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Ret plan investments - misc

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Fiduciary Rule Update, August 2017
"The new FAQs state that it would not be 'fiduciary investment advice' to encourage additional contributions to a plan or IRA to 'maximize the value of employer matching contributions or ... to meet objective financial retirement milestones, goals, or parameters based upon the participant's age, time to retirement or other similar measures' provided no specific investment recommendations are made.... Some have suggested that the position being taken by DOL in this new FAQ guidance may conflict with earlier DOL guidance. In any case, the new guidance raises a question: does it extend to a recommendation that a participant not decrease her savings, e.g., not take a cash distribution on termination of employment?" (October Three Consulting)
Tibble's Trials Nearly Over, with a District Court Win
"[T]he court noted that for the first time [defendant Southern California Edison] argues that they had a right to invest in the retail-class shares to take advantage of revenue sharing, but found several problems with this argument, notably that it could have been made eight years ago.... Applying guidance from the Supreme Court in Tibble I, the court held that the defendants were liable for breaching the duty to monitor from August 16, 2001, onward.... 'Thus, even if Defendants successfully showed it would take months to make the switch, they are nonetheless liable for losses on each mutual fund at issue either beginning on August 16, 2001, or on the day after 2001 that institutional funds became available,' [Judge Wilson] wrote." [Tibble v. Edison, No. 7-5359 (C.D. Cal. Aug. 16, 2017)] (National Association of Plan Advisors [NAPA])
[Opinion] Fiduciary Rule Critics Cry Wolf
"Wall Street has received the message, and it isn't waiting around for the Labor Department. Brokers are paring high-priced funds from their mutual fund offerings to retirement savers. They're also moving those investors from commission-based accounts -- which charge a fee for each transaction -- to fee-based accounts -- which charge an annual fee based on assets." (Nir Kaissar, via Bloomberg)
[Opinion] ERIC Comments on Nevada Fiduciary Rule
"ERIC urges the Securities Division to model or mirror the language provided for under the DOL's rule.... S.B. 383 places a greater burden through more prescriptive requirements on brokers-dealers, investment advisers, and other financial planners that advise on retirement plans. While states are within their right to provide for greater standards than what the federal government requires, Nevada should be hesitant if doing so would lead to more cumbersome and costly administrative processes." (The ERISA Industry Committee [ERIC])
Alight Solutions 401(k) Index: July 2017 Observations
"July was the lightest trading month for defined contribution plan investors in over five years. Just 0.11% of balances were traded in the month -- the lowest level since April 2012 and the second lowest month since 1997 when the Index was started.... On average, 0.012% of balances traded each day. There was one day of above normal trading." (Alight Solutions)
ETFs Are Hot -- Except Among Retirement Plans
"Of the $5 trillion in assets in company-sponsored 401(k) plans, two-thirds are held in mutual funds... ETF assets ... are a mere fraction of the pool left over... Among retail investors, ETFs are favored for tax efficiency, intraday trading and cheap fees.... In a tax-advantaged 401(k) plan, where investors are in it for the long-haul, those advantages matter less." (Reuters)
Federal Magistrate Recommends Dismissal of ESOP Challenge Against Wilmington Trust
"The judge noted that stock must be purchased at an inflated price and sold at a loss for an economic injury to occur.... Chief U.S. Magistrate Judge Mary Pat Thynge of the U.S. District Court for the District of Delaware found that the plaintiffs lack standing for subject matter jurisdiction because they did not allege an economic injury." (planadviser)
How to Select the Right Target Date Fund for a 401(k) Plan
"Few plans have a homogenous participant pool that would clearly dictate the selection of a specific glide path perfectly fitting all participants' needs. It is also true that many plan participants, even those investing in 'through' TDFs, liquidate their retirement plan assets upon retirement.... Having lifetime-income (annuity) and target-risk (flat glide path) options can provide important flexibility to meet the needs of participants who don't fit the mold of a plan's chosen TDF series." (InvestmentNews)
Everything You Need to Know About the Fiduciary Rule Delay
"The delay is not a done deal until OMB reviews the proposal and approves it, but the delay is consistent with the timeline requested by many parties within the financial industry when it came to phasing in this rule. The delay gives the DOL more time to conduct a review before the other parts of the rule are enforced, which include the Best Interest Contract (BIC) exemption rule. It also opens up the opportunity for the SEC to weigh in." (BenefitsNav)
Distributed Ledger Technology and Retirement Savings Infrastructure, Part 1
