Briand, head of ESG at MSCI. “Through our research, tools and efforts to promote transparency, we seek to support investors in the critical quest to integrate ESG considerations in their portfolios.”

“The MSCI Principles of Sustainable Investing” can be found here.

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Categories: Industry News

HSA Bank, Principal Pair HSA, Retirement Savings Information

Thu, 2020-01-23 12:32

HSA Bank, a division of Webster Bank, N.A., announced a new relationship with Principal Financial Group, through which the firms will offer customers a convenient way to view their health savings account (HSA) balances alongside the rest of their retirement plan information.

The collaboration gives Principal customers with an HSA through HSA Bank easy access to a comprehensive online snapshot of their retirement portfolio—one that includes their HSA balances. Through an application programming interface (API), customers who authorize the integration of their HSA Bank and Principal accounts will be able to get a holistic view of their HSA cash and investment balances. With single sign-on (SSO) technology, customers utilizing the Principal retirement portal can easily log into the HSA Bank website with one click to better manage their account for long-term savings and future health care costs.

“We know health care can be a significant expense throughout a person’s lifetime, especially in retirement, and that HSAs are an advantageous way to save for future health care costs,” says Chad Wilkins, president of HSA Bank. “I believe this relationship will provide a useful tool for customers, uniting health and wealth in one common goal: to meet their retirement savings needs.”

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Categories: Industry News

Businessolver Introduces Emergency Savings Employee Benefit

Thu, 2020-01-23 12:29

Businessolver, a provider of SaaS-based benefits administration technology and services, has introduced Goal Accounts (GA), its latest product innovation within the MyChoice Accounts suite of solutions.

Like current MyChoice Accounts products, GAs are elected and managed within the Benefitsolver employee benefits platform. The solution automatically deducts funds from an employee’s paycheck, after taxes, and deposits them into an account in an amount specified by the employee. Funds are available any time without penalty via a debit card or electronic transfer. Employees can establish a GA as part of their benefits enrollment process since the accounts are integrated with Benefitsolver.

“We’re excited to build this relationship with Businessolver and be part of an innovative solution that will help individuals further contribute to their financial wellbeing,” Chief Operating Officer and Director of UMB Healthcare Services Phil Mason says. “Adding this vehicle to existing items like HSAs and 401(k)s is one more way employers can help support employees in achieving their overall savings goals.”

Rae Shanahan, Businessolver’s chief strategy officer, says, “With our MyChoice Accounts products, saving for both short- and long-term goals is automated and simple, and employees can see their ‘one wallet’ of compensation and savings from our Benefitsolver platform and the MyChoice Mobile App, with which they are already engaging. Additionally, employers can communicate with and educate their employees about the importance of their overall benefits package and financial health from one cohesive solution.”

More information may be found here.

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Categories: Industry News Offers Benchmark Reporting for 403(b)s

Thu, 2020-01-23 12:18 has rolled out its operational benchmark reporting for 403(b) plans.

Subscribers can now benchmark a 403(b) plan against a custom peer group using nine operational benchmarks.

Professionals operating in the health care and higher education markets will find this feature particularly useful, as more than half of the approximately 20,000 403(b) Form 5500 filers are represented in these two markets.

This new feature is included at no extra charge in the ERISApedia’s Plan Data Intelligence product. is a provider of compliance resources in the retirement plan industry. The company provides retirement plan administrators, plan sponsors and attorneys a complete product suite of online compliance products as well as a webcast series.

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Categories: Industry News

Phasing Out Retirement Jargon

Thu, 2020-01-23 10:21

Retirement planning is a stressful journey, unsurprising to many. From projecting desired income sums to understanding the retirement savings process, preparation can be an overwhelming course. And the jargon isn’t helping—neither for the participant nor the plan sponsor.

This jargon, including a motley of abstruse terms like Social Security optimization and glidepath, can discourage participants from engaging with their retirement plan, reports say. A 2019 Invesco study found when participants were presented with a “personalized, plain-English and positive short description” of a retirement plan, 54% were either very or extremely likely to stay in the plan with a monthly payout feature.

“Very few people want to talk about investments in the abstract or theory,” explains Greg Jenkins, the head of Institutional Defined Contribution at Invesco in Texas. “People would rather talk about investments in terms of their goals, that’s much more meaningful to them.”

For employers—especially smaller plan sponsors—these terms can prove just as trying. At smaller institutions, where managing the retirement plan does not encompass a full 40-hour work week, comprehension levels are comparable to participants, says Steve Jenks, chief marketing officer at Empower in Colorado. “It’s different when you get into the very large end of the market, where overseeing a retirement plan is somebody’s full-time job,” he says.

Smaller plan committees, whose members as fiduciaries structure the workplace plan, are not commonly fluent in technical terms like Social Security optimization, Jenks adds. When it comes to this specific terminology, plan sponsors cannot assume the committee will understand all terms. It’s far more effective to break down the language.   

Even those who understand the lingo aren’t welcoming to the terminology. Words such as “glidepath,” “best in class” and “institutional quality” that may resonate with plan sponsors aren’t necessarily adopted, mentions Jenkins. Adding plan-English definitions, such as a rebalancing strategy for investments or a risk-reduction path, are preferred over the jargon. “There are some words that work with plan sponsors, where they may understand what providers are talking about, but the participants don’t,” he adds.

Financial advisers and providers can take advantage of their own knowledge to simplify jargon for plan sponsors and participants. For example, providers tend to use unfamiliar terms such as noncorrelated asset management, hedging, and different types of derivatives, notes Jenkins. He says that while some will assume the plan sponsor will understand, the reality is many employers misinterpret the meaning. Terms like this are misunderstood or are misconstrued because, for many plan sponsors, that’s just not their world.

