Headlines about "Ret plan investments - misc"
Gathered from the web by the editors at BenefitsLink.com.
Average 401(k) Balance 62% Above 2009, Fidelity Says
"The average account balance in the U.S. was $74,600 compared with $46,200 at the end of the first quarter of 2009, according to a report released [by Fidelity Investments].... The stock market recovery and renewed commitment to saving has driven the increase[.]" (Bloomberg)
[Opinion] Text of Morningstar Comment Letter to SEC on Need for More Disclosure to Investors in Target-Date Funds
"Target-date funds are quickly becoming Americans' primary -- if not only -- retirement-savings tool, so it's critical that investors understand how these dynamic funds are run. Also, plan sponsors, researchers, and fiduciaries need more data to evaluate target-date series side by side. Morningstar's specific suggestions for how to improve the funds' disclosure follows in the text of the letter." (Morningstar)
Florida Agency Says Legislators Should Consider Increase in Required Employee Contributions to Pension Fund
"The staff of the [State Board of Administration], which manages investments for the $121.6 billion [Florida Retirement System (FRS)] fund, advised the House and Senate leadership of potential problems this week. In a required annual review of the FRS actuarial valuation, the financial analysts also said the state could consider cutting the fund's 7.75 percent expected earnings target by a half-percent." (The Florida Current)
DOL FAQs Address Participant Fee Disclosure Rules as Applied to Brokerage Windows, Calculation of Total Annual Operating Expense Ratio
"While brokerage windows, self-directed brokerage accounts and other similar plan arrangements (for simplicity, referred to here after as 'brokerage windows') are not considered designated investment alternatives and are therefore excluded from the annual investment disclosures, brokerage windows must still make certain annual plan-related disclosures to each participant eligible to use the window, whether or not he or she chooses to use the window. A plan administrator offering a brokerage window must furnish a general description of the brokerage window and any fees or expenses that may be charged against an individual participant's account. The quarterly disclosure must reflect the dollar amount of fees and expenses that were charged against that individual participant's account over the preceding quarter[.]" (SunGard Relius)
The Implications of SEC's Capital Buffer Proposals for Money Market Funds (PDF)
"Given the wide range of approaches that SEC requirements could take, this analysis considers several variations on the capital buffer idea, including requiring fund advisers to commit capital, requiring funds to raise capital in the market, or having funds build a capital buffer inside funds from fund income." (Investment Company Institute)
DOL Alleges Idaho Plan Administrator Misused Retirement Funds
"[DOL] has filed a complaint in the U.S. District Court for the District of Idaho against Matthew D. Hutcheson alleging that he violated [ERISA]. The complaint alleges that, toward the end of 2010, Hutcheson used more than $3.2 million representing the retirement plan savings of workers from multiple employers for his own personal expenses and in an attempt to purchase an interest in the Tamarack Resort -- a failed ski and golf resort in Idaho. [The DOL alleges that the resulting] prohibited transaction has left affected retirement plans without sufficient funds to pay participants all the benefits owed to them." (Employee Benefits Security Administration)
Is Your Target-Date Fund's Glide Path Unstable?
