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Institutional Investor Expectations, Manager Performance, and Fund Flows

Summary: Study analyzes institutional investors' expectations about the future performance of fund managers and the impact of those expectations on asset allocation decisions. It finds that institutional investors allocate funds mainly on the basis of fund managers' past performance and of investment consultants' recommendations, but not because they extrapolate their expectations from these. This suggests that institutional investors base their investment decisions on the most defensible variables at their disposal.

Source: Ssrn.com, February 2015

Racial Disparities in 401k Savings Behavior

Summary: This paper examines 401k saving behavior of continuously employed workers over an eight-year period at a single, geographically diverse employer. Paper demonstrate substantial difference in 401k savings behavior by employee ethnicity even within a single employer 401k plan architecture.

Source: Nber.org, February 2015

Companies Are Improving Automatic Features in 401k Plans

Summary: To improve the long-term financial outlook for workers, a new survey from Aon Hewitt, reveals that the majority of companies now offer automatic features in their 401k plans to ensure that workers are saving enough to receive full company matching contributions over time.

Source: Wolterskluwerlb.com, February 2015

New Mortality Tables Shine Spotlight on 401k Plans

Summary: While there has been lots of discussion about the impact the new mortality tables will have on pension plans, there's been far less talk about how longer life spans also affect DC plan participants. Yet the average employee shares the same goal as any defined benefit plan: accumulate sufficient assets to provide a targeted percentage of preretirement income for their remaining lifespan.

Source: Cfo.com, February 2015

Comparison of Retirement and Deferred Compensation Plans

Summary: Whether it is when we are growing up, in school, or in our careers, we tend to gravitate towards those who are most like us and form groups. It makes sense then that when we start to think ahead to the future and retirement plans, we would do the same. The government thinks the same and has established 403(b) and 457(b) plans in addition to the standard 401k plan. Article outlines and compares these plans so that you can review what make each unique.

Source: Belfint.com , February 2015

Automatic Enrollment, Employer Match Rates and Employee Compensation in 401k Plans

Summary: This study examines the relationship between automatic enrollment and employee compensation. A significant negative correlation exists between the generosity of the employer match structure and the automatic enrollment provision. However, study finds no evidence that total compensation costs or DC costs differ between firms with and without automatic enrollment, and no evidence that DC costs crowd out other forms of compensation.

Source: Ssrn.com, February 2015

Failing 401k Sponsors Cling to Their Own Stock

Summary: Companies with high levels of their own stock in their retirement plans often fail to scale back their exposure even when they're heading into financial straits, according to a new study. The result, the study said, can lead to significant losses to participants' retirement savings, suggesting a need for limits on how much such stock should be held by a company plan.

Source: Benefitspro.com, February 2015

Will Employers Scrap DC Plans Because of the ORPP?

Summary: Sixty-six percent of Ontario companies may consider eliminating their existing DC or group registered retirement savings plan if the Ontario Retirement Pension Plan (ORPP) is introduced, according to a survey.

Source: Benefitscanada.com, February 2015

Top 1% of 401k Plans Hold Bulk of Assets

Summary: The top 1% of 401k plans owns a lopsided proportion of defined contribution retirement assets. Of the 540,000 active 401k plans as of the end of last year, 5,400, or 1% of sponsoring employers, held $3.06 trillion, or 71% of all assets, according to an analysis from Judy Diamond Associates.

Source: Thinkadvisor.com, February 2015

Recordkeeper Data Show Plan Participants' Commitment to Saving

Summary: ICI's latest study of retirement plan savers' actions shows Americans' continuing commitment to saving for retirement. The study includes data from January through September 2014 and is based on defined contribution plan recordkeeper data covering about 25 million participant accounts at employer-based DC plans.

Source: 401khelpcenter.com, February 2015

Nine in 10 Canadian DC Plan Sponsors Meet Their CAP Goals

Summary: Ninety-seven per cent of defined contribution plan sponsors and 90 per cent of registered retirement savings plan sponsors say their plans are meeting their original Capital Accumulation Plan (CAP) objectives, reveals the Great-West Life study, 2014 CAP Benchmark Report.

Source: 401khelpcenter.com, February 2015

GAO Issues 401k Cash-Out Report

Summary: The GAO report is generally critical of the current procedures for ‘forced’ 401k plan rollovers, generally transfers of balances of $5,000 or less to an IRA without the participant's consent. This article reviews the report and the GAO's recommendations.