This means that most of the responsibility sits with the providers. Just how providers need to communicate with participants and incorporate their language, the same should be done with plan sponsors, Jenks argues. Instead of exhausting retirement terminology, providers can consult with employers on adjusting the language.

If a plan sponsor has trouble interpreting vocabulary and its provider has not conferred with it, Jenkins suggests employers push back. Ask providers to explain what terms mean and if there are any plain-English meanings that can help with understanding. The end goal for providers is to build communication for all three parties—themselves, the employer and the participant. “Plan sponsors are communicating to an employee,” he says. “It’s the same responsibility that providers have when communicating with employers.”

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Categories: Industry News

Should Your Company Finally Offer a Retirement Plan?

Wed, 2020-01-22 14:01

It’s OK—you’re far from alone—47% of small to midsize businesses don’t offer a retirement plan, and you have reasons for being one of those. You have more to do than run a retirement plan and don’t want to spend your time administering a plan or picking investment options. And, given your company’s size, you think the costs of offering a plan outweigh any tax, recruiting, employee retention or other benefits you might get in return.

New legal changes may make you rethink your decision. First, there are new tax incentives for offering a retirement plan. Second, there are new ways for employers to take advantage of professional plan administration and the economies of scale that had been available only to larger employers. Third, states may soon require employers to offer a plan or participate in a state-run scheme.


The first question to ask: Why should we offer a retirement plan? There are many reasons, including the following:

  • So your employees can save for their retirement and then retire, allowing the next generation of employees to help lead your company into the future.
  • So employees can receive a tax deferral for their contributions.
  • So you can deduct your contributions made on employees’ behalf.

Additionally, employers may even be eligible for a tax credit for the startup costs for their plan.

New Tax Credits

This past December, Congress added to the tax incentives employers get for offering a retirement plan—viz., for starting one. With passage of the SECURE Act, now, an employer can receive a credit of $500 to as much as $5,000 for three years for starting a plan. The employer also will get a credit for including an automatic enrollment feature that defaults employees into participating in the plan. This credit is $500 and can be claimed for three years. All in, these changes mean that employers are eligible for tax credits of up to $16,500 if they create a retirement plan.

New Ways to Band Together

While these tax incentives may make you want to create a retirement plan after all, there are more new ways to provide retirement benefits to your employees as a result of regulatory and legislative changes last year.

First, there are two options for employers that would rather participate in a plan run by a third party. Right now, chambers of commerce and other associations are designing and sponsoring “association retirement plans.”

Next year, there will be another possibility, “pooled employer plans.” These plans will be run by a professional entity. In a pooled employer plan, an employer’s responsibilities are limited to monitoring the entity administering the plan, providing information, making timely contributions and taking steps to maintain tax qualification. In some cases, an employer may have some investment responsibility. For all other aspects of plan administration, the professional entity will be responsible.

In both association retirement plans and pooled employer plans, employers can offer retirement benefits while leaving most aspects of plan administration to others and taking advantage of the opportunity to benefit from aggregating with other employers for better pricing.

State Programs

Those pooled plans are not the only avenue being considered by and for small and midsize employers. Some states have and others are considering mandates whereby an employer that doesn’t offer a retirement plan would be required to make a filing and contribute to a state program on behalf of employees. However, if a small or midsize business is operating in multiple states, a nationwide retirement plan could offer a single solution to providing that company’s retirement benefits. Such a plan could help the employer avoid the need for determining the filings that various states may require and weaving through possible mandates in each jurisdiction. Importantly, many of these state laws exempt employers that offer a nationwide retirement plan.

Kevin Walsh is a principal at the Groom Law Group. He advises clients on a wide range of “standard of care” matters. His practice encompasses helping retirement plan service providers, including registered investment advisers and broker-dealers, comply with the Department of Labor’s fiduciary rules, the Securities Exchange Commission’s best interest rules, FINRA’s suitability rules, and evolving state care standards.

David N. Levine is a principal at the Groom Law Group, where he advises plan sponsors, advisers, and other service providers on a wide range of employee benefit matters, including retirement. He was previously the chair of the IRS Advisory Committee on Tax Exempt and Government Entities and is currently a member of the executive committee of the Defined Contribution Institutional Investment Association.

This feature is to provide general information only, does not constitute legal or tax advice, and cannot be used or substituted for legal or tax advice. Any opinions of the author do not necessarily reflect the stance of Institutional Shareholder Services (ISS) or its affiliates.

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Categories: Industry News

TIAA Unveils Institutional HSA Offering

Wed, 2020-01-22 11:30

With rising health care costs and longer life expectancies, plan sponsors are increasingly looking to help employees save for their retirement medical expenses.

Given this trend, retirement plan providers are moving into the health savings account (HSA) market, and the latest to do so is TIAA. The firm says its forthcoming TIAA HSA will be administered by HealthEquity Inc. and will work “in concert” with TIAA retirement plans.

According to the firm, the TIAA HSA will be available in the first quarter to all institutional clients that offer employees a high-deductible health plan (HDHP).

“Health care expenses are increasingly connected to an individual’s ability to retire and maintain a good standard of living throughout their lives,” observes Lori Dickerson Fouché, CEO of TIAA Financial Solutions. She says preparing for rising health care costs is a significant financial concern for both employers and individuals, citing TIAA research showing that more than 90% of plan sponsors say rising health care costs are a significant concern for retirement security. 

“As individual life spans increase, so does the potential cost of medical care in retirement,” Fouché adds. “By providing employees a one-stop-shop experience, we believe employees are more likely to take positive steps towards financial security.”

