Products June 17, 2015

BNY Mellon Raising Commitment to DC Plans

Launches new publication for sponsors and advisers.
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BNY Mellon Investment Management, which has 80% of U.S. pension plans under custody, is making a concerted effort to gain a greater share of the defined contribution (DC) business, says Michael Gordon, head of retirement, insurance and strategic solutions for BNY Mellon.

“We have a huge presence in the defined benefit (DB) market,” Gordon says. “We consider this to be a core part of who we are and what we do. We also have a strong legacy of being a good DC player. We have a very talented and professional organization to provide solutions, and we are very much committed to growing this market, and to help participants as they grow their savings and reach retirement.”

To distinguish itself in the DC market, BNY Mellon plans on creating “innovative solutions” for advisers, recordkeepers and participants, Gordon says. For example, BNY Mellon is committed to “developing the next generation QDIA that can help people manage risk and take them to and through retirement,” he says. Noting BNY Mellon’s extensive experience with DB plans and liability-driven investing, Gordon says, “We believe we can bring a lot of that expertise to the DC world. We believe we are the right institution to bring to bear the right capabilities to help participants be successful and reach better outcomes.”

As part of this endeavor, BNYMellon is launching a biannual print and digital magazine called “Planet DC” aimed at retirement plan advisers and sponsors, recordkeepers and platform managers.

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The publication will cover emerging best practices for retirement plans, investments, fiduciary and regulatory developments, and participant engagement and communication, says Mark Browne, head of institutional and retirement marketing for BNY Mellon. The inaugural issue discusses the Department of Labor’s (DOL) proposed fiduciary rule and holistic financial wellness, among other topics, he notes.

Our goal is to help reframe the conversations among advisers and plan sponsors to help set participants on a more secure course, Gordon says. “In a perfect world, Americans would like to retire with enough money to live comfortably and leave a family legacy once they are gone,” Gordon says. “Unfortunately, that’s not a reality for many today. The move from DB to DC has transferred the responsibility for choosing and managing retirement planning to individuals who are not investment experts. At BNY Mellon, we strive to develop solutions and technologies that can better position individuals to reach their targeted retirement goals and enjoy a dignified retirement.”

Benefits June 17, 2015

No Rush to Self-Insure Health Benefits Yet

The move to self-insure health benefits is growing, but not among small firms so far, EBRI finds.
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Since enactment of the Patient Protection and Affordable Care Act (ACA) in 2010, there has been speculation that the law will result in an increasing number of smaller employers offering self-insured plans.

So far (up to 2013, the latest data available), there is no evidence that they are doing so, according to new research by the Employee Benefit Research Institute (EBRI).

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The EBRI analysis finds that the overall percentage of American workers in self-insured plans has been rising in recent years, compared to pre-ACA. Specifically, in 2013, 58.2% of workers with health coverage were in self-insured plans, up from 40.9% in 1998. Large employers (with 1,000 or more workers) have driven the upward trend in overall self-insurance.

However, EBRI found there is no evidence that smaller firms were increasingly self-insuring their health plans. The percentage of workers in self-insured plans in firms with fewer than 50 employees has been close to 12% in most years examined in the analysis going back to 1996.

The percentage of American workers in self-insured plans in 2013 ranged by state/federal district from a low of 35.5% to a high of 73.5%. Hawaii (at 35.5%) was the only state with fewer than 40% of workers with health insurance in self-insured plans. In four states and the District of Columbia (California, New York, Rhode Island, D.C., and Massachusetts), between 40% and 50% of workers with health insurance were in self-insured plans. Only two states (Indiana and Nebraska) had more than 70% of workers with health insurance in self-insured plans.

Some employers think that components of the ACA, such as the strict grandfathering requirements; the minimum-creditable-coverage requirement; the breadth of essential-health benefits; the taxes on insurers, medical-device manufacturers, and pharmaceutical companies; the affordability requirements; and the reinsurance fees will all drive up the cost of health coverage. To the degree small employers are concerned about the rising cost of providing health coverage, self-insurance may become a more attractive means to mitigate any expected regulatory cost increases.  

The full report, “Self-Insured Health Plans: State Variation and Recent Trends by Firm Size, 1996‒2013,” is published in the June 2015 EBRI Notes, online at www.ebri.org.

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