"[Plan] sponsors and providers have sought to lower costs by leveraging scale ... 'institutionalizing' plan investment ... and simplifying plan design. The movement (among some sponsors) towards explicit pricing (unbundling of investment and administrative services) and lower-cost passive investment strategies is also a response to this pressure. These initiatives are all taking place within the current asset management and plan administration infrastructure ... There is, however, an innovation emerging which some argue will radically change ... current infrastructure and materially reduce both investment and administrative costs across the board: distributed ledger technology (DLT)." (October Three Consulting)
Interesting Angles on the DOL's Fiduciary Rule, Part 58
"[In newly-issued FAQs, [the DOL] reversed its prior position by responding that [certain] recommendations would not be fiduciary advice.... [T]he 'rules of the road' for recommending increased contributions to plans or IRAs, while avoiding fiduciary status, is to [1] make the recommendation based on an objective measurement, and [2] avoid a concurrent discussion of investments or investment strategies for the plan or IRA." (
[Guidance Overview] Major Developments in Fiduciary Rule
"The DOL has submitted to [OMB] a delay in applying the full requirements of the [BICE], and two related prohibited transaction exemptions.... Significantly, the delay leaves the Fiduciary Rule itself in place.... The DOL has issued FAQs [which] note that many providers have already communicated with their customers about the Fiduciary Rule and corresponding changes in services and operations. The DOL expects those communications will frequently be sufficient to function as change notices for purposes of the 408b-2 rules." (FIS Relius)
The Case for Custom Target Date Funds (PDF)
"Allowing plan fiduciaries to choose investments and a rebalancing strategy, custom TDFs offer a greater degree of control than traditional TDFs. As such, the [DOL] suggests that plan fiduciaries investigate custom TDFs as a potentially 'better' option for their plans.... The selection of a custom TDF does not, in itself, automatically satisfy a fiduciary's duty of prudence under ERISA. However, a custom TDF offers several specific advantages, which can enable the plan fiduciary to satisfy these ERISA obligations more effectively." (Ivins, Phillips & Barker for Columbia Threadneedle Investments)
[Guidance Overview] DOL Issues Additional Fiduciary Rule Transition FAQs
"[The FAQs] address: whether updates to service provider fee disclosures are required during the transition period in light of the new definition of an investment advice fiduciary; whether a recommendation to a plan participant or an IRA owner to increase his or her contributions constitutes fiduciary investment advice; and whether a recommendation to an employer or plan fiduciary regarding plan design changes that are intended to increase participation and contributions constitutes fiduciary investment advice." (Morgan Lewis)
[Opinion] An Open Letter to the OMB: No Further Delays in the DOL Rule and Bice
"[A]ny arguments by the investment industry that the fiduciary duties imposed on broker-dealers and stockbrokers under the Rule and BICE are onerous and/or unfair are meritless, as those same duties have already been recognized by their own SRO, FINRA and its predecessor, the NASD.... The significant and irreversible damage that has already been done, and will continue to be done, by further delaying full implementation of the Rule and BICE has been documented by several independent research organizations." (The Prudent Investment Adviser Rules)
Sears Hit with Second Lawsuit Over Company Stock in 401(k) Plans
"Numerous publicly known 'red flags' alerted Sears that its own stock was an 'unsuitable' investment for retirement, a participant in Sears' savings plan alleged in a lawsuit filed Aug. 10 in federal court in Illinois. Despite this knowledge, plan fiduciaries 'stood idly by' and failed to properly monitor the continued prudence of investing Sears stock while the value of the participants' investments in stock continued to plummet, the lawsuit said." (Bloomberg BNA)
[Guidance Overview] DOL's Latest Set of FAQs: 408(b)(2) Disclosures and Plan Contribution Recommendations
"[T]he existing 408(b)(2) regulation -- including the obligation to provide any changes within 60 days -- is separate from any other requirement of the fiduciary rule or the related exemptions. As a result, some service providers have been confused about whether they need to provide a change notice related to their fiduciary status under the fiduciary rule, and if so, when such a change notice would be required.... DOL's latest set of FAQs provides significant relief through a very broad interpretation of the 408(b)(2) regulation based on the unique circumstances of the fiduciary rule[.]" (Drinker Biddle)
[Guidance Overview] New Conflict of Interest FAQs Address ERISA Section 408(b)(2) (PDF)
"The 408(b)(2) FAQ will allow some service providers to avoid changing previously provided 408(b)(2) notices and give others additional time to adjust the content of those notices. The contribution FAQs should ease concerns that encouraging retirement savings could lead to fiduciary status.... [T]he guidance could signal the Department's willingness to take a more measured approach to the Fiduciary Rule[.]" (Groom Law Group)
Insurance Execs Say June 9 DOL Doomsday a Dud
"[If] June 9 provided little disruption to agents and clients, the same can't be said about the fiduciary rule affecting sales of certain annuity market segments.... Lingering ambiguity around the rule's implementation will continue to exert a drag on annuity sales ... Even so, individual insurers have found ways to spur sales through repricing." (
Do 401(k) Managed Accounts Live Up to All the Hype?
