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SURVEY SAYS: Number of Jobs

Plansponsor.com - Mon, 08/19/2019 - 04:30
Last week, I asked NewsDash readers, “How many jobs have you had since finishing your education?”More than seven in 10 (7.7%) of responding readers consider themselves to be Millennials, 26.9% said they are Gen Xers, 63.5% Baby Boomers and 1.9% members of the Silent Generation.A small percentage (5.8%) of respondents reported they have had more than 10 jobs since finishing their education, while nearly one-quarter (24%) indicated they have had six to 10. Another 62.5% said they’ve had two to five jobs, and 7.7% have had only one.In verbatim comments, readers shared why they’ve had as many jobs as they’ve had. Some moves have been by choice; others were forced. Reasons to stay included having a defined benefit (DB) plan, having a good manager and/or good coworkers and ability to change responsibilities or move up. Reasons to leave included bad managers, toxic environment, to advance or increase salary. Several pointed out they’ve had more job changes than employer changes. Editor’s Choice goes to the reader who said: “If work isn’t fun, you’re not playing on the right team.”Thank you to all who participated in the survey!Verbatim8 changes. 2 by choice, 6 by layoff. HR wasn’t a super career for job stability!I’m in my 3rd job since graduation. First job 1 year, 2nd job 14 years, 3rd job 15 years. I would have stayed in the 2nd job except my employer merged and changed my job responsibilities.I’m 53 and I have had 3 real jobs since college. The shortest tenure was 6 years at my first job followed by 11 at my second job. I’ve been at my current job for 8 years and hope to stick it out until I retire in 12 more years.While I’ve worked for just one employer over the past 40 years, I have had the opportunity to work in different departments within the company. I have had the opportunity to do about 6 different functions at the company.Unfortunately, in my experience, changing jobs seems to be the only way to obtain significant increases in compensation.I’ve only had two jobs. Took me a year to get into my desired profession and have been with my current employer over 25 years.As I near retirement I wish I would have changed jobs more often when I was younger. I’ve had only 2. But, with young children and no ability to work remotely, that kept me where I was. At my current and final job, continuing to accrue a pension benefit has been a big incentive to stay.Sometimes you have to try a job on for size before you find the right one. I’ve been at my current job 7 years – I found the right one!Thank God I no longer need to worry about this as I am retiring in 3 weeks. Yay!I had one HR job I was happy with for 20 years even though the company would be folding in 1-2 years. I was going to see it through to the end but was recruited away prior to that happening by an employee I had laid off and have now been with the second company over 28 years. I’ll be retiring at the end of 2020 with 30 years of service here.I worked for two companies that I helped build up and then sold which allowed me to retire at 54.Education is AA degree, 5 jobs, one which was self-employed. 5th job been with for 23 years and will hopefully retire from in 8 years, but who’s counting?If work isn’t fun, you’re not playing on the right team.I have generally liked my employers so luckily I haven’t had to change jobs very often. My last job change, was not by my choice, but allowed me to move back home and find a great employer that I hope to retire with. And more important than employers are your managers. If you have a great manager, you should be able to work for the company a long time.I did change jobs a few times very early in my career for a variety of reasons. However, I have been with my current firm for 29 years and plan to retire here in 8 more years. It took a while, but I found my niche.I have moved on from jobs to grow my career from retirement plan administrator at a retirement plan provider to HR generalist at a professional services company. I never could have grown into this career if I had stayed at any one of the previous four organizations. -job #5 started 1 month ago.Industry consolidation triggered cost cutting with the greatest expense associated with employeesMore forced changes than voluntary.Haven’t had to do it in 35 years. Hoping for 2 more until I retire. Wouldn’t have stayed this long if I hadn’t had the opportunity to grow and develop and be respected for it along the way.I went part-time for a while and tried another job on the side, but discovered I like what I do and where I am.I am proud to say I have been with one company for 37 years. In fact, I furthered my education while I worked. Something that is unheard of today.Most have been due to an opportunity to move up, but one was due to a reduction in force. Two also involved a relocation.7 jobs in 35 years. I changed jobs frequently early in my career as I tried to find my niche. Over the past 20 years, I’ve had only 2 jobs.More than 10 jobs, but with a total of 7 employers. Even Baby Boomers have moved around to get ahead!!There’s a difference between changing jobs and changing companies. I’ve changed jobs within a company multiple times, but only changed companies rarely.Wanderlust combined with accelerated boredom and a “grass is greener” mentality does not result in a stable resume (10 jobs since law school). It has bit me a few times, but I’m now in my dream job and the defined benefit retirement I’ll have will keep me in this one until I throw in the retirement towel.I’m 68 yrs old and have been working since 1977. I’ve had 12 jobs. Sometimes I changed for money, others for advancement and still others because I grew bored or detested my boss.I am on my 5th job, but 8th company.I started with my current employer at age 24 and will retire from here in 5 years at age 65. In the 36 years I’ve been employed here, I’ve been laid off and rehired 3 times and was able to retain all my service credit each time I was rehired. I work for a great company and I feel fortunate to have spent my career here.As I’ve gotten more experience, I have stayed at various jobs longer. Right now, 13 years–the longest I have been anywhere.Given employers’ disdain for employees and worship of the bottom line, changing jobs is often the only way to move forward in a career. In one 17-year period, I worked for 5 different employers in 7 different locations, all without changing my job or clients, courtesy of the merger and acquisitions mania in the industry. At one employer, we went 7+ years without receiving a raise; raises were approved in some years but the divisional SVP refused to implement as it would adversely affect his bottom line and personal bonus.My first job was for one year. I have been at my second job for 35 years. We are one of those great companies that still has a Pension plan. Makes it very hard to leave!!!!I think the question should be – How many career changes have you had since college graduation? I’m on my second (currently in Financial Services / recordkeeping) after 29 years in HRI’m on my 4th job in 38 years. I left the first one after 2.5 years to accept a scholarship to study abroad. I stayed with the 2nd job for 6.5 years, until the company moved out of state. I left the 3rd job after 3.5 years because it wasn’t worth staying. I’ve been in my current job for nearly 24 years and plan to retire after reaching 25 years! Woohoo! My next job is retirement!I will stay at a job as long as I feel like a valued employee and I can make a difference. When that is gone, it is time to move on.Working for current employer for 28 yearsI was at my first job for 13 months, my second job for 13 years and at my current job for over 20 years. I plan on finishing my working career here. The key is to find a company that provides opportunity and challenges; appreciation for your efforts; great people to work with and a competitive pay/benefit package. Having great leadership in an organization also helps, since most of the time employees are still leaving organizations because of their managers – not because of pay or benefits or any other reason. There are good companies still out there, but I feel that there will always be a feeling that the grass is greener somewhere else. About 5% of current workforce is rehires – those that left and realized how great a place we really work at and wanted to come back.Companies abandoned loyalty to their employees over short-term financial gain and bemoan this generation’s lack of loyalty. This generation has seen first-hand from their parents’ experience that they should pursue what’s best for them and their career.I tend to work in 10 year cycles. I last about 10 years then I need a change of pace and new environment.I’ve had 4 jobs in my career, but have been in the same one for the last 30 years.Moved a lot, so lots of new jobs for that reason. Early on, I frequently had a second job after office hours. Spent time in the 80s and 90s working in bank trust departments (innumerable mergers and job losses during that time). But, I finally settled in with a law firm as an ERISA paralegal, and have spent the last 23 years of my career there.Been here for 33 years but of course I’m one of those old timers.Difficult – more so as you get older. Age discrimination is alive and well. Honesty and ethics are rare, but met and worked with some very bright people.I have been at my current employer 12 years and have been very happy here. I was hoping this would be my last employer since I am less than 10 years from retirement. Well – – the company was recently acquired and our future is uncertain. I might have one more job change after all.Seems the ‘young folks’ don’t understand the meaning of loyalty, but then again neither do some employers!I’m a boomer, we tend to stick. I’ve only changed jobs due to relocating and the last change was a dial back 12 years ago to a position I really enjoy with a short 15 minutes commute!This is a nuanced question: six to ten “jobs”, however in my financial services career two employers with three “job changes” within my current employer.My first job was for 7 years; I have been at my second job for the last 28 years.I had to leave my last job due to the toxic environment. Which, then in turn, caused me to change my career into a TPA. In the end, it was a great change. I feel that changing jobs a lot is not great, but if the change is needed, you must leap at the chance!I have been with my current employer for 21 years. The only reason I had to look for another job because the business closed. If I am treated respectfully, i will be loyal and give my 100%Employers are no longer “faithful” to employees, so there is no reason for employees to be. Seems like it’s everyone for themselves anymore. How sad.There are many instances when you must change employers in order to advance.I have worked in the same location for almost 25 years. The company has been sold multiple times and my functions have changed over the years with the new owners so I have not wanted to look for a new job until recently.Not always my idea but overall changes have allowed me to have more exposure and experience and have been positive. Advise my daughters to always be thinking about the next step but also consider if you are on the right path for what you want to do. Starting out of college the concern was stable job for long term which looking back was not the right mindset for a lifetime of work.I have all the luck of picking companies that would eventually be bought or acquire/thereby go through downsizing, or completely go out of business (two did that). Otherwise, I may not have changed so many times.I’ve had 5 jobs since finishing my Undergraduate studies in 1987. The last two jobs I have were for 10 years and 15 years and counting. At this point of my career I’m not looking to reestablish or reinvent myself.I am currently working for my third employer since graduating from college. Both of my job changes were directly related to caring for my family.I would never have left my job of 27 years if my job had not been eliminated. I think once you’ve been in a job more than 3 or 4 years, the people you work with feel like family. After all, we’re spending more waking hours with them than our actual families!Number of jobs? 6 Number of employers? 2I have worked for four employers, but the interesting thing is I worked for my first employer for more than 20 years, then became a job hopper.You asked how many jobs, but my response is what I assume you actually mean to know, which is how many EMPLOYERS. Even today, I’m carrying what are arguably the responsibilities for five different jobs – with a single paycheck. And while that sounds like a complaint, I’ve actually (mostly) enjoyed the diversity of roles and perspectives I have had in my 5-employer career. Of course, the “riff” these days has been that Millennials have “invented” job changing, though of course that’s an urban legend, perpetrated by people who by now should know better. The reality is that, at least since WWII, young people have always changed jobs relatively rapidly. The “problem” is that these days as you get older that job change isn’t always your choice. I feel fortunate at this stage in my career to have always made the external “jumps” on my timing – though there have been a fair number of internal “reassignments” and realignments I would just as soon have been spared… and at least two that triggered an external “jump” (on my terms!).3 jobs. Last for 37+ years. Retiring next month. Enjoyed your publication and have found it very useful.I have had 6 jobs since graduating in December of 1990. I am still working 3 of those jobs.Only 2…there’s a lot of difference between 2 and 5 when you have only been in the workforce 17 yearsWHILE ATTENDING COLLEGE TOOK A JOB THAT LASTED 13 YEARS MARRIED/MOVED TOOK SHORT TERM AND THEN TOOK THE JOB I NOW HAVE HAD FOR 41 YEARS I SEE NO WORK ETHIC IN SOME OF THE YOUNGER GENERATION AND AN ATTITUDE THAT I HAVE AN EDUCATION AND CAN JUST GET ANOTHER JOB NO REAL EFFORT IS CONTRIBUTED TO GAIN THE OPPORTUNITY TO GROW AND ADVANCEI like stability. I owned my own company from 1980 to 1989 and I have had 2 jobs since then. I work for someone else now so I can make money and have free time.  NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Institutional Shareholder Services (ISS) or its affiliates.The post SURVEY SAYS: Number of Jobs appeared first on PLANSPONSOR.
Categories: Industry News