Source: Octoberthree.com, February 2015

The Impact of Leakages on 401k/IRA Assets

Summary: As 401k's and IRAs have become the dominant source of retirement saving, the potential for pre-retirement withdrawals ("leakages") has grown. Estimates indicate that about 1.5 percent of assets leaks out of 401k's/IRAs each year, reducing wealth at retirement by about 25 percent. Given the size of leakages, it may be time to take steps to curtail them.

Source: Crr.bc.edu , February 2015

Infographic - Five Facts About The World's Largest Pension Funds

Summary: This interesting Towers Watson infographic illustrates the top five facts arising from the joint research of the largest global pension funds in 2013.

Source: Towerswatson.com, February 2015

Pension Trends: Is Phased Retirement an Option for Your Employees?

Summary: More employees are working in retirement and it's not just about the money. A 2014 survey of Municipal Retirees Organization Ontario (MROO) members revealed 28% of the 1,580 respondents have paid part-time post-retirement jobs. Even seniors with a solid pension aren't always ready to stop working.

Source: Benefitscanada.com, January 2015

U.S. Retirement Crisis Getting Worse According to Report

Summary: A Center for American Progress report says there are three clear trends in particular that illustrate how Americans are unprepared for retirement: a large percentage of Americans aren't saving for retirement, families that are saving often have insufficient assets, and households should increase their savings relative to prior generations but aren't doing so.

Source: Benefitscanada.com, January 2015

Individuals Approaching Retirement Have Options (Literally) to Secure a Comfortable Retirement

Summary: This paper examines the critical final five year period leading up to retirement and analyzes whether traditional asset allocation strategies effectively and consistently assist individuals in reaching their retirement income goals as they approach retirement. These traditional strategies are evaluated against alternative, option based investment strategies that assure a certain amount of retirement income, after adjusting for inflation, while maximizing stock participation with the remaining funds in the portfolio through the use of options.

Source: Ssrn.com, January 2015

DC Sponsors' Big Concern: Controlling Costs

Summary: In its forward-looking survey for 2015, Aon Hewitt found defined contribution plan sponsors are pretty preoccupied with controlling fees and expenses.

Source: Moneymanagementintelligence.com, January 2015

Average 401k Balance Hits Record

Summary: 401k balances reached a record high last year, thanks to a soaring stock market and larger contributions from workers participating in the savings plans.

Source: Cnn.com, January 2015

2014 Plansponsor DC Survey: Plan Benchmarking

Summary: The retirement plan industry's reinvigorated focus on fees has been a positive development overall for plan participants, leading to better prices and greater transparency. Article looks at the big picture in plan fee benchmarking.

Source: Plansponsor.com, January 2015

Debt Stands in the Way of Retirement Readiness

Summary: Eighty-one percent of working age people surveyed by HSBC Bank said saving for retirement is not their main priority. Other priorities included paying off debts (24%), saving for children's education (8%), saving for a rainy day (8%) or a vacation (6%). The survey found major life events have affected more than three-quarters (76%) of pre-retirees' retirement saving.

Source: Planadviser.com, January 2015

Custom Target-Date Funds Gaining in DC Plans

Summary: Defined contribution plans are sharply cutting back on target-date funds offered by recordkeepers and also expanding use of custom target-date funds, according to a survey by Callan Associates.

Source: Pionline.com, January 2015

Automatic Enrollment: The Power of the Default

Summary: Sponsors can use the inertia inherent in participant retirement savings decisions to improve retirement outcomes in defined contribution plans. This 16 page report provides updated statistics drawn from Vanguard recordkeeping data of the effects of automatic enrollment on participants' saving and investing behaviors.

Source: Vanguard.com , January 2015

Employers Offering More Retirement Planning Tools and Reducing DC Plan Costs

Summary: Aon Hewitt survey shows employers are offering more tools and resources to improve financial outcomes for workers. Companies are also taking steps to reduce defined contribution plan costs to improve returns.

Source: 401khelpcenter.com, January 2015

De-branding the 401k Fund Menu

Summary: DC plan sponsors face several problems when they make a significant commitment to a brand name fund, especially when it is the only investment option for a specific asset class. This raises the question: What is gained by having a brand name fund in the 401k plan's fund menu?

Source: Russell.com , January 2015

Finding "Best Fit" in a Retirement Plan Provider Through the RFP Process

Summary: Rather than relying upon purely quantitative comparisons of data from competing proposals, plan sponsors should base their final decision on a more balanced set of factors that can help them achieve "best fit" with a prospective provider. Article discusses three areas of fit that are essential to a successful sponsor-provider relationship.

Source: 401khelpcenter.com, January 2015

Change in Average 401k Account Balances

Summary: This is a one page chart of the change in average account balances (by age and tenure) from January 1, 2014 - January 1, 2015 among consistent 401k participants with account balances on December 31, 2013.