"Plan sponsors should assess the value of a vendor's managed account services against the fees paid out of participants' accounts.... Target-date funds (TDFs), like managed accounts, were created to tailor account investments to a participant's needs ... Managed accounts, in contrast, take into consideration a wider range of factors, such as contribution rates, personal risk tolerance, current savings in individual retirement accounts (IRAs) or taxable accounts, and anticipated spending needs in retirement.... The problem is getting participants to interface with the data and provide all necessary information to the account manager[.]" (Society for Human Resource Management [SHRM])
DOL to Proposes Extension of Fiduciary Rule Transition Period to July 1, 2019
"The DOL's potential extension of the transition period appears to mean: Fiduciaries impacted by the regulations would temporarily benefit from a 'good faith' compliance standard through at least July 1, 2019, instead of January 1, 2018.... The written disclosure requirements for certain prohibited transaction exemptions would be scheduled to take effect on July 1, 2019 instead of January 1, 2018." (Mazursky Constantine LLC)
DOL to Propose Extension of Fiduciary Rule Transition Period
"[T]he proposed amendments seek to defer the applicability of the full conditions of such exemptions for 18 months until July 1, 2019, but this date is subject to OMB clearance and may be changed before the proposal is officially published in the Federal Register. Moreover, the proposal likely will be subject to a notice and comment period so that interested parties may comment on the merits and length of the delay, as well as to further OMB review of any DOL proposed final rule. Thus, the ultimate length of the delay (if any) will not be clear until the DOL publishes a final rule." (Morgan Lewis)
Another Fiduciary Rule Delay Would Cost Retirement Savers $10.9 Billion Over 30 Years
"[A map] shows how much retirement savers would lose in each state over the next 30 years as a result of an additional 18 month delay. The losses range from $16 million in Wyoming to $132 million in Iowa to $646 million in Texas to $1.2 billion in California." (Economic Policy Institute)
[Opinion] SIFMA Submits Comments and New Evidence of the DOL Fiduciary Rule's Negative Impact on Retirement Savers
"SIFMA provides the following to assist in the DOL's review of the Rule: [1] data detailing the negative impact to investors as firms move to implement the Rule and Exemptions; [2] An explanation of why it is unnecessary to create a new private right of action to change the standard of conduct in the financial services sector; [3] Changes to the regulatory language needed to help make this Rule work for retirement savers; [4] Comments regarding the Exemptions; and [5] A proposed new principles-based exemption that protects investors and provides certainty to service providers seeking to comply with the Rule's intent." [See full text of comment letter and Deloitte study commissioned by SIFMA.] (Securities Industry and Financial Markets Association [SIFMA])
Dalbar Puts a Sellers' Exemption to Fiduciary Rule on DOL's Desk
"In comment letters to the DOL, Empower Retirement and attorneys at Davis & Harmon are among those calling for a so-called sellers' exemption, which would distinguish one-time sales of investments by brokers and insurance agents from fiduciary advice. In its comment letter, Dalbar goes further, and actually submits a proposed sales professional exemption. At its heart, the proposed exemption ... would prohibit brokers and insurance agents from marketing themselves as fiduciaries, something many fiduciary proponents say the [SEC] should have been doing all along." (ThinkAdvisor)
[Guidance Overview] DOL to Seek 18-Month Delay of Best Interest Contract Exemption and Other Fiduciary Rule Exemptions
"Although the Transition Period is currently scheduled to end on January 1, 2018, the DOL's court filing states that the DOL seeks to extend the Transition Period by 18 months, to July 1, 2019. If adopted, it appears that the BICE, Principal Transaction Exemption, and PTE 84-24 will continue to be available as long as the impartial conduct standards are satisfied, without regard to any other conditions of those exemptions." (The Wagner Law Group)
[Guidance Overview] DOL Announces Proposed 18-Month Extension of the Fiduciary Rule Transition Period (PDF)
"In the notice of administrative action, DOL states that it has submitted 'proposed amendments' extending the Transition Period to [OMB]. The words 'proposed amendments' could mean that DOL is only at the 'proposed rule' stage with a delay. If that is the case, then there is a probability that the length of the delay or other specifics of the delay could change; there is also some risk that the delay may not become finalized." (Groom Law Group)
