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Insight on Plan Design & Investment Strategy
Updated: 1 hour 6 min ago

Fourth Quarter Volatility Wipes Out DB Plans’ Funding Status Gains

Fri, 2019-03-22 11:49

Despite higher interest rates and significant contributions by pension plans, their funding status rose only 70 basis points last year, according to a new report from Goldman Sachs, “2018 Pension Review ‘First Take:’ Groundhog Day.”

While some plans notably increased fixed-income allocations, likely linked to significant contribution activity and the intra-year rise in funded levels last year, other pension plans may not have been able to act before the volatility of the fourth quarter erased gains. Goldman Sachs’ report, written by Senior Pension Strategist Mike Moran, says, “In some ways, it feels like the 1993 movie ‘Groundhog Day,’ as we relive the same scenario over and over again. For corporate pensions, that may mean seeing funded levels rise, missing the opportunity to lock in those gains, and then watching those gains dissipate, especially in light of an aging bull market and expectations of a potential slowdown.”

Goldman’s report is based on the 50 largest pension plans in the S&P 500. These companies’ funding levels rose during 2018 to their highest level since the 2008 financial crisis, but gave back most of their increases in the fourth quarter. “This is, unfortunately, a scenario that has played out before for U.S. corporate defined benefit [DB] plans and is contributing to a sense of déjà vu.”

Allocations to fixed income rose to 48% by the end of 2018, the highest level Goldman Sachs has ever tracked in DB plans. In 2017 and 2018, the majority of DB plans were cash flow negative, meaning that some of their contributions were used to fund benefit payments and never made their way into asset allocations. Furthermore, Goldman Sachs says, another reason why allocations to fixed income rose last year could well have been because pension plans withdrew allocations from other asset classes in order to pay benefits.

“Also, recall that the end of 2018 was quite volatile,” Goldman’s report says. “The S&P 500 lost around 9% in December, while fixed income had low single digit returns as interest rates fell. Some plans may not have been able to effectuate rebalancing actions before the end of the year, resulting in higher fixed-income allocations than anticipated.”

Over the past 10 years, there have been times when pension plans could have de-risked through better asset liability matching but some did not, Goldman Sachs says, resulting in many plans having to repeat their contributions. By the end of 2017, plans were collectively underfunded by $245 billion for a funded ratio of 86%.

For 2019, Goldman Sachs expects fixed-income allocations to rise and it recommends that pension plans take a “more customized approach in managing these assets,” the report says. “Unless the fixed-income allocation is tailored to the actual liability profile of the plan, the hedging assets may not perform as contemplated and funded status may decline unexpectedly.” To accomplish this, Goldman Sachs recommends that pension plans hire a strategic partner to use overlays and derivatives to fine tune hedges and position the portfolio for an annuitization in-kind transfer.

Goldman Sachs also notes that pensions are increasingly turning to outsourced chief investment officer (OCIO) services and that this movement could help them improve their funded status.

Goldman Sachs’ full report can be downloaded here.

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Categories: Industry News

Retirement Industry People Moves

Fri, 2019-03-22 10:17

Art by Subin Yang

Schroders Makes Promotions and Hires to Distribution Team

Schroders has announced changes to its distribution team, as part of the firm’s strategy to enhance its North American distribution platform.  As part of these changes, Marni Harp has been promoted to head of Institutional Consultant Relations for the U.S. and Scott Garrett has joined the firm as an institutional sales director, focused on Taft-Hartley.

Harp brings over two decades of experience in the investment industry and will be responsible for overseeing the firm’s relationships with local and global investment consultants and their institutional clients.  She joined Schroders in August 2016 to lead coverage of investment consulting firms in the firm’s western region. Harp is based in Los Angeles and will report directly to Marc Brookman, deputy CEO of North America. 

As an institutional sales director, Garrett will be responsible for new business development and relationship management for Taft-Hartley clients in the U.S. He joins from Systematic Financial Management, where he was a senior vice president and was responsible for developing and maintaining client relationships with Taft-Hartley, public funds, foundations and endowments and corporate plans. Garrett will be based in Southern California and will report to Rock Wilkinson, head of U.S. Institutional Sales. 

Niles Lankford Group Rebrands to Latitude

Niles Lankford Group Companies, a third-party retirement plan administration group, has changed its name to Latitude Service Company Inc.

A leading third-party retirement plan administration firm specializing in quality retirement plan administration, Latitude has offices nationally and serves more than 2,500 employer-sponsored plans.

“Latitude is as much an idea as it is a destination. It reflects our national presence as well as our flexibility in crafting retirement plan solutions that meet each client’s needs,” says CEO Brad Lankford.

Latitude operates as Latitude Retirement and unifies the branding of Niles Lankford Group (NLG), Pension Systems (PS), Retirement Systems of Arizona (RSA), and Retirement Systems of California (RSC). In addition to providing plan consulting and administration services, the company offers actuarial, compliance, payroll integration and fiduciary services to help employers achieve their goals with less work and lighter responsibilities.

Franklin Templeton Names PM on Emerging Markets Team

Franklin Templeton has appointed Nicole Vettise as senior vice president, institutional portfolio manager, within the Franklin Templeton Emerging Markets Equity (FTEME) investment team. Reporting to Manraj Sekhon, her primary responsibility will be to support FTEME’s full suite of strategies for clients in Europe and North America. Vettise is based in London.

Vettise brings over 20 years of experience in the investment industry and joins the firm from Blackrock, where she managed a team of product strategists for a range of equity strategies including natural resources and thematic funds. Prior to this, she was institutional portfolio manager, emerging markets and natural resources, at RBC Global Asset Management and previously worked at J.P. Morgan Asset Management. Vettise has also held communication and investor relations roles in Asia, Europe and London.

Vettise obtained a BSc qualification in European studies from the Institute d’Etudes Politiques in Grenoble, France, and the University of Hull and is a CAIA Charterholder.

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Categories: Industry News

Health Care Costs to Outpace Inflation

Fri, 2019-03-22 09:56

As much as people try to understand their financial needs in retirement, one unknown cost is health care. Despite the existence of Medicare insurance for seniors, it does not cover all costs and health care can be extremely expensive, particularly as one ages.

For instance, according to the analysis “Healthcare Costs & Spend: Rising by Age, Gender, and Race” by, by the time one reaches age 65, average health care costs are $11,300 per person, per year—nearly triple the annual average cost of those in their 20s and 30s. The average healthcare expenses for women is nearly twice as high as for men. And minority groups such as Black and Hispanic Americans costs are nearly 30% less than on White Americans. analyzed several reports to create this analysis.

According to the Department of Health and Human Services MEPS survey data of medical costs by age and demographics dating from 1999 through 2016, health costs are lowest from age five to 17 at just $2,000 per year on average. From then on, it’s a steady increase with costs rising to over $11,00 per year.