Source: Ebri.org , January 2015

Deciding What Is Reasonable: Assessing Fees Using Value and Outcomes

Summary: With greater transparency around fees, plan sponsors now have more information than ever before to evaluate the fees they are paying for plan services. However, many sponsors aren’t quite sure how to use and apply the large amounts of information provided by the DOL's 408(b)(2) fee disclosure regulations. Paper lays out a four-step process, developed by fiduciary expert Donald Trone, to make reasonably informed and knowledgeable assessments about fees.

Source: Tiaa-Cref.org, December 2014

New 401k Participants Rely on Target-Date Funds

Summary: The evolution of 401k plan designs has resulted in a significant increase in the use of balanced multi-asset-class funds (in particular, target-date funds) by recently hired employees, a December 2014 research report shows.

Source: Shrm.org, December 2014

Canadians Want to Pay Down Debt

Summary: A new poll show that retirement planning is declining in importance compared to more immediate financial concerns. Canadians nearing retirement age have significantly shifted their focus to reducing debt.

Source: Benefitscanada.com, December 2014

DC Participants Seek Certainty

Summary: The desire of plan sponsors and participants to increase the certainty of reaching retirement objectives increases the focus on retirement income as the expected destination; yet neither group is fully grasping the trade-offs between the expectation for performance/return and the probability of success. PIMCO's Philip Chao discusses the DC plan design process, suggesting that plan sponsors start with setting the plan's objective and defining how to measure success.

Source: Pimco.com , December 2014

Retirement Readiness: A Broader Perspective

Summary: This paper creates an awareness of significant obstacles that employees face as they enter retirement. Specifically, this paper highlights debt risk in retirement, cognitive risk in retirement, and healthcare issues in retirement.

Source: Multnomahgroup.com, December 2014

2015 Reporting and Disclosure Calendar for Benefit Plans

Summary: This detailed 27 page Reporting & Disclosure Calendar for Benefit Plans is intended to indicate general reporting and disclosure requirements applicable to pension and health and welfare benefit plans on an annual basis. It does not cover all special requirements that may apply in a particular year due to an extraordinary event (e.g. plan termination) or that may apply only to a particular class of participants (e.g. highly compensated employees or nonresident aliens).

Source: Sibson.com , December 2014

Teacher Retirement Plans: Case Studies Indicate Value of Pensions

Summary: This report examines the retirement benefit elections of teachers in two states when new teachers have a choice between a defined pension plan or a plan that combines a defined contribution individual account with a DB pension. The analysis finds that since 2008, teachers in both states show a preference for the stand-alone DB pension.

Source: Nirsonline.org , December 2014

One in Five Investors Have Tapped Into 401k Prematurely

Summary: The majority of nonretired investors in the U.S. say their employer offers a 401k plan, and of these, 89% say they participate in it. Yet 21% of those who participate in such a plan say they have either taken out a 401k loan or even taken an early withdrawal from the plan in the last five years.

Source: Gallup.com, December 2014

Greater Protections Needed for 401k Forced Transfers and Inactive Accounts

Summary: Millions of employees change jobs each year and some leave their savings in their former employers' 401k plans. If their accounts are small enough and they do not instruct the plan to do otherwise, plans can transfer their savings into an IRA without their consent. In this report, the GAO examines the implications for plan participants of being forced out of plans and into these IRAs.

Source: Gao.gov, December 2014

Countdown to a Better DC Plan

Summary: Citing results from Callan's annual DC Trends Survey, paper explores plan sponsor adoption of PPA provisions to see how they have benefited, where they have met challenges, and where they could do more. Organizes around seven takeaways to help sponsors better position their plans in 2015.

Source: Callan.com , December 2014

401k Plan Asset Allocation, Account Balances, and Loan Activity in 2013

Summary: This comprehensive 56 page report is an update of EBRI and ICI's ongoing research into 401k plan participants' activity through year-end 2013.The report is divided into four sections: the first describes the EBRI/ICI 401k database; the second presents a snapshot of participant account balances at year-end 2013; the third looks at participants' asset allocations, including analysis of 401k participants' use of target-date, or lifecycle, funds; and the fourth focuses on participants' 401k loan activity.

Source: Ebri.org , December 2014

Majority of New 401k Participants Rely on Balanced and Target-Date Funds, EBRI

Summary: The evolution of 401k plan designs has resulted in a significant increase in the use of balanced funds, including target-date funds, by recently hired 401k plan participants in 2013 compared with recently hired participants 15 years ago, according to a newly updated annual report by the Employee Benefit Research Institute (EBRI).

