Retirement benefits

Illinois became the second state to settle with the U.S. Securities and Exchange Commission over charges it misled investors about a growing shortfall in its employee pension funds as it sold $2.2 billion in bonds.

The Principal Financials’ Aaron Friedman says we are seeing 403(b) plan sponsors interested in reviewing their plan designs as they look to further clean up initial steps that were taken just a few years ago. This additional work is based on their own experience with compliance under the final regulations, as well as the administrative lessons they’ve learned.

Defined contribution plan sponsors who have yet to get on board with auto-enrollment -- a trend that began more than a decade ago -- are now in the minority. One study published last week in Science magazine found that 56% auto-enroll participants -- up sharply from 19% back in 2005. The study by behavioral economists Shlomo Benartzi and Richard Thayler also found that a slim majority (51%) of sponsors has embraced auto-escalation of deferral amounts.

We’re starting your week with three important facts, developments or conversations from recent and upcoming events. This week, we’ll look at why uninsured Americans’ hospital bills are so high, more official steps forward by HHS on public exchanges and HHS goals for tech improvements in 2013.

It’s getting a lot of press. “It” is the provision in the recently passed American Taxpayer Relief Act of 2012 that now allows participants in 401(k) plans to convert existing traditional 401(k) balances to Roth 401(k) balances.

Participant guidance, advisor relationships and regulatory environment drive success in the below $50M market

Insurer Boasts 2% Average Fees on Annuity Assets.

What do plan participants say they need to make better use of their retirement? Some answers, from a recent State Street Global Advisors survey, offer insights that can help advisers work with their clients on member education efforts.

Probably you. The Securities & Exchange Commission (SEC) is moving forward in its quest to define who is a fiduciary for various client/adviser transactions.

New York City’s police pension won’t sell about $10 million in gun-related holdings, the president of the biggest officer union says.

Many employer plan sponsors are expressing a high level of interest in adding Roth 401(k) in-plan conversions as an option to their 401(k) plans in 2013. The recently passed Taxpayer Relief Act of 2012 made it possible for retirement plan participants to convert existing 401(k) plan balances to Roth 401(k) balances, whether or not the participant is distribution eligible.

The challenges confronting many retirement plan advisers are familiar.

New 401(k) loan transactions were down approximately 5% year-over-year, and total hardship and in-service withdrawals were down nearly 8%, according to Bank of America Merrill Lynch’s most recent 401(k) Wellness Scorecard, released Thursday.

Pressure is growing to change incentives for retirement savings as U.S. lawmakers look for revenue, and top earners may pay the price.

Try a little “brain-based sales and marketing,” suggests ASSPA’s Lisa Allen. Speaking about building a loyal client base this week at the ASSPA/NAPA 401(k) Summit, Allen offered the view that plan sponsors typically choose to work with an adviser because they find a “good personal fit,” then retroactively confirm that all of the objective and numbers-based reasons for that decision are in line.”

Principal Financial Group Inc., the seller of life insurance and retirement products, agreed to buy a 55% stake in Liongate Capital Management LLP to expand in hedge funds and meet demand for alternative investments.

It’s nothing new that Americans are working and living longer. But with 401(k)s, IRAs, Roth IRAs and the old money-under-the-mattress plan, what could possibly be added to secure Americans’ financial security? Pension Advisory Group thinks it has the answer — a new group long-term disability insurance product.

A new study released by insurance industry researcher LIMRA shows that half of defined contribution employees are still not aware of how much they pay in annual fees and expenses, despite fee disclosure requirements added in 2012.

There is a general belief that advisers acting as fiduciaries to a 401(k) plan would violate ERISA if they advise participants on IRA rollover opportunities and wind up managing those rolled over funds. That opinion is not surprising, according to ERISA attorney Marcia S. Wagner of the Wagner Law Group. But it is not necessarily correct.

Once the province of only large plans, ERISA Accounts have found their way into the small plan market. And if you’re an advisor working in that market, it can be an important tool for you to add value to plan sponsors.