The TIAA HSA will include a diversified series of TIAA-CREF and Nuveen mutual fund investments in an integrated TIAA online and mobile view. In addition, the TIAA HSA will offer participants comprehensive tools and education resources, including a plan comparison tool, an HSA contribution calculator and a future balance calculator.

Ted Bloomberg, chief operating officer of HealthEquity, says his firm will be providing TIAA HSA members with “24/7 education and support.”

TIAA’s announcement comes just a few weeks after T. Rowe Price Retirement Plan Services Inc. announced it will offer integration of ConnectYourCare’s health savings account into its retirement plan offering. ConnectYourCare, a national provider of consumer directed health care solutions, serves as the product administrator and custodian.

That HSA solution will be offered within T. Rowe Price’s retirement savings plan recordkeeping platform, giving eligible participants the ability to view and manage their retirement and health savings accounts holistically.

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Categories: Industry News

Supreme Court Declines to Review Question About Dudenhoeffer Pleading Standards

Wed, 2020-01-22 09:38

The U.S. Supreme Court has denied a petition to review proceedings in a case alleging that fiduciaries of the SunEdison Inc. Retirement Savings Plan continued to offer SunEdison stock as an investment option in the plan when they knew or should have known it was imprudent to do so.

Like many stock drop cases following the Supreme Court’s previous decision in Fifth Third v. Dudenhoeffer, the SunEdison case was dismissed after a judge found the allegations did not meet the pleading standards of Dudenhoeffer. Specifically, a lower court and the 8th U.S. Circuit Court of Appeals decided plaintiffs in the SunEdison case offered “no allegations that the circumstances indicated to the defendants that they could not rely on the market’s valuation of SunEdison stock.”

In 2016, a former employee of SunEdison Semiconductor LLC, referred to in court documents as “Semi,” alleged that between July 20, 2015, and April 21, 2016, the defendants knew or should have known that SunEdison was in poor financial condition and faced poor long-term prospects and therefore should have removed SunEdison stock from the plan’s assets. SunEdison, Semi’s parent company, had filed for bankruptcy on April 21, 2016.

According to case documents, pursuant to a plan amendment, effective February 1, 2015, participants could retain their existing investments but could no longer direct additional investments into the SunEdison stock fund. The plaintiffs presented evidence of SunEdison press releases announcing losses, as well as financial press reporting that SunEdison was in financial distress. Between July 20, 2015, and April 21, 2016, the market price of SunEdison stock fell from $31.66 to $0.34.

In its decision affirming a lower court decision, the 8th Circuit wrote: “The [Supreme Court] opined that where a stock is publicly traded, allegations that a fiduciary should have recognized from publicly available information alone that the market was over- or undervaluing the stock are implausible as a general rule, at least in the absence of special circumstances. This is because ERISA fiduciaries, who could reasonably see little hope of outperforming the market based solely on their analysis of publicly available information may, as a general matter, prudently rely on the market price. In its analysis, the [Supreme Court] embraced the view that a security’s price in an efficient market reflects all publicly available information and represents the market’s best estimate of its value in light of its riskiness and the future net income flows that those holding it are likely to receive. Noting that the complaint at issue did not point to any special circumstance that rendered reliance on the market price imprudent, the [Supreme Court] remanded for the lower courts to apply its guidance in the first instance.”

“The similarity between plaintiff’s allegations and those that the Supreme Court deemed insufficient to plausibly state a breach of the duty of prudence in Dudenhoeffer is undeniable,” the decision stated.

In his petition to the Supreme Court, the plaintiff noted that in Dudenhoeffer, the high court unanimously held that the question whether a plaintiff had plausibly alleged a claim under the Employee Retirement Income Security Act (ERISA) for breach of the fiduciary duty of prudence had to be answered by conducting a “careful, context-sensitive scrutiny of a complaint’s allegations” because the content of the duty of prudence “turns on ‘the circumstances . . . prevailing’ at the time the fiduciary acts.” He claimed that the 8th Circuit “discarded the core lesson of Dudenhoeffer and imposed a categorical heightened pleading standard on ERISA plaintiffs alleging a breach of the duty of prudence based on the fiduciary’s decision to hold an unduly risky asset despite publicly available information and inside information evincing the asset’s imprudence.”

The question he asked the high court to answer was “whether Dudenhoeffer’s ‘context-sensitive scrutiny of a complaint’s allegations’ can be met where a court presumes an asset must be prudent if it is publicly traded and presumes that a reasonably prudent fiduciary would never conclude that it ‘would not do more harm than good’ to freeze purchases of a company’s assets based on inside information.”

The Supreme Court denied the petition on January 21.

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Categories: Industry News

Consider the More Conservative Investments Pre-Retirees Should Hold

Tue, 2020-01-21 12:49

After a year of exceptional returns in 2019, gathering headwinds could hinder retirement plan returns in 2020 and beyond, according to Retirement Outlook 2020 from MFS Investment Management.

“We estimate that a hypothetical portfolio of 60% equities and 40% bonds will have a 10-year annualized return of approximately 3.6% [over the next 10 years] as compared with a return of 7.2% over the past 10 years,” say report authors Jon Barry, senior retirement strategist, and Jessica Sclafani, DC strategist, at MFS in Boston.

Barry says this is an educated estimate based on research. On the equity side, “We feel good about sales growth and dividends, but we don’t feel as good about corporate margins and profits and just valuations in general,” he says. “Stocks are trading at a very high price-to earnings ratio, and we don’t see that as sustainable. With the trade wars, and as unemployment remains low and wage growth cuts into margins, companies will be restrained.”