Source: Ebri.org , December 2014

Baby Boomers Are Revolutionizing Retirement, Are Employers Ready?

Summary: The nonprofit Transamerica Center for Retirement Studies just released a new report, Baby Boomer Workers are Revolutionizing Retirement: Are They and Their Employers Ready?, which examines the retirement vision among Baby Boomer workers (born between 1946 and 1964) and the level of involvement among employers to facilitate their transitioning into retirement. Report details included in article.

Source: 401khelpcenter.com, December 2014

Ten Tips for Retirement Plan Executives and Managers

Summary: This article examines ten proven actions that all executives can follow to significantly and quickly improve their organizations' ERISA-related risk management programs.

Source: Rolandcriss.com , December 2014

The Australian Retirement Income System: Comparisons With and Lessons for the United States

Summary: Paper briefly compare the Australian and US economies and demographics, and then describes the Australian arrangements and assess its econ efficiency and efficacy in delivering retirement support. Concludes by considering insights for the evolution of the US pension reform debate as demographic change unfolds.

Source: Pensionresearchcouncil.org, December 2014

ERISA Advisory Committee on Lifetime Plan Participation

Summary: The ERISA Advisory Council presented its recommendations on two retirement issues it studied in 2014: Facilitating Lifetime Plan Participation and Outsourcing Employee Benefit Plan Services. This article discusses their recommendations on "lifetime plan participation" and how they may play out in regulatory or sponsor initiatives.

Source: Octoberthree.com, December 2014

PSCA Releases Research on 403(b) Plans

Summary: Most not-for-profit organizations believe they have a responsibility to encourage their employees to save for retirement, but only 10.6 percent of those organizations are able to measure potential participant outcomes as part of their retirement plans, according to a new survey of 403(b) plan sponsors from the Plan Sponsor Council of America.

Source: 401khelpcenter.com, December 2014

For Retirement Preparation, Higher Ed Is at the Head of the Class

Summary: College faculty and staff are better prepared for retirement than the general population, according to a new TIAA-CREF survey. In addition to saving in their employer-sponsored retirement plan, 42 percent of higher education employees have saved in an IRA, compared to 34 percent of American employees overall. While 36 percent of college faculty and staff say they have met with a financial advisor, only 22 percent of the general population report the same.

Source: 401khelpcenter.com, December 2014

Changes to Plan Design Result in Better Outcomes and Increased Plan Participation

Summary: White paper from Prudential has found that changing a plan's design, including the addition of an in-plan guaranteed lifetime income solution, improved participation and contributions. According to the paper, plans can increase participation rates nearly 35 percent by making slight modifications to plan design, with the addition of a lifetime income solution and the use of auto enrollment and auto escalation.

Source: Prudential.com , December 2014

401k Plan Costs Decline As Indexing Becomes More Popular

Summary: Average asset-weighted total plan costs for 401k plans dropped to 39 basis points in 2012 vs. 49 basis points in 2009, according to a report released Monday. The decline in expenses, management fees, administrative fees, advice fees and other costs, was felt most strongly by the largest plans and the smallest plans, the report said. One possible contributor to lower costs is the growing popularity of index funds.

Source: Investmentnews.com (free registration may be required), December 2014

Plan Profile Series: A Close Look at 401k Plans

Summary: This 64 page BrightScope/ICI Defined Contribution Plan Profile focuses primarily on private-sector 401k plans. It analyzes more than 35,000 DC plans that have between four and 100 investment options. This report focuses on plan year 2012, presenting data on how 401k plans are structured, the types of service providers that plan sponsors engage with, and the fees and expenses paid by 401k participants and plan sponsors for these services.

Source: Ici.org , December 2014

What Do Jelly Beans and the Stock Market Have in Common?

Summary: This white paper reveals the results of an experiment on how jelly beans and the stock market have more in common than you may think. Hint, if you believe that the market has it wrong, you are pitting your knowledge or hunches against the combined knowledge of millions of other market participants.

Source: Greenspringwealth.com , December 2014

Fee Compression Slowing, Fee Structures Changing

Summary: Asset levels continue to peak in DC plans, driving fees tied to asset levels higher in the investment management as well as recordkeeping and administration marketplaces. However, after three straight years of material compression in recordkeeping and administration expenses, the market may have found equilibrium.

Source: Multnomahgroup.com, December 2014

Evaluating Plan Expenses: A Road Map of Possible Routes and Potholes to Avoid!