In addition, according to the data, women will need to budget more than men for health care expenses each year. Not only that, but women tend to live two more years than men in the United States,  which requires additional savings.

There is an average of $3,500 annual health care spending by white adult Americans, approximately 70% higher than for Asian, Black, and Hispanic Americans. The root cause and implications of this unequal spending should be studied further to see if their remedy can improve healthcare outcomes for all, according to the analysis.

If one adds annual spending figures, in today’s dollars, if you’re “average,” one can expect costs to be $414,000. However, according to, there is reason to believe this estimate is conservative. Their data suggests that health care costs in the United States have been increasing faster than inflation. 

Even with the best health insurance, senior citizens are often charged expensive co-pays or need drugs that their plans won’t cover. These expenses can impact ones retirement savings and even result in bankruptcy. As one saves for retirement, it’s important to understand the value of having savings for your future medical expenses, which will likely be higher than they are today.

Medical surveys were analyzed by the staff at See their report here.  

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Categories: Industry News

TIAA Enhances Customers’ View of Retirement Income

Thu, 2019-03-21 13:13

TIAA announced enhancements to its Retirement Profile tool, a feature of the company’s Preparing for Retirement experience.

Available to all customers, the tool analyzes an individual’s real-time account information, along with their responses to a handful of simple lifestyle and financial questions, to give them a view of what their income in retirement might look like.

According to Executive Vice President and CEO of TIAA Financial Solutions Lori Dickerson Fouché, the tool is designed to make retirement planning easier for customers and help them build confidence in their decisions.

“The enhanced Retirement Profile tool shows TIAA annuity customers how the combination of lifetime income—such as fixed and variable annuities, Social Security or pensions—and systematic withdrawals have the potential to yield a steady and guaranteed retirement paycheck,” she adds.

According to TIAA, the expanded retirement income profile tool offers individuals estimates whether an their portfolio is “on track” to generate the monthly income they will need in retirement using real-time account data; suggests strategies to help an individual work toward their goals by adjusting factors like the age at which they start collecting Social Security and how they will draw income from their annuities; and provides an interactive “play area” that shows individuals how adjustments to their inputs, such as retirement age, can change their monthly retirement income and likelihood of meeting their annual retirement income needs.

Proposed strategies are outlined alongside an individual’s current strategy, illustrating how adding income from annuities may be able to help an individual secure a stream of income in retirement for as long as they live. The tool also generates a “probability of success” indicator to further illustrate whether a particular approach will put an individual on track to achieve their annual retirement income needs.

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Categories: Industry News

Investment Product and Service Launches

Thu, 2019-03-21 11:55

Art by Jackson Epstein

Schwab Adds Conestoga Fund to Mutual Fund List

Conestoga Capital Advisors, LLC announced that the Conestoga SMid Cap Fund (ticker CCSMX) has been added to Charles Schwab’s Mutual Fund OneSource Select List in the first quarter of 2019.  The Mutual Fund OneSource Select List is comprised of no-load and no-transaction fee mutual funds that have passed rigorous screening for performance, risk and expenses by Charles Schwab Investment Advisory, Inc.  Launched in 2014, the Conestoga SMid Cap Fund celebrated its five-year history on January 21.

“We are excited to have been chosen for the OneSource Select List and look forward to the opportunity to work with Schwab’s Individual and Advisory clients,” says Derek Johnston, partner and portfolio manager of the Conestoga SMid Cap Fund.

The SMid Cap Fund is managed by the same five-person investment team that oversees Conestoga’s Small Cap Fund.  The Conestoga SMid Cap Fund seeks to provide long-term growth of capital through a portfolio invested in small- and mid- capitalization companies.  The investment team searches for profitable companies which they believe have sustainable earnings growth rates, strong financial characteristics, and insider ownership. Co-Portfolio Managers Robert Mitchell and Derek Johnston employ a very similar investment approach as the Small Cap Fund, but across a wider market capitalization range. The Conestoga Small Cap and SMid Cap Funds have approximately 50% overlap in portfolio holdings. 

“We believe the SMid Cap Fund offers a similar opportunity for long-term capital appreciation and downside protection as our Small Cap Fund,” says Conestoga Co-Founder/Managing Partner and Portfolio Manager Bob Mitchell.  “In addition, we are able to hold some of our companies as they grow into the mid-capitalization range, seeking to extend their growth and success.”

GSAM Acquires Standard & Poor’s Investment Advisory Services

Goldman Sachs Asset Management (GSAM) has entered into an agreement to acquire Standard & Poor’s Investment Advisory Services (SPIAS) from S&P Global Market Intelligence, a division of S&P Global. The transaction is expected to close in the first half of 2019. Terms of the agreement were not disclosed.

The acquisition is said to expand GSAM’s multi-asset offerings and rules-based equity strategies, positioning the firm to address the needs of financial intermediaries and institutional clients. SPIAS manages multi-asset class model portfolios using Exchange Traded Funds (ETFs) and mutual funds, as well as equity portfolios produced employing a rules-based investment process.

“The firm is acquiring a compelling platform for growth and a differentiated team with a strong long-term track record of performance. The team’s expertise will allow us to deliver greater value to the financial intermediaries and institutions we serve,” says Timothy O’Neill and Eric Lane, co-heads of the Consumer and Investment Management Division at Goldman Sachs.

“S&P Global enabled us to grow our investment advisory business, and as our business continues to evolve, our focus on providing clients with solutions to more easily and efficiently manage their portfolios fits perfectly within GSAM,” says SPIAS president and chairman Michael Thompson. “We look forward to becoming part of one of the world’s leading asset managers, which will deliver additional resources to benefit our clients and address their changing needs.” 

Firm Offers FDIC-Insured Alternative to Stable Value Funds

Insured Retirement Investments has introduced SafeHaven, an FDIC-Insured alternative to stable value funds with a significant rate and safety advantage.

The firm notes that stable value funds invest in lower maturity fixed rate bonds, and prices of bonds go down when rates go up. Three rate hikes are expected in 2019, and payouts to 401(k) plan participants will generally decline because the stable value fund must amortize differences between book and market value against the participant payout. SafeHaven is in the opposite position: as rates go up, payout to participants goes up.

Currently the rate for SafeHaven is 2.4%, compared to 1.92% for stable value funds.

For participants, SafeHaven is the best place to keep cash until it’s needed, there is easy access to cash, they cannot lose principle, and earnings increase as interest rates go up. SafeHaven provides retirement plan sponsors with sensible alternatives for cash investments. Since it is fully FDIC-Insured, there is less risk than stable value or money market funds, and a low expense ratio provides exceptional value.

In addition, the firm says SafeHaven is the smart choice for advisers acting as fiduciaries to retirement plans.

More information can be found here.