As for fixed income, Barry says, “Rates are historically low, and we don’t see anything in the near term that will make rates move higher in a meaningful way. Starting yields are a good predictor of where returns will be. Treasuries are yielding around 2%, and it’s not unreasonable to expect the same,” he says. “Central banks in the U.S. and around the world have extended a lot of resources available to keep the positive cycle going. We question how much they have left to do to keep it going.”

The report notes that defined contribution (DC) plan sponsors made substantial allocations to passive investment strategies over the past decade, mostly due to costs concerns. But, it says, “The new year presents an opportunity for sponsors to revisit their allocations to active investment strategies, which could offer additional returns in a low-growth environment and provide some level of risk management when the current cycle comes to an end. These characteristics of active management will be particularly crucial for participants approaching retirement, who are vulnerable to sequence of returns risk.”

As participants approach retirement, common wisdom is to move to more conservative investments, but considering the low interest rate environment’s effects on fixed income investment vehicles, Barry and Sclafani suggest plan sponsors also revisit participants’ fixed income investments, including both core options on the DC plan investment menu and fixed income allocations in qualified default investment alternatives (QDIAs) such as target-date funds (TDFs).

Sclafani notes that traditional U.S.-based core (and core plus) fixed income funds have been the most prevalent in DC plans. “We think because of the low-rate environment and other reasons, plan sponsors should broaden and diversify access to fixed income investments in their core investment menus as well as TDFs,” she says.

To broaden and diversify access, Sclafani suggests plan sponsors should consider global bond and global opportunistic funds. “Participants approaching retirement are generally increasing their fixed income exposure, but they are also increasing their exposure to interest rate risk. If all of their fixed income investments are in core or core plus vehicles, that exaggerates their interest rate risk. If they diversify with global opportunistic strategies, they will get a different interest rate exposure from a geographic perspective,” she says.

Barry says that having a good short duration bond fund in a portfolio is important. “Look at high-yield bonds and emerging market debt for potentially higher yields, not just for those nearing retirement, but for all participants,” he adds. He warns that these investments also come at a higher risk so plan sponsors should very thoughtfully add them into the investment lineup. Barry also suggests considering Treasury Inflation-Protected Securities (TIPS) for inflation protection.

“We’re not advocating that sponsors necessarily add these investments as standalones on the investment menu,” Sclafani says. “Consider mixing them into other strategies, such as a white label fund or TDF.”

Sclafani mentions a survey MFS fielded in the first quarter of 2019 of approximately 1,000 DC plan participants who were approaching retirement. While a majority of the participants identified the need to increase their focus on fixed income as they age, only about 20% answered that they were likely to add to their fixed income investments.

According to the MFS Retirement Outlook 2020 report, “We view this disconnect as an opportunity for sponsors to support participants approaching retirement by packaging their fixed income for them.” Sclafani says this includes white label funds and TDFs, as she mentioned. “The obvious construct is in the plan’s QDIA. We encourage plan sponsors to review their TDFs and take a deep dive into the fixed income allocation—not just the level of fixed income allocations along the glidepath, but the components of the fixed income allocations,” she says.

The percentage of DC plan sponsors with a policy for retaining the assets of terminated and retired participants in their plans has increased steadily since 2015, according to the Callan 2020 DC Trends Survey. Sclafani says this is true particularly in the mega plan market. And, to help participants with decumulation strategies, more DC plan sponsors are including income solutions in their plans. A survey from Willis Towers Watson found that among those that offer a lifetime income solution, the most common is systematic withdrawals (80%), followed by lifetime education and planning tools (70%) and in-plan managed account services (44%). Only 17% offer an in-plan asset allocation option with a guaranteed minimum withdrawal or annuity component. Fifteen percent support out-of-plan annuities, and 15% offer in-plan deferred annuity investment options.

“Sometimes the industry equates retirement income solutions with annuities, and that is not the case,” Sclafani says. “To make a DC plan a retirement income vehicle, plan sponsors should review plan distribution options, consider offering managed account programs with financial wellness components, and make advice available to participants approaching retirement age. This is when participants are more engaged and looking for advice.”

A BlackRock analysis suggests that given some negative views of annuities, plan sponsors could consider in-plan income options that are not guaranteed.

“A lot of it comes down to providing education and tools,” Barry says. “Even for younger folks, if we’re looking at a lower-return environment, DC plan participants need to think about saving more or deferring retirement. Plan sponsors should make sure they have the tools or access to advice to model outcomes and to help participants think through their strategy for taking Social Security.”

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Categories: Industry News

Employees Say Video Is Preferred Method for Learning

Tue, 2020-01-21 12:38

A survey from video technology provider Kaltura found employees prefer video for learning.

Though the survey focuses on employee training and development, the responses are informative for retirement plan sponsors, providers and advisers who develop or offer retirement plan and financial wellness education. Among the 1,200 full-time professionals who work at companies with more than 500 employees across the United States, 69% said they would rather learn a new skill from video than from a written document. Video is the preferred learning method among all demographic groups.

However, 72% of employees admit they do not give training videos their full attention, skimming them, watching without sound, listening while doing something else, or ignoring them completely. There is a difference between generations; 44% of Baby Boomers report always paying attention to training videos, but among Generation X, Millennials, and Gen Z, only 23% to 24% report watching training videos with full attention.

Survey responses suggested ways to improve employee engagement with video training. Eighty-two percent said they believe interactive videos hold their interest better than traditional videos. Kaltura said videos can be made interactive by techniques such as adding hotspots that link to additional materials or videos, embedding quizzes in the video, and even building videos where content and storyline change depending on the viewer’s choices. “Interactive, personalized videos create a lean forward experience that drives increasingly better results,” the company says.