Robo-Advisers: More Complex Than They May Appear (PDF)
"What is a robo-adviser? ... How are robo-advisers regulated? ... What special challenges do robo-advisers confront in satisfying their disclosure obligations? ... Can robo-advisers satisfy their fiduciary duties to their clients? ... Are robo-advisers operating unregistered investment companies? ... Can robo-advisers satisfy their compliance responsibilities?" (Katten Muchin Rosenman LLP, via Bloomberg Law Securities Regulation & Law Report)
[Guidance Overview] DOL Issues FAQs Clarifying Required Fiduciary Status Disclosures Under ERISA Section 408(b)(2)
"The FAQs provide examples of communications that would not be considered fiduciary investment advice, including: [1] A plan enrollment brochure stating that participants should consider saving a certain percentage of their pay. [2] A targeted email suggesting that a participant increase his or her contributions by a certain percentage to reach a specific savings goal. [3] A targeted email sent during a participant's birth month suggesting that a participant contribute a certain amount based on the amount that the participant has already saved in the plan." (Thomson Reuters Practical Law)
[Guidance Overview] The Final Rule: DOL Issues Fourth Set of FAQs
"The FAQs leave open the possibility that, if service providers update 408b-2 disclosures currently to describe service or other changes, they may need to update those disclosures again after January 1 to expressly use the 'fiduciary' term ... The FAQs do not appear to address the case of a service provider that was an unintended 'functional' fiduciary under prior law." (Eversheds Sutherland, via Lexology)
Income for Life: Using Deferred Income Annuities in Retirement
"Deferred income annuities (DIAs) can help you insure against the possibility of outliving your assets in retirement. DIAs can offer the same level of benefits after the deferral period as immediate annuities for a much smaller up-front payment. DIAs generally aren't liquid so you can't withdraw their value as cash, but knowing that you'll get a guaranteed income for life could free you to keep more of your other savings invested." (Charles Schwab)
DOL Notifies District Court of Intent to Extend Transition Period and Delay Applicability Dates for Fiduciary Rule and PTEs (PDF)
"[DOL hereby notifies] the Court that on August 9, 2017, the Department submitted to [OMB] proposed amendments to three exemptions, entitled: Extension of Transition Period and Delay of Applicability Dates From January 1, 2018, to July 1, 2019; Best Interest Contract Exemption (PTE 2016-01); Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs (PTE 2016-02); Prohibited Transaction Exemption 84-24 for Certain Transactions Involving Insurance Agents an d Brokers, Pension Consultants, Insurance Companies, and Investment Company Principal Underwriters (PTE 84-24). Notification of the submission becomes publicly available the morning after submission." (U.S. Department of Labor [DOL], via U.S. District Court for the District of Minnesota)
[Opinion] SPARK Comment Letter to DOL on Fiduciary Rule and PTEs (PDF)
14 pages. "[M]any plan sponsors, participants, and IRA owners have been cut off from beneficial products and services that were previously made available to them.... The overall reduced access to important products and services is a direct result of the steps our members have been forced to take in order to comply with the Department's overly broad and poorly tailored definition of fiduciary investment advice. Unless changes are made ... we are concerned that this reduced access to information, products, and services could become permanent." (The SPARK Institute)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 57
"[If] an adviser (or his or her supervisory entity) was a fiduciary, functional or acknowledged, before June 9th, but did not give a 408(b)(2) notice of fiduciary status, that is not covered.... The] relief does not cover new relationships with retirement plans after June 9th.... [If] the adviser's prior 408(b)(2) disclosures, or agreement, stated that the adviser (and his or her supervisory entity) is not a fiduciary, then relief is not provided and a disclosure must be given." (
[Guidance Overview] DOL Issues FAQ Addressing Key Concerns Over Fiduciary Rule
"[T]he DOL has clarified that it does not consider service providers to have been informed of a change in fiduciary status on June 9, 2017, the date the fiduciary rules became applicable. In addition, the DOL recognizes the uncertainty caused by its past decisions to delay the fiduciary rules and considers the current circumstances to be beyond the control of service providers. Therefore, service providers who must update their disclosures for the fiduciary element of the service provider disclosure must simply do so as soon as it is practicable. In addition, the DOL FAQ reminds service providers that such amendments may be provided to plans electronically. A chart summarizing these disclosure rules is provided[.]" (Ascensus)