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Categories: Industry News

Start-Up Retirement Plans Will Evolve in Plan Design and Governance

Thu, 2019-03-21 11:49

It takes time to perfect a project, and results from PLANSPONSOR’s 2018 Defined Contribution Survey suggest this is true for start-up defined contribution (DC) plans.

While start-up plans (defined as those with less than $1 million in assets and less than three years of tenure with their provider) do offer beneficial provisions for retirement plan participants, the survey finds not all of them are yet using plan designs and governance practices that are recommended in the industry. It is likely this will change as start-up plans get larger and spend more time being educated by plan advisers and providers.

According to the survey, the majority (73.9%) of start-up plans are safe harbor plans, which do not have to worry about nondiscrimination testing. This compares to 54.4% of DC plans overall in the survey. In addition, three-fourths (75.7%) of start-up plans offer participants the ability to save after-tax contributions in a Roth account. Forty-five percent of start-up plans that match participant deferrals say match amounts are immediately 100% invested, compared to 36% for DC plans overall. Start-up plans offer a similar variety of investment classes to participants for investing plan assets as DC plans overall.

One-third of start-up plans report their approximate average asset-weighted expense ratio of all investment options in their plan less than 25 bps, and 74.4% reported it is less than 75 bps. Also, more often than other plans, start-up plans do not pass fees to participants. For example, 66.1% said recordkeeping fees are paid by the company, versus 33.9% for DC plans overall. More than three-fourths (78.8%) of start-up companies report that expenses associated with employee communications and education are paid by the firm, compared to 52.1% for all DC plans.

However, only 19.5% of start-up plans use automatic enrollment, compared to 46.3% of DC plans overall. Those that do use automatic enrollment tend to stick more to smaller default contribution rates than DC plans overall. Two-thirds (66.7%) use a default deferral rate of 3% or less. In addition, only 14.7% of start-up plans use automatic deferral escalation, versus 37.8% of DC plans overall.

While average participation and deferral rates are similar between start-up plans and DC plans overall, start-up plans tend to make employee wait longer to be eligible to participate in their DC plans. Only 17.9% are eligible immediately upon hire (vs. 36.8% for DC plans overall), and 33.3% must wait until they are employed for one year (vs. 21%).

What is interesting is the information about which start-up plans are unsure. Nearly two-thirds (64%) are unsure or don’t know whether their plan includes mutual funds that pay 12b-1 and/or sub-TA fees to recordkeepers or third-party administrators (TPAs). Half are unsure whether their plan uses an “ERISA account” or “plan expense reimbursement account” to track revenue sharing credits.

In addition, no start-up plans have a policy to address fee equalization.

Fortunately, nearly two-thirds (64.5%) of start-up plans employ the services of a retirement plan adviser or institutional investment consultant. Continued interaction with retirement plan advisers, investment consultants and recordkeepers most of the time results in improved education for plan sponsors and participants and improved plan design.

For information regarding the purchase of the PLANSPONSOR 2018 Defined Contribution Survey results or industry reports, contact Brian O’Keefe at

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Categories: Industry News

Nearly Half of State and Local Government Employees Approve of Auto-Enrollment

Thu, 2019-03-21 10:56

Nearly half of state and local government employees (47%) approve of automatic enrollment in defined contribution plans, known in the space as supplemental retirement plans (SRPs), the Center for State and Local Government Excellence (SLGE), ICMA-RC and Greenwald & Associates learned in a survey of 400 government employees.

If they were auto-enrolled into a SRP, 77% of these employees say they would remain invested in the plan. Employees who approve of auto-enrollment say it encourages saving (24%), that people are unprepared for retirement (14%), that people would not enroll on their own (13%) and that it is done with the best interests of the employee in mind (13%).

Additionally, 44% approve of the employer setting a default deferral rate. SLGE said it conducted the survey since few government agencies auto-enroll their workers into a SRP.

Approval of auto-enrollment declines from 24% when the default rate is 1% to 12% when the default rate is 7%. At the same time, 38% disapprove of auto-escalation, and 30% approve of it.

Seventy-nine percent said they are satisfied with their retirement plan. Eighty-four percent are saddled with consumer debt. Eighty-five percent have savings goals other than retirement. Sixty-seven percent said debt is preventing them from saving more for retirement.

A slim majority want more information about general financial issues and retirement planning. Thirty percent would welcome an increase in one-on-one in-person communication by their employer and financial services companies.

“The findings are critically important given that the responsibility of saving for retirement in the public sector is shifting from the employer to the employee in many jurisdictions,” says Rivka Liss-Levinnson, director of research at SLGE and author of the report. “The fact that those presented with a 7% default settled on a significantly higher rate than the group given the 1% default rate is important. This suggests that employers, retirement plan providers and policymakers should consider how small nudges—such as changing the default rate for auto enrollment in a SRP—can combat inertia and impact an employee’s ability to save for retirement.”

The report can be downloaded here. SLGE and ICMA-RC will host a webinar on May 7 to discuss the findings. Registration for the webinar is here.

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Categories: Industry News

MainePERS Has Some Suggestions for Struggling Public Pensions

Thu, 2019-03-21 10:39

According to Sandy Matheson, executive director of the Maine Public Employees Retirement System (MainePERS), there is good reason to be optimistic that the public pension system in the U.S. may be turning a corner towards greater stability and financial strength.

She says this because she has seen firsthand how a troubled public pension system can be reformed. In addition to her description of the MainePERS turnaround, she points out that a good portion of the unfunded liabilities on the books of public retirement systems today were actually created years ago—under employer contribution and benefit structures that have since been reformed. In Maine’s case, after decades of irresponsible management, the plan today is far more conservative about its long-term assumed rates of returns and its projected liability discount rates, and it forbids the creation of any new unfunded liabilities.

“I like to say our plan is a case study in how to turn around a troubled pension system,” Matheson said during a briefing held by IMCA-RC and the Center for State and Local Government Excellence in New York. “In the 1980s, we had a funded status that ranged below 20%. We were in about as bad a situation as you could be.”

Today the system is far better funded, Matheson said, approaching 85%.

“Some states are lagging in their recovery due to the more constrictive nature of their unique laws governing public pensions,” Matheson said. “That is an additional layer to this conversation that can make fixing public pensions even more difficult. But in states where there is flexibility, a lot has already been done to put public pensions on a better path. Maine is a state that has made great progress and may serve as an example for other states to follow.”

The Maine story

At a high level, the recovery of the MainePERS system started in earnest in 1995, when a public outcry successfully propelled an amendment to the Maine State Constitution, setting the goal of achieving a 100% funded status by 2028. Under the Constitution, any new benefits created in the system had to be paid for with defined funding streams arranged up front, Matheson noted, which essentially meant the system would permit no new unfunded liabilities. Matheson recalled that the fund has also benefited from an additional technical overhaul in 2011.