In addition, 64% of respondents said their employers are using live broadcasts or virtual classrooms for training, in which trainees can learn in real time and interact with their instructor.

To download a copy of the report, visit

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Categories: Industry News

DCIIA and SPARK Collaborate on Cybersecurity and More

Tue, 2020-01-21 10:32

The Defined Contribution Institutional Investment Association (DCIIA) and the SPARK Institute (SPARK) recently announced a plan to partner on several joint projects in 2020.

The advocacy organizations tell PLANSPONSOR their objective in forming this partnership is to more efficiently focus on shared goals and initiatives that promote the U.S. retirement system and improve savings and retirement security for working Americans. Lew Minsky, president and CEO of DCIIA, notes his organization is recognizing its 10th anniversary in 2020, and that he looks forward to working even more closely with Tim Rouse, SPARK Institute executive director.

Moving forward, the SPARK Institute will become a founding member of the DCIIA Retirement Research Center and utilize its capabilities to conduct primary research on recordkeeping issues, policy developments in Washington and more. Other potential topics of research mentioned by Minksy and Rouse include the electronic delivery of retirement plan documents, as well as the subjective behavioral tendencies and decisions of real-world investors and participants. Both organizations see their new collaboration leading to significant expansion in their collective research capabilities. 

“We believe there is a gap in the current research landscape and in the dialog about retirement planning,” Minsky says. “With SPARK and DCIIA working together, we are going to be able to pull together all the right parts of the ecosystem to execute on truly market-informed, policy-relevant research. We aim to provide insight which is practical and actionable and which will make a difference in the way we talk about plan designs, investment structures, administrative strategies, etc.”

Minsky and Rouse say they particularly look forward to working together on the linked topics of cybersecurity, fraud prevention and financial services technology development. They also cite blockchain technology as an exciting area to study.

“The industry has realized that by working together on cybersecurity issues, we are stronger than if we remain in our own silos,” Rouse says. “Cybersecurity and fraud prevention is not an area where companies in this space are looking to get a competitive advantage over one another—quite the opposite. We are promoting a cooperative outlook and we have been putting together best practices and case studies for what works and what doesn’t work in cybersecurity.”

Minsky and Rouse recall an industry event DCIIA and SPARK held in October 2019, during which the topic of blockchain was discussed. A blockchain is a series of records of data that cannot be modified and is managed on computers of different entities. Each of these blocks of data are secured and bound to each other using cryptographic principles. The interest and enthusiasm around the topic inspired the two leaders to make technology development a key theme in their 2020 collaboration.

“The consensus at that event was that blockchain could have a huge impact on our space,” Rouse observes. “Like cybersecurity, blockchain is an area where collaboration is needed and which thrives on a consortium model. At the 2019 event, the most popular ideas for the use of blockchain were creating protected digital identities for participants, and doing the same thing for plan data. We’re just at the beginning of this conversation, but it’s a very important one to start.”

Another main part of the DCIIA and SPARK Institute collaboration will be a series of conferences that look at the state of the U.S. retirement system and compare this to the global outlook. The goal is both to learn from places like Australia or the United Kingdom while also being able to pass on what U.S. employers and service providers have learned.

“Over the last few decades we have seen a significant transformation in the U.S. retirement system, and globally that transition is a little behind where we are,” Minsky says. “We have knowledge to share, and on the other hand, we can learn from the automation best practices they have implemented in the United Kingdom, or the high default savings rates in Australia. We will be studying all of this.”

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Categories: Industry News

OneAmerica Enhances Web Design for Group Annuity Platform

Tue, 2020-01-21 10:06

OneAmerica launched a new design for its group annuity digital platforms, used to administer company retirement plans.

Changes were made in response to feedback about functionality from retirement plan sponsors, advisers and third-party administrators (TPAs). The new look provides an engaging experience and streamlines page navigation.

OneAmerica tells PLANSPONSOR the design change allows it to shift its focus to holistically examine the user experience as it is designing new features.

The improvements involve accounts operated by 5,000 financial advisers, close to 2,000 TPAs, and approximately 21,000 individuals at the employer level who handle retirement plans for their personnel.

“We are known in the industry for our emphasis on relationships, education and customization,” says Sandy McCarthy, president of retirement services. “We’re proud of these digital enhancements because they really showcase our commitment to all three factors that differentiate us, and they build a foundation of human-centric, intuitive and seamless experiences for our stakeholders.”

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Categories: Industry News

SURVEY SAYS: Best Picture Oscar Winners 2020

Mon, 2020-01-20 03:30

Last week, I asked NewsDash readers, “Which 2020 nominee for Best Motion Picture do you think should win the Oscar?”

But first, I asked which of the Best Picture Oscar nominees they’ve seen. No one saw Jojo Rabbit, and no one saw all of them. The movie seen by the most responding readers was Once Upon a Time… in Hollywood, with 25.8% selecting it. Ford v. Ferrari was seen by 6.4% of respondents, The Irishman was seen by 22.6%, and Joker was seen by 3.2%. Nearly two in 10 (19.3%) respondents saw Little Women, 12.9% saw Marriage Story, 6.4% saw 1917, and 3.2% saw Parasite. Nearly 42% of responding readers said they haven’t seen any of the movies nominated.

Though it was only seen by a small number of readers, 1917 was selected by 30.4% as the nominee that should win the Oscar. This was followed by 17.4% who said Little Women should win, and 13% each selected Ford v. Ferrari and The Irishman. Joker, Marriage Story and Once Upon a Time… in Hollywood were each selected by 8.7% of responding readers as being the movie they think should win the Oscar.