Brokers Charged With Improper Handling of ADRs

Plansponsor.com - Fri, 08/16/2019 - 13:33
The Securities and Exchange Commission (SEC) announced that broker Cantor Fitzgerald & Co. will pay more than $647,000 and broker BMO Capital Markets Corporation will pay over $3.9 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs).Neither firm admitted or denied the SEC’s findings.ADRs—U.S. securities that represent foreign shares of a foreign company—require a corresponding number of foreign shares to be held in custody at a depository bank. The SEC explains that the practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares, provided brokers receiving the ADRs have an agreement with a depository bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADRs represent.According to the SEC’s orders, both Cantor Fitzgerald and BMO Capital obtained pre-released ADRs when they should have known that the pre-release transactions were not backed by foreign shares. The SEC found that both brokers improperly obtained pre-released ADRs indirectly from other broker/dealers, and as to Cantor Fitzgerald, it found that the firm also improperly obtained pre-released ADRs directly from depository banks.The SEC’s order says both brokers failed reasonably to supervise their securities lending desk personnel.The post Brokers Charged With Improper Handling of ADRs appeared first on PLANSPONSOR.
Categories: Industry News

Startup Focuses on Connecting Employees With Primary Care

Plansponsor.com - Fri, 08/16/2019 - 13:05
Studies show that going to the doctor regularly and preventatively is more effective for long-term health and well-being, yet only 54% of adults surveyed by Lively report that they do this.Almost half only see a doctor if they are sick or something catastrophic happens (such as a broken bone). Lower-income adults tend to only go when something catastrophic happens.Lively suggests many employees may not realize that their health insurance plan covers some level of preventive care, so helping employees understand all the components of their coverage will allow them to take full advantage of their insurance.A former hospital administrator with Tenet Healthcare and Cancer Treatment Centers of America left to build a startup with a focus on giving employees better access to affordable primary care. Equal Health, a business-to-business (B2B) marketplace to help employers get employees connected to better primary care, was officially launched in April.“In today’s health care environment, even people with insurance are not getting good primary care because they are afraid of getting a bill. Therefore, they end up over-utilizing urgent care or going into the hospital, which drives up employer costs,” says Ameeth Reddy, founder and CEO of Equal Health, based in Detroit.Equal helps connect businesses and employees with direct primary care doctors for a monthly fee—employees pay no copays, and they can call or email doctors or get same- or next-day appointments. The company charges employers between $7 and $10 per month per member. If an employer has 500 employees, but only 30 signed up to be members, Equal Health would only charge for those employees.According to Reddy, the direct primary care trend is becoming prevalent; many more doctors are in independent practice. There is no good way for large, self-funded employers to offer these insurers—they would have to contract with many of these doctors to give employees options. Equal provides access to doctors all over the country.Reddy explains that each doctor charges a monthly fee instead of copays per visit for employees. Employers can choose to pay all or a share of that cost for employees; they could say they will pay up to a certain dollar amount and the employee has to pay any additional amount a doctor may charge out-of-pocket. Services other than primary care—for example, going to a specialist—will still be provided as per the terms of the employer’s plan.However, Reddy notes that case studies have shown that by encouraging employees to use primary care doctors, which encourage them to get preventive care, employers reduce their claims for other services. One case study of an Equal Health employer member shows surgeries and hospitalizations dropped by more than 70% and patient satisfaction was in the 54% range for a control group versus 94% for those with primary care.Equal manages all payments to all doctors selected and sends employers a monthly or quarterly bill—whichever they choose.“There is no marketplace like this for direct primary care doctors,” Reddy says. “I spent a couple of months interviewing practices across the country. These independent doctors are able to do some marketing to get clients from their community, but they have no way to market to employers. So we said we can manage that and aggregate all doctors together on our platform.” He adds that the marketplace resides on Equal’s platform, but the firm can customize an employee’s experience to show his employer’s brand.“Our marketplace works for any type of employer, but we are focusing on larger employers with self-funded benefits. They already have a plan in place, and our marketplace goes alongside the plan to help employees access direct primary care,” Reddy says.“Trump’s executive order on health care called out direct primary care. The model is growing, and we can expand it to so many employers and employees,” he concludes.More information about Equal Health is at https://www.tryequal.com/.The post Startup Focuses on Connecting Employees With Primary Care appeared first on PLANSPONSOR.
Categories: Industry News