As Matheson explained, apart from mandating more realistic return assumptions and interest rate projections, the core of the new policy was to ensure that contributing government employers would have predictability and stability in their required contributions. In fact, she called contribution volatility the top challenge facing public pension systems today. 

“Of course the unfunded liability is a serious problem, but we realized it was important to acknowledge that you only get unfunded liabilities when there are required contributions that are not being made,” Matheson explained. “We came to realize that, if we could smooth out the volatility in required contributions, this would be a very practical way to start to bring our funded status up over time.”

The operational details are complicated, but one salient feature of the reformed MainePERS is that any excess investment losses the system faces in the equity markets are offset by amortized reductions to the system’s variable benefit cost-of-living increases. This approach is taken in contrast to simply requiring greater employer or employee contributions when a the plan’s funded status slips in a given year. Under the first round of reforms, the amortization period was set at 10 years, but eventually the leadership proposed and adopted a 20-year amortization period to create an even smoother contribution figure.

She said this realization about the interplay of funded status and contribution volatility is important for all pension plans, but especially for public plans which rely on budgets that are a matter of law. In the case where the markets have a bad year and a much greater contribution is necessary, the market issues can cause the state or local government to experience a short-term budget crunch that will make a larger contribution all but impossible. Thus a funded status drop is also all but impossible. 

Matheson said the cost of living adjustment (COLA)-reduction approach was settled upon after more than two years of analysis and discussions. She said a very important part of the success of the reforms was a concerted communications campaign, targeting both the participating employers and employees. Eventually, stakeholders came to see this new approach represented a balanced way to parcel risk between all the parties.  

Significant progress yet to be made

Matheson encouraged other states to learn more about the changes that Maine has put into place, which have dramatically improved funded status. She noted that, thanks to the reforms put in place, the MainePERS funded status is commonly seen to increase when other pension systems’ are suffering funding setbacks.

Stepping back, Matheson set the context for Maine’s success by reflecting on where the broader public-sector defined benefit pension system stands today. She recalled that, as recently as the year 2000, the average funded status for state and local government retirement systems was about 85%. Today the figure is closer to 72%.

As Matheson explained, there is a plethora of related causes that have driven the collective state and local government pension funded status so low, and it’s not just the lingering effects of the “dotcom” market crash or the Great Recession.

“A big part of the challenge is more structural and fundamental than the occasional recession,” Matheson said. “The whole defined benefit model was created at a time when individuals’ working and private lives looked different than they do today. When pension plans were first designed and popularized, people didn’t commonly live late into their 80’s and 90’s. Furthermore, as fixed-income returns have fallen over time to the very low levels we have seen persist for the last decade, this drove pensions to hold more in equities to meet their return needs, which left them very exposed during the market crashes in the 2000s.”

According to Matheson, a more stable future for public pensions will only come about if states get serious about implementing the principles of liability-driven investing (LDI), and if they seriously consider making the kind of changes MainePERS has embraced.

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Categories: Industry News

VALIC Changes Name to AIG Retirement Services

Thu, 2019-03-21 08:13

VALIC, a retirement plan provider for health care, K-12, higher education, government, religious, charitable and other not-for-profit organizations, will now be known as AIG Retirement Services.


“By changing our name to AIG Retirement Services, we are leveraging the strength, scale and brand of our parent company, AIG—a recognized Fortune Global 500 leader with deep experience in retirement and financial services. While the VALIC name is strong and well respected, the AIG name carries even greater recognition in the marketplace and among sponsors, consultants and participants,” Rob Scheinerman, president, AIG Retirement Services, tells PLANSPONSOR.


“With AIG celebrating its Centennial this year and our new relationship as the official insurance partner and exclusive retirement plan provider for the PGA of America, it was the perfect time. Our relationship management teams and advisers are very excited to go to market as AIG, and we look forward to working with our plan sponsor and consultant partners to help them make the most of their benefit plans and improve retirement outcomes for participants,” he adds.


AIG Retirement Services offers retirement plan participants and sponsors access to technologies that can greatly improve retirement readiness. FutureFIT is AIG’s proprietary participant experience offering a highly personalized digital platform that encourages engagement and action through guidance, education, tools and behavioral science principles. Retirement Pathfinder is an retirement readiness tool that enables employees to sit down with an adviser and map out the future they envision, including real-time answers to key retirement-related questions such as: Can I retire when I plan? Am I currently saving enough? How much monthly income will I need? Will I outlive my savings? These tools are complemented by local advisers who help employees develop holistic financial plans when and where it best meets the employees’ needs, whether at work, at home or online.


AIG Retirement Services provides every generation with information tailored by life stage to address the decisions they are most likely facing, as well as personalized FutureFIT statements that offer a snapshot of how much income they’ll need at retirement and steps they can take to improve their retirement readiness.


In addition, AIG Retirement Services offers data analytics to help plan sponsors drive better employee engagement and improved participant outcomes. This includes SponsorFIT, a comprehensive online experience that transforms how plan sponsors access and interact with their retirement plan, whether it’s creating custom reports, reviewing plan data or trends to turn insights into action, or customizing specific strategies to help improve retirement readiness and financial wellness among employees.


“Our interactive digital programs like FutureFIT, SponsorFIT and Retirement Pathfinder are powerful tools for participants and sponsors, and when coupled with our local advisers, help close the gap between retirement dreams and reality,” Scheinerman said in a press release.


AIG Retirement Services includes the VALIC family of companies which are not changing their legal names: The Variable Annuity Life Insurance Company and its subsidiaries, VALIC Financial Advisors, Inc. and VALIC Retirement Services Company.


The renaming to AIG Retirement Services will be phased in throughout 2019. The way clients work with the company with respect to customer accounts, policies or service will not change as a result of renaming.

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Categories: Industry News

Small Business 401(k) Recordkeeper Redesigns Website

Wed, 2019-03-20 12:41

LT Trust, a low-fee, open architecture 401(k) recordkeeping platform for small businesses, launched a redesigned website,


The website offers deeper insight into the 401(k) services offered by LT Trust for 401(k) advisers, employers, and employees, as well as a more intuitive interface.


The new website highlights LT Trust’s dedication to providing a true open architecture 401(k) platform, with detailed sections on what true open architecture is, the importance of investment freedom, and how unlimited investment lineup options can help 401(k) advisers give their clients the best chance of reaching retirement readiness.


In an effort to educate small business owners on the importance of saving for retirement and on 401(k) basics, LT Trust’s new website will also serve as a 401(k) resource center to employers sponsoring 401(k) plans and to their employees.

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Categories: Industry News

Education Can Help Employees Engage in Managing Health Care Costs

Wed, 2019-03-20 11:17

Two-thirds (66.7%) of consumers are moderately or highly engaged in their physical wellness and health costs, according to HSA Bank’s Health & Wealth Index for 2019.

