Data and Research July 22, 2016

Move to Non-Recordkeeper TDFs Is Growing

In an effort to improve the usage of TDFs, plan sponsors are beginning to assess both the number and quality of the funds they offer, SEI finds.
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In the second of SEI’s Institutional Group’s three-part study looking at the management of defined contribution (DC) retirement plans in the United States, SEI found that non-recordkeeper or off-platform target-date funds (TDFs) continue to grow in popularity among plan sponsors.

While 90% of survey respondents said they currently offer TDFs as an investment option in their plan, the use of recordkeeper TDFs and non-recordkeeper TDFs is essentially split evenly. Those plans with more than $1 billion in assets, referred to as “mega” plans in the survey, are leading the way, with 64% offering non-recordkeeper TDFs.

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“The notion that nearly as many plan sponsors are using off-platform TDFs as are using recordkeeper TDFs supports a broader trend around the decoupling of asset management from recordkeeping,” says Joel Lieb, director of the Defined Contribution Advisory Team at SEI’s Institutional Group. “In the past few years, regulatory agencies, such as the Department of Labor, have issued guidance to plan sponsors to evaluate non-recordkeeper TDFs as a potentially better option and it looks like that shift is well underway. We would expect that trend to continue as more plan sponsors build DC plan line-ups that offer traditional institutional investment options.”

One potential trigger for future changes is an overall lack of satisfaction among plan sponsors around participant usage of TDFs, SEI contends. More than half (58%) of survey respondents said they would like to see more of their participants using the TDFs they offer. Nearly three-quarters (73%) said less than half of their participants use the TDFs they offer in their plan. Plans with DC assets between $300 million and $1 billion showed the lowest levels of TDF participation.

In an effort to improve the usage of TDFs, plan sponsors are beginning to assess both the number and quality of the funds they offer. More than three-quarters of those polled said they offer between six and 15 funds in their TDF series. Plan sponsors are also applying re-enrollment schemes to bring their participants into TDFs. Nearly half (42%) of those polled said their organization was likely to conduct a re-enrollment within the next year. Re-enrollment would likely help increase TDF usage by defaulting more participants into TDFs.

The poll was conducted by SEI’s Defined Contribution Research Panel in December 2015 and completed by 231 executives representing DC plans ranging in size from $25 million to more than $5 billion.

The complete poll summary is at http://www.seic.com/enUS/institutions/17704.htm.
Break from the Grind July 21, 2016

A Little Friday File Fun

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In Lewiston, Maine, a man with an electronic benefits transfer card called the number on his card to get his EBT balance. However, when he dialed he number, he heard a voice that said, “Welcome to America’s hottest talk line.” A Maine Department of Health and Human Services spokesman told the Sun Journal that officials have been aware for months that the phone number on some cards is off by one digit. The department plans to replace the misprinted cards and strengthen its review process to prevent future errors.

In Washington, D.C., a restaurant owner is offering some consolation for those who receive speed camera tickets. According to the Daily Caller, the owner of the restaurant Caribbean Citations in southeast D.C. offers diners with a speed camera ticket a price discount on each menu item. They also get a raffle ticket to enter a chance to have the restaurant owner pay for their entire parking ticket.

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In Baltimore, Maryland, police officers were standing on a southeast Baltimore corner when a Toyota RAV-4 hit a cruiser steps away. Police say the driver told police that he was looking down playing “Pokemon Go” on his cellphone when he hit the cruiser. According to the Associated Press, the driver stepped out of his car and showed the officer his phone, saying “That’s what I get for playing this dumb … game.”

In East Greenwich Township, New Jersey, in another example of “Pokemon Go” going wrong, a woman climbed a tree inside a cemetery while playing the game. She found herself stuck there and had to call fire and rescue to get her down.

A paddleboarder claims when she plays her flute, whales come to her—and they do.

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Woman freaks out over frog on car hood.

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