Retirement Industry People Moves

Plansponsor.com - Fri, 08/16/2019 - 12:18
Art by Subin YangAscensus Acquires Retirement and Benefits Solution AdviserAscensus has acquired Beneco from Alpine Investors. The firm, which offers a full suite of recordkeeping, third-party administration (TPA), and benefit plan consulting services, will immediately become part of the FuturePlan by Ascensus line of business.“At FuturePlan, we understand that contractors face unique challenges when it comes to creating and managing an employee benefits plan while keeping the cost of their bids down,” states Jerry Bramlett, head of FuturePlan. “Beneco is one of the largest prevailing wage specialists in the country—adding their significant scale and unrivaled expertise to the FuturePlan team will allow us to help prevailing wage businesses to build a better future for their employees while giving them the ability to be more competitive with their contract bids.”“For more than 30 years, Beneco has partnered with prevailing wage businesses all over the country to help them provide their employees with comprehensive benefits and valuable retirement plans,” states Kristy Bryson, Beneco’s chief executive officer. “We have invested time and resources to successfully position our business for the future and are excited to execute on new growth opportunities as part of FuturePlan.”AndCo Names New Senior ConsultantAndCo has hired Gwelda Swilley as a senior consultant. Swilley joins the firm with over 25 years of investment consulting and leadership experience. Swilley viously served as a senior vice president and senior consultant with Callan Associates.  Prior to joining Callan, she served as a managing consultant with Gray & Co. and held early career development consulting positions at both LCG and Watson Wyatt. Swilley will be based in Atlanta and will work to expand the company’s presence across the country. She will service all plan types within the institutional space.Swilley received her bachelor’s degree and master’s degree in international relations and affairs from Florida State University.Private Equity Director Joins Hirtle CallaghanHirtle Callaghan announced that Stephen Vaccaro has joined the firm as director of Private Equity. Vaccaro is an investment professional with more than 15 years of experience in endowment management and consulting, including the University of Pennsylvania, Princeton University, and BCG.Vaccaro is working closely with Hirtle Callaghan’s investment team to oversee private equity investment efforts on behalf of the firm’s family, endowment, foundation, health care and pension clients. He reports to Dan McCollum, deputy chief investment officer, who leads the firm’s manager selection and is himself an endowment veteran, having joined Hirtle Callaghan from Brown University. Vaccaro also serves as a member of Hirtle Callaghan’s Investment Policy Committee and Investment Strategy Committee.“We are excited to welcome a professional of Stephen’s caliber to the investment team at a time when private equity is an increasingly important component of our clients’ portfolios,” says McCollum. “Stephen brings an impressive track record leading private equity investments and a robust relationship network of talented fund managers. We are certain that his extensive experience at two of the world’s most prestigious university endowments will further enhance our ability to identify and access top performing private equity managers.” Vaccaro joins Hirtle Callaghan from the University of Pennsylvania’s Office of Investments. As a senior team member, he played an active role in investment committee discussions across public equity, private equity, real assets and absolute return strategies.Prior to joining the University of Pennsylvania, Vaccaro was a senior team member at Princeton University’s $26 billion endowment, where he worked in private investments across buyouts, venture capital, natural resources and real estate. Before Princeton, he served as a principal in BCG’s New York and Moscow offices, where he led numerous projects for private equity firms, investment banks, global corporations, and start-up ventures. Vaccaro holds a bachelor’s degree from Vanderbilt University and a master’s degree from Yale University. He is also a CFA charterholder. Empower Retirement Selects Chief Product OfficerEmpower Retirement appointed Tina Wilson as senior vice president chief product officer, where she will lead the product strategy and delivery of retirement plan and retail products.The appointment will be effective on September 9, and she will report to Empower President and CEO Edmund Murphy.In her role, Wilson will lead a team of 35 professionals responsible for product development while collaborating with teams across the organization, including technology, marketing and client experience.“Tina will drive product vision, lead and collaborate with teams across our organization to ensure that we are a leader in providing our customers the best experience,” says Murphy. “We are in an exciting time in our company and in our industry. Our customers’ expectations are evolving and changing rapidly and we continue to innovate, bringing them a personalized customer experience.”Wilson joins Empower Retirement from MassMutual Financial Group having led both retirement and investment product teams at MassMutual. She has more than 25 years of industry experience in numerous leadership roles. She holds an undergraduate degree from the University of Connecticut, has a CFA credential and is an accredited investment fiduciary.The post Retirement Industry People Moves appeared first on PLANSPONSOR.
Categories: Industry News

ADP Offers Plan Health Dashboard That Uses Real-Time Data

Plansponsor.com - Thu, 08/15/2019 - 13:45
ADP Retirement Services has launched an analytics-driven dashboard to help retirement plan advisers and sponsors assess how effective a plan is.“Across the board, it takes into account participant features as well as plan-level features,” Kristin Andreski, senior vice president and general manager, retirement services, at ADP, tells PLANSPONSOR. “At the participant level, it looks at participation rates, deferral rates and retirement readiness based on age and account balance.  At the plan level, the factors are plan design and utilization of particular features such as auto-enrollment, Roth, loans and withdrawals.”ADP’s proprietary plan health scoring methodology then assigns points to particular plan metrics, such as participation, retirement readiness, diversification of investments and leakage, Andreski says.“The key to it is participants’ retirement readiness,” she says. “The intent of the dashboard is to let plan sponsors and advisers know how well a plan is performing on an absolute as well as a relative basis compared to benchmarks of plans of similar sizes and industries. It highlights a plan’s strengths, points out opportunities to make improvements and enables sponsors to take action within the application to make those changes.“Based on research we commissioned to better understand employee retirement preparations and outlook in January, retirement readiness remains a significant challenge, with nearly half of employees saving less than $5,000 annually. With this offering, we seek to provide our customers with a holistic solution that helps plan sponsors be more proactive and strategic.”She adds that what is unique about this plan health dashboard is that it uses real-time data.The post ADP Offers Plan Health Dashboard That Uses Real-Time Data appeared first on PLANSPONSOR.
Categories: Industry News

Investment Product and Service Launches

Plansponsor.com - Thu, 08/15/2019 - 12:41
Art by Jackson EpsteinNorthern Trust Enhances Securities Lending OfferingNorthern Trust (NTRS) has developed a pricing engine utilizing machine learning and statistical techniques to drive revenue growth for clients, by forecasting the loan securities rate in the securities lending market.Built on a hybrid-cloud platform that allows processing of data, the algorithm leverages strategic market data points from multiple asset classes and regions to project the demand for equities in the securities lending market. Northern Trust global securities lending traders are able to leverage these projections, together with their own market intelligence, to automatically broadcast lending rates for 34 global markets to Northern Trust’s extensive network of borrowers, thereby enhancing revenue opportunities for lending clients. “Northern Trust continues to invest in emerging technologies to bring enhanced value to our clients,” says Pete Cherecwich, president of Corporate and Institutional Services at Northern Trust. “The use of machine learning in our global securities lending business enables greater pricing efficiency that helps clients improve revenue across portfolios. This enhances Northern Trust’s broad suite of securities financing capabilities, providing borrowers with highly automated, low transaction cost trade execution solutions in this cost-conscious market.”Global X Adds ETF Suite to Model Market CenterGlobal X ETFs has added a suite of seven exchange-traded fund (ETF) model portfolios to the TD Ameritrade Institutional Model Market Center. Model Market Center allows investors to access model portfolios from third-party model providers, with the ability to customize the models as needed through an integration with TD Ameritrade’s rebalancing platform, iRebal on Veo.“We are excited to expand the availability of our model portfolios to more investors through this innovative platform,” says Jon Maier, CIO at Global X ETFs. “We hope that investors will be able to utilize the model portfolios to meet their needs and we are excited to be working with TD Ameritrade Institutional.”The portfolios, which allocate across ETFs managed by Global X ETFs and other asset managers, are designed as packaged solutions to help serve investors’ needs. The model portfolios joining the Model Market Center platform include: Equity Thematic Disruptors ETF Model Portfolio; Equity Income ETF Model Portfolio; and five risk-based Core Series models: Conservative, Moderately Conservative, Moderate, Moderately Aggressive, and Aggressive.Cohen & Steers Makes Changes to REIT Mutual FundCohen & Steers is making key enhancements to its real estate investment trust (REIT) mutual fund, Cohen & Steers Realty Shares.The expense ratio for the fund has been reduced by approximately 10% and Class A, C, I, R and Z shares are now offered alongside legacy Class L shares. Cohen & Steers Realty Shares has delivered an 11.7% annualized total return since its 1991 inception through June 30, outperforming the FTSE Nareit Equity REITs Index and the S&P 500 Index. With top-quartile performance in its Morningstar category for the first, third, fifth and 10-year periods, the fund garners a four star overall Morningstar rating.The new share classes provide investors with access to the fund through brokerage, advisory and retirement platforms. The fund is available on advisory platforms at most major intermediaries, and brokerage availability is expected to expand with the addition of Class A and C shares. The Class L shares, to which existing shareholders have been mapped, are available to new investors as well. “The U.S. REIT market has evolved considerably over decades, with the disruptive impact of technology and demographic shifts creating new opportunities in emerging property sectors such as cell towers, data centers and rental housing,” says Tom Bohjalian, senior portfolio manager and head of U.S. Real Estate Investments. “We believe this is an attractive time to consider allocating to REITs with an active manager, with healthy fundamentals and defensive characteristics potentially driving favorable absolute and relative returns.”The post Investment Product and Service Launches appeared first on PLANSPONSOR.
Categories: Industry News

