The average 401(k) plan offers a variety of investment options

The average large 401(k) plan offered 27 investment options — including a mix of equity funds, bond funds, and target date funds, according to a recent study by BrightScope and the Investment Company Institute (ICI). © Shutterstock “Employers recognize the importance of being able to customize the design of their 401(k) plans to suit their […]

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The average large 401(k) plan offered 27 investment options — including a mix of equity funds, bond funds, and target date funds, according to a recent study by BrightScope and the Investment Company Institute (ICI).

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“Employers recognize the importance of being able to customize the design of their 401(k) plans to suit their workforces, which is one of the strengths of the 401(k) system,” Sarah Holden, ICI’s senior director of retirement and investor research, said. “Employers use the flexibility of the 401(k) system—including a wide variety of investment options and the structure of employer contributions—to build plans that encourage employee participation and make it easier for participants to plan and save.”

It also found that plan fees continue to decline.

“The 401(k) marketplace is constantly evolving, and with that, the overall costs of 401(k) plans for participants have declined,” Brooks Herman, vice president of data and research at BrightScope, said. “There are a variety of factors contributing to the decrease of fees and expenses in plans, including increased competition and the growing size of the 401(k) marketplace, as well as public disclosure of plan costs. All of these factors benefit participants and help them continue to grow their retirement nest eggs.”

The study also revealed that 85 percent of large 401(k) plans offered employer contributions. Employer contributions most commonly are structured as a simple matching contribution. Additionally, nearly 60 percent of larger 401(k) plans automatically enrolled their participants.

Finally, all large 401(k) plans included domestic equity funds, international equity funds, and domestic bond funds. Also, 80 percent of large 401(k) plans offered target-date funds while 69 percent offered guaranteed investment contracts (GICs) and 65 percent offered other types of balanced funds. In addition, 44 percent offered money funds, and 30 percent offered international bond funds.

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Bill targets retirement planning simplification

Sen. John Kennedy (R-LA) has crafted a bill designed to enhance retirement savings plan options while simplifying the process.© Shutterstock Kennedy said the measure would make it easier and less expensive for small businesses to offer retirement plans, like 401(k)s, by encouraging small businesses to band together through organized business associations, like chambers of commerce, […]

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Sen. John Kennedy (R-LA) has crafted a bill designed to enhance retirement savings plan options while simplifying the process.

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Kennedy said the measure would make it easier and less expensive for small businesses to offer retirement plans, like 401(k)s, by encouraging small businesses to band together through organized business associations, like chambers of commerce, to sponsor affordable retirement plans for all of the associations’ members.

“Millions of Americans work for small businesses that don’t have the resources to offer their employees retirement plans, which can make saving for retirement challenging and complicated,” Kennedy said. “This bill will make retirement plans more simple and available to people who own or work for small businesses. Americans know the value of hard work, and we work like dogs hoping that one day, we’ll be able to kick back and retire. This legislation will help make those retirement dreams more accessible to many hard-working Americans.”

Bureau of Labor Statistics maintains one-third of private sector employees did not have access to employer-sponsored retirement plans three years ago, and only 47 percent of employees of small businesses with fewer than 50 employees have access to defined retirement contribution plans, such as 401(k)-style plans.

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Insurance association commends Senate for holding hearing on terrorism insurance

The leadership of the American Property Casualty Insurance Association (APCIA) recently commended the Senate Banking Committee for holding today’s hearing on the reauthorization of the Terrorism Risk Insurance Program.© Shutterstock The Terrorism Risk Insurance Program was reauthorized in 2015 by President Barack Obama and was extended through Dec. 31, 2020. It was initiated on the […]

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The leadership of the American Property Casualty Insurance Association (APCIA) recently commended the Senate Banking Committee for holding today’s hearing on the reauthorization of the Terrorism Risk Insurance Program.

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The Terrorism Risk Insurance Program was reauthorized in 2015 by President Barack Obama and was extended through Dec. 31, 2020. It was initiated on the idea that sustaining a viable private market for terrorism insurance depends on a federal backstop.