"[A] little-recognized aspect of target-date funds is their glide paths -- the way an investor's asset allocation changes over time -- may change. This is not the expected change in allocations from year to year as stocks decline and bonds increase; rather it's when the entire glide path itself shifts up or down, so an investor who is 25 years old today does not have the same stock allocation as a 25 year old did five years ago. Researchers ... identified this phenomenon and assigned a metric to it, called the Glide Path Stability Score[.]" (MorningstarAdvisor)
New York City and State Pension Fund Chiefs Sing Praises of DB Plans and Offer Reforms
"[The chief of the New York City funds], backed by New York City Mayor Michael Bloomberg, advocates an independent investment board composed of representatives of the mayor, comptroller and unions that would set pension strategy and hire managers for all five city pension funds. Additionally, the proposal calls for an independent Bureau of Asset Management headed by a chief investment officer who only answers to the investment board and not directly to any elected official. [T]he combined board and CIO proposal would lower costs of the five pension funds by $30 billion over 30 years without reducing benefits." (Pensions & Investments; free registration required)
[Guidance Overview] Eleventh Circuit Becomes Latest to Adopt Rebuttable Presumption That Fiduciaries Act Prudently by Investing in Employer Stock
"[This] decision is an adaptation of the presumption of prudence first announced in Moench v. Robertson, ... which is commonly referred to as the 'Moench presumption.' ... [but the Eleventh Circuit here] determined that the Moench presumption was more appropriately viewed as a standard of review rather than an evidentiary presumption. ... [A]ffirming the application of the presumption at the pleading stage is in marked contrast to a recent Sixth Circuit decision to the contrary in Pfeil v. State Bank ... The resolution of this circuit split is a developing issue in ERISA litigation, and it is likely to have a significant impact on the viability of ERISA stock drop law suits going forward. It may also eventually lead the United States Supreme Court to consider the application of the Moench presumption." (Jenner & Block)
The Case for Indexing as an Investment Strategy vs. 'Active' Investment Management
"This ... research paper explores both the theory behind indexing as an investment strategy and the evidence to support its use in investor portfolios. The research compares actively managed funds with unmanaged benchmarks weighted by market capitalization. It shows that the average U.S.-domiciled actively managed fund has underperformed a style benchmark with greater volatility over long time periods. The paper also finds that reported performance statistics can change markedly once survivorship bias is accounted for, and that persistence among past winners is no more predictable than the flip of a coin." (Vanguard)
Actuarial Techniques to Manage Pension Risk (PDF)
Slides used in a presentation by a prominent actuarial firm with a large public plan practice, from the 2010 National Conference on Public Employees Retirement Systems. (Gabriel Roeder Smith & Company)
2012 Industry Survey of Target Date Funds (PDF)
"Flows into target-date funds continued to cool off in 2011, though they remain one of the most consistent sources of new assets in the industry. While net assets rose only 11% to $378.5 billion in 2011, compared with a year-overyear rise of 33% in 2010, much of that difference can be attributed to 2010's superior market performance." (Morningstar)
Indexed Target Date Funds Hitting the Mark with Plan Sponsors
"[A]ssets are pouring into passive series at nearly twice the rate of their actively managed cousins. Last year, passive target date funds grew by 19%, while the active series grew 11%. There are several factors behind that rising interest in these funds. 'Plan sponsors are looking for different options, particularly fund lineups with lower tracking error and less volatility compared with actively managed funds,'.... The cost equation is another motivation as index-based offerings have lower costs and fees continue to exert competitive pressure in the target date fund industry[.]" (Investment News)
[Guidance Overview] The Final 408(b)(2) Regulation: Impact on Investment Managers (PDF)
"The new disclosure rules apply to any discretionary asset manager for an ERISA-covered retirement plan who reasonably expects to receive $1,000 or more of direct or indirect compensation in connection with its services to a plan.... Discretionary managers include those hired directly by the plan to manage all or some of its assets, and also the fiduciary managers of 'plan asset vehicles' -- investments that are themselves subject to ERISA, and in which a plan invests. Such investments include collective investment funds or trusts offered by banks, the separate accounts of insurance companies or certain other investment vehicles (e.g., hedge funds) if more than 25% of the funds being managed come from ERISA plans and other 'benefit plan investors.'" (Drinker Biddle)
Funded Status of U.S. Pensions Declines to 76.3 Percent in April