The greatest difference in health and wealth engagement occurs for health plan type. High-deductible health plan (HDHP) consumers remain the most engaged group overall. Baby Boomers show the greatest level of engagement in their health and wealth. The tendency of women to consider cost more frequently when purchasing health services and receive more preventative health services leads to a slightly higher engagement score for women than men.

HSA Bank’s survey revealed that nearly one in five consumers are not able to identify their health plan type. The firm notes that plan type influences how consumers access care and pay for health care services because the health insurance plan determines the in-network providers, treatment and prescription coverage, as well as premium, copay, coinsurance, deductible and out-of-pocket costs. Knowing the costs involved in one’s health care is key to being an engaged consumer. Thirty percent of consumers don’t know their premium, deductible or out-of-pocket cost amounts.

HSA Bank encourages plan sponsors to simplify health plan terminology by creating a guide for employees to understand the health insurance plans offered. For each plan, indicate: the type of plan, a definition of that plan, and the key cost-sharing amounts for those plans with definitions and examples of when those costs would be applicable. Make the guide available to employees all year, not just during open enrollment.

In addition, the firm says a health plan comparison tool can accompany the guide and help employees evaluate their plan options. Employees can “do the math” for various health care scenarios: no health care expenses, about the same expenses as last year, and expenses equal to the deductible or out-of-pocket maximum, to determine what their total estimated annual cost would be with each of the plans offered.

For the second year, 86% of consumers believe they made lifestyle changes to improve their health in the past year, and more than 90% receive at least one preventative health exam each year. Women and college graduates are more likely to receive preventative health services. In addition, those enrolled in health savings account (HSA)-eligible HDHPs are likely to receive preventative exams.

HSA Bank notes that many preventative health exams are covered under the Affordable Care Act regardless of the type of health insurance plan. Employees may not be aware of this, so it’s important to educate them about what is covered and encourage them to receive preventative health services by offering incentives like adding funds to their HSAs.

Saving and considering cost are two fundamental aspects of financial responsibility for health care. But, these two practices can be a bit more challenging since many consumers do not have an account specifically designed to help them save for health care, and researching and comparing costs for health care services is still largely up to the individual. The research finds 40% of consumers are not currently saving for health care expenses and 30% are not considering cost.

HSA Bank says employers can improve employee financial engagement in health care by offering a convenient and tax-advantaged account, such as an HSA, to save specifically for health care expenses today and in retirement. The firm suggests employers encourage employees to make regular contributions by implementing a match program similar to a 401(k) plan.

For the index, a survey of more than 2,000 randomly selected U.S. adults (ages 18 and older) was conducted in the fall of 2018. The full report may be downloaded from here.

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Categories: Industry News

Fidelity Faces Second Lawsuit Over Undisclosed Payment Scheme

Wed, 2019-03-20 11:00

Participants in several retirement plans served by Fidelity Investments have filed a lawsuit challenging what it claims are undisclosed payments received by Fidelity through its “Funds Network.”

This is the second such lawsuit filed against Fidelity this year. In a statement to PLANSPONSOR about the new lawsuit, Fidelity said, “Fidelity emphatically denies the allegations in this complaint and intends to defend against this lawsuit vigorously. Fidelity fully complies with all disclosure requirements in connection with the fees that it charges and any assertion to the contrary is not only misleading, but simply false. Fidelity has an outstanding platform that provides significant benefit to our customers, including an extensive offering of funds with no transaction fees, the ability to consolidate investments in one place, and industry-leading tools to help find the right funds. We are committed to remaining an open architecture platform that provides access to thousands of funds to all of our customers, but such a broad offering requires substantial infrastructure. For example, Fidelity must support systems and processes needed for recordkeeping, trading and settlement, make available regulatory and other communications, and provide customer support online and through phone representatives. It is costly to maintain this kind of infrastructure, and Fidelity requires the fund firms on our platform to compensate us for those costs. For a small number of those companies, this includes an infrastructure fee that is charged to the fund firms.  The fee is not charged to the plan sponsor or plan participants.”

According to the recent complaint, brought on behalf of similarly situation Fidelity retirement plan customers, since at least 2016, Fidelity has breached its fiduciary duties to the plans by charging mutual fund and other investment companies a substantial fee as a condition for their investment vehicles being offered on Fidelity’s fund platform. The lawsuit alleges that “Although Fidelity refers to this arrangement as an ‘infrastructure’ fee, it is in fact an illegal and undisclosed pay-to-play fee that Fidelity extracts from investment companies that wish to ensure their products are marketed and sold through Fidelity.” The plaintiffs say the fee drives up expense ratios borne by 401(k) plan participants, causing these participants to pay more in fees and receive lower returns on their investments.

The complaint cites a Wall Street Journal report that said Fidelity instructed participating mutual funds not to disclose the fee to any third party, including plan sponsors, plan beneficiaries and the public. The Journal further reported that, based on internal Fidelity documents, the fee represents “0.15% of a mutual-fund company’s industry-wide assets.” According to the plaintiffs, that the fee is calculated by reference to industry-wide assets, rather than assets held only through Fidelity, confirms that the fee bears no meaningful relationship to any “infrastructure” maintenance by Fidelity and constitutes excessive compensation.

According to the complaint, Fidelity has significant leverage to coerce payments from mutual fund complexes interested in offering their funds through Fidelity. The firm also offers its own mutual funds, and the fee enables it to offset losses it has sustained from investors flocking to lower-cost index funds.

The plaintiffs point out that the Department of Labor (DOL) and the Massachusetts Securities Division have each opened investigations into Fidelity’s imposition of the fee.

The lawsuit alleges that Fidelity’s assessment of the fee constitutes self-dealing that violates Fidelity’s fiduciary duties and the Employee Retirement Income Security Act’s (ERISA)’s prohibited transaction rule. Additionally, the fee constitutes indirect compensation to Fidelity that must be disclosed to the plans under ERISA, which mandates written disclosure of any such compensation that Fidelity “reasonably expects to receive” in connection with its services. “Despite its fiduciary and disclosure obligations, Fidelity continues to charge the fee and keeps the amount of the fee payments confidential,” the complaint says.

The plaintiffs seek to enforce the Fidelity defendants’ liability to return all plan losses arising from each breach of fiduciary duty and to restore to the plans all profits gained through the use of the plans’ assets. They also seek to enjoin Fidelity’s imposition of the undisclosed fee.

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Categories: Industry News

Pension Risk Transfers Help Largest DB Plans Reduce PBGC Premiums

Wed, 2019-03-20 09:46

Entering Q3 2018, corporate pension plans had broken through post-crisis highs and were on course to notch a second year of strong funded status gains, notes J.P. Morgan’s “Corporate Pension Peer Analysis 2018,” written by Michael Buchenholz, head of U.S. Pension Strategy, Institutional Strategy and Analytics.