Among the few readers who left comments, there seems to be some disdain for the Oscars—either the award itself or the show. One suggested a different movie that should win, and another said the movies he or she had seen were all horrible. There is no Editor’s Choice this week. A big thank you to all who participated in the survey!


Rich people patting themselves on the back.

The real best movie of the year – by far – was Uncut Gems. Great lessons about investing for retirement in it too!

Winning an Oscar has become a real crap shoot. Who knows?

At this point, who cares what the Oscar committee thinks? Enjoy the movies that make you feel something. All the rest is nonsense.

I just realized I haven’t seen any of them…. and I’m okay with that. I look forward to others’ feedback.

I enjoy watching the award shows, but often think the entire event is so over-rated. Hollywood really likes to pat themselves on the back publicly. Where are the awards for the sciences, education, medicine, etc.?

The three movies that I saw were, in my opinion, all horrible. I don’t think any of them should have even been nominated!

Usually the movies I enjoyed are never nominated.

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Categories: Industry News

Retirement Industry People Moves

Fri, 2020-01-17 13:43
Transamerica Increases Client Engagement Team for Mega/Large Plans

Transamerica has expanded its client engagement team for mega/large retirement plans with the elevation of Andrea Thompson and Manny Pedro. The company also announced that Sarah McEleney, Joe Centofanti, and Kevin McDonald joined the company as client executives.

Thompson has previously worked in customer service at Transamerica focusing on mid-size retirement plans. She holds a master’s degree from The University of Hartford and is a certified financial planner (CFP). She will report to John Taylor, regional director.

Pedro was elevated to senior client executive. He will serve clients across the country that use Transamerica’s Total Retirement Outsourcing and report to Stefanie Signorello, regional director.

McEleney joins Transamerica with 15 years of experience in the employee benefits industry. She is an accredited investment fiduciary through the Center for Fiduciary Studies, and a certified plan fiduciary adviser through the National Association of Plan Advisors. She will be based in Tampa, Florida, and report to Robert Rooney, regional director.

Centofanti returns to Transamerica to focus on large-market retirement plans in New York City and surrounding areas. With 22 years of experience specifically in customer service of retirement plans, he holds a bachelor’s degree from Pace University. He will report to Matt Hummel, regional director.

McDonald joins Transamerica with more than 20 years of experience in relationship management and retirement plans. He will focus primarily on helping large retirement plan clients in Ohio and surrounding areas. McDonald holds a bachelor’s degree from Marietta College.  He will report to Taylor.

Mercer Adds Investments and Retirement Business Leader

Mercer has hired Brandi Wust as Tri-State Business Leader for its investments and retirement business.

In this newly created position, Wust will help Mercer drive strategic initiatives and define and implement the company’s local business strategy for the greater New York, New Jersey and Connecticut area. She will also play a role in the company’s business development efforts through acquiring new clients as well as expanding relationships with current clients.

Wust brings over 20 years of experience to the role, providing strategic investment solutions to clients with a wide range of institutional asset pools.

Most recently, she served as a senior director and the Northeast Investment leader at Willis Towers Watson, where she focused on identifying, cultivating and expanding client opportunities in the investment space. She is based in New York and will be reporting to Marc Cordover, senior partner and east wealth business leader for Mercer effective immediately.

RiskFirst Hires Former PBGC Head

Fintech company RiskFirst has appointed Charles Millard to develop its North American defined benefit (DB) pensions client base, which includes pension plans, consultants and asset managers.

RiskFirst provides risk analytics and reporting solutions to the pensions and investment markets through its platform PFaroe.

Millard has held senior positions within the industry for nearly 20 years, including at the Pension Benefit Guaranty Corporation (PBGC), Citigroup and BP Direct Securities.

“RiskFirst is a leading organization with cutting-edge technology, and I am extremely pleased to become part of the team,” comments Millard. “I am looking forward to helping RiskFirst advance its client base and, through the power of its technology, helping to ensure North American pensions can meet the challenges of an increasingly complex market.”

Segal Acquires Public-Sector Implementation Services Provider

Segal has acquired LRWL Inc., provider of public-sector retirement systems implementation services.

The LRWL team has become part of Segal’s Administration, Technology and Consulting (ATC) practice.

“In acquiring LRWL, we are building on Segal’s strong core competencies and enhancing our ability to support public-sector retirement systems,” says David Blumenstein, president and CEO of Segal. “Our strengths complement each other, and this acquisition reaffirms Segal’s continued commitment to providing public-sector entities with the highest level of consulting services.”

“We look forward to offering clients access to Segal’s robust consulting capabilities,” says Leon Wechsler, president of LRWL, who has joined Segal as vice president and senior consultant. “Both of our companies are known for assisting clients through a personalized approach rather than providing the one-size-fits-all approach. We will soon be able to offer even more personalized options to meet client needs.”

Former AXA Equitable Life Rebrands

Equitable–formerly known as AXA Equitable Life–unveiled the brand it will operate under as an independent, U.S.-based company.

“Today we herald the next step in our journey as an independent company,” says Equitable CEO Mark Pearson. “Throughout our 160-year history, we have helped millions of Americans reach their goals and achieve financial security. As one of this country’s most enduring brands, the name Equitable is at the core of our commitment to help clients secure financial well-being so they can pursue long and fulfilling lives.”

The company offers variable annuities, tax-deferred investment and retirement plans, employee benefits, and protection solutions for individuals, families and small businesses. Equitable’s broad portfolio is distributed through an affiliated retail channel, Equitable Advisors, with approximately 4,330 registered and licensed financial professionals, and through third-party distribution platforms.

The company has changed its logo, now representative of the Greek goddess Athena. The new logo is said to signal Equitable’s values of optimism, empowerment and progression.