“APCIA commends Chairman Crapo and members of the Senate Banking Committee for holding today’s hearing. APCIA strongly supports reauthorization of the current TRIA program as quickly as possible, for as long a duration as possible, and without changes to the current thresholds,” Nat Wienecke, senior vice president of federal government relations at APCIA, said.

Wienecke said that although the program does not expire until the end of 2020, it is imperative that TRIA is reauthorized this year.

“This fall, insurers will begin to negotiate new policies with durations running past TRIA’s expiration and have provisions ending terrorism coverage should TRIA lapse. Reauthorizing TRIA as soon as possible also will avoid disruptions and confusion in the marketplace for both insurers and their consumers,” Wienecke said. “APCIA will continue to work with Congress on a long-term reauthorization of TRIA.”

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SIFMA offers dissenting view of NJ fiduciary rule

The Securities Industry and Financial Markets Association (SIFMA) is offering a dissenting opinion regarding New Jersey’s proposed rule to create a state fiduciary standard.© Shutterstock “To best protect investors and avoid investor confusion, the optimal approach is to defer to the uniform, nationwide, heightened, best interest standard for broker-dealers which is embodied in the SEC’s […]

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The Securities Industry and Financial Markets Association (SIFMA) is offering a dissenting opinion regarding New Jersey’s proposed rule to create a state fiduciary standard.

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“To best protect investors and avoid investor confusion, the optimal approach is to defer to the uniform, nationwide, heightened, best interest standard for broker-dealers which is embodied in the SEC’s now final Reg BI,” SIFMA officials wrote in their letter to the New Jersey Bureau of Securities. “A state-by-state approach, on the other hand, would result in an uneven patchwork of laws that would be duplicative of, different than, and possibly in conflict with federal standards. It would also heighten investor confusion. We urge the Bureau to pause its rulemaking process, review Reg BI and reevaluate its proposal before deciding whether it is necessary to proceed with an additional state regulation.”

The correspondence also addressed potential broader negative consequences for the state in the wake of its industry footprint.

“The finance and insurance industry has roughly 200,000 employees in the state of New Jersey and accounts for almost 5 percent of all employment in the state,” the letter stated. “Every dollar spent in the securities industry in New Jersey generates an additional $1.22 for the state economy and every job in the securities industry generates an additional 1.34 jobs statewide.”

It is the SIFMA’s position the plan would represent a fundamental change in the way the securities sector operates in the state and would fundamentally alter its relationship with millions of New Jersey investors.

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Measure seeks to expand credit access

A bipartisan group of senators recently introduced a bill designed to expand credit access opportunities for Americans.© Shutterstock Sens. Angus King (I-Maine), Joe Manchin (D-WV), Tim Scott (R-SC), Doug Jones (D-AL), Mike Rounds (R-SD), Jon Tester (D-MT) and Tom Cotton (R-AR) said the Credit Access and Inclusion Act of 2019 addresses circumstances in which Americans […]

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A bipartisan group of senators recently introduced a bill designed to expand credit access opportunities for Americans.

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Sens. Angus King (I-Maine), Joe Manchin (D-WV), Tim Scott (R-SC), Doug Jones (D-AL), Mike Rounds (R-SD), Jon Tester (D-MT) and Tom Cotton (R-AR) said the Credit Access and Inclusion Act of 2019 addresses circumstances in which Americans
do not have a history of traditional loan payments, such as student loans, mortgages, and car loans.

“Oftentimes, Americans who struggle with access to credit are able to pay their bills – but the recurring bills they pay are not included in the credit rating process,” King said. “Maine people who pay their phone and utility bills on time every month should be able to point to these bills as an example of credit because these are the major expenses they incur every month. This bill is about giving people the chance to establish themselves and open up new avenues to success – it doesn’t get more common sense than that.”