"The drop was due to a 4.5 percent rise in liabilities, resulting from falling interest rates, and a decline in the equity markets, according to the BNY Mellon Pension Summary Report for April 2012. BNY Mellon attributed the increase in liabilities to the 29-basis-point drop in the Aa corporate discount rate to 4.29 percent. The decline in the equity markets was the primary reason for the 0.1 percent drop in plan assets during the month, BNY Mellon said." (BNY Mellon)
Investment Advisers Often Tell Customers What They Want to Hear, Tout Higher-Fee Products, Finance Professors Conclude
Professor Mullainathan (Harvard) is the Assistant Director for Research at the Treasury Department's Consumer Financial Protection Bureau. Excerpt: "Do financial advisers undo or reinforce the behavioral biases and misconceptions of their clients? [This study uses] an audit methodology where trained auditors meet with financial advisers and present different types of portfolios. These portfolios reflect either biases that are in line with the financial interests of the advisers (e.g., returns-chasing portfolio) or run counter to their interests (e.g., a portfolio with company stock or very low-fee index funds). [The authors] document that advisers fail to de-bias their clients and often reinforce biases that are in their interests. Advisers encourage returns-chasing behavior and push for actively managed funds that have higher fees, even if the client starts with a well-diversified, low-fee portfolio." (Sendhil Mullainathan, Markus Noeth and Antoinette Schoar via National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full text)
'Institutionalizing' DC Plans: Reasons Why and Methods How (PDF)
"Using DB plans as the institutional model for retirement, institutionalization of DC plans can encompass a broad spectrum of practices, including: Managing toward a financial target (e.g., income replacement percentage); Recognizing the role of funding (in DC plans, funding equates to contribution levels) in achieving the financial target; Use of institutional investment vehicles that enable scale pricing (separate accounts, collective trusts); Improving diversification by offering exposure to alternative asset classes; Managing risk -- specifically risk to achieve an income target through the DC account [and more]." (Defined Contribution Institutional Investment Association)
Avoiding Surprises in Pension Contribution Liability: How Public Employers Can Anticipate and Evaluate 'Pension Risk' (PDF)
"The most significant risks include investment, inflation, and longevity risk. Left unmanaged, adverse experience from any of these can cause the retirement system to drift into a costly and perhaps unsustainable position. Certain circumstances may increase the likelihood that this may occur, including: Significant investment losses; Volatility in contribution rates; and Contribution levels that are inadequate when compared to the level of benefits promised to members." (Gabriel Roeder)
[Guidance Overview] Does Your 401(k) Plan Have an Investment Policy Statement and Do Your Fiduciaries Follow It?
"There is an important lesson in [Tussey v. ABB. Inc.]: it can be very expensive to depart from your investment policy. [The authors] find that many employers adopt 'canned' investment policies that they received from their outside service provider without much explanation or analysis. The best defense against the kind of award won by the plaintiffs is for investment fiduciaries to make sure that they have read and understand the [investment policy statement, or 'IPS'] and determined whether it is appropriate for them, and, where appropriate, made any changes to customize a canned IPS." (Osler)
[Guidance Overview] Former Trustee Liable for over $4 Million for Breach of Fiduciary Duty
"The [Court of Appeals for the Third Circuit] said that [the retirement plan's trustee] breached his ERISA-imposed duty and caused a loss to the Plan. He fraudulently reported an inaccurate account balance ..., improperly distributed the Plan's assets to himself, and otherwise used the assets for his personal benefit. These fraudulent actions resulted in a loss when the Plan participants received an amount smaller than their proportionate shares in the [trust fund]." (ERISA Lawyer Blog)
First Quarter 2012 Pension Plan Funded Status Experience (PDF)
"During [this period], the funded status of the model pension plan examined ... improved by five percentage points: from 74 percent to 79 percent. This improvement was driven by asset growth of 7 percent." (Sibson Consulting)
New Trade Association for Retirement Plan Advisors Grows Much More Than Expected
"The National Association of Plan Advisors (NAPA) -- an individual membership organization created by and for retirement plan advisors ... announced it has exceeded its first-year membership goal just six months after its launch." (ASPPA)
[Opinion] Text of Comments by ASPPA on Proposed Modifications to Minimum Present Value Regs for Partial Annuity Distribution Options under DB Plans
"ASPPA COPA applauds the addition of specific rules for dealing with bifurcated benefit distributions. However, final regulations should acknowledge that plan sponsors and plan administrators have had to develop plan language and administrative procedures to address bifurcated benefits in light of the minimum present value requirements ever since those specific requirements were added to the Code in 1984, and the absence of specific formal guidance has led to divergent practices." (ASPPA)