Stakeholders Urged to Push Retirement Policy for Presidential Election

Plansponsor.com - Thu, 08/15/2019 - 12:00
Retirement industry sources spoke about the increasing demand for consistent and dependable national retirement policy in a webcast recently hosted by The American Academy of Actuaries.The session, moderated by Eric Keener, chairperson of Retirement System Assessment and Policy Committee at the Academy of Actuaries, began by pointing out the disparity in workplace retirement plans. Just less than 50% of private-sector employers are currently offered any access to retirement savings, he said. Instead, plan sponsors are letting an employee rely on personal savings to fund for the future. Additionally, because retirement savings programs are managed by different pillars of government, whether on a state or federal level, changes to individual programs can be complex and difficult to interpret.The group called for a collective change on current national retirement policy, starting with alterations to the country’s Social Security system. The Social Security 2100 Act, a current bill in Congress intended to cut taxes and safeguard Social Security checks for future retirees, would increase taxes and lessen retirement savings for employees, argued Romina Boccia, director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation. Without the higher taxes associated with the Act, American workers at all income levels would be better off funding retirement with personal savings. For example, a worker making $24,353 would accrue $63,748 in additional benefits under the Act, but would save $78,526 in additional savings sans higher taxes, amounting to a difference of $14,778 in funds.Theresa Ghilarducci, professor of Economics at The New School for Social Research, focused on an inadequacy in workplace retirement plans, citing a “do-it-yourself” approach and government tax policy as the main culprits. This failure in the retirement system has caused dissolutions of union plans, along with unstable retirement account balances, Ghilarducci noted.“Most people in the past 75 years have gotten the majority of their retirement security from the Social Security system,” she said. “We’ve built a voluntary system based on the employer and household level. It’s a system that has really crumbled, as unions have lost their power.”Stabilizing retirement savings will heavily rely on a strong Social Security system and on the preservation of pension plans, Ghilarducci added. “Most people really like Social Security and defined benefit (DB) plans because they can’t take it out. People really like the idea that they can’t borrow from both,” she said.Additionally, Ghilarducci proposed bringing back the now-defunct myRA, a savings account launched in 2015 for workers without workplace retirement savings plans. It was cut in 2017 by the U.S. Department of Treasury, due to low demand and investments.James Lockhart, senior fellow and co-chair of the Commission on Retirement Security and Personal Savings at the Bipartisan Policy Center, offered Commission recommendations for retirement savings plans, including promoting personal savings for short-term needs, facilitating lifetime-income options, and the use of home equity for retirement consumption, among others. He argued how advocating for a better reverse mortgage for workers can help facilitate home equity.“Just to put it in perspective, Americans own more than $15.8 trillion in home equity, and then have $17.6 trillion in defined contribution (DC) and individual retirement accounts (IRAs). There’s about $14 trillion in household debt,” he reasoned.Moving forward, experts agreed on expanding financial education in higher education to strengthen its comprehension, and also encouraged the use of federal savings plan, including opening the Thrift Savings Plan to private-sector employees. Looking at the 2020 presidential election, experts said the public will need to drive that conversation among candidates.“Push retirement policy for the presidential election,” said Ghilarducci. “We need to really start raising public awareness to start doing a better need for retirement policy.”The post Stakeholders Urged to Push Retirement Policy for Presidential Election appeared first on PLANSPONSOR.
Categories: Industry News

SoFi Adds 529 Contributions to SoFI at Work Program

Plansponsor.com - Thu, 08/15/2019 - 10:24
SoFi has added 529 contributions to its SoFi at Work program, including automated payroll deductions and employer contribution capabilities. SoFi is also planning to include an investment selection tool that will provide employees with 529 college savings plans that best fit their individual financial situation.With the forthcoming 529 selection tool, employees will be able to input basic information about their expected college costs and household financial status and then receive a personalized recommendation for two college savings plans.SoFi notes that the average cost of public, out-of-state universities is $26,290 and $35,830 for private universities, and that saving in a 529 college savings plan is an important step for parents. “To date, SoFi has helped over 250,000 members refinance $18 billion in student loans, continuing our commitment to easing the student loan burden,” says Anthony Noto, CEO at SoFI. “More than ever, employees are looking to their employers for financial wellness benefits and guidance.  The addition of 529 capabilities to the SoFi at Work program is essential in offering the best-in-class tools for employers to provide their employees with the resources to help them reach their personal financial goals.”The post SoFi Adds 529 Contributions to SoFI at Work Program appeared first on PLANSPONSOR.
Categories: Industry News

Caution Warranted When Tying Yield Curve Inversions to Recession

Plansponsor.com - Thu, 08/15/2019 - 10:07
Speaking with PLANADVISER during what has proven to be something of a wild week for the U.S. and global equity markets, investment experts reiterated their perspectives that a recession is not very likely in the near term.The recession risk is higher now with the trade issues, they note, and the fact that corporate profits are slowing down, but a recession is generally not in most economists’ base case. When it comes to interest rates in the U.S. and what influence the Federal Reserve’s recent rate cut may have had on equity markets here and abroad, most say the 25 basis point cut was to be expected.Still the market reaction to the rate cut was still significant. Some speculate that President Trump tweeting about his feelings that a bigger rate cut is needed caused some of the market jitters. The markets have also seemingly reacted to the chief executive’s heated tweets the yield curve.Reading the Yield Curve Tea LeavesChristopher Hyzy, chief investment officer at Merrill, a Bank of America company, suggests the current yield curve inversion—often called a harbinger of recession—is due more to declining inflation expectations and growth expectations, and the weight of negative bond yields in Europe.“If the Fed begins an easing campaign, the short end should begin to turn downward, changing the shape of the overall curve,” he says. Longer-term bonds typically offer higher returns, or yields, to investors than shorter-term bonds. The yield curve inverts when yields on that shorter-term debt exceeds those on longer maturity debt.Hyzy adds that some market watchers believe the U.S. is the late stages of the business cycle with a rising probability of a recession. However, he says, Merrill believes there have actually been a series of “mini wave” pullbacks that have made a significant recession less likely. “We are in the early to mid-stages of the fourth mini wave since the Great Recession,” Hyzy suggests. “Our view is largely based on current economic conditions, many of which are not typical of a cycle’s late stages historically.”Volatility Likely to Tick Higher Offering some additional context for the recent market volatility, the Natixis Midyear Strategist Survey suggests outcomes for 2019 will be “more muted as markets grapple with a number of downside scenarios and little in the way of upside surprises.”According to the survey, a “messy Brexit outcome” is the most likely downside risk, while a rebound in growth driven by new central bank policy ranks as the most likely upside. The survey also identifies a more bullish outlook for U.S. sovereign bonds, emerging market equities, global real estate investment trusts (REITs) and emerging market bonds due to accommodative central bank policy.“The survey results clearly show that, in aggregate, our respondents don’t see a lot of positive market catalysts on the horizon—nor do they see a recessionary worst-case scenario as very likely in the near term,” says Esty Dwek, head of global market strategy, dynamic solutions, Natixis Investment Managers. “It’s a kind of a ‘muddle through’ outlook.”Natixis strategists predict little in the way of equity returns in the U.S. and Eurozone over the next six to twelve months. But that’s not to say the consensus calls for dramatic losses either. Overall, according to the survey, the outlook on equities is balanced and no strategists forecast a bear market (-20%) or even a market correction (-10%) in this time frame. On average, the strategists predict the U.S. Fed will ease rates back by 50 basis points by year-end. In Europe, respondents see further easing from the European Central Bank (ECB) and anticipate a 5 bps to 10 bps reduction in the overnight deposit rate.The Natixis strategist projections for volatility go hand-in-hand with the equity outlook, anticipating a slight increase in volatility, “with the VIX rising 2.1 points from its mid-year level of 15.1.” This average projection to 17.2 represents “a modest but meaningful increase in volatility overall.” The VIX is the Cboe Options Exchange Volatility Index.The post Caution Warranted When Tying Yield Curve Inversions to Recession appeared first on PLANSPONSOR.
Categories: Industry News

