Is It Time to Reevaluate Participant Self-Direction?
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General Items Is It Time to Reevaluate Participant Self-Direction? Summary: When you really think it through, changing the 401k investment approach from participant-directed to offering portfolios selected by the plan sponsor or an investment fiduciary has merit. It allows those who are most qualified to make asset selections do what they do best. The participant's choices get boiled down to just a few important questions. Source: Napa-net.org Pension Plan De-Risking (Part I); What Trends Do We See in Canada? Summary: An increasing number of public and private sector employers around the world are either abandoning the traditional DB pension plan model in favor of more affordable and sustainable alternative arrangements, or are doing away with their employer sponsored retirement plans altogether. Canada is no exception to this global trend. Even among Canadian employers, the search to find suitable ways to de-risk volatile DB pension obligations is becoming a more common strategic corporate priority. Source: Pensionsbenefitslaw.com Adding Categories: A Sample of a New and Improved 401k Investment Option Menu Summary: The 401k plan investment menu remains, for the most part, unchanged since the mutual fund industry allied with plan recordkeepers in the 1980s. With the advent of the fiduciary and with the power of behavioral finance, this has finally begun to change. Many companies are now adopting systemic changes to their 401k that create plans more in line with the language, needs and motivations of their employees. Source: Fiduciarynews.com
Compliance and Regulatory Related EBSA Allows JP Morgan to Terminate 180 Abandoned DC Plans Summary: The Department of Labor's Employee Benefits Security Administration has approved a request from JP Morgan Chase Bank NA and ADP Inc. to terminate or wind up about 180 defined contribution pension plans that have been abandoned because of corporate crises or neglect. Source: Benefitspro.com Groups Warn SEC Against Watered-Down Fiduciary Standard Summary: A broad coalition of advocacy groups is calling on the Securities and Exchange Commission to press ahead with an expansion of a fiduciary standard to hold broker-dealers to identical standards of care for retail client that are already imposed on investment advisors. Source: Financial-Planning.com 2013 Department of Labor Initiatives Summary: Bradford P. Campbell was the Assistant Secretary for Employee Benefits Security of the United States Department of Labor, the official in charge of the Employee Benefits Security Administration. Mr. Campbell believes the DOL has a few major agenda items for 2013 and provides some questions to ask yourself. Source: Agbaygroup.com SEC to Try Again on Money Market Reform Summary: Nine months after the Securities and Exchange Commission failed to advance money market fund reform amid a storm of industry protest, the agency will try again next week -- this time with a new leader at the helm. On June 5, the SEC, now headed by Mary Jo White, is slated to vote on money fund proposal. Source: Investmentnews.com (free registration may be required) SEC Fact Sheet on Reforming Money Market Funds Summary: The SEC is considering a proposal that would include two principal alternative reforms that could be adopted alone or in combination. The proposal also includes additional diversification and disclosure measures that would apply under either alternative. This is a "fact sheet" covering the proposal. Source: Americanbenefitscouncil.org
403(b) Plans 403(b) Program Creates Some Concerns About Future of Individually Designed Plans Summary: The news from IRS that limited resources make it infeasible for the agency to establish a determination letter program for individually designed 403(b) plan documents was unexpected and potentially the most disruptive guidance in a revenue procedure that the agency released March 28, practitioners told BNA in a series of interviews at the end of May. Source: Bna.com
Fiduciary Material and Insight Promoting and Evaluating the Success of Your Plan Summary: To promote the success of their plans, a plan's fiduciaries should consider examining various plan-related metrics to help them evaluate the performance of their respective plans, including the following: participation rate, contribution rate, portfolio risk, investment education, and retirement readiness. These key metrics may be used to establish appropriate goals, which may in turn serve as tools to help plan fiduciaries monitor the overall health of their plans and to better manage them. Source: Wagnerlawgroup.com IRA Rollover Services and Responsibility of Plan Sponsors Summary: The Government Accountability Office has issued a report that raises serious issues about how participant rollovers are being handled. The report also suggests that plan sponsors and committees, in their roles as ERISA fiduciaries, may have duties regarding rollovers they have never considered. This bulletin summarizes parts of the GAO Report and discusses whether plan sponsors and committees may be obligated to monitor the IRA rollover services offered by their providers. Source: Drinkerbiddle.com It Takes Only One Participant to Sink a Retirement Plan Sponsor Summary: For retirement plan sponsors who do nothing to minimize their fiduciary liability, they need to know that it only takes one. This article is about how it only takes one plan participant to cost a plan sponsor dearly in terms of headaches and fiduciary liability. Source: Rosenbaum Law Firm Rule 408(b)(2): The New Fiduciary Paradox Summary: The new fee disclosure rules are imperfect, but still a step in the right direction. CEFEX Analyst Mark Mensack provides a perspective on the increased attention plan sponsors should give to disclosure of service provider fees and conflicts of interest. Source: Cefex.org
Insights: Studies, Research and White Papers Over Half of Employers Use Social Media for Internal Communications, Survey Reveals Summary: According to the survey from Towers Watson, 56 percent of employers currently use various social media tools as part of their internal communication initiatives to build community. Social media tools can be effective in creating a sense of community and employee engagement, but an employer's efforts must be tailored to the particular needs of the organization. Source: Bna.com Is It Time to Diversify DC Risk With Alternative Investments? Summary: The Defined Contribution Institutional Investment Association believes that DC plan sponsors should consider adding an investment offering that provides better risk balance, in an attempt to enhance returns and to reduce the volatility that the typical plan participant experiences. One solution is to provide access to an asset category broadly referred to as "alternatives." Source: Defined Contribution Institutional Investment Association A Guide for Globalizing DC Core Menus Summary: At a time when plans are seeking to control risk and enhance returns, hedged global bonds can help improve outcomes for US defined contribution investors. Hedged global bonds have delivered better risk-adjusted results over time than US bonds. So how do plan sponsors incorporate global bonds, and what is the ideal allocation in core menus? Source: Alliancebernstein.com Facts About DC Plans and Retirement Security Summary: The share of retirees receiving private-sector pension income has increased substantially since the 1970's and DC plans are a key component of achieving retirement security. Here are some fact. Source: Investment Company Institute
Items of Special Interest to Advisors More Conversations With 401k Clients Critical, BofA Says Summary: As the performance of equities markets pushes employee confidence up, financial advisors need to make sure they still wave the caution sign when it comes to their clients' goals, according to Bank of America Merrill Lynch. Source: Financial-planning.com Fidelity Recognizes Power of RIAs in 401k Small-Plan Market Summary: Fidelity Investments has reinvented its small-plan 401k strategy in a way that appears to put RIAs very much in the driver's seat for the first time. The policy shift by the Boston giant marks a major change in that RIAs previously received little support in trying to win and serve 401k prospects. Source: Riabiz.com
Court, Legislative and Washington DC Automatic IRA Legislation Is Reintroduced Summary: Rep. Richard Neal (D-MA) has reintroduced payroll withholding automatic IRA legislation from the 112th Congress, with some minor changes. The legislation is intended to make available an employer-coordinated retirement saving opportunity to those workers whose employers do not offer a more typical retirement plan. Source: Ascensus.com
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