Pension Plan Underfunding Rises Slightly During April
"The decrease in funded status in April [and commensurate increase in the level of underfunding] was attributable to an increase in liabilities due to declining interest rates. Interest rates on high quality corporate bonds, which are used to measure the pension liability, fell 22-32 basis points during the month, as measured by the Mercer Pension Discount Yield Curve. Assets were relatively flat during the month as US equity markets were down about 0.6 percent for the month, offset by positive returns for fixed income investments." (Mercer)
Managing the Volatility of Defined Benefit Plan Funded Ratios and Contributions
"[I]t requires an in-depth analysis of asset allocation and the role it plays in creating risk within a plan. A first step to a finance team's managing against unexpected volatility is understanding the unique circumstances of the plan by identifying several key characteristics: current asset allocation, liability profile, funded ratio, contribution policy, status of the plan, the plan's 'end game,' and, most importantly, the plan sponsor's risk tolerance." (CFO)
Risks and Rewards of Opening a Lump-Sum Distribution Option to Already-Terminated Pension Plan Participants
"Before 2012, a lump-sum window generally would have carried with it considerable incremental cost due to the legally required basis for calculating lump-sum payments, which included Treasury bond rates as well as corporate bond rates. Beginning with the 2012 plan year, however, the amount of a lump-sum payment is based solely on corporate bond rates.. . . This [article] discusses the role that a lump-sum window could play in DB plan de-risking by making the financial footprint of the plan smaller." (Sibson Consulting)
A Survey of Current Recordkeeping Practices for 'ERISA Budget Accounts' (PDF)
At page 6 of this 20-page document. "More recently, the broader marketplace began forcing recordkeepers to offer access to non-proprietary investments. These funds enter agreements with recordkeepers to share revenue in the form of sub-transfer agent (Sub-TA) fees, and as part of that process, recordkeepers began agreeing to cap their annual fee on plans at a certain level. As revenue was received, either all, or a portion of the amount in excess of the cap was in turn set aside in what many call an 'ERISA Budget Account.'" (CAPTRUST)
Stockton, California Bankruptcy Would Public Employee Pensions and Bondholders Nationwide
"Under a new California law governing municipal distress, Stockton has entered into a mandated mediation period before it can file for bankruptcy under Chapter 9.... Stockton faces an avalanche of obligations that it cannot meet. Foremost among them are contributions to public employee pensions, as well as debt service on bonds earlier sold to fund its pension contributions." (Governing)
[Opinion] Text of ICI Comments on Proposed IRS Regs Under Foreign Account Tax Compliance Act (PDF)
"[ICI suggests an alternative approach for improving further on the many positive changes made by the Proposed Regulations in the treatment of retirement accounts. Specifically, the Final Regulations should state that, except to the extent provided by the Secretary, any retirement plan organized under a country's laws for the principal purpose of saving for retirement will be eligible for treatment as a certified deemed compliant FFI, will be treated as an exempt beneficial owner, and will be excluded from the definition of financial account[.]" (Investment Company Institute)
The Fiduciary Assessment of an Investment Advisor (PDF)
"An assessment should begin with a background check, including civil lawsuit databases and a review of public information such as the AdvisorCheck from the SEC and the Financial Industry Regulatory Authority's (FINRA) BrokerCheck if applicable. Since the assessment is likely to be used to increase client trust, the background check is a necessary starting point." (ASPPA)
Text of U.S. Census Bureau Summary Report on State and Locally Administered Pensions, 2010 (PDF)
"This survey covers the following retirement system activities: revenues by state (earnings on investments, employee contributions, government contributions); expenditures by state (benefits, withdrawals, other payments); cash and investment holdings by state (governmental securities, corporate stocks and bonds, foreign and international securities, etc.); and membership information by state (number of retirement systems, total members, beneficiaries receiving periodic payments)." (U.S. Census Bureau)
Ten Things Plan Fiduciaries Should Avoid (PDF)
"In recent court case, Tussey v. ABB, Inc., ... the judge found that the plan fiduciaries breached their fiduciary duties and were jointly and severally liable for $13.4 million lost by the Plan due to failure to monitor recordkeeping fees and negotiate rebates and $21.8 million lost by Plan due to mapping one investment fund to another. In addition, the service provider was held jointly and severally liable for $1.7 million for lost float income. Lessons learned from this case are at least 10 things Plan fiduciaries should avoid[.]" (ERISAdiagnostics, Inc.)