CalPERS Offers Pre-Funding Trust to State Public Employers

Plansponsor.com - Thu, 08/15/2019 - 08:55
To help state and public agencies within the state manage their other post-employment benefits (OPEB) costs, the California Public Employees Retirement System (CalPERS) has implemented a trust fund that allows them to pre-fund the costs. Established by Senate Bill 1413, participation in the California Employers’ Pension Prefunding Trust (CEPPT), is voluntary and mirrors the functions of CalPERS’ California Employers’ Retiree Benefit Trust (CERBT) Fund by providing employers with the flexibility to determine the amount of their contribution, risk tolerance and time horizon.The fund also allows employers two diversified strategic asset allocations with low and moderate risk levels that are expected to yield a net investment return of 4% and 5%. It charges a low annual investment fee of 25 basis points. Its overall goal is to improve retirement security for active employees and retirees.“This new fund gives public agencies an opportunity to save and plan ahead,” says Marcie Frost, CEO of CalPERS. “Prefunding is a smart and efficient approach for employers to mitigate rate increases and temper contribution volatility. Benefits are only as secure as our employers’ ability to pay them.”Any state and local public agency that offers a defined benefit (DB) plan to their employees can participate; they do not have to contract with CalPERS for their pension plan to participate in the program. OPEB includes health, vision and dental benefits, as well as life insurance.The post CalPERS Offers Pre-Funding Trust to State Public Employers appeared first on PLANSPONSOR.
Categories: Industry News

Custom Portfolio Fees, Allocations Questioned in ERISA Complaint

Plansponsor.com - Wed, 08/14/2019 - 13:34
As it awaits the results of a Supreme Court appeal on another case scrutinizing its investment decisions, Intel Corporation now faces an additional lawsuit questioning the fees and performance of custom target-date funds (TDFs) offered to its defined contribution (DC) retirement plan participants.The lawsuit, filed in the U.S. District Court for the Northern District of California, suggests a number of Intel defendants breached their fiduciary duties by investing billions of dollars of employees’ retirement savings in “unproven and unprecedented investment allocation strategies featuring high-priced, low-performing illiquid and opaque hedge funds.”Case documents show the lead plaintiff is a participant in two Intel retirement plans, bringing this action on behalf of a class of similarly situated participants. According to the plaintiff, Intel plan fiduciaries “deviated greatly from prevailing professional investment standards for such retirement strategies in several critical ways.” Chief among them, according to the lawsuit, is the investing of billions of dollars in hedge funds, private equity and commodities.“And then, as investment returns repeatedly lagged peers and benchmarks, [plan fiduciaries] did nothing while billions of dollars in retirement savings were lost,” the complaint states. “[Defendants] deviated from the standard of care of similarly situated plan fiduciaries who select target-date funds for their plans that include little or no exposure to these strategies.”The complaint further states that Intel defendants failed to properly monitor the performance and fees of either the custom TDFs or of a custom multi-asset portfolio with a fixed allocation model that is also available to participants. The complaint says defendants failed to properly investigate the availability of lower-cost investment alternatives with similar or superior performance and failed to properly monitor and evaluate the “unconventional, high-risk allocation models adopted for these custom investment options.”Additionally, the compliant states, Intel defendants failed to provide adequate disclosures associated with the custom investment options’ “heavy allocation” to hedge funds and private equity, and either misinformed or failed to inform participants about the allocation mix of their account balances and the allocation strategy of the custom options.“As a result of these imprudent decisions and inadequate processes, defendants caused the plans and many participants in the plans to suffer substantial losses in retirement savings,” the complaint alleges.Stretching over 100 pages, the complaint includes substantial detail about the process Intel allegedly used to create and manage the custom funds. Notably, until January 1, 2018, the Intel TDFs and multi-asset funds were not technically funds—as there was no distinct legal entity such as a mutual fund or collective trust that held the investments. Rather, they were allocation models that directed participant savings into various pooled investment funds. Each of these pooled investment funds was structured as a collective trust. Effective December 31, 2017, the Intel models were converted to standalone collective investment trusts.According to plaintiffs, throughout the history of these investment strategies being offered, participants have consistently been charged fees significantly higher than both actively managed and passively managed target-date series offered by professional asset managers. At the same time, plaintiffs allege, the custom investments have demonstrated substantially worse performance, both in absolute terms and on a risk-adjusted basis.Readers may be aware this is in fact at least the second lawsuit Intel faces questioning its decisions in offering custom investments. Back in November 2015, plaintiffs first filed what has now proved to be a long-running compliant that similarly alleges fiduciary failures by various Intel defendants. That case, Sulyma v. Intel Corporation, was initially decided in favor of Intel on statute of limitations grounds. However, the 9th U.S. Circuit Court of Appeals overturned the ruling in December 2018, finding that disputes of material fact exist as to the timing of the plaintiff’s actual knowledge of the alleged fiduciary breach, precluding summary judgment for untimely filing. This appellate ruling in turn has been accepted for review in the next term of the U.S. Supreme Court.The Sulyma case is potentially quite significant in that the question of what creates “actual knowledge” plays directly into arguments of timeliness under ERISA. In basic terms, this is because the timing of when “actual knowledge” of a potential fiduciary breach is established is used to define when one of several potential statues of limitations will start to run for a given fiduciary action or decision.The full text of the new complaint is available here.The post Custom Portfolio Fees, Allocations Questioned in ERISA Complaint appeared first on PLANSPONSOR.
Categories: Industry News

Mobile App From Principal Designed to Make Account Transactions Quick and Easy

Plansponsor.com - Wed, 08/14/2019 - 10:42
Principal Financial Group has launched a new mobile app that leverages biometrics, education and on-the-go account access to help instill confidence and make transactions quick and easy.The newly designed app is the latest in a string of customer experience enhancements that Principal has rolled out, including the launch of ARAG will preparation services, educational content, HSA account integration and an Amazon Alexa Flash Briefing skill to share financial tips.“We don’t expect customers to interact with their 401(k) account every day,” says Joleen Workman, vice president of customer care at Principal. “But we know that when they want to check their account or make changes, it needs to be a seamless experience. The app has the transactional excellence that people expect coupled with moments of education and celebration to help our customers build confidence. Retirement planning doesn’t have to feel complex when the industry doesn’t make it hard.”The ability to manage future investment allocations on websites provided by recordkeepers is very important to retirement plan participants, but a study found participants can be confused by terminology and frustrated by design features.Principal has planned enhancements to the app in the coming months.The post Mobile App From Principal Designed to Make Account Transactions Quick and Easy appeared first on PLANSPONSOR.
Categories: Industry News

