March totals for net new investments in stock and bond funds
dipped to $49.4 billion, down from the previous month’s $56.7 billion,
according to data from Strategic Insight, an Asset International Company.
Net intake to equity products rose to $40 billion from
February’s $32.2 billion, driven by a $38.3 billion inflow to international
equity. Actively managed international equity funds attracted $12.7 billion in
March—a rise from the $6.9 billion of the previous month, led by demand for
international growth products ($3.5 billion).
Taxable bond funds attracted lower flows of $7.4 billion
during the month—a dip from February’s $30.8 billion—with $4.8 billion of
inflows to global bond funds.
The month’s fund returns showed negative returns for international
equity, at -1.1%, and for U.S. equity, at -0.8%. One-month average bond fund
returns were flat at 0.1% during the month.
Money market fund net redemptions totaled $27.1 billion in
March, up from $9.3 billion in February.
More information about Strategic Insight is at www.sionline.com.
As
provisions of the Patient Protection and Affordable Care Act (ACA) have rolled
out over the past couple of years, many companies are making substantial
changes to their health benefit offerings, according to Paul Goldbeck, senior
consultant at Towers Watson.
Goldbeck
told attendees of the 44th Annual Retirement & Benefits Management Seminar,
hosted by the Darla Moore School of Business at the University of South
Carolina, and co-sponsored by PLANSPONSOR, that the individual mandate and
provision for adult children has resulted in additional employees signing up for
employer plans, and new taxes and fees have also increased costs for employers.
In addition, the ACA added administrative complexity with new eligibility and
reporting requirements as well as rules to coordinate out of pocket maximums among
pharmacy benefit and health plans.
“All
of this leads employers to consider whether they want to take a different
approach to health benefits,” Goldbeck said. Many have increased employee
cost-sharing and/or moved to private exchanges. He added that the pace of
change may accelerate as the 2018 excise tax on high-cost health plans
approaches. Towers Watson estimates that about 48% of large companies will
incur the excise tax in 2018.
If
employers exceed the excise tax thresholds in 2018 or 2019, benefit reductions
are likely, Goldbeck contended. Then, the question is, does the company get a
windfall, or should there be a redistribution of the savings to other benefits?
By
2020, health care benefits may become less of a differentiator as more
employers gravitate towards similar offerings. If companies have used health
benefits to attract employees, they’ll have to think about new ways to stay
ahead of their competition, Goldbeck said.
He
acknowledged that the law is still subject to change and ongoing guidance. The
Supreme Court will make a decision in King
v. Burwell that could throw a wrench in the employer mandate if it is determined that
individuals in federally run exchanges are not entitled to subsidies. And, Goldbeck said he thinks there is a
reasonable possibility the definition of full-time employee will be changed to those who work 40 hours a week.
He
added that likely discussions among lawmakers include repealing the employer
and/or individual mandate, repealing the medical device excise tax and
repealing the automatic enrollment mandate. However, coverage for children up
to age 26 and protection for pre-existing conditions will not go away.
Goldbeck
said there are potential obstacles to ACA changes. “Even though the Senate
switched to Republican control, they still don’t have enough votes to veto
anything, and they disagree among themselves on an approach to changing the
law,” he stated. “In addition, they have other big legislation to worry about,
such as immigration.”
Health care reform is
a transformational moment leading employers to consider whether to build or buy
health benefits and how it affects total rewards and workforce planning,
Goldbeck concluded.