Federal Reserve Bank Is No Friend of Defined Benefit Retirement Plans
"In the past five years, the sponsors of the largest plans have poured $164.4 billion into the plans, and yet their aggregate funding shortfall has increased by $368 billion to $258.3 billion and their average funded status has fallen to 81.6% from 108.6%.... Certainly, the stock market plunge in 2008 and 2009 is partly to blame, although the losses have largely been recovered. The larger culprit is the Federal Reserve and its low interest rate policy, which has driven down the discount rate companies must use in valuing their future liabilities, and thus has increased the current value of those liabilities despite substantial corporate contributions." (Pensions & Investments)
ERISA Section 408(b)(2) Is about Plan Sponsors' Continued Fiduciary Obligations
"Financial advisers to retirement plans need to recalibrate their thinking about Section 408(b)(2) of [ERISA]. Rather than focusing on what it means for their own disclosure obligations, they need to remember that the law is truly about the due-diligence obligations of plan sponsors." (Investment News)
Would Tax Increases at the Top Affect Savings and Investment?
"Capital gains tax increases do reduce after-tax returns to saving, and this may cause some taxpayers to save and invest less. But, other people may save and invest more in order to reach a certain savings goal, balancing out those who scale back. On the whole, the Congressional Research Service ... concludes that capital gains tax rate increases appear to have 'little or no effect' on private saving." (Center on Budget and Policy Priorities)
Advances in Managing Pension Asset Volatility
"Defined benefit ... pension plans face significant and complex risks as they struggle to recover both from the asset losses sustained during the financial crisis and from the negative impact of today's low interest rate environment. Current portfolios -- commonly consisting of equities, bonds and alternative assets -- do not employ sophisticated risk management techniques, leaving pension plans exposed to material losses in the event of a severe or sustained market decline." (Milliman)
Despite Proliferation of Service-Providers and Monitoring Firms, Plan Sponsors Can't Shed Ultimate Liability
"Consider the cautionary tale of several small plans that entrusted fiduciary responsibility to someone once considered a stalwart in the field. Matthew Hutcheson, who co-wrote the book 401(k) Ethos, was regarded as a go-to person for all things fiduciary and testified before Congress, recently was indicted for wire fraud after allegedly stealing money from the plans for which he acted as fiduciary." (Treasury & Risk)
[Guidance Overview] 401(k) Plan Fees in Turmoil: District Court in Tussey Case Finds Fiduciary Breaches but Third Circuit Does Not
"Overall, the courts' decision in Tussey and Renfro appear to show that the ... outcome is less dictated by the choices made by plan fiduciaries than by the thoroughness and care by which the plan fiduciaries investigated, considered and compared their investment selections and fees. Accordingly ... it is critical for plan sponsors to understand and follow their plan's investment policy procedures and guidelines, to understand their plan's fees and compare them to the marketplace, to document all actions taken with respect to investment selections and plan fees, and to act for the exclusive benefit of plan participants and beneficiaries." (Trucker Huss)
A Look at the Funding of 'ERISA Accounts' Using Mutual Funds
"[I]f the plan had the legal right to [a 12b-1 payment of plan fees, is] that payment ... a plan asset (or is the right to the payment an asset)? If the 12b-1 payment is made to the plan's trust, it is a plan asset. But what if, instead, it is paid directly to the TPA, who uses it to offset administrative costs under its contract with the plan? Is it a plan asset? What about the advisor, or the plan's investment manager (particularly if it also manages the underlying mutual fund?)." (Business of Benefits)
[Guidance Overview] DOL Files Suit to Recover Losses to ESOP of California-Based Parrot Cellular
Quoting from the government press release: "The department's suit is based on an investigation conducted by [EBSA] that found violations of [ERISA].... The suit alleges that the defendants caused or permitted the ESOP to purchase ... stock for more than fair market value and that [the principal owner of that stock] enriched himself by millions of dollars at the expense of the plan and its participants." (Employee Benefits Security Administration)
Examining Exchange-Traded Funds (PDF)
"ETFs [Exchange-Traded Funds] don�t work in the same way as mutual funds. What are ETFs really, and how do they work? [T]his paper ... review[s] the history and construction of ETFs which, although hugely popular, are little-understood by most investors ... [and] explore[s] in greater depth the potential risks and advantages of exchange-traded funds." (Arnerich Massena, Inc.)