In April, King wrote a letter challenging the IRS to refocus its limited resources away from disproportionately auditing lower-income households who utilize the Earned Income Tax Credit (EITC) and co-sponsored the Working Families Tax Relief Act, which expands the EITC and Childcare Tax Credit (CTC).

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Bill targets corporate board diversity

Rep. Carolyn B. Maloney (D-NY), chair of the House Committee on Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets, introduced legislation designed to ensure investors and the public have information regarding the gender, racial, and ethnic diversity of corporate boards.© Shutterstock The Diversity in Corporate Leadership Act of 2019 requires public companies to […]

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Rep. Carolyn B. Maloney (D-NY), chair of the House Committee on Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets, introduced legislation designed to ensure investors and the public have information regarding the gender, racial, and ethnic diversity of corporate boards.

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The Diversity in Corporate Leadership Act of 2019 requires public companies to disclose the gender, racial, and ethnic composition of their boards of directors every year in their proxy statements sent to shareholders and investors.

“I strongly believe that by requiring companies to take a real look at the gender, racial and ethnic makeup of their boards, we will create incentives and inspire change so that these boards better resemble the American public at large,” Maloney said. “By disclosing this information to investors, we are also empowering shareholders to support companies that embody their ideals and pull investment from those that don’t.”

Maloney said increased diversity also makes financial sense in addition to making moral and common sense.

“Studies have repeatedly found that companies with more diverse leadership are better positioned to succeed,” she said. “Why wouldn’t companies want to show off that they’re making smart financial decisions by moving towards more diversity and equality on their boards?”

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Housing Financial Literacy Act advances Financial Services Committee

The House Committee on Financial Services has voted to advance the Housing Financial Literacy Act of 2019, which is designed to aid first-time homebuyers.© Shutterstock The measure, introduced by Rep. Joyce Beatty (D-OH), provides first-time homebuyers with a discount on their Federal Housing Administration (FHA) mortgage insurance premium of 25 basis points. “Motivating first-time homebuyers […]

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The House Committee on Financial Services has voted to advance the Housing Financial Literacy Act of 2019, which is designed to aid first-time homebuyers.

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The measure, introduced by Rep. Joyce Beatty (D-OH), provides first-time homebuyers with a discount on their Federal Housing Administration (FHA) mortgage insurance premium of 25 basis points.

“Motivating first-time homebuyers to seek vital pre-purchase counseling and equipping them with the much-needed financial skills and tools to make informed financial decisions benefits their families, the surrounding neighborhood, and our entire economy,” Beatty said. “I am pleased to see my bill move one step closer to becoming law and many thanks to my Democratic and Republican colleagues for their support.”

The effort involves first-time homebuyers completing a Department of Housing and Urban Development (HUD)-certified housing counseling course to be eligible for the discount. Studies confirm homebuyers receiving pre-purchase housing counseling are nearly one-third less likely to fall behind on their mortgage and face a reduced risk of foreclosure.

The legislation now moves from the Committee to the full House Floor for further consideration.

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Senators applaud CFTC for addressing climate-related financial risks

Members of the Senate Banking Committee commended the Commodity Futures Trading Commission (CFTC) for holding a public meeting on climate-related financial risks.© Shutterstock “Climate change impacts are likely to exacerbate market volatility, erode investor confidence, and increase the risk of financial crashes,” the senators wrote in their letter to CFTC Commissioner Rostin Behnam. “We strongly […]

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Members of the Senate Banking Committee commended the Commodity Futures Trading Commission (CFTC) for holding a public meeting on climate-related financial risks.

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“Climate change impacts are likely to exacerbate market volatility, erode investor confidence, and increase the risk of financial crashes,” the senators wrote in their letter to CFTC Commissioner Rostin Behnam. “We strongly support your decision to assess climate-related risks to our financial markets and the impact on the stability of the global financial system. We encourage you to reach out to other financial regulatory agencies to urge them to follow your lead. We also encourage you to engage with the group of 36 international central banks and bank supervisors working together to develop analytic tools to assess climate-related financial risks.”