Health Benefit Plan Sponsors Focusing on High-Cost Claims

Plansponsor.com - Wed, 08/14/2019 - 10:21
Of the health care initiatives large employers participating in the National Business Group on Health’s (NBGH) latest Health Care Strategy and Plan Design Survey cited, implementing virtual solutions (51%) and developing a more focused strategy to address high-cost claims (39%) were at the top of the list.This was followed by expanding centers of excellence (COEs) to include other conditions (26%) and implementing engagement platforms that aggregate top solutions (26%).According to the survey, large employers are predicting that for 2020, their health care costs will increase a median of 6% without any cost management adjustments. Taking negotiations and other initiatives (e.g., alternative delivery models) into account, employers are expecting a 5% increase. While this constancy in health care cost trend provides some level of predictability to employers, it is still a sizable increase in health care budgets, well above general inflation and representing millions each year for the average large employer, the NBGH says.Eighty-five percent of surveyed large employers cited musculoskeletal conditions (MSK) as their first, second or third most costly condition group. Cancer is the most expensive disease group for 26% of large employers. Diabetes and cardiovascular conditions are also driving costs. This data supports the need for large employers to take creative approaches for specific disease classes, such as by offering a COE program and procuring a condition management solution.Increasingly, employers are working with partners to develop innovative solutions and address emerging challenges. Another reason for increased reliance on partners for 2020 is necessity, especially in the area of high-cost specialty therapies. Some therapies already on the market are in excess of $1 million per patient, and it is likely that new drug therapies will cost even more. As a growing number of high-price drugs from the pipeline are approved, the need to work closely with partners on how to finance and manage these therapies will only increase, the survey report says.Curating a COE network is a common strategy for employers aiming to improve the quality of care delivered to those with a specific condition or disease. In 2020, 27% of large employers will expand their COE offerings to address additional conditions. Orthopedic procedures and musculoskeletal claims are the top driver of health care costs and continue to be one of the key areas of health care waste and overuse, the survey finds.In addition, a growing number of employers are turning to COE models for fertility and maternity programs (38% and 17%, respectively); 10% are deploying a COE for transgender health.Strategies to bolster employee utilization of COEs include requiring/mandating the use of a COE for certain conditions; reducing or eliminating the employee cost share; or requiring or incentivizing the use of second-opinion services (which would help the employee find a COE if s/he ended up needing care).Requiring COE coverage is standard for typically carved-out benefits like bariatric surgery and infertility services. The exception to this rule is transplants: Because they require highly specialized care, these procedures are historically sought and covered at a COE facility.In 2020, 31% of large employers will offer an accountable care organization (ACO) and/or high-performance network (HPN) either through a direct contract in select markets or via their health plan(s). This number has remained relatively stable from 2019. As ACOs mature to show positive results in both patient outcomes and cost management, more employers may consider making them a predominant focus of their health care strategy.According to the survey, interest in virtual solutions continues to grow. This year, 63% of employers said that they expect virtual solutions, in areas ranging from mental health to musculoskeletal problems to telehealth, will have a very significant or significant impact in the future. In 2019, employers solidified their virtual offerings in the areas of telehealth for acute problems (98%), mental health (73%), weight management (55%) and diabetes management (44%). Looking ahead to 2021-2022, 38% are considering adding virtual care for musculoskeletal services and prenatal care (29%), as well as broadening telehealth to include specialty services such as dermatology (32%).The NBGH also finds, this year, the use of tools and programs such as second-opinion services, advocacy support and online decision-making continues to grow. There was an increase in the use of medical decision support and second-opinion services from 2019 to 2020 (71% vs. 78%), and the use of advocacy support (65% vs. 73%). The use of high-touch concierge services increased significantly (39% vs. 60%), reflecting the need to simplify the consumer experience and help employees navigate the health care system.The cost of specialty medical treatments is escalating at an unsustainable rate—typically a double digit percent increase year-over-year. Even worse, large employers with self-funded plans are footing the bill for newer high-cost treatments, some in the millions per treatment. Employers have many concerns related to high-cost treatments: the million-dollar price tags and the speed at which the treatments come to market, which can call into question the rigor and timeline of clinical trials. What’s more, an increasing focus of the research and development pipeline is on treatments for narrow subsets of patient populations with rare diseases—making this an exciting time in health care when patients with certain illnesses, sometimes terminal, are able to receive treatments or even be cured, the report notes.However, as a result of the pipeline of treatments for rare diseases, large employers are increasingly focused on the impact of even one or two cases on their overall annual health care budgets. For example, Zolgensma, a one-time injection to treat spinal muscular atrophy in young pediatric patients, was launched in May at a $2.1M price tag, sending employers into action mode to uncover ways to finance such therapies.In 2019, about one-quarter of employers are delaying the inclusion of new treatments from their formulary at launch (e.g., for 6 months) to enable the pharmacy benefit manager (PBM) or health plan to better determine the treatment’s efficacy and safety. The other two options—stop-loss insurance and outcomes-based contracting—aren’t as popular an approach, but are being considered heavily for 2021/2022.In 2018, a majority (56%) of large employers voiced skepticism about the proposed health plan–PBM mergers. Specifically, they were unsure if these newly formed relationships would lower cost, improve quality and curate a better consumer experience. As a followup to that survey question, this year’s survey dove into whether employers are “voting with their feet” by going out to bid in direct result of mergers between health plans and PBMs.The survey finds 16% of surveyed employers are issuing a request-for-proposal (RFP) due to health plan–PBM mergers. Another 30% are considering doing so in 2021-2022. These numbers are an indication that consolidation is having a profound effect on the health care industry, which could result in a plan change—health plan or PBM—for a number of employers, the report says.The full report is only available to NBGH members, but an executive summary of the findings is available here.The post Health Benefit Plan Sponsors Focusing on High-Cost Claims appeared first on PLANSPONSOR.
Categories: Industry News

403(b) Plan Sponsors Have Taken Steps to Prepare for Market Volatility

Plansponsor.com - Tue, 08/13/2019 - 12:19
Sponsors of 403(b) plans are more concerned about market volatility than 401(k) plan sponsors, according to the 2019 BlackRock DC Pulse: 403(b) Report.Comparing responses from each plan type in its overall 2019 DC Pulse survey, BlackRock found 86% of 403(b) plan sponsors anticipated market volatility in 2019, compared to 71% of 401(k) plan sponsors. In addition, 93% of 403(b) plan sponsors have taken steps to prepare for market volatility.These steps include:46% have conducted a plan design analysis;42% have added an investment option that seeks additional return;42% have reviewed the plan’s investment performance, including downside protection; and36% have conducted a reenrollment.Nearly nine in 10 (89%) 403(b) plan sponsors prefer investments offering downside protection over investments that seek to outperform the market (vs. 71% of 401(k) plan sponsors). Additionally, 85% of 403(b) plan sponsors mentioned their organization is re-evaluating core fixed income to better manage risk and return (vs. 69% 401(k) plan sponsors).The survey also found 403(b) plan sponsors are stronger advocates of active management than their 401(k) peers, as 87% said active strategies can get better returns than index strategies (vs. 68% of 401(k) plan sponsors). Ninety-two percent of 403(b) plan sponsors said an actively managed target-date fund (TDF) could reduce the impact of volatility for participants.403(b) plan sponsors have been ahead in the game of offering retirement income products and services to participants. BlackRock’s survey found 85% of 403(b) plans offer investments designed to help support participant spending needs once they retire, compared to 55% of 401(k) plans. In addition, 90% of 403(b) plan sponsors are providing tools to help participants understand retirement income.A large majority of plan sponsors said TDFs go hand-in-hand with generating retirement income. Eighty-seven percent agreed with the statement, “When selecting a TDF, it’s an important consideration whether or not it can be used as a decumulation vehicle in retirement. Only 68% of 401(k) plan sponsors agreed. Eighty-nine percent of 403(b) plan sponsors said their current TDFs can be used as a decumulation vehicle for participants in retirement, and 92% stated their participants would benefit from a TDF that generates guaranteed retirement income. This compares to 72% and 75% of 401(k) plan sponsors, respectively.The survey also found 403(b) plan sponsors feel more responsible about the overall financial well-being of their employees than their 401(k) counterparts (99% vs. 90%). And, 403(b) plan sponsors are also more invested in employees after they leave: 68% feel very responsible to help participants plan for and manage their income in retirement, versus 37% of 401(k) plan sponsors.“It’s no surprise that 403(b) plan sponsors are leading the way on retirement income, ESG and other innovative measures to drive retirement readiness. They are consistently among the most highly engaged plan sponsors and feel tremendous responsibility for their participants’ well-being in retirement. It’s also encouraging to see them really embracing plan design to help make their vision a reality,” Erin Wikander, director of defined contribution 403(b) sales/strategy at BlackRock in New York City, tells PLANSPONSOR.The post 403(b) Plan Sponsors Have Taken Steps to Prepare for Market Volatility appeared first on PLANSPONSOR.
Categories: Industry News