Summary: It is important for plan fiduciaries to understand that while certain plan expenses can be paid out of plan assets, such expenses must be reasonable. A plan fiduciary must also evaluate and defray investment fees and expenses as part of that process because such costs could have a significant impact on plan investment returns. Therefore, to fully satisfy his/her fiduciary obligations with respect to a plan, each fiduciary should understand how to evaluate the myriad of plan fees, including unraveling those associated with various plan investments and plan services. This article provides guidance.

Source: Drinkerbiddle.com , December 2014

Hiring a Quality Auditor to Perform Your Employee Benefit Plan Audit

Summary: The AICPA Employee Benefit Plan Audit Quality Center prepared this 24 page advisory to provide plan sponsors, administrators, and trustees with an understanding of the importance of hiring a quality auditor to perform their employee benefit plan financial statement audit, and information to help select a quality auditor.

Source: Aicpa.org , December 2014

Roadmap to a Successful Tiered Investment Menu Design and Communication Program

Summary: Plan fiduciaries have an important task of managing fiduciary responsibility and, at the same time, designing an investment menu that is easily understood by participants and addresses the needs of a diverse participant base. Thoughtful investment design can help lead to better participant outcomes. This paper suggests that a first step is to shift the focus of menu design to a tiered structure, based on a plan's unique needs and the level of participant involvement.

Source: Manning-napier.com , December 2014

A Road Less Traveled: Including Alternative Investments in a 401k Plan

Summary: There has been a steadily increasing acceptance of alternative investments as part of a retirement plan's investment portfolio, including in 401k plans. Their appeal lies in their unique asset classes and investment strategies which offer potentially higher returns, diversification, or downside risk protection. This article by Marcia Wagner discusses some of the issues raised by including alternative investments in 401k plan investment menus.

Source: Wagnerlawgroup.com , November 2014

GAO Report on Multimillion Dollar IRAs

Summary: The GAO Recommends that Congress consider revisiting its legislative vision for the use of IRAs. GAO makes five recommendations to IRS, including approving plans to fully compile and digitize new data on nonpublicly traded IRA assets and seeking to extend the statute of limitations for IRA noncompliance. IRS generally agreed with GAO's recommendations.

Source: Gao.gov, November 2014

New Research on Women and Retirement

Summary: Retirement savings shortfalls are imminent unless women can start saving more, according to a new global study by Transamerica Center for Retirement Studies. The report on women in retirement polled 16,000 individuals in 15 countries in the Americas, Europe and Asia. The report cites ways that policymakers and employers can help women and men achieve a better retirement.

Source: Transamericacenter.org , November 2014

Using DC Plans to Improve Retirement Readiness

Summary: The 2014 DC Plan Sponsor Survey Report includes responses from 457 large and midsize U.S. companies that sponsor a 401k or 403(b) plan. It summarizes the design, investments, communication approaches and fee practices in their programs.

Source: Towerswatson.co, November 2014

Are Retirees Falling Short? Reconciling the Conflicting Evidence

Summary: This paper examines conflicting assessments of whether people will have adequate retirement income to maintain their pre-retirement standard of living. Paper covers key findings and public policy implications.

Source: Crr.bc.edu, November 2014

Workers Rate Benefits Important, Show High Take-Up Rates

Summary: he vast majority of workers say their benefits package is important to their decision to take a job, as supported by the high take-up rates when benefits are offered, according to a new report by the nonpartisan Employee Benefit Research Institute.

Source: Ebri.org , November 2014

A Fiduciary Tune-Up

Summary: This 65 page paper by attorney John L. Utz, of Utz & Lattan, was presented at the recent 25th Annual SW Benefits Compliance Conference. The paper reviews a number of topics including: Does Dudenhoeffer change who should serve on a fiduciary committee, making sure investment consultants are subject to fiduciary standards, and IRS emphasis on internal controls and what it means for fiduciaries.

Source: Utzlattan.com , November 2014

Impending Changes to Private Retirement Plans

Summary: The retirement landscape in America is shifting. The private pension system is under pressure and may be significantly changed through tax reform or more direct efforts to alter the character of the system to a more centralized model. In this eight page article, Marcia Wagner reviews many of the ways policymakers are working to transform the current system.

Source: Wagnerlawgroup.com , November 2014

The Middle-Income Boomer Retirement Gap: Savings, Education and Advice

Summary: The challenges of saving, investing and managing assets through retirement are becoming more complex. Navigating this world requires an increased level of knowledge, training and experience with financial matters and an ability to draw on trusted resources for information and guidance. This study explores how middle-income Boomers are saving for retirement, and the extent they use financial professionals for retirement advice.

