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January 3, 2017
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What Happens When DB Funding Relief Goes Away?
Sponsors Remain Cautious on Impact Investing and ESG
DOL: Lifetime Income Elements Can Be Included in Prudent Default
IRS Releases Proposed Mortality Tables for DB Plans
Why Use Certain DC Investment Options?
Benefits & Administration
The majority of public pension plans made several reforms following the financial crisis. A new brief examines how, why, and to what extent state and local governments have enacted these changes. Read more »
What Happens When DB Funding Relief Goes Away?:
The Pension Protection Act of 2006 (PPA) defined specifically how defined benefit (DB) plans should measure funded status—using high-quality corporate bond interest rates and a specific mortality table. It also prescribed a calculation for minimum required contributions each year, and plan sponsors had seven years to get their plans fully funded. However, since the passage of the PPA, there have been six efforts to give funding relief to DB plan sponsors. Currently, funding relief is available until 2020. What happens if no further funding relief is provided? Read more »
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2016 Recordkeeping Survey
Sponsors Remain Cautious on Impact Investing and ESG:
2016 was an effective year for providers and recordkeepers searching to incorporate socially and environmentally conscious investment themes; yet fear of fiduciary risk and industry jargon are slowing progress among defined contribution (DC) plans. Read more »
Products, Deals and People
QBI, a third-party administrator (TPA), has released the Secure Client Dashboard, a new platform aimed at facilitating communication between consultants and their clients. Read more »
Economic Events

In the week ending December 24, the advance figure for seasonally adjusted initial claims for unemployment insurance was 265,000, a decrease of 10,000 from the previous week's unrevised level of 275,000, the Labor Department reported last Thursday. The four-week moving average was 263,000, a decrease of 750 from the previous week's unrevised average of 263,750. 

As of December 29, the average interest rate for a 30-year fixed-rate mortgage was 4.32%, up from 4.30% a week prior, according to Freddie Mac. The average interest rate for a 15-year fixed-rate mortgage was 3.55%, up from 3.52%.

THE ECONOMIC WEEK AHEAD: Today, the Census Bureau will report about construction spending for November. Thursday, the Labor Department will issue its initial claims report. Friday, the Bureau of Labor Statistics will reveal the unemployment rate for December, and the Census Bureau will report about factory orders for November.
Market Mirror

Friday, the Dow closed 57.18 points (0.29%) lower at 19,762.60, the NASDAQ decreased 48.91 points (0.90%) to 5,383.12, and the S&P 500 was down 10.43 points (0.46%) at 2,238.83. The Russell 2000 slipped 6.04 points (0.44%) to 1,357.13, and the Wilshire 5000 lost 98.57 points (0.42%) to close at 23,425.86.

On the NYSE, 3.1 billion shares changed hands, with a slight lead for advancers. On the NASDAQ, 2.9 billion shares traded, with three declining issues for every two advancing issues.

The prices of the 10-year Treasury note and the 30-year Treasury bond each increased 8/32, bringing their yields down to 2.447% and 3.069%, respectively.
Compliance
The Department of Labor (DOL)’s Employee Benefits Security Administration (EBSA) has updated guidance for plan fiduciaries in regards to proxy voting by employee benefits plans. Read more »
DOL: Lifetime Income Elements Can Be Included in Prudent Default:
In an information letter to Christopher Spence, senior director, Federal Government Relations at TIAA, the Department of Labor (DOL) says a defined contribution (DC) plan could prudently choose a default investment for the plan that contains lifetime income elements. The letter was in response to a request regarding the application of the Employee Retirement Income Security Act (ERISA) to TIAA’s Income for Life Custom Portfolios (ILCP). While the DOL said the ILCP does not qualify as a QDIA, it said an investment with lifetime income elements can be a prudent default investment option in DC plans, even if not a QDIA. Read more »
IRS Releases Proposed Mortality Tables for DB Plans:
The Internal Revenue Service (IRS) has revealed proposed regulations, to be effective beginning in 2018, regarding mortality tables to be used by most defined benefit (DB) pension plans to determine minimum funding requirements and the minimum required amount of a lump-sum distribution from such a plan. Read more »
Investing
Why Use Certain DC Investment Options?:
An analysis of potential investment options in a plan sponsor's line-up and when and why to use them, or not. Read more »
Small Talk
ON THIS DATE: In 1521, Pope Leo X excommunicated Martin Luther. In 1777, the Battle of Princeton took place in the War of Independence, in which George Washington defeated the British forces, led by Cornwallis. In 1823, Stephen F. Austin received a grant from the Mexican government and began colonization in the region of the Brazos River in Texas. In 1825, the first engineering college in the U.S., Rensselaer School, opened in Troy, New York. It is now known as Rensselaer Polytechnic Institute. In 1888, the drinking straw was patented by Marvin C. Stone. In 1924, English explorer Howard Carter discovered the sarcophagus of Tutankhamen in the Valley of the Kings, near Luxor, Egypt. In 1938, the March of Dimes was established by U.S. President Franklin Delano Roosevelt. In 1951, NBC-TV debuted "Dragnet." In 1957, the Hamilton Watch Company introduced the first electric watch. In 1959, in the U.S., Alaska became the 49th state. In 1961, the U.S. severed diplomatic relations with Cuba. In 1983, Tony Dorsett (Dallas Cowboys) made the longest run from scrimmage in NFL history. Dorsett ran 99 yards in a game against the Minnesota Vikings. In 1993, U.S. President George H.W. Bush and Russian President Boris Yeltsin signed the second Strategic Arms Reduction Treaty (START) in Moscow. In 2000, Charles M. Schulz's final original daily comic strip appeared in newspapers. In 2004, NASA's Spirit rover landed on Mars. The craft was able to send back black and white images three hours after landing.
TRIVIAL PURSUITS: Who was the last Fuhrer of Nazi Germany? Read more »
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Alison Cooke Mintzer | Editor-in-Chief | alison.mintzer@strategic-i.com

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