Glide Path Strategies to Reach Funding Goals
"Like a GPS for defined benefit plans, an effective glide path strategy (GPS) offers plan sponsors a valuable, multi-period guide to reaching funding goals while gradually de-risking the pension portfolio. The end result is a balanced solution, incorporating often-competing return, risk, contribution and time frame objectives." (J.P. Morgan)
Monitoring the Risks to the U.S. Economy of Weaknesses in State and Local Government Finance
"The Municipal Financial Monitoring Team [of the Federal Reserve Banks of Cleveland and Atlanta] has been looking at how shocks to the municipal bond market, continued problems with pension funding, and general fiscal stress could ripple into something much larger�either in the form of a (rather unlikely) threat to financial stability or perhaps as an aggravation of regional economic woes. To understand these issues, the Monitoring Team has been exploring a number of areas where risks may be building." (Federal Reserve Bank of Cleveland)
Public Pension Funds and Public Finances
"[T]he Federal Reserve Banks of Cleveland and Atlanta have formed a Financial Monitoring Team to study pension funds and municipal finance with an eye toward implications for the wider economy and financial system.... In this article ... [the authors] explain where risks could be building and how reforms might help forestall their impact on the broader economy and financial system." (Federal Reserve Bank of Cleveland)
ERISA Fiduciaries Can Be Liable for Misdeeds of Others
"Financial advisers and plan sponsors, beware: If you recommend a fiduciary to perform plan services, you may be held responsible if something goes wrong. That is the opinion of legal experts commenting on the case of high-profile 401(k) fiduciary Matthew D. Hutcheson, who was indicted April 11 on federal charges of diverting money from clients in multiple-employer plans for his own purposes." (Investment News)
[Opinion] Is Dual Registration the Cause of Opposition to the Fiduciary Standard?
"Does the opposition to a universal fiduciary standard stem from a big-time Wall Street company's ingenious ploy and a Washington regulator's botched response? In 1999, an upset but wily Merrill Lynch sought to prevent itself from becoming exposed to the onerous regulation of [the SEC]. In a series of Keystone Kops maneuverings, the SEC blundered through a series of missteps through two administrations, each flying under the banner of a different political party. The absent regulator allowed the birth of an entirely new industry until, almost a decade later, a harsh court ruling sent the entire house of cards tumbling down." (Fiduciary News)
[Opinion] Three Myths and a Fact about Public Pension Systems
"Myth 1: Public pension systems are about to run out of money.... Myth 2: A few good years in a bull market will bring the fund back to health.... Myth 3: Since the states are going to dramatically increase their contributions over the next few years, this should take care of the underfunding problem, as happened in the 1980�s.... Which leads us to a cold hard fact: the fix which worked in the past is unlikely to succeed in the future. Putting public pension systems on firm footing is going to require significant and unpopular changes to current policy." (LPL Financial)
Idea of 'Small Rules Meaning Much' Has Relevance in the Multiple Employer Plan World
"One of the risks in adopting a MEP is that, under IRS rules, a single bad plan can disqualify the entire MEP. What minutiae is critical here, though, is Section 10.12 of EPCRS ... As a practical matter, this means the risk of an economic catastrophe from a single employer disqualifying an entire MEP can be cost effectively managed." (Business of Benefits)
ERISA Stock Drop Lawsuit Against BP over Gulf Oil Spill Might Rise from the Dead
"National Law Journal has an article about the ERISA stock drop lawsuit against BP, indicating that this lawsuit may not be dead yet.... [It] says the plaintiffs will be attempting to salvage their lawsuit by filing an amended complaint with the court." (The Pension Protection Act Blog)
Brokerage Company Agrees to Pay $630,000 to Retirement Plans
"Morgan Keegan and Co. Inc. has agreed to pay $633,715.46 to 10 pension plans covered by [ERISA]. This agreement follows an investigation by the U.S. Department of Labor's Employee Benefits Security Administration that [asserted] the full-service brokerage company violated federal law when it recommended certain hedge funds of funds as investments to its ERISA-covered employee benefit plan clients. These recommendations resulted in the hedge funds of funds paying Morgan Keegan revenue-sharing and other fees." (Employee Benefits Security Administration)
Two-Thirds of Pension Plans Now Using Liability-Driven Investment Strategies
"The survey results reflect a central tension in the current [Liability-Driven Investments, or "LDI"] discussion, between plan executives increasingly sold on the need to hedge their pension liabilities, but hesitant to accept the costs of better matching those bond-like liabilities now, with bond yields near historic lows." (Pensions & Investments)
