Bill Would Expand Investments 403(b) Plans Can Make
NAPA | 3/23/2020
Because… This bill is significant because it would bring 403(b) plan law up to date. The law, which was enacted in 1958, only allowed annuities at the time. Mutual funds were added to the plan menu by the Employee Retirement Income Security Act (ERISA) in 1974. Investments in a 403(b) plan are currently restricted to these two investment types unless it is a 403(b)(9) retirement income account offered by a church. Church plans can offer collective investment trusts (CITs) based on a 2015 law, but they usually lack the scale to take advantage of CITs’ lower costs. According to PSCA’s 2019 403(b) Survey, nearly 60% (58.2%) of organizations formally evaluate plan-paid fees annually, indicating the importance of costs to their plans. If the bill is passed, it could level the playing field for 403(b) plans and encourage more teachers and health care workers to increase retirement savings.
Global Investor Confidence Decreased in March by 4.0 Points to 74.5 due to Covid-19
Press Release | 3/25/2020
Because… While State Street’s Investor Confidence Index analyzes trading patterns of institutional investors, we believe retail investor confidence has also decreased amid the market turbulence. How to boost investor confidence at this difficult time is what every asset management firm should contemplate. When markets tumble, investors start to question portfolio managers’ risk management skills and ability to safeguard their assets. Thus, regaining their confidence becomes essential to retain investors. Keeping communications with investors open and candid is a must. Fund firms should explain whether they have adjusted their risk mitigation strategies to handle recent market caprices, how the markets rebounded from major crashes in the history, what the government has done to get people and businesses back on their feet, and why investors should stay focused on their long-term goals instead of being distracted by short-term noise.
Senate Approves Coronavirus Stimulus with Retirement Relief
NAPA | 3/26/2020
Because… We are dealing with unprecedented times due to the worldwide spread of the coronavirus: disruptions it brought to people’s everyday life and overall economies, measures undertaken by governments across the world, and the chaos it caused to global financial markets. The devastating effects can last for quite a while, which makes the Senate’s approval of a sweeping $2 trillion stimulus bill very timely. The retirement relief would be particularly helpful for those impacted by the virus. Financial companies should not only keep themselves informed of the latest regulatory developments, but also get the investing public up to speed with the legislation. Firms should dissect the 883-page bill and help investors understand how the biggest stimulus package can protect businesses and American workers, which key provisions will affect retirement plans, and who is eligible for coverage. Most importantly, guidance should be crafted in plain English so that investors can easily digest it without feeling overwhelmed by legalese.