New DOL Guidance in Connection with the Fiduciary Rule
"If a service provider will continue to provide only nonfiduciary services to ERISA plans post-Fiduciary Rule, or has already effectively disclosed investment advice fiduciary status, no additional disclosure would be required under Section 408(b)(2) of ERISA. In the case of a service provider who does not 'reasonably and in good faith believe' that it will be providing services to an ERISA plan that would make it an investment advice fiduciary under the Fiduciary Rule, then the service provider would not be required to disclose its newfound fiduciary status under Section 408(b)(2) of ERISA." (Stradley Ronon)
[Opinion] EPI Comment Letter to DOL on the Fiduciary Rule and PT Exemptions
"[W]hether or not most retirement savers who currently rely on a broker's conflicted 'advice' will actually hire financial advisers instead -- a doubtful assertion -- 'advice' from brokers is not comparable to advice from disinterested experts. Similarly, even if the industry's prediction that the rule could cause investors to lose access to some investment products is borne out, it does not follow that investors will be harmed since these products are unlikely to be in savers' best interests." (Economic Policy Institute)
[Opinion] Investors Will Win If SEC Swiftly Adopts -- and DOL Recognizes -- Best-Interest Standard for Brokers
"ICI advocates that the SEC take the lead by adopting a new, clearly defined best-interest standard of conduct for SEC-registered brokers that enhances the current 'suitability' standard and other obligations that apply to brokers under federal securities laws and FINRA rules.... The new SEC standard that ICI recommends ... enhances the suitability standard to provide an explicit duty of care and duty of loyalty[.]" (Investment Company Institute [ICI])
[Guidance Overview] Plans Must Comply with Rules of U.S. Treasury�s Office of Foreign Asset Control (PDF)
"Under OFAC guidance, both governmental and private employee benefit plans are required to comply with OFAC compliance programs. Failure to comply can lead to reputational damage and/or civil and criminal penalties.... Many ERISA and governmental benefit plans may view trade sanctions as something that applies to banks but that doesn't impact our retirement system. This view is wrong....[This article provides] a high level overview of things that a plan would want to consider in evaluating/developing an OFAC compliance program." (Groom Law Group)
[Opinion] IRI Comment Letter to DOL on Fiduciary Rule and PT Exemptions (PDF)
43 pages. "[IRI appreciates] the opportunity to provide these comments to the [DOL] in response to [its recent] request for information ... 71 percent of advisers are planning to stop providing advice to at least some of their current small accounts due to the risk and increased costs of the Rule; 35 percent will stop serving accounts under $25,000, and 25 percent will raise their minimum account thresholds.... [D]istributor members reported that approximately 155,000 of their clients have already been 'orphaned,' with far more accounts expected to be impacted as implementation of the Rule proceeds.... More than 60 percent of the participating distribution firms have, are planning to, or are considering exiting or deemphasizing target markets such as small IRA holders and small retirement plan sponsors." (Insured Retirement Institute [IRI])
Pension Plan Funded Status Decreases (PDF)
"During the second quarter of 2017 (Q2 2017), the funded status of the model pension plan ... fell by 2 percentage points, to 82 percent, due to a 5 percent liability increase offsetting a 3 percent rise in asset value." (Sibson Consulting and Segal Marco Advisors)
QDIAs: a Recipe for Fiduciary Protection (And a Better Retirement Plan)
"After the sponsor has selected a permissible default, employees must be notified of the QDIA, as well as its objectives and fees.... The notification must be timely: 30 days prior to eligible participation, recurring annually. The retirement plan's Investment Policy Statement must also be updated to reflect selection and monitoring criteria for the qualified default." (Alliant Wealth Advisors)
Seventh Consecutive Quarter of Investment Gains for Institutional Plan Sponsors
"Equities continued to drive investment returns in the Northern Trust Universe, with the median international equity program up 6 percent and median total equity program up 4.3 percent in the second quarter. Private equity programs gained 3.3 percent at the median, while fixed income and real estate were up less than 2 percent in the quarter." (Northern Trust)