But because average funded status declined an estimated 7.2% in Q4 2018, J.P. Morgan’s analysis of the largest 100 corporate defined benefit (DB) plans by assets found only a 1.5% improvement to an 87.2% funded status on average for the year.

Returns for almost every public market asset class fell in 2018, with the exception of extended credit exposures. Agency mortgages/collateralized mortgage obligations (CMOs), commercial mortgage loans (CMLs), bank loans and other securitized assets had small positive returns. “These asset classes are increasingly being utilized as hedge portfolio diversifiers and did their job in 2018,” says Buchenholz.

Generally, the only plan sponsors with positive total returns for the year were those whose fiscal year ended prior to the Q4 market rout. The peer set’s average calendar year return, -3.9%, was the worst performance since a flat 2015 and, before that, the 2008 financial crisis.

De-risking activities

Preceding Q4, rising rates, accelerated contributions, improved funded status and concerns about equity market valuations led to the largest asset allocation de-risking year since 2011. Buchenholz notes that while the pension industry has been steadily increasing fixed income duration every year since at least 2010, data from regulatory filings show that 2018 brought a large shift in actual fixed income allocation. More than 20 of the top 100 plans moved 10% or more of assets into fixed income over the year. J.P. Morgan expects this de-risking trend to continue along with constructing more diversified hedge portfolios and shifting more assets into low-equity-beta alternatives like infrastructure equity.

This shift in fixed income allocation corresponded with lowered return assumptions. The average expected return assumption for plans with 70% or more in fixed income assets was 5.70%.

Buchenholz cites LIMRA research that shows the pace of pension risk transfers continued unabated. One of the major drivers of pension risk transfer activity over the last several years has been the accelerating costs of Pension Benefit Guaranty Corporation (PBGC) premiums. Buchenholz points out that DB plan sponsors have attempted to reduce these outlays by improving funded status, reducing head count, off-loading small balance participants to minimize the variable rate cap, and other “actuarial engineering” transactions, such as the reverse spinoff, which was rebuffed by the PBGC. PBGC data suggests that despite the continued march higher in premium levels, plan sponsors have been successful: The average premium paid as a percentage of assets declined two years in a row, to 16bps for the top 100 plans, and closer to 20bps for all pension plans.

Other topics explored in the review are pension contributions versus other uses of cash and the impact of changes to pension accounting and reporting rules.

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Categories: Industry News

Custom TDF Data Shows Plan Sponsors Aligning Assets for Different Demographics

Wed, 2019-03-20 04:55

The Defined Contribution Institutional Investment Association’s (DCIIA)’s Retirement Research Center has published a summary of key findings from its inaugural custom target-date fund (TDF) survey, primarily intended to aid defined contribution (DC) plan sponsors and asset allocators during custom glidepath discussions.

Chris Nikolich, head of glidepath strategies in the multi-asset solutions business at AB in New York City, and co-contributor to the research initiative, told PLANSPONSOR, “The whole purpose of this was to allow plan sponsors to compare their custom allocations to others managed by potentially other investment managers. That kind of peer information didn’t exist; there has been no ability for plan sponsors to gauge how similar or different their custom TDF glidepaths are to others.”

Joshua Dietch, another co-contributor and vice president and group manager for retirement financial education at T. Rowe Price, who is located in Owings Mills, Maryland, said plan sponsors also have no idea of the magnitude of their peer group—whether they are the only one with a certain glidepath or one of many. “With this report, plan fiduciaries know where they stand in a broader marketplace perspective,” he said.

The DCIIA survey template identified 29 asset classes, and more than a dozen additional asset classes were identified from an “Other, please specify,” option. The resulting 40-plus asset classes are categorized into four broad asset categories: equity, fixed income, inflation sensitive, and diversifiers.

Based on the DCIIA sample of those that provided both custom TDF and a breakdown of plan assets, custom TDF strategies accounted for 43% of total plan assets for the year-end 2017. On average, the number of individual funds, or vintages, per custom TDF was 10.

A majority of the average custom TDF exposure was allocated to equities and fixed income, with a relatively modest—but increasing—allocation to inflation sensitive assets 15 to 20 years prior to retirement. Diversifiers illustrate a relatively consistent, yet minor, average allocation.

Nikolich explained that diversifiers are used for what TDF fund managers are trying to do on behalf of participants—deliver growth in time and control risks. For example, when there are substantially rising interest rates, exposure to things other than traditional fixed income can help in that regard. He adds that “in today’s economic and capital market environment, most investment managers are not expecting the same returns we’ve seen over last 10 years—expectations for returns for both equities and bonds are lower. Diversifiers can help with return generation and growth control, and can be customized to the specifics of the plan.”

Custom TDF equity and fixed-income allocations

The research found high (95th percentile) equity allocations ranged from to 92% for 2060 funds to 39% for income funds. Similarly, the low (5th percentile) equity allocations ranged from 72% for 2060 funds to 12% for income funds. The average allocation to equities for 2060 funds was 85% falling to 28% for income funds. The spread between different custom TDFs was greatest for the 2025 and 2020 vintages, at 33 percentage points between the 95th and 5th percentiles.

The top five equity asset classes by prevalence were: U.S. large-cap equity (89%), non-US developed equity (69%), emerging markets equity (66%), U.S. small-cap equity (49%), and U.S. small- and mid-cap equity (29%). Every participating plan had allocations to U.S. all-cap, U.S. large-cap, or global equity.

On the low end of exposure, 5th percentile fixed-income allocations ranged from 32% for income funds to 5% for 2060 funds. The 95th percentile equity allocations ranged in a similar style, from 67% for income funds to 13% for 2060 funds. The average allocation to fixed income for income funds was 52%, declining to 7% for the 2060 fund. Differences between the 95th and 5th percentiles varied little for later-dated funds but peaked at thirty-five percentage points for the income allocation.

The top five fixed-income asset classes by prevalence were: core U.S. bond (94%, the highest percentage of any custom TDF underlying exposure), short duration bond (49%), high-yield/high-income bond (35%), cash (29%), and emerging markets bond (20%). Stable value was prevalent in 20% of custom TDF strategies. All plans had either core or global core allocations.

Future DCIIA research will delve further into comparisons of custom and off-the-shelf TDFs, but based on his experience, Nikolich said, regarding equity and fixed-income allocations, in general there is not a lot of differentiation between custom and off-the-shelf TDFs at the tail end of the glidepath for funds for younger and older participants. “There was more differentiation in the two or three vintages leading up to retirement, with higher growth strategies in custom TDFs, but we will delve more into this is the next iteration of the research,” he said.