Source: Centerforasecureretirement.com , November 2014

Small Business Study Reveals Disconnect Between Retirement Preparedness and Aspirations

Summary: The Small Business Owners Retirement Readiness Study shines a spotlight on small business owners' perspective on retirement and provides a better understanding of their retirement needs and aspirations. Compared to the 2011 study, SBOs are feeling more confident, 52 percent of SBOs state they are either "very" or "fairly" well prepared for retirement, and 56 percent have a clear vision of how they will spend their time once they are no longer involved with the business.

Source: 401khelpcenter.com, November 2014

Survey Reveals That, Despite Challenges, More Women Looking Forward to Retirement

Summary: Despite starting with less savings at retirement and needing to fund more years in retirement, a new survey from Financial Engines found that women are surprisingly optimistic about their golden years. Fifty-one percent of women surveyed said that they are looking forward to retirement, compared to just 41 percent of men.

Source: 401khelpcenter.com, November 2014

Special Report: Fewer Firms Servicing the 401k Field

Summary: Over the past year, competition for 401k providers has increased and the competition has never been fiercer. Consolidation has picked up and there may only be five or six providers left in a few years according to some sources. In 2007, Callan data showed 38 major players offering recordkeeping services. Today, only 29 are still in the market.

Source: Workforce.com, November 2014

Improving Asset Allocation With Factor Analysis

Summary: This NEPC research paper recommends using macroeconomic risk factor analysis to provide new insights into portfolio management. A multi-disciplinary and holistic approach that includes factor analysis can strengthen the asset allocation decision-making process.

Source: Nepc.com , November 2014

Defined Contribution Plan Participants' Activities, First Half 2014

Summary: To measure participant-directed changes in DC plans, ICI has been tracking participant activity through recordkeeper surveys since 2008. This report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering about 25 million employer-based DC retirement plan participant accounts as of June 2014. The broad scope of the recordkeeper survey provides valuable insights about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans.

Source: Ici.org , November 2014

Recordkeeper Data Show Retirement Plan Participants' Commitment to Saving

Summary: ICI's latest study of retirement plan savers' actions, based on defined contribution plan recordkeeper data covering about 25 million employer-based DC plan participant accounts, shows Americans' continuing commitment to saving for retirement.

Source: 401khelpcenter.com, November 2014

Better Financial Security in Retirement? Realizing the Promise of Longevity Annuities

Summary: This paper highlights how recent trends have hastened a need for products that offer protection against longevity risk, considers whether longevity annuities can improve retirement security, then highlights barriers to more widespread take-up of longevity annuities, and offer a menu of potential reforms to bolster this fledgling market.

Source: Brookings.edu , November 2014

A Path to Better Retirement Outcomes: Allocating Real Estate Assets to Retirement Portfolios

Summary: DCREC released this white paper on allocating real estate assets to retirement portfolios. The paper found that by adding as little as 10% allocation to listed and unlisted real estate in a DC plan may improve retirement outcomes.

Source: Dcrec.org , November 2014

Fidelity Reports Average 401k Balance Rise; Contributions Up

Summary: Fidelity Investments discloses that quarter-end 401k balance increased nearly six percent over the same period last year and employee contributions into 401k accounts continued to trend upward, reaching record levels.

Source: 401khelpcenter.com, November 2014

401k Participation Rate Varies Widely by State, Delaware Tops

Summary: Judy Diamond Associates released an analysis of 401k participation rates by states, revealing wide disparities in states' performance on this crucial measure of retirement preparedness. Delaware had the highest participation rate at 85.8%. Nevada had the lowest participation rate at 53.0%.

Source: 401khelpcenter.com, November 2014

Infographic: Retirement Income Then and Now

Summary: The Investment Company Institute recently examined retirees' sources of income in 1975 and 2013. Then and now, Social Security accounted for more than half of a retiree's income stream.

Source: Aarp.org, November 2014

Top 20 International Stock Funds Held in DC Marketplace, BrightScope

Summary: BrightScope announced the ranking of the Top 20 International Stock Funds in the defined contribution industry based on total distribution.

Source: 401khelpcenter.com, October 2014

What Plan Sponsors Should Know About Automatic Rollovers and Where to Find Help

Summary: Plan sponsors have long wondered what best practices are in handling terminated, missing and lost plan participants. One option for DC sponsors for those with terminated participants that have account balances of $5,000 or less is to automatically roll such participants out of the plan and into a safe harbor IRA. However, for plan sponsors, the selection of a provider for such a service requires the proper due diligence and can be challenging.

Source: Mtrustcompany.com , October 2014

How Big Is the Problem? The High Cost of Accounts Left Behind

Summary: On the surface, the expense of administering accounts with small balances in a retirement plan may seem relatively immaterial and inexpensive. This whitepaper helps quantify the costs of maintaining small balance accounts for former employees. It offer some solutions for mitigating these costs as well as minimizing the fiduciary responsibilities created by these accounts.