Fiduciary Education Courses Now Available in Three Tiers

Plansponsor.com - Tue, 08/13/2019 - 11:58
Fiduciary Education is now making its online courses and certifications available as part of a three-tiered membership program for advisers and plan sponsors. The courses are designed to help them make informed decisions in the best interest of organizations and participants.“There’s a massive amount of information and tools available that are often unknown or underutilized,” says Brent Wiley, co-founder and director of Fiduciary Education. “We’re centralizing this knowledge with a community-focused membership that challenges the trillion-dollar retirement and benefits industry to push forward.”The three tiers for membership subscriptions are Basic, Guided and All-Access, ranging from free to $999 a year. Plan fiduciaries, committee members, human resources and benefits professionals, chief financial officers, business owners, retirement advisers and anyone else looking to improve overall plan management can benefit, Fiduciary Education says.More information can be found here.The post Fiduciary Education Courses Now Available in Three Tiers appeared first on PLANSPONSOR.
Categories: Industry News

U.S. Considering Whether to Join Lawsuit Over California Secure Choice Program

Plansponsor.com - Tue, 08/13/2019 - 09:36
The United States is considering joining a lawsuit challenging the establishment of the California Secure Choice Retirement Savings Program.The Howard Jarvis Taxpayers Association (HJTA) filed the complaint last year in the United States District Court for the Eastern District of California. The lawsuit alleges the act that created the Secure Choice program “violates the Supremacy Clause of the United States Constitution because it is expressly preempted by the Employee Retirement Income Security Act of 1974.”A notice filed with the court and signed by Trial Attorney Christopher R. Healy with the U.S. Department of Justice says, “The United States may have an interest in providing its views with respect to that issue and is actively considering whether to participate.” The notice requests that the court defer ruling on the pending motion to dismiss in order to afford the United States an opportunity to complete the authorization process and determine whether to participate in the litigation.The notice explains, “This approval process generally takes several weeks, but it can vary depending upon the Assistant Attorney General’s workload and availability. The United States is aware that Defendants’ motion to dismiss is fully briefed, and it intends to work expeditiously to complete the process of determining whether to participate in this lawsuit.”According to its supporters, the California Secure Choice Retirement Savings Program is meant to provide a voluntary, low-risk, auto-enrollment retirement savings plan for many uncovered workers in the state who would otherwise have little opportunity to start saving in a constructive way. According to detractors, such as HJTA, the program will most likely prove to be an expensive experiment that does little to actually improve retirement savings adequacy in the state.However, recent data shows OregonSaves, the first state-facilitated payroll deduction individual retirement account (IRA) program in the nation to launch, has demonstrated success by a number of measures. It reports more than seven in 10 workers have elected to stay in the program; workers are saving at a higher percentage of pay than anticipated (an average of $117 per month); and so far, $25 million has been saved by workers who were not saving before.In addition, Kasey Krifka, engagement director of the Oregon Savings Network, with the Oregon State Treasury, tells PLANSPONSOR that OregonSaves became self-sustaining in July 2019, years sooner than initially planned, which means the state of Oregon and the people of Oregon are benefiting from an important program at less cost than initially projected, and with no additional loans or general fund support.The HJTA filed its compliant less than a year after the Trump administration and Congress cancelled an ERISA safe harbor established by the Obama administration, which was meant to prevent this very preemption issue. By issuing a new final rule, “Definition of Employee Pension Benefit Plan Under ERISA,” the Department of Labor’s Employee Benefit Security Administration (EBSA) removed its final rule regarding the Employee Retirement Income Security Act (ERISA) safe harbor of government-run plans for private-sector workers from the Code of Federal Regulations.The notice filed in the California Secure Choice litigation says the United States will update the court on the status of its consideration to participate in the lawsuit by August 30.The post U.S. Considering Whether to Join Lawsuit Over California Secure Choice Program appeared first on PLANSPONSOR.
Categories: Industry News

Few 401(k) Participants Make Trades in July

Plansponsor.com - Mon, 08/12/2019 - 13:22
Despite volatility, July was a slow trading month for 401(k) investors, according to the Alight Solutions 401(k) Index. July also marks the 18th month in a row that net trades have moved from equities to fixed income. Nineteen of the 22 trading days favored fixed income. On average, only 0.014% of 401(k) balances were traded daily, and there was only one above-normal trading day.Year-to-date, investors have favored fixed income on 186 trading days, or 86% of the trading days available.Asset classes with the most trading inflows in the month were bond funds (taking in 52% of the inflows, worth $189 million), international equity funds (14%, $52 million) and money market funds (12%, $43 million).Asset classes with the most trading outflows were company stock (42%, $154 million), large U.S. equity funds (40%, $143 million) and small U.S. equity funds (9%, $33 million).Asset classes with the largest percentage of total balances at the end of July were target-date funds (TDFs) (29%, $62.166 billion), large U.S. equity funds (25%, $54.291 billion) and stable value funds (10%, $21.188 billion). Asset classes with the most contributions in July were TDFs (47%, $511 million), large U.S. equity funds (20%, $220 million) and international funds (7%, $79 million).Returns were very muted during the month, with large U.S. equities rising 1.4%, small U.S. equities up 0.6%, U.S. bonds up 0.2% and international equities down 1.2%.The post Few 401(k) Participants Make Trades in July appeared first on PLANSPONSOR.
Categories: Industry News

Walgreen 401(k) Participants Seek $300M in Lawsuit Over TDF Mismanagement

Plansponsor.com - Mon, 08/12/2019 - 12:15
A group of current and former participants in the Walgreen Profit-Sharing Retirement Plan, individually and as representatives of a class of participants and beneficiaries of the plan, have filed a lawsuit on behalf of the plan for breach of fiduciary duties under the Employee Retirement Income Security Act (ERISA).The lawsuit names as defendants Walgreen Co., the Retirement Plan Committee For Walgreen Profit-Sharing Retirement Plan and its members, and the Trustees for the Walgreen Profit-Sharing Retirement Trust and its members.The complaint notes that as fiduciaries, the Walgreen defendants must prudently curate the plan’s investment options. They must regularly monitor plan investments and remove ones that become imprudent. The lawsuit alleges that the defendants breached these fiduciary duties by adding to the plan in 2013 a suite of poorly performing funds called the Northern Trust Focus Target Retirement Trusts and keeping these funds in the plan despite their continued underperformance.Despite a market “teeming with better-performing alternatives,” the plaintiffs say, Walgreen selected the Northern Trust Funds, which already had a history of poor performance. According to the complaint, they had significantly underperformed their benchmark indexes and comparable target-date funds since Northern Trust launched the funds in 2010.The lawsuit contends it was predictable that the Northern Trust Funds continued underperforming through the present. For nearly a decade, these investment options performed worse than 70% to 90% percent of peer funds, according to the complaint. The plaintiffs say not only does Walgreen refuse to remove the funds, it has actually added Northern Trust funds to the plan’s investment lineup, and selected the Northern Trust target-date funds as the plan’s default investment.According to the complaint, the funds now comprise 11 of the 24 investment options in the plan and collectively hold more than $3 billion in plan assets, which represents more than 30% of the plan’s assets. “Walgreen’s imprudent decision to retain the Northern Trust Funds has had a large, tangible impact on participants’ retirement accounts. Based on an analysis of data compiled by Morningstar, Inc., Plaintiffs project the Plan lost upwards of $300 million in retirement savings since 2014 because of Walgreen’s decision to retain the Northern Trust Funds instead of removing them,” the complaint states.It further says, “The Northern Trust Funds have also impaired the Plan’s overall performance. According to Brightscope, the average Plan participant could earn $193,925 less in retirement savings than employees in top-rated retirement plans of a similar size. The $193,925 disparity translates to an additional 10 years of work per participant.”The plaintiffs are seeking to enforce the Walgreen defendants’ personal liability under ERISA to make good to the plan all losses resulting from each breach of fiduciary duty occurring during from January 1, 2014, to the date of judgment. In addition, they seek such other equitable or remedial relief for the plan as the court may deem appropriate.Notably, given the impending U.S. Supreme Court decision in the case of Intel v. Sulyma regarding when “actual knowledge” actually starts for retirement plan participants for use in deciding when a case is filed beyond the statutory limits under ERISA, the Walgreen complaint says the plaintiffs did not have knowledge of all the material facts until shortly before they filed the complaint. “Further, Plaintiffs do not have actual knowledge of the specifics of the Walgreen Defendants’ decision-making processes with respect to the Plan, including the Walgreen Defendants’ processes for monitoring and removing Plan investments, because this information is solely within the possession of the Walgreen Defendants prior to discovery,” the complaint states.Walgreen declined to comment on pending litigation.The post Walgreen 401(k) Participants Seek $300M in Lawsuit Over TDF Mismanagement appeared first on PLANSPONSOR.
Categories: Industry News