Inflation-sensitive assets in custom TDFs

Unlike those for equity and fixed income, the 5th percentile allocations for inflation-sensitive assets were relatively consistent across vintages and showed little range around 4% to 6%. However, the range for the 95th percentile was more pronounced—from 46% for income funds to 14% for 2060 funds. The average allocation to inflation-sensitive assets for income and 2015 funds was approximately 18%, while vintages between 2040 and 2060 hovered around 6%. The custom TDF sample demonstrated consistency in inflation-sensitive exposure among later-dated funds designed for younger plan participants. However, as average allocations to inflation-sensitive asset classes rose, the spread between the 95th and 5th percentile allocations peaked for the retirement allocation fund at 41%.

The top five inflation-sensitive asset classes by prevalence are: TIPS bond (72%), real estate (48%), commodities (38%), real assets (23%), and global REITs (11%).

Nikolich said this was one of the biggest surprises for him in the research findings—the extent to which inflation exposures differed, especially as the analysis moved toward retirement and income funds. “This range could be very informative to plan sponsors,” he said.

Dietch said the findings about inflation-sensitive assets get to the heart of why plan sponsors may want custom TDFs. “They can better align instruments they want to use for different demographics, which off-the-shelf TDFs don’t allow for,” he explained.

Diversifiers in custom TDFs

Similar to inflation-sensitive asset classes, the 5th percentile allocations for diversifier assets were relatively consistent across vintages and showed little range around 1%. The allocations to diversifier assets were also consistent in the 95th percentile—between 17% and 20%—with the exception of income funds, which had a 95th percentile allocation of 30%. The average allocation to diversifiers was 2% across all vintages, but this percentage alone does not capture the high end of the allocations represented by the 95th percentile.

The top five diversifier asset classes by prevalence were: bank loans (6%), hedge funds (6%), global tactical asset allocation (GTAA) (5%), preferred (3%), and U.S. balanced (3%). Preferred refers to preferred stock (or preference shares), a hybrid security that combines some features of stocks and bonds. Preferred stock is still a stock and trades on an exchange, and it also pays a dividend, though it is generally higher than a similar common stock from the same company.

Nikolich said the research report bears out modest averages for inflation-sensitive and diversifier assets, and this is not right or wrong, but reflects different views from different managers.

Regarding the overall research findings, Dietch said he found it interesting that there is a lot of heterogeneity in terms of approaches by plan sponsors that, when mixed in the report, tends to get lost. “Each plan has unique rationales for doing what they did. The averages come together, but we could see a great range in what individual plan sponsors are doing,” he said. He pointed out that based on the feedback DCIIA is getting, there is enthusiasm to ask more questions. “We took a modest approach to get the research off ground with the intention that if it was successful, we can ask more complex, deeper questions to provide even more information to plan sponsors,” Dietch noted.

DCIIA says it seeks to expand its coverage of the custom TDF universe and incorporate other data elements. Future areas of research may include comparative glidepath analysis of “to” versus “through” strategies, corporate versus public DC plans, or “off-the-shelf” versus custom structures. DCIIA may also expand the scope of the project beyond custom TDFs to include other custom implementations such as balanced funds, managed accounts, and model portfolios.

Survey participants were asset allocation service providers for custom TDFs who submitted non-attributable plan statistics and asset allocation detail for custom TDF clients. The sample used for asset allocation statistics reflects 65 plans and 673 unique funds. The custom TDF assets represented in the sample exceed $340 billion, while plan assets exceed $990 billion. The total custom TDF market was an estimated $430 billion at year-end 2017, with the DCIIA sample accounting for roughly 80% of the total market.

The research report is available on DCIIA’s website.

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Categories: Industry News

Bill Would Amend Voting Procedures for Multiemployer Plan Benefit Cuts

Tue, 2019-03-19 11:44

U.S. Senators Rob Portman, R-Ohio, and Sherrod Brown, D-Ohio, introduced the Pension Accountability Act (S. 833), designed to give workers and retirees “a seat at the table” when a looming multiemployer pension bankruptcy may require major pension cuts.

The Senators both opposed the Multiemployer Pension Reform Act (MPRA), enacted in 2014, and are working together to replace it with a comprehensive, bipartisan solution. They claim the MPRA did virtually nothing to prevent the pending insolvency of the Pension Benefit Guaranty Corporation (PBGC), which is projected to become insolvent in 2025. According to a press release, PBGC Director Tom Reeder recently testified that the insurer’s net deficit in 2026 would be only 1% smaller if eligible plans could not use MPRA to reduce benefits.

Under MPRA, severely underfunded multiemployer pension plans within 20 years of insolvency may apply to cut pension benefits if the cuts would have more than a 50% chance of preventing plan insolvency, among other requirements. Multiemployer plan participants are allowed to vote on the cuts, but the Pension Accountability Act is a targeted, technical fix to amend the voting procedures under MPRA.

The bill amends the MPRA in two ways:

  • For struggling pension plans seeking cuts, it will make the participant vote binding in all situations. Their majority vote will be required for any pension cuts to occur.
  • It will make the vote fair by counting only the ballots that are returned. Unreturned ballots will no longer be counted as a “yes” vote.
Portman and Brown served on the Joint Select Committee on Solvency of Multiemployer Pension Plans last year. Following the expiration of the Joint Select Committee, both Senators have continued working together to find a solution to the pension crisis threatening 1.3 million Americans.

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Categories: Industry News

Number of Pension Buy-Out Deals Growing Each Year

Tue, 2019-03-19 09:48

U.S. single premium pension buy-out product sales exceeded $10.4 billion in the fourth quarter of 2018, nearly level with fourth quarter 2017 results.

This is only the third time fourth quarter sales have surpassed $10 billion, according to LIMRA Secure Retirement Institute’s quarterly U.S. Group Annuity Risk Transfer Survey.

In 2018, single premium buy-out product sales peaked at $26 billion, more than 14% higher than 2017. Total single premium product sales (including buy-ins) exceeded $11.3 billion in the fourth quarter 2018. For the year, total single premium product sales were $27.3 billion.

“A big driver of the 2018 buy-out sales was a combination of mid- to large-PRT [pension risk transfer] deals,” says Eugene Noble, research analyst, LIMRA Secure Retirement Institute. “We also saw two new insurance companies enter the PRT market this year.”

Total assets of buy-out products were $135.5 billion in 2018, more than 18% higher than the prior year. Survey participants reported 29,632 contracts sold as of December 31, 2018.

Seventeen companies participated in this survey. A breakout of pension buy-out sales by quarter since 2012 is available in the LIMRA Data Bank.

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Categories: Industry News

Plaintiffs in Putnam Self-Dealing Case Ask Supreme Court to Deny Review

Mon, 2019-03-18 11:27

Plaintiffs in a case in which Putnam Investments was accused of engaging in self-dealing by including high-expense, underperforming proprietary funds in its own 401(k) plan have filed a brief in opposition of Putnam’s petition for the Supreme Court to review the case.

