Administration December 18, 2008

SEI Provides Guidance on FAS 87 Disclosure Assumptions

December 18, 2008 (PLANSPONSOR.com) - Despite current market conditions and returns for 2008, plan sponsors should not drastically adjust Return On Asset (ROA) assumptions for 2009, according to SEI's 2009 update of an annual research study on Financial Accounting Standards No. 87 (FAS 87).
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According to a press release, the study can be used by companies in the calculation of pension expense and obligations by providing guidance for the discount rate and ROA assumptions plan sponsors will use for 2008 year-end calculations.

SEI’s research suggests short term average returns may be extremely time dependent.   For example, the 20-year average ROA of a 60/40 portfolio is 7.5% as of November 30, 2008; however, it was 10.2% as of November 30, 2007, the press release said.

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Though plan sponsors may receive increased pressure from auditors to review whether their ROA assumptions are reasonable, SEI’s research suggests more of a long-term view in selection of an ROA.

“Given the market performance, this will be a difficult year for determining the appropriate ROA assumption, but recent market conditions are just a consideration in the selection process,”said Jon Waite, Chief Actuary for SEI’s Institutional Group, in the press release. “Plan sponsors should still consider what they expect the portfolio to return over the long-term when selecting this assumption.”

At the end of each fiscal year, plan sponsors are required to select a discount rate based on current market conditions to be used in valuing their plan’s accounting liabilities that must be disclosed in the footnotes to their financial statements. The discount rate selected for the 2008 disclosure is the same rate that will be used in the calculation of 2009 pension expense.

A copy of SEI’s research is available by emailing seiresearch@seic.com .

Products December 17, 2008

New Merrill Program Helps Workers Save for Retirement

December 17, 2008 (PLANSPONSOR.com) - The Merrill Lynch Retirement Group has introduced a new communication program, "Achieve Life" for workers in employer-sponsored retirement plans.
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A Merrill news release said the program is designed to help workers appreciate their company benefits, understand the need to save for retirement, motivate them to take action, and help them make the appropriate choices for their retirement savings.

The company said the offering includes targeted communications campaigns, an interactive e-kit, printed materials, online communications—including podcasts, webinars, e-mails, Merrill Lynch’s Benefits Online Web site—and workplace presentations. 

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According to Merrill, the program delivers targeted messages that include the need to:

  • Maximize company benefits by increasing savings regularly and contributing at least to matching levels.
  • Invest wisely by diversifying among asset classes, rebalancing periodically, and adjusting asset allocation based on changing age and/or financial circumstances.
  • Set and monitor retirement plan goals, to ensure employees stay on track to financial success.
  • Protect accumulated assets through asset allocation programs and distribution strategies.

Merrill said the program includes a “Managing Your Career Transition Guide,” which provides insights and resources to help employees assess their options.

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