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Auditing Recordkeeper Statements — A Fiduciary Duty?

Adhering to prudent standards includes auditing quarterly statements from the recordkeeper. However, there is no explicit requirement for plan fiduciaries to do so. With regard to plan assets, fiduciaries have the explicit duty to ensure that: employee deferrals are contributed in a timely manner; the plan does not engage in prohibited transactions; and plan assets are used exclusively to pay plan benefits and defray reasonable plan expenses. Fiduciaries must act prudently in carrying out these duties. A bright-line test…

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Women in Retirement: 60 Percent Not Saving Enough

In November 2016, the Texas Conference for Women surveyed attendees about their retirement savings and found that almost a whopping 60 percent weren’t socking away enough. In fact, many weren’t even sure if they were going in the right direction. One person responded, “I don’t know if I’m on track, and that’s the worst part.” Many women are doubtful that they can retire comfortably, if at all. Consider these results of the 17th Annual Transamerica Retirement Survey: Women believe…

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Portfolio Patriotism—Domestic Market Optimism or Inadvertent Asset Allocation?

Globalization of the world economy has increased exposure to international investments, yet equity portfolios in general remain largely home biased today. This may be a good time for participants to reevaluate their asset allocation to see if they may be exhibiting a home country bias— or displaying overly optimistic expectations about the domestic market and/or pessimism about foreign markets. After years of mediocre growth from developed international equity markets, we are finally starting to see signs of life abroad….

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Benchmarks Are Not Created Equal

Because benchmarks are an important part of investment due diligence, a plan fiduciary should carefully consider their selection. Two of the most common are FTSE Russell1 and Standard & Poor’s2. The RPAG Scorecard3 utilizes Russell and here’s why: Russell ranks each company in the investable universe according to its total market capitalization. The market cap is the primary tool to determine where a company belongs in the Russell Index. S&P uses a committee to make these decisions. Russell indices…

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Fixed Income: A Sinking Ship or Much Ado About Nothing?

Time is a powerful modifier of perception and purpose. No need to look any further than the frequent rumblings surrounding fixed income in the current rising interest rate environment. That isn’t to say the frequently touted “bond bubble” and rising interest rate topics are unimportant or overstated, it’s merely a reaction to the volume and misappropriation of focus often exhibited in these ongoing conversations. Monitoring the trajectory of rising interest rates is a good idea, however letting it affect…

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May Any Employee Join the Retirement Committee?

Upon first blush, to the extent an employee from the general populace can and wishes to make a contribution as a committee member, there seems to be no reason why they shouldn’t participate on the committee. In practice, most committees consist of executives from finance (preferably the CFO), benefits and human resources. Due to the potential personal liability exposure, if there is interest from other lay people who wish to represent the vote of the participant base, they are…

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Partial Plan Terminations

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A partial plan termination occurs when 20 percent or more of a company’s employees are laid off in one year. Routine turnover during the year is generally not considered a partial plan termination. To determine whether your turnover rate is routine, consider the following factors: What was your turnover rate during other periods and what was the extent to which terminated employees were actually replaced? Do the new employees perform the same functions as the previous employees? Do they…

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Millennial Workers Require Special Investment Menu Design

Millennials are the largest demographic cohort in the nation, U.S Census Bureau data shows. And up to 80 percent are already saving in their employer-sponsored retirement plans, according to a 2015 report from Bank of America Merrill Lynch. The newest generation of workers—which the Pew Research Center defines as those born between 1981 and 1997—has exhibited distinctive attitudes and behaviors that plan sponsors and their advisors must consider when designing menus. Plan administrators, too, must rethink some long-held beliefs…

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Should You Have Alternatives in Your Lineup?

The term “alternative investments” may conjure images of classic automobiles, fine wine, rare art and valuable jewels. Some may think about the Honus Wagner baseball card that sold for $3.12 million at auction in 2016. Or about the 1962 Ferrari 250 GTO that sold at auction for a whopping $34.65 million in 2014. Or maybe they set their sights even higher and think about the Hope Diamond, with an estimated value of $200-$250 million. While these treasures are fun…

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What is an ERISA fiduciary?

The Employee Retirement Income Security Act (ERISA) was enacted in 1974 to protect employees who participate in retirement plans and certain other employee benefit plans. At the time, there were concerns that pension plan funds were being mismanaged, causing participants to lose benefits they had worked so hard to earn. ERISA protects the interests of plan participants and their beneficiaries by: Requiring the disclosure of financial and other plan information Establishing standards of conduct for plan fiduciaries Providing for…

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