Caesars Owes No Withdrawal Liability for One Closed Pension in Controlled Group

Plansponsor.com - Mon, 08/12/2019 - 10:40
A federal appellate court has determined that Caesers Entertainment Corporation owes no withdrawal liability for ceasing to make contributions to a multiemployer pension plan for a closed casino while it continued to make contributions for others.The 3rd U.S. Circuit Court of Appeals notes that the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA) imposes liability on employers who withdraw from covered plans by ceasing contributions in whole or in part. The current case involves one type of partial withdrawal, “bargaining out,” which occurs when an employer “permanently ceases to have an obligation to contribute under one or more but fewer than all collective bargaining agreements under which the employer has been obligated to contribute … but continues to perform work… of the type for which contributions were previously required.”Caesars Entertainment Corporation (CEC) once operated four casinos in Atlantic City: Caesars, Bally’s, Harrah’s and Showboat. These comprised a “controlled group” under the Employee Retirement Income Security Act (ERISA), with CEC being the “single employer” of the group. CEC bargained with the International Union of Operating Engineers, Local 68, for engineering work at all four casinos.In 2014, the Showboat casino closed, and CEC stopped contributing to the fund for engineering work there. The other three casinos under CEC’s control remain open, and CEC continues to pay the fund for their union work. Showboat’s closure reduced CEC’s total contributions to the fund by 17%—well below the MPPAA’s 70% threshold that would have automatically triggered liability for a partial withdrawal.The fund claimed CEC was liable under the “bargaining out” provision of the MPPAA, but CEC disagreed. So the parties went to arbitration, and CEC lost. The arbitrator held CEC had triggered both clauses of the bargaining out provision. The arbitrator reasoned clause [2] applied because“[t]he type of work for which contributions were required at the closed Showboat is the same type of work currently being done at the remaining casinos.”The U.S. District Court for the District of New Jersey, reversed the arbitrator’s decision. The Court assumed without deciding that, under clause [1], the jurisdiction of the Showboat collective bargaining agreement (CBA) included all engineering work in Atlantic City. But it held that, under clause [2], liability exists only when an employer replaces work that contributes to the pension fund with “work—of the same sort—that does not.” Such replacement hadn’t occurred because CEC’s “constituent members [aside from the shuttered Showboat] continue to contribute to the fund for all engineering work they perform throughout Atlantic City.”The 3rd Circuit agreed with the District Court that the dispositive question is whether under the bargaining out provision of the MPPAA “work… of the type for which contributions were previously required” includes work of the type for which contributions are still required. The appellate court said the statutory text and Pension Benefit Guaranty Corporation (PBGC) guidance confirm that the answer is no.The 3rd Circuit first noted that the bargaining out provision typically applies when there is a change in union representation or the employer negotiates out of an obligation to contribute to a plan. “Neither of those things happened here,” it wrote in its decision. However, the fund claims CEC continues to perform “work … of the type for which contributions were previously required,” because engineering work continues at Caesars, Bally’s, and Harrah’s. According to the court document, in the fund’s view, it is irrelevant that CEC still must contribute to the plan for the work performed by Union members at those three casinos. The appellate court disagreed.“[W]ork … of the type for which contributions were previously required” means “work … of the type for which contributions are no longer required,” the court wrote, citing prior case law. In arriving at this conclusion, the appellate court gives “previously” its ordinary meaning at the time Congress enacted the relevant provision. “If Congress had meant to adopt the fund’s interpretation, it could have omitted ‘previously’ to no effect,” the decision states. “The provision would have targeted work ‘for which contributions were required.’ Because that’s not what Congress wrote, we give ‘previously’ some meaning. And that meaning tracks what we’ve learned from dictionaries and corpus linguistics.”For these reasons, the appellate court said the best reading of “work … of the type for which contributions were previously required” excludes work of the type for which contributions are still required. “To hold otherwise would put us in conflict with our sister courts’ interpretation of identical language in another MPPAA provision,” the court wrote. For example, the court noted Section 1383(b)(2)(B)(i) imposes complete withdrawal liability on employers in the construction industry when they continue to perform “work… of the type for which contributions were previously required.” Two of its sister courts have held that the same provision imposes liability only when employers “cease making payments to the plan” for a type of work (e.g., construction) “while continuing to do [that work] in the area.”The 3rd Circuit found additional support for its view in longstanding guidance from the PBGC. In the case, the District Court found persuasive PBGC Opinion Letter 83-20, which says that no withdrawal liability results from “merely ceasing or terminating an operation.” According to the PBGC, liability under the bargaining out pro-vision arises “only [in] situations where work of the same type is continued by the employer but for which contributions to a plan which were required are no longer required.” So an employer isn’t liable when it “closes one [facility] and shifts the work of that [facility] to other [facilities] which are covered by other [CBAs] under which contributions are made to the plan.”The appellate court said, “That’s precisely what happened here. And we, like the District Court, find that the PBGC’s view tracks the text of the MPPAA.”The appellate court affirmed the judgement of the District Court finding that, because CEC continues to contribute to its pension plan for engineering work at its remaining three casinos, it is not liable under the bargaining out provision of the MPPAA.The post Caesars Owes No Withdrawal Liability for One Closed Pension in Controlled Group appeared first on PLANSPONSOR.
Categories: Industry News

Looking at User-Friendliness of Recordkeeper Websites

Plansponsor.com - Mon, 08/12/2019 - 09:02
A positive participant website experience is something retirement plan sponsors want to make sure they are getting from their recordkeepers.A study from Corporate Insight found 69% of participants deemed the ability to manage future investment allocations to be very or extremely important when rating the value of transaction types on recordkeeper websites. However, a more recent study found participants can be confused by terminology and frustrated by design features.For example, one firm titles the transaction Change How My New Money Will Be Invested and the balloon tip states, “I want to make changes to how new money like contributions or rollovers are being invested.” The term “new money” confused multiple respondents. The majority of firms use the term “future contributions” in both titles and descriptions, which proved to be a strong indicator for respondents when choosing between transaction options.In another example, multiple participants incorrectly selected one recordkeeper’s option, Investment Elections, from the Manage section of the main menu, which opens a page with information about participants’ current investment instructions. Participants did not expect the page to include a link to a data page, given its action-oriented name. Once they returned to the overview screen and scanned the options again, they all chose the correct option, Change Investments.According to Corporate Insight’s report, participants consistently expressed a desire to view investment performance data in a manner that did not interfere with their ability to use the transactional interface. They also wanted the information to be statically available, as this makes it easier to compare funds. Thus, the overall consensus among respondents was that providing fund data directly on the interface is the most helpful, followed by new browser tabs or windows that house this data. One participant summed up the general sentiment by saying, “The performance data is really what I am using to make my decisions here, so I like being able to see it or open it in any way. But when I am using it, I should be able to compare funds.”Participants all appreciated the asset allocation advice available on a few recordkeeper’s participant sites. However, when Corporate Insight asked participants to reallocate their investments to align with the provided recommendations, they consistently raised the same issue: the pie charts depicting suggested allocations were not viewable throughout the transactional interface. Following the advice on one recordkeeper’s site requires users to consistently open and close a lightbox, while following it on another’s requires users to continuously scroll up and down the page.The study also found respondents preferred firms giving them the option to allocate by source, rather than requiring them to do so, a transactional feature 41% of the recordkeeper websites tested offered.Organizational features are particularly important when it comes to future investment transactional interfaces, as many plans offer a litany of fund options, Corporate Insight says. Participants in its test consistently expressed frustration when investment lists were particularly long; long lists often made key interface features less findable. To help participants locate and browse funds, Corporate Insight says firms should organize funds by asset class, which 76% of recordkeepers tested do. Further, incorporating expandable sections can shorten potentially long fund lists, but only 18% of recordkeepers take this approach.Information about how to obtain the July 2019 Corporate Insight Retirement Plan Monitor Report is here.The post Looking at User-Friendliness of Recordkeeper Websites appeared first on PLANSPONSOR.
Categories: Industry News
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