FASB Update to Accounting Pension Expense Creates Opportunities (PDF)
"The new changes will bring about much needed simplicity and dampen some of the volatility often associated with these types of plans.... Under the new accounting treatment ... the expected rate of return is no longer an operating expense and thus is de-emphasized. Hence, there is one school of thought that this change will result in more plans moving to a more conservative investment approach." (Findley Davies | BPS&M)
[Official Guidance] Text of DOL Conflict of Interest FAQs: 408(b)(2) Disclosure Transition Period, Recommendations to Increase Contributions and Plan Participation (PDF)
"[Three] FAQs provide information on [1] a 'fiduciary status disclosure' issue under the [DOL's] ERISA section 408(b)(2) service provider disclosure regulation ... [2] whether recommendations to plan participants and IRA owners to contribute to or increase contributions to a plan or IRA constitute fiduciary investment advice under the Fiduciary Rule, and [3] whether recommendations to employers and other plan fiduciaries on plan design changes intended to increase plan participation and contribution rates constitute fiduciary investment advice under the Fiduciary Rule." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
Comparison Across Two Generations of 401(k) Savers in Their Twenties Shows Contrast in Asset Allocations
"Compared with their counterparts 20 years ago, the twenty-something 401(k) investors of 2015 allocated a similar share of their aggregate assets to equities -- including equity funds, company stock, and the equity portion of balanced funds -- but changed the mix, becoming less concentrated in equity funds and company stock and more concentrated in balanced funds (which include target date funds). These differences are consistent with both the allocation trends for all 401(k) plan participants and the evolution of plan design shown in EBRI/ICI's two decades of extensive 401(k) research." (Investment Company Institute [ICI])
401(k) Balances Reach Record Levels Although Many Workers Don't Take Full Advantage of Company Match
"Retirement account balances reached all-time highs for the third consecutive quarter.... People in their 401(k) for 10 years straight saw their balance increase to a record average of $266,100, up from $78,800 in Q2 2007.... Over the last 12 months, employees contributed a record average of $5,850 2 to their 401(k), up 4 percent from one year prior. But many employees are not taking full advantage of their employer's matching contributions." (Fidelity)
401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2015 (PDF)
60 pages. "On average, at year-end 2015, 66 percent of 401(k) participants' assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock.... Nearly 65 percent of 401(k) plans, covering nearly three-quarters of 401(k) plan participants, included target-date funds in their investment lineup at year-end 2015.... A majority of new or recent hires invested their 401(k) assets in balanced funds, including target-date funds.... 401(k) participants' investment in company stock continued at historically low levels.... 401(k) participants were less likely to have loans outstanding at year-end 2015 than at year-end 2014." (Employee Benefit Research Institute [EBRI] and Investment Company Institute [ICI])
Questions Employers Should Ask About Stable Value Funds
"[1] How popular are stable value funds when offered as an investment option in a retirement plan? ... [2] Are there different types of stable value funds? ... [3] Why include a stable value option in a retirement plan? ... [4] How does stable value protect investors from interest rate volatility? ... [5] Are there any guarantees in stable value? ... [6] Are there waiting periods or restrictions on participant withdrawals? ... 10. Are stable value funds risk-free? ... [7] What are the fees associated with stable value investments?" (Strategic Benefit Services)
RFP for Target Date Funds Is a Good Idea
"Participants are suing plan fiduciaries over their selection of these funds, so how can fiduciaries protect themselves? One way is to conduct a separate RFP for target date funds.... [An] RFP can make sense even if a potential recordkeeper limits fund choices because fiduciaries should reject a recordkeeper whose only fund offerings are sub par or have excessive fees. How would this RFP work?" (401kTV)
Pension Funding Risk Remains Unchanged in 2017
"Among the Willis Towers Watson (WTW) Pension 100, average funded status climbed to 90.4% in 2013, boosted by rising interest rates and a prosperous stock market. By 2014, ... funding was back down to 82.4% -- where it has stayed. Investment returns in 2016 were just high enough to offset rising obligations, leaving funded status still at 82% by year-end 2016.... Risk scores have inched up over the last four years, increasing from 1.5% in 2014 to 1.9% in 2017." (Willis Towers Watson)