In addition to asking the high court to weigh in on whether the plaintiff or the defendant bears the burden of proof on loss causation under Employee Retirement Income Security Act (ERISA) Section 409(a), Putnam asked the court to determine “whether, as the First Circuit concluded, showing that particular investment options did not perform as well as a set of index funds selected by the plaintiffs with the benefit of hindsight, suffices as a matter of law to establish “losses to the plan.”

Regarding the question of burden of proof, the plaintiffs say this case is not a suitable vehicle for resolving the question presented, because, for one, a final decision has not been made in the case. The 1st U.S. Circuit Court of Appeals vacated certain decisions in the case and remanded it to a federal District Court for further consideration, especially concerning prohibited transactions. “It would put the cart before the horse to address the tertiary issue of causation before the district court makes definitive findings on the antecedent issues of breach and loss. In the event that either of those initial issues is resolved in [Putnam’s} favor, there will be no need to address the causation issue—and the question presented here will have no effect on the outcome of this case,” the plaintiffs argued.

The plaintiffs also content that Putnam overstates the purported circuit split regarding the burden of proof, saying, “In 2015, the Solicitor General explained that “there [was] no clear circuit split” regarding who bears the burden of proving causation in ERISA fiduciary breach cases.” They say there is no clear disagreement among the circuits about who has the initial burden of producing the claim—the plaintiffs in a case, and they cite several other court cases that show that once a claim has been produced—such as in discrimination claims—the burden of “persuasion” that the loss was not caused by the alleged breach shifts to defendants in the case. “When the defendant is in a much better position to know vital facts on an issue, it is not unusual for the defendant to be assigned the burden of production while leaving the burden of persuasion with the plaintiff,” the brief says.

The plaintiffs also argue that the 1st Circuit’s decision was correct on the merits. They say Employee Retirement Income Security Act (ERISA) fiduciary duties are derived from the common law of trusts, which says “when a beneficiary has succeeded in proving that the trustee has committed a breach of trust and that a related loss has occurred, the burden shifts to the trustee to prove that the loss would have occurred in the absence of the breach.”

Regarding the fund comparison question, the plaintiffs say the selection of comparator funds is a “fact-intensive question” that depends on, among other things, “the nature of the breach involved, the availability of relevant data, and other facts and circumstances of the case.” They argue this fact-specific question is precisely the type of question that does not warrant certiorari review.

The plaintiffs say Putnam suggests no future case will bring the loss issue to the Supreme Court because the 1st Circuit’s decision will pressure defendants to settle. They say that argument is entirely unfounded, citing the case in which American Century defended a similar breach of fiduciary duty claim involving its 401(k) plan at trial and won.

Previously, in an amicus curiae brief, the Investment Company Institute argued that letting the Appellate Court decision in the case stand will increase ERISA litigation, distort retirement plan fiduciary decisionmaking and ultimately harm plan participants.

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Categories: Industry News

HUB Announces Launch of AHP Under New DOL Rules

Mon, 2019-03-18 10:10

HUB International Limited has announced what it says is one of the nation’s first association health plans (AHPs) under the Department of Labor’s (DOL)’s new AHP rules.

“Working closely with Tennessee REALTORS, we successfully tailored one of the first affordable and robust AHPs for a professional association under the new regulations and look forward to working with other associations to build additional AHPs throughout the U.S. in the future,” says Mike Barone, president of employee benefits at HUB International.

HUB and Tennessee REALTORS created a fully insured AHP, which includes three different medical plan options plus a dental and vision option, and wellness solutions. Additional benefits will be offered to members through other insurance benefit partners, including accident with a disability insurance rider, critical illness and life insurance with a long term care rider. And, the expectation is to have the AHP continue to grow and evolve over time.

Last June, the DOL finalized regulations to expand the opportunity to offer employment-based health insurance to small businesses through AHPs. Under the DOL’s new rule, AHPs can serve employers in a city, county, state, or a multi-state metropolitan area, or a particular industry nationwide. Sole proprietors as well as their families will be permitted to join such plans. In addition to providing more choice, the new rule makes insurance more affordable for small businesses. Just like plans for large employers, these plans will be customizable to tailor benefit design to small businesses’ needs. These plans will also be able to reduce administrative costs and strengthen negotiating power with providers from larger risk pools and greater economies of scale.

In 2018, HUB and Tennessee REALTORS conducted a survey of members, composed mostly of 1099 contractors, W2 employees, and sole proprietorship/partners and owners, gauging their interest in an AHP. The survey results revealed 94% had strong interest in accessing benefits through the establishment of an AHP. In addition, 50% of the respondents identified as “individuals” who felt they were paying too much for health care coverage.

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Categories: Industry News

MassMutual Introduces Financial and Benefits Planning Tool

Mon, 2019-03-18 09:36
MassMutual has created a new tool, MapMyFinances, that is available for free through employers that use its defined contribution services. The tool gives each user a personalized financial wellness score and provides guidance on how they can achieve their financial goals.

“MapMyFinances is breakthrough financial wellness technology designed to help all Americans secure their financial futures and protect the ones they love,” says Tina Wilson, head of investment solutions innovation at MassMutual. “Whether you’r starting your career, preparing to retire or somewhere in between, MapMyFinances can help you make the best choices about saving for retirement, protecting your family and securing your financial future.”

MapMyFinances replaces MapMyBenefits. It arrives at the financial wellness score by asking users a series of questions about their family situation, budget and personal finances, including retirement savings, health care, life insurance and debt. To help people achieve their financial goals, MapMyFinances creates a to-do list of simple, actionable steps.

“Later this year, MassMutual will be announcing additional financial benefits and services through MapMyFinances, such as debt management, medical and emergency savings, tuition reimbursement and budgeting,” Wilson adds.

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Categories: Industry News

ERISApedia Announces Availability of 403(b) Plan eSource

Mon, 2019-03-18 09:16 announced the release of The 403(b) Plan eSource, authored by industry expert S. Derrin Watson, J.D., APM.

Timothy McCutcheon, JD, CPA, MBA, publisher of said, “We found that the market needed a comprehensive, easy-to-understand reference book on 403(b) plans. We believe that The 403(b) Plan eSource will be the ‘go-to’ resource for 403(b) professionals and will allow 403(b) professionals to find answers to their compliance questions easily and quickly.”

Watson says it’s easy to update the book as new guidance is released, or as questions from ERISApedia subscribers reveal areas that need to be explored.

Watson has been answering questions over the past year about 403(b) and other plans in the “Ask the Author” service. In January, the firm announced he had edited and selected over 400 responses to subscribers to include in its Qualified Plan eSource (QPeS).

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Categories: Industry News