[Guidance Overview] $35.2 Million Joint and Several Liability on Fiduciaries In Case of Excessive Fees and Imprudent Investments
"The U.S. Federal District Court for the Western District of Missouri determined that plan fiduciaries breached their fiduciary duties by failing to monitor recordkeeping costs, negotiate rebates, and prudently select and retain investment options. This is a federal district court decision and it differs from positions taken by some federal circuit courts which are precedential, but whether this decision is judicial activism or a new trend will need to play out over time." (Haynes and Boone)
[Guidance Overview] Federal District Court Dismisses Fiduciary Liability Claims in BP Stock Drop Lawsuit
"In dismissing all claims, the court determined that plaintiffs failed to show that the plan fiduciaries had access to nonpublic information regarding the safety programs, and that the presumption of prudence applied." (Haynes and Boone)
Video: FAQs Expected from DOL on Fee Disclosure Regulation
Total Run Time = 3:04. "Since the Department of Labor issued the final [regs], many questions have been raised on the exact impact of the new rule. In particular, the meaning of the term 'designated investment alternative' and whether asset allocation strategies should be classified as such. Michael Davis, Deputy Assistant Secretary of [DOL's EBSA], indicated at the ASPPA 401(k) SUMMIT held in March of 2012 that sub-regulatory guidance -- in the form of frequently asked questions (FAQs) -- should be available on the DOL website 'within weeks'[.] Although not yet released, it is expected shortly." (ASPPA)
Stable Value Funds, Version 2.0: Fewer Investor Guarantees
"Insurers who guarantee the principal in [stable value] funds have significantly limited the type of investments they will insure in the last several years. Fund providers such as J.P. Morgan Asset Management and Pacific Investment Management Co, have responded by offering stable value funds that no longer guarantee principal or make it harder to get out of funds quickly. Some 401(k) plans have switched to funds that only guarantee a portion of a participant's investment, exposing them to the market volatility the funds used to shield them from." (Reuters)
Plan Sponsor Hit for $35 Million in 401(k) Excessive Fee Case
"In the first class action over 401(k) fees to be tried and decided on its merits, a Missouri federal district court ruled on March 31 that manufacturer ABB Inc. breached its ERISA fiduciary duties. The court's opinion is a must read for all plan sponsors and service providers." (CFO.com)
Young Investors Using New Tools to Weight Equities More Heavily in Asset Allocation
"Despite concerns about the global financial crisis and its impact on the willingness of younger investors to enter the stock market, twentysomethings actually have higher equity allocations in defined contribution (DC) plans than previous generations had at the same age." (Vanguard)
DB Plan Underfunding Means Investment Management Remains Challenging Despite Recent Stock Gains
"Despite the strong rally of equity markets in the first quarter of 2012 the financial status of pension plans has improved only slightly ... The median pension solvency funded ratio of a large sample of pension plans has increased from 68% at the end of 2011 to only 69% at the end of March, 2012. About 97% of pension plans in this sample had a solvency deficiency as at that date." (Aon Hewitt)
Highlights of Defined Contribution Consulting Support and Trends Survey, 2012 (PDF)
Survey of 39 consulting firms" opinions on the defined contribution consulting business (primarily investment advice); asset allocation and target-date strategy support; plan oversight; and core investment trends. (PIMCO)
The Impact of The Broker-Dealer Fiduciary Standard on Financial Advice
"It has been suggested that the imposition of a fiduciary standard on registered representatives would result in significant changes in how broker-dealers conduct business by limiting a representative's ability to recommend commission investments, provide advice to middle-market clients, and offer a broad range of financial products. We take advantage of differences in state broker-dealer common law standards of care to test whether a relatively stricter fiduciary standard of care impacts the ability to provide services to consumers. We find that the number of registered representatives doing business within a state as a percentage of total households does not vary significantly among states with stricter fiduciary standards." (Michael S. Finke and Thomas Langdon)
The links shown above have been gathered from the web by the editors at BenefitsLink.com. Each article's publisher is shown above in parentheses. Opinions expressed in each article are those of the article's publisher, not necessarily those of BenefitsLink.com, Inc. or any web site that displays these headlines in a "frame." You should contact the listed publisher for copyright information about any particular article or to inquire into the right to use the article in any manner.