The letter was signed by U.S. Sens. Brian Schatz (D-HI), Sherrod Brown (D-OH), and members of the Senate Banking Committee.

“Climate change is increasing the frequency and severity of episodic severe weather events like droughts, floods, and wildfires; it is also changing long-term climate patterns in ways that will lower productivity, devalue and destroy fixed assets, stress agricultural yields, and ultimately affect every sector of our economy. The markets and market participants that the CFTC regulates will not be immune to these risks. Climate change impacts are likely to exacerbate market volatility, erode investor confidence, and increase the risk of financial crashes,” the senators wrote.

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Index determines CEO projections reserved

The Business Roundtable’s Q2 2019 CEO Economic Outlook Index has determined CEO expectations for sales and plans for capital spending over the next six months are healthy but decreased.© Shutterstock “The second quarter CEO survey was in the field during a turbulent few weeks for U.S. trade relations with China and Mexico,” Jamie Dimon, chairman […]

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The Business Roundtable’s Q2 2019 CEO Economic Outlook Index has determined CEO expectations for sales and plans for capital spending over the next six months are healthy but decreased.

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“The second quarter CEO survey was in the field during a turbulent few weeks for U.S. trade relations with China and Mexico,” Jamie Dimon, chairman and Chief Executive Officer of JPMorgan Chase & Co. and chairman of Business Roundtable, said.”Business leaders are ready and eager to invest and hire in the United States. Yet, the uncertainty over trade policy is making it more difficult for companies to invest and operate confidently. The Administration and Congress can remove trade uncertainty by working together on policies that will fortify U.S. trading relationships and expand international commerce for the benefit of America’s workers, families, and communities.”

The CEO Economic Outlook Index decreased 5.7 points in the second quarter to a value of 89.5, officials said, which exceeds the Index’s historical average of 82.6 and signals a continued positive direction for the U.S. economy.

The analysis showed CEO plans for hiring decreased 5.2 points to 75.2, plans for capital investment decreased 2.9 points to 88.1, and expectations for sales decreased 8.9 points to 105.1.

“The second quarter CEO survey was in the field during a turbulent few weeks for U.S. trade relations with China and Mexico,” Joshua Bolten, Business Roundtable president and CEO, said. “Business leaders are ready and eager to invest and hire in the United States. Yet, the uncertainty over trade policy is making it more difficult for companies to invest and operate confidently. The Administration and Congress can remove trade uncertainty by working together on policies.”

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Rep. Luetkemeyer backs bill to delay FASB’s accounting standard

U.S. Rep. Blaine Luetkemeyer (R-MO) voiced his support for legislation that would delay the implementation of the Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss (CECL) standard.© Shutterstock Luetkemeyer supports the Continued Encouragement for Consumer Lending Act, introduced in May by Sen. Thom Tillis (R-NC), which would require the FASB to delay the implementation […]

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U.S. Rep. Blaine Luetkemeyer (R-MO) voiced his support for legislation that would delay the implementation of the Financial Accounting Standards Board’s (FASB) Current Expected Credit Loss (CECL) standard.

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Luetkemeyer supports the Continued Encouragement for Consumer Lending Act, introduced in May by Sen. Thom Tillis (R-NC), which would require the FASB to delay the implementation of CECL until a quantitative impact study can be completed that can assess the new accounting standard’s economic impact.

The proposed CECL standard, which goes into effect Dec. 19, 2019, marks a shift in the way credit losses on loans and financial assets are recorded. It will impact financial institutions internal accounting policies and procedures and may affect how they manage capital.

“With the potential to drastically impact consumers across the nation, it is simply unacceptable to continue the implementation of CECL without understanding the broad economic implications,” said Luetkemeyer, ranking member of the House Subcommittee on Consumer Protection and Financial Institutions. “It has become abundantly clear that no comprehensive analysis was done to see how the most significant accounting change in decades would affect our economy. In response to the growing groundswell of concern surrounding CECL, I’m proud to join my bipartisan colleagues on this commonsense legislation.”

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