Fiduciary Rule May Force Plan Advisers Away from Portfolio Management
"The latest research from Cerulli Associates suggests most executives in the advisory industry believe that home-office discretion over clients' investment exposures will increase significantly under the [DOL] fiduciary rule and other competitive pressures." (PLANSPONSOR)
Variable 'Pooled Separate Accounts' Have the Ability to Competitively Provide Scale
"One of the most unique, flexible, and underutilized investment platforms in the 401(a) marketplace is the insurance company variable 'pooled separate account' (the 'PSA').... The market is looking to provide the smaller end of the market with the 'scale' which can give plans access to well-priced investments, along with access to large numbers of unrelated funds and fund managers, which otherwise would not be available to them. PSAs do this, while providing 'frictionless' trading.... They are also flexible enough to handle a variety of lifetime income designs[.]" (Business of Benefits)
DOL Rule Opponents Have Good Day in Court of Appeals
"The 68-minute hearing was marked by several spirited clashes between government attorney Michael Shih and Judge Edith H. Jones over the DOL's authority to regulate individual retirement accounts and how investment advice works in practice.... After a string of federal court losses last year, DOL rule opponents finally found a friendly court [in the Fifth Circuit Court of Appeals]." (
Leading Advisers and 401(k) Plan Sponsors Use Goal-Oriented Targets to Replace Outdated Modern Portfolio Theory Risk Tools
"The [goal-oriented target (GOT)] is a number, but it's a number based not on investment returns, investment risk, or any other of the myriad of MPT-based statistics. It doesn't rely on complex 'Monte Carlo'-type analyses best confined to think tank computers, not the smart phones used by everyday folk. All the numbers required for input represent real numbers specific to each retirement saver. They're easily accessible and just as easy to understand." (Fiduciary News)
Fifth Circuit Hears Latest Round of Fiduciary Rule Arguments
"At least one judge on the three-judge panel that has been assigned to the case seemed to have little sympathy for the basic strokes of the DOL's arguments.... Judge [Edith] Jones asked a number of questions about prohibited transaction exemptions that already existed prior to the ongoing fiduciary standard expansion -- about how these exemptions speak of the difference between sales interactions and investment advice." (PLANSPONSOR)
[Opinion] American Benefits Council Comments to DOL on Unwarranted and Harmful ERISA Breach of Fiduciary Duty Litigation (PDF)
10 pages. "In order to help reduce the negative impacts of unwarranted class-action litigation against employers that sponsor a retirement plan, and the service providers that assist them, we are asking the Solicitor of Labor to direct agency resources in a manner that would slow the proliferation of unwarranted and harmful litigation.... [T]he Office of the Solicitor of Labor could make a significant difference in reducing unwarranted litigation against retirement plan sponsors and service providers by filing amicus briefs where appropriate, including ... in opposition to class-action plaintiffs that do not satisfy the pleading standards necessary to survive a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6)." (American Benefits Council)
Interesting Angles on the DOL's Fiduciary Rule, Part 56
"The benefits of increased contributions are so obvious, and the potential conflict is so small, that the easiest, and most direct, solution would be for the DOL to conclude that a recommendation to make or increase contributions is not fiduciary advice. However, if the DOL doesn't do that, it should follow through with ... a streamlined exemption for contribution recommendations." (
Why Investors Need a Retirement Policy Statement
"The idea is to establish a set of guidelines so you'll know if you're on course or veering off the road. You suddenly hanker for a 40-foot motor home? Well, it shouldn't be an impulse buy -- get it only if it fits your spending rules. And decide whether you'll handle things on your own or get professional help for spotting opportunities and pitfalls" (U.S. News & World Report)
Public Pension Plan Investment Returns Are In for FY 2017
"The S&P 500 was up 15%, the Dow was up 19%, and NASDAQ was up 26%. Those 'expectations-breaking' public pensions returns don't look all that amazing now, do they?" (STUMP)

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