Source: Mtrustcompany.com , October 2014

401k Wellness Scorecard

Summary: This scorecard monitors plan participants' behavior and sponsors' adoption of new plan design features and services in Bank of America Merrill Lynch 401k business. This report indicates that employees recognize the value of their retirement plans, and plan sponsors are interested in a plan design focused on supporting employees' efforts to save for the future.

Source: Baml.com , October 2014

$460 Billion in DC Plan Assets in Search of a New Home

Summary: After years of extremely low turnover, retirement plan sponsors are giving serious consideration to altering their 401k plan recordkeeping relationships. With the current US-based 401k retirement plan assets estimated at $4.4 trillion assets controlled by plan sponsors planning a move represents a $460 billion opportunity for providers that can effectively differentiate themselves in an increasingly commoditized marketplace.

Source: 401khelpcenter.com, October 2014

Retirement Plan Participation Starts Ticking Up Again

Summary: The percentage of workers who participate in an employment-based retirement plan increased in 2013 for the first time since 2010 -- both among all workers and private-sector workers, according to a new report by the nonpartisan Employee Benefit Research Institute. Specifically, the percentage of all workers participating in an employment-based retirement plan increased to 40.8 percent in 2013, up from 39.7 percent in 2010.

Source: Ebri.org , October 2014*

Employment-Based Retirement Plan Participation: Geographic Differences and Trends

Summary: This paper examines the level of participation by workers in public- and private-sector, employment-based pension or retirement plans. It begins with an overview of retirement plan types and participation in these types of plans and describes the data used in this study, along with their relative strengths and weaknesses. It then explores retirement plan participation across U.S. geographical regions.

Source: Ebri.org, October 2014

Frequently Asked Questions About 401k Plans

Summary: The Investment Company Institute has updated their FAQ on 401k retirement plans. Some of the questions covered are: How large is the 401k market? How many Americans have 401ks? What is the average 401k plan account balance? What role do mutual funds play in 401k plan investing?

Source: Ici.org, October 2014

Preliminary Information on IRA Balances Accumulated as of 2011

Summary: In 2014, the U.S. federal government will forgo an estimated $17.5 billion in tax revenue from IRAs. Congress limited annual contributions to IRAs to prevent the tax-favored accumulation of unduly large balances, but concerns have been raised that tax benefits accrue primarily for higher -income individuals. This GAO report provides observations based on ongoing work on information on IRA balances in terms of reported fair market value aggregated by taxpayers.

Source: Gao.gov, October 2014

State of U.S. Employee Retirement Preparedness

Summary: Financial Finesse has released its annual research report on the state of U.S. employee retirement preparedness for 2014. This 15 page report finds employers are taking the right steps to improve retirement plan preparedness, but economic and market uncertainty may be creeping into the national psyche.

Source: Financialfinesse.com , October 2014

Saving for Retirement Not Happening for a Third of Middle Class

Summary: Saving for retirement is a formidable challenge for middle-class Americans, with 34% not currently contributing anything to a 401k, an IRA or other retirement savings vehicle, according to the fifth annual Wells Fargo Middle-Class Retirement study. Forty-one percent of middle-class Americans between the ages of 50 and 59 are not currently saving for retirement. Nearly a third (31%) of all respondents say they will not have enough money to "survive" on in retirement, and this increases to nearly half (48%) of middle-class Americans in their 50s.

Source: 401khelpcenter.com, October 2014

A Look at Private-Sector Retirement Plan Income After ERISA

Summary: The importance of private-sector DB pensions in providing retirement income is often exaggerated. The time before the emergence of 401k plans in 1981 has been characterized by many as the golden age of the golden watch: a time when most private-sector workers retired with a monthly pension check that replaced a significant portion of their pre-retirement income. Against this standard, 401k plans are judged to be falling short. The facts support a different narrative.

Source: Ici.org , October 2014

Nearly Half of Americans Surveyed Think They Pay Zero Retirement Investment Fees

Summary: A new survey commissioned by retirement investment advisory firm Rebalance IRA finds that many full-time employed baby boomers do not have a clear understanding of the fees they are paying in their retirement accounts. When asked what they pay in retirement account fees, 46 percent believed that they do not pay any fees at all.

Source: 401khelpcenter.com, October 2014

Five Ways Employers Can Improve Their 401ks

Summary: 401k's and similar plans play a vital role in the American retirement system by helping workers save and invest for retirement. Yet, workers need to save more to achieve a financially secure retirement and a few plan design changes could help them do so. Here are five suggestions.