“We believe at the heart of every financial decision is a life decision,” says Equitable President Nick Lane. “To be fully invested and deliver the best advice and strategies, we must know our clients as individuals. Financial planning can be a deeply emotional and personal subject, and our promise is to take a lifelong, holistic view of our clients’ goals, dreams and aspirations so we can help them navigate their unique journeys.”

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Categories: Industry News

Prudential Investment Management Fined for Inaccurate Investment Information

Fri, 2020-01-17 11:57

The Financial Industry Regulatory Authority (FINRA) has published a letter of acceptance, waiver and consent entered into by member firm Prudential Investment Management Services (PIMS).

Underlying the letter, in which Prudential accepts FINRA’s settlement terms but neither affirms nor denies any specific allegations, is a challenge by FINRA suggesting that Prudential provided retirement plan clients with inaccurate expense ratio information and historical performance information.

“During at least the period January 2010 to June 2017, PIMS provided employer sponsors and employee participants, in retirement plans administered and/or maintained by the Prudential Retirement business unit, with inaccurate expense ratio information and historical performance information for numerous investment options in defined contribution plans offered through a group variable annuity,” the letter states.

In addition, FINRA says, from at least October 2003 to December 2018, PIMS provided inaccurate third-party ratings for investment options in retirement plan group variable annuities.

“PIMS made these misstatements in nine different types of communications, including customer statements and quarterly fact sheets,” FINRA says.

Additionally, according to FINRA, from at least January 2004 to September 2019, in multiple client-facing publications, PIMS provided performance data for money market funds available as investment options in retirement plans, but failed to provide “seven-day yield” information as required by Rule 482(e) under the Securities Act of 1933.

“Throughout the period of these violations, PIMS did not have supervisory systems or written supervisory procedures reasonably designed to achieve compliance with the content standards of FINRA’s advertising rule by ensuring that its communications to customers about retirement plan investments and related investment options were accurate,” the letter states. “By virtue of the foregoing, PIMS violated NASD Rules 2210(d)(1)(A) & (B), 3010(a) & (b), and 2110, and FINRA Rules 2210(d)(1)(A) & (B), 3110(a) & (b), and 2010.”

As part of this matter, PIMS has consented to a censure and a fine in the amount of $1 million. There are also non-monetary elements agreed to. For example, the firm has agreed to retain at its own expense one or more qualified independent consultants “not unacceptable to FINRA” to conduct a comprehensive review of the adequacy of the firm’s compliance with FINRA Rules 2210(d)(1)(A) & (B) and 3110(a) & (b), in connection with the violations described.

The letter further states that, once retained, PIMS “shall not terminate the relationship with the independent consultant without FINRA’s written approval; respondent shall not be in and shall not have an attorney-client relationship with the independent consultant and shall not seek to invoke the attorney-client privilege or other doctrine or privilege to prevent the independent consultant from transmitting any information, reports or documents to FINRA.

PIMS provided the following statement: “Transparency, doing the right thing, and maintaining constructive relationships with regulators are foundational to how Prudential conducts business. Upon discovery of the issues following a FINRA inquiry, Prudential conducted a thorough review, reported its findings, and fully cooperated with FINRA. We have taken action to address the issues and are pleased to have this matter resolved.”

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Categories: Industry News

State of Membership Organizations/Industry Associations Retirement Plans

Fri, 2020-01-17 11:49

Membership organizations/industry associations retirement plans rank No. 2 among all industries when it comes to average participant deferral rate (8.8%), according to the PLANSPONSOR 2019 Defined Contribution (DC) Survey. They also rank in the top 10 for average account balance ($118,376).

The PLANSPONSOR 2019 Defined Contribution (DC) Survey results incorporate the responses of 3,472 plan sponsors from a broad variety of U.S. industries. Within the survey, 52 respondents are from membership organizations/industry associations.

Among membership organizations/industry associations, 86.5% offer a 401(k) plan and 15.4% offer a 403(b) plan. More than one-quarter (27.5%) offer a traditional defined benefit (DB) plan, and 3.9% offer a cash balance plan.

Now that the SECURE Act allows for multiple employer plans (MEPs) for employers that do not share a common nexus, the industry is wondering how those plans may be set up. This provision is effective January 1, 2021, and David Whaley, partner at Thompson Hine LLP in Cincinnati, Ohio, says he anticipates some MEPs will be sponsored on day one. “There are already pooled plans among trade associations. I think they will choose to treat themselves as open MEPs, now that the SECURE Act allows them to file a single Form 5500, and they will make modifications to be ready on January 1, 2021,” he says.

The 2019 PLANSPONSOR DC Survey finds that two-thirds (65.3%) of membership organizations/industry associations retirement plans are “safe harbor” plans. The average participation rate is 80.3%, compared to 78.9% for plans in the survey overall.

The most common service delivery model among membership organizations/industry associations retirement plans (44.9%) is a fully bundled arrangement—the same recordkeeper and trustee, and all of the investments are managed by the recordkeeper. Recordkeeper reviews are done annually by 65.2% of plans.

Fifty-seven percent of these plans employ the services of a financial/retirement plan adviser or institutional/investment consultant to specifically assist with plan design decisions, compared to 70.1% of plans in the survey overall. Investment advice is offered to participants in 81.8% of membership organizations/industry associations retirement plans—via financial advisers, a third-party or tools from recordkeepers.

Nearly 45% of membership organizations/industry associations retirement plans indicate they employe a third party as a 3(16) administration fiduciary. Sixty-two percent of these plans have an investment committee, and 79.6% have a written investment policy statement (IPS).

