SPRING 2014
THE ONE PAGE MAGAZINE
Company Pension Plans Are
Healthier, But They Are Still
Dying.
Defined Contribution Plans
In The Public Sector: An
Update
Pension plans finished 2013 in their best shape last
year since the financial crisis of 2008. Their funded
status are finally at a point where corporations
have enough assets on hand, in some cases, to
pay their projected obligations to beneficiaries.
A new issue brief from the Center for State
and Local Government Excellence, Defined
Contribution Plans in the Public Sector: An
Update, finds that while there has been much
discussion of shifting from defined benefit
to defined contribution plans, relatively few
governments have actually done so.
That being said, corporations have no appetite
to continue to excercise this particular risk and
are making steps to convert over to 401(k) plans.
To read the article on Reuters visit:
www.reuters.com/article/2014/04/01/column-millerpensions-idUSL1N0MS11U20140401
—BenefitsPro, 4/1/14
The brief finds that defined benefit plans still
dominate and only about 11 percent of public
sector workers have a primary defined contribution
plan.
Other key findings include:
•
DC Participants Stay the
Course with Saving and
Investing
A report, “Defined Contribution Plan Participants’
Activities, 2013” released by the Investment
Company Institure (ICI), finds the majority of
paticipants continued contributing to their plans
in 2013 with only 2.7% stopping contributions,
compared with 2.6% in 2012. The report notes
some of these participants may have stopped
contributing simply because they had reached
their annual contribution limit.
•
•
Post-2008 changes have been to establish either
hybrid plans or cash balance plans, rather than
stand-alone defined contribution plans.
The changes appear driven by a desire to avoid
future unfunded liabilities, to reduce investment
and mortality risk, and to help short-tenure
workers.
Such changes transfer risk to participants,
but if the new plans enhance the likelihood
of responsible funding, they could also offer
some increased security.
Read the full brief at: slge.org/publications/definedcontribution-plans-in-the-public-sector-an-update.
—PRNewsWire, 4/24/14
Health Care Reform
Spurs Move To Defined
Contribution Benefits
Model
Full implementation of the AfforableCare Act
by 2015 is prompting employers to rethink the
way they offer benefits, with many increasingly
eyeing a transition to defined contribution (DC)
benefit models. According to Group Benefits
and the Defined Contribution Model, the second
in a series of five research briefs based on the
Prudential Insurance Company of America’s
(Prudential’s) Eighth Annual Study of Employee
Benefits: Today and Beyond, nearly half (47%)
of employers report they are moving or have
moved to a DC model.
For the full release click here: www.marketwatch.
com/story/health-care-reform-spurs-move-to-definedcontribution-benefits-model-2014-04-14
—Marketwatch
The report also found:
•
•
•
Plan withdrawals in 2013 remained low and
stayed in line with activity in 2012. Only 3.5%
of DC plan participants took withdrawals in
2013, compared with 3.4% in 2012. Only 1.7%
took hardship withdrawals during 2013, same
as in 2012.
Loan activity remained about the same
throughout 2013 although it continues to
remain elevated compared with five years ago.
As of the fourth quarter of 2013, 401(k) plans
and other DC plans made up $5.9 trillion, of
overall retirement assets.
To read the article on planadviser and download
a copy of the report visit: www.planadviser.com/
NewsArticle.aspx?id=10737423031
—Kevin McGuinness
PlanAdviser.com, 4/23/14
6 | SPRING 2014
More Philanthropists Give Away Their Foundation’s Assets
in Their Lifetimes.
More philanthropists are choosing to donate all of their foundations’ assets within their lifetimes.
About 50 years ago, only 5% of the total assets of America’s largest 50 foundations were held by
spend-downs. In 2010, that number had risen to 24%, according to Bridgespan Group in Boston.
For the full article click here: online.wsj.com/news/articles/SB10001424052702304017604579447562412564966
— Veronica Dagher
Wall Street Journal, 4/13/14