September 2020

07Sep

US. DOL´S mixed message for plan sponsors

The Labor Department is on a tear. In recent actions, it has opened the door for sponsors of defined contribution retirement plans to consider adding alternative investments such as private equity to their lineups. And it also sent a stern warning for both defined benefit and DC plan sponsors over including investments with an explicit ESG focus. More recently, it has proposed blocking an ERISA plan sponsor's ability to vote a proxy unless the issue has an economic impact on...

September 7, 2020
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04Sep

US. No, Joe Biden Won’t Kill Your 401(k)

A simmering debate among financial professionals and policy wonks has intensified as the presidential race kicks into high gear: Should Joe Biden become president, will he reinvent the 401(k)? A Biden campaign pledge to make employer-sponsored plans more equitable is driving the conversation. While Biden’s team hasn’t offered many details, some observers believe a Biden administration would favor changing retirement plan tax benefits to the benefit of lower-income workers. Skeptics worry this would depress retirement savings overall and lead...

September 4, 2020
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03Sep

US. COVID-19 economy pushing workers into early, involuntary retirement

The COVID-19 pandemic may have pushed millions of older workers out of the workforce prematurely. A report published earlier this month from the Schwartz Center for Economic Policy Analysis (SCEPA) at The New School showed that 2.8 million older workers have left their jobs since March — and ongoing economic turmoil coupled with poor health could make it difficult to resume their career elsewhere. Some may have already given up. Per the report, 38% of unemployed older employees stopped...

September 3, 2020
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02Sep

Pennsylvania Teachers’ Pension Sheds $2 Billion in Risky Investments

The board of trustees of the $55.8 billion Pennsylvania Public School Employees’ Retirement System (PSERS) has unanimously voted to dump approximately $2 billion from “expensive and underperforming” investments. At its most recent meeting, the board agreed to the move as part of a $5 billion reallocation out of hedge funds and other higher risk investments into stocks, bonds, commodities, and infrastructure investments. The move was lauded by Pennsylvania State Treasurer Joe Torsella. “It’s time that more pension funds wake...

September 2, 2020
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01Sep

How can cities adapt to the needs of their aging populations?

Long before COVID-19 had us rethinking just about every aspect of how we live, demographers and experts on aging were already considering what the future will look like for the world’s cities. A decade from now, roughly 3 of every 5 people on the planet will live in cities, and that population is getting older than the urban dwellers of the past. On top of that, aging populations will double between now and the end of the century. Add...

September 1, 2020
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August 2020

31Aug

US. The Contribution Conundrum For Underfunded Plans

Reduced PBGC variable rate premiums may make now an optimum time to contribute. Plan sponsors undertaking risk-transfer activities in underfunded plans should consider contributing additional assets to maintain funded status equivalence. For some plans, low borrowing rates may present an opportunity. At the end of March 2020, the CARES Act was signed into law. One impact of this legislation for defined benefit plan sponsors is that any contributions that were required during 2020, either quarterly contributions or those...

August 31, 2020
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28Aug

US. The Future for ESG Investing in Retirement Plans

The department of labor (DOL)’S proposed rule on environmental, social and governance (ESG) investment practices, published in June, intended to add clarity to years of obscure regulatory guidance. Instead, it’s created a layer of complexity among fiduciaries and has fueled more than 1,000 critical comments. The proposed regulation restates that plan sponsors in defined contribution (DC) plans cannot disregard financial approaches in an effort to pursue ESG-related considerations without violating their fiduciary duties under the Employee Retirement Income Security...

August 28, 2020
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26Aug

US. A$1.6 Trillion Pension Fund Gap – Is Infrastructure Investment The Answer?

The U.S. is a superpower in the pension fund world, controlling more than 50% of global assets, and yet a recent Financial Times article identified a $1.6 trillion dollar funding gap as a grave threat to the U.S. economy. Read also US. The Future for ESG Investing in Retirement Plans For the last 15 years, as Canadian and Australian pension funds have returned on average nearly 5% per year, and often much more, their U.S. counterparts have averaged returns of...

August 26, 2020
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21Aug

Financial Knowledge Overconfidence and Early Withdrawals from Retirement Accounts

By Sunwoo T. Lee, Sherman D. Hanna Early distributions from retirement accounts could endanger future retirement income security, and the U.S. has restrictions to discourage them, including possible tax penalties. On the other hand, tapping one’s retirement assets may be rational when an individual encounters financial hardship. With the 2020 Coronavirus Aid, Relief, and Economic Security Act (CARES Act), early distribution from retirement accounts became an even more attractive option to individuals. In this study, we examined factors related...

August 21, 2020
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21Aug

US. Sustainability Matters: Overwhelming Opposition to Proposed Regulation Limiting the Use of ESG in Retirement Plans

The U.S. Department of Labor has proposed a rule that would limit the use of investments that consider environmental, social, and corporate governance factors in worker retirement plans subject to ERISA, including 401(k) plans. Read also US. DOL Issues New Rules On Retirement Plan Income Disclosures The proposed rule questions the financial materiality of ESG issues and assumes that ESG-focused investment strategies and funds are primarily focused on providing “nonpecuniary” benefits, often at the expense of “pecuniary” benefits, otherwise known...

August 21, 2020
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