Only three in 10 membership organizations/industry associations retirement plans use automatic enrollment, compare to 48.2% of plans overall. For those that do use automatic enrollment, 80% use target-date funds (TDFs) for the default investment. The most common default deferral rates are 6% (26.7%) and 3% (20%).

Only 29.4% of membership organizations/industry associations retirement plans offer automatic deferral increases (auto escalation).

A profit sharing or other non-matching contribution is offered in 62.5% of membership organizations/industry associations retirement plans, compared to 48.4% of plans overall. A matching contribution is offered in three-quarters of plans, the same as for all plans in the survey. The most common match formula is 51% to 99% of the first 6% of salary, again, the same as for all plans.

The majority of membership organizations/industry associations retirement plans (88.4%) use mutual funds as investment choices in their DC plans, with only 20.9% using separate accounts and only 11.6% using collective investment trusts (CITs). The average number of investment options offered is 21.

One-third (34%) of membership organizations/industry associations retirement plans review investment options quarterly, and 31.9% do so annually. Ninety-three percent say they offer assistance for participants with creating retirement income—via systematic withdrawals, in-plan guaranteed insurance-based products, in-plan managed accounts or managed payout funds or out-of-plan annuity purchase/bidding services.

Two-thirds allow for Roth deferrals, 82.7% allow participants to take loans, and 80.4% allow hardship withdrawals.

PLANSPONSOR 2019 DC Survey industry reports may be purchased by contacting Brian O’Keefe at

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Categories: Industry News

Few Retirees Receiving Income from the Three-Legged Stool

Fri, 2020-01-17 11:47

The National Institute on Retirement Security (NIRS) issued a report examining the sources of retirement income for older Americans—finding that while many Americans rely on Social Security throughout retirement, only some are receiving the benefit.

According to the report, 40% of older American retirees rely only on Social Security income in retirement, while only 6.8% receive income through Social Security, a defined benefit (DB) plan and a defined contribution (DC) plan. The report found roughly the same number of older Americans will receive income from DB plans, as from DC plans. However, this is likely to change, as the American workforce steers away from pensions.

“Future private-sector workers today have less access to defined benefit pensions, and so when they reach retirement age, they’re less likely to have any income from a DB plan,” stated Tyler Bond, NIRS manager of research, in a webinar about the report.

The report also emphasized key demographics and its relationship to retirement income. For example, unmarried older men and women receive retirement income from a combination of Social Security and DB and DC plans, but older unmarried men will consistently have higher incomes than unmarried women, an unsurprising detail considering the ongoing gender pay gap. These two groups tended to have smaller retirement incomes than married men and women, as multiple people in a household receive more income.

Additionally, the report found that both race and educational attainment have strong roles in establishing retirement income. Older white Americans received considerably more in Social Security income and total retirement income—at $23,292 for a median total retirement income figure and $14,760 in median Social Security amount. Older black Americans received a median total retirement income of $16,863 and a median Social Security Income figure of $13,320. Hispanics had the lowest median retirement income at $13,560, and the smallest Social Security income at $12,720—albeit having the highest percentage of those receiving Social Security benefits (45.9%). Almost 40% of white people are receiving these benefits, while 44.8% of black people are.

“The percentage is slightly higher for black people and Hispanics who are only receiving Social Security income in retirement, but you see that the median amounts are much closer together,” said Bond.

The report says those with a college degree will typically have significantly higher retirement incomes than those with only a high school education. “College graduates are more likely to have income from all three sources than those with just some college or those with only a high school education,” explained Bond.

The report also notes how sources of retirement income affect poverty status. For example, people receiving income from DB plans were found to have much greater poverty than those receiving income from DC plans. “One reason for this is that recipients of defined contribution income tend to have significantly higher net worth than recipients of defined benefit income,” said Bond.

The report concludes by stating that Social Security expansion can assist policymakers fighting elder poverty.

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Categories: Industry News

Friday Files – January 17, 2020

Thu, 2020-01-16 13:52

A surprise in the leaf pile, a tiny Irish dancer, and more.

In Mexico City, Mexico, travelers on the Mexico City subway system often blame authorities for broken-down escalators at subway stops, but Metro officials have discovered another explanation. Somehow, urine is penetrating and corroding the drive wheels and mechanisms of the escalators that carry riders up from underground stations. Fermin Ramirez, the system’s assistant manager for rails and facilities, said riders appear to be urinating on escalators at off-peak hours and lightly used stations, “even though it seems hard to believe,” the Associated Press reports.

In London, England, online music giant Spotify launched a podcast for dogs left home alone in Britain, after its polling suggested most owners believe audio recordings help calm their canines. The streaming service has created a “soothing mix” of music, speech and sounds to de-stress dogs home during the day. According to the AFP, the playlists utilize the vocal skills of “Game of Thrones” actor Ralph Ineson and Jessica Raine, the lead actress in the BBC series “Call the Midwife.” The two offer “dog-directed praise, stories, affirmation messages and reassurance”, Spotify said as it unveiled its new “My Dog’s Favourite Podcast” offering.

In Harlan, Iowa, man has asked an Iowa judge to let him engage in a sword fight with his ex-wife and her attorney so he can “rend their souls” from their bodies. The man said in a court filing that his former wife and her attorney had “destroyed (him) legally.” According to the Associated Press, the couple has been embroiled in disputes over custody and visitation issues and property tax payments. The judge had the power to let the parties “resolve our disputes on the field of battle, legally,” the man said, adding in his filing that trial by combat “has never been explicitly banned or restricted as a right in these United States.” He also asked the judge for 12 weeks’ time so he could secure Japanese samurai swords.

A surprise in the leaf pile. If you can’t view the below video, try

Tiny Irish dancer. If you can’t view the below video, try

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Categories: Industry News