Source: 401khelpcenter.com, October 2014

Farewell to Company Stock, or Not?

Summary: This article deals with DC litigation around company stock and the potential effect of the recent Supreme Court decision in Fifth Third Bancorp v. Dudenhoefferon. It suggests that the risk to plan sponsors of offering company stock may be slightly higher given the Court's rejection of the presumption of prudence and explains that simply "hardwiring" company stock into a DC plan document and then following the document without more process will not be sufficient.

Source: Pimco.com , October 2014

Canada's Retirement Income System Ranks High

Summary: Canada's retirement income system maintained its 'B' grade in the 2014 edition of the Melbourne Mercer Global Pension Index (MMGPI), reinforcing its position as one of the leading retirement income systems in the world. While Canada's ranking fell from sixth to seventh after the addition of five new countries, Canada's overall score in the index increased slightly from 67.9 to 69.1.

Source: Benefitscanada.com, October 2014

Are Employees Getting What They Need From Their Workplace Benefits?

Summary: Seventy-four percent of middle-income employees derive the majority of their financial security from the benefits they receive at the workplace, according to the 2014 Guardian Workplace Benefits StudySM. Despite the importance of benefits, only one in four employees finds their company's communications helpful in choosing what's right for them.

Source: 401khelpcenter.com, October 2014

NEPC 2014 Defined Contribution Plan & Fee Survey: What Plan Sponsors Are Doing Now

Summary: NEPC's Defined Contribution practice group conducts an annual Defined Contribution Plan and Fee Survey to help plan sponsors understand and benchmark the fees, pricing and structure of their defined contribution plans. In its ninth year now, this 2014 Survey includes data from 113 plans, encompassing over 1.4 million plan participants. This is a five page summary.

Source: Nepc.com , October 2014

ICI Study Examines Who Gets Retirement Plans

Summary: An updated study released today by the Investment Company Institute finds that most workers who are likely to have the ability to save and to be focused primarily on saving for retirement have access to an employer-provided retirement plan. In Who Gets Retirement Plans and Why, 2013, ICI uses the most recent data on pension coverage to update its analysis of the employee characteristics that make some employers more likely to offer, and some workers more likely to seek, compensation packages that include retirement benefits.

Source: Ici.org, October 2014

Which Employees Are Delaying Retirement and Why?

Summary: Retirement patterns are changing in the U.S. and in many other countries as well. During the mid-to-late 20th century, labor force participation rates dropped for older workers and rose for younger ones. These trends have recently reversed, especially among men and younger workers. This article reviews these shifts.

Source: Towerswatson.com, September 2014

Creating Sustainable Retirement Income in 401k plans Using Managed Risk Funds

Summary: This white paper discusses how 401k participants are faced with a serious risk: will their retirement account (coupled with Social Security and personal savings) provide them with adequate income to last through retirement? Authors discusses how managed risk funds help mitigate the volatility risk without dampening the higher return potential of equities.

Source: Drinkerbiddle.com , September 2014

Retirement Savings and Tax Reform White Paper

Summary: In this white paper, the American Council of Life Insurers contends that Congress should do no harm to the existing retirement savings system in the context of tax reform. Further, policy-makers should avoid disrupting a system that helps millions of Americans save for retirement. Instead, Congress should focus on enhancing the system so that it reaches more Americans.

Source: Acli.com , September 2014

Designing Balanced DC Menus: Considering Capital Preservation Strategies

Summary: DC plan sponsors face a challenge in selecting capital preservation strategies, which seek to preserve invested principal. Recent money market fund reforms will likely stress yields, which already are negative in real terms, and while many stable value strategies historically have provided attractive returns, not all plan sponsors can avail themselves of this option. Paper suggests that a customized and actively managed low-risk bond strategy may offer an attractive capital preservation-focused solution.

Source: Pimco.com, September 2014

Creating Sustainable Retirement Income in 401k Plans Using Managed Risk Funds

Summary: One approach for plan committees seeking ways to help their participants accumulate adequate sustainable retirement income is to offer managed risk funds as a designated investment alternative. Such funds are designed to permit participants to maintain exposure to equity investments while also stabilizing volatility and reducing the potentially devastating effects of sequence-of-returns risk.

Source: Milliman.com , September 2014

Make Your Retirement Plan an Anti-Fraud Control

Summary: According to the most recent Association of Certified Fraud Examiners report, fraud can represent approximately five percent of a company revenue annually. Fraud could be a significant charge to the bottom line. This video offers an idea on how your retirement plan can be an anti-fraud control.

Source: Erisasunscreen.com, September 2014

 


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