Administration April 11, 2012

Conn. to Review State Street Forex Practices

April 11, 2012 (PLANSPONSOR.com) - Connecticut Attorney General George Jepsen plans to review foreign exchange trades made by State Street Corp. on behalf of the state’s pension fund. 
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Jepsen plans to hire a forex consultant who will provide expert testimony in potential litigation, according to a contract proposal made public, Reuters reports. Proposals for the contract are due May 11.

The consultant will review forex trades State Street made on behalf of the Connecticut Retirement Plans and Trust Fund, which is valued at $25 billion.

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State Street and the Bank of New York Mellon Corp. have been accused by several states of overcharging public pension funds on their forex trades (see “State Street Forex Practices Investigated”).

Administration April 11, 2012

Principal Preservation Still a Focus for Plan Participants

April 11, 2012 (PLANSPONSOR.com) - In a recent analysis of its client base, New York Life Retirement Plan Services found that despite a low interest rate environment, principal preservation investment solutions remain a heavily utilized retirement plan investment option.
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Since the financial crisis of 2008, on average, more than 20% of retirement assets have been invested in stable value investments and half of all participants across New York Life’s retirement platform have some 401(k) savings within a stable value investment today.  

The reliance on stable value is not attributed solely to an aging population that wants to shelter their retirement savings from the marketplace. Significant stable value usage spans all age ranges. On average, Baby Boomers—participants between 49 and 66 years of age—allocate 22% of their assets in stable value, compared with 12% for Gen X participants—those between 33 and 48 years of age—and 10% for Gen Y—those between 23 and 32.   

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In addition, half of all participants invested at least a portion of their defined contribution balances to stable value in 2011, according to the analysis. Baby Boomers had the highest rates of stable value use, at 58%, followed by Gen X at 46% and Gen Y at 32%. New York Life says the data is significant, given that participants are not automatically defaulted into a stable value investment, but must proactively place assets there.  

“Gen Y has not experienced a positive market cycle during their professional careers, and Baby Boomers just watched a good portion of their retirement erode in rough market conditions,” said Steven Dorval, managing director of retirement and investment strategy at New York Life Retirement Plan Services. “All participants require an investment option that will preserve principal, and at a minimum keep up with inflation. These are among the reasons stable value continues to be a core savings option.”

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