Capital Preservation

Capital Preservation covers investments such as stable value, general insurance contracts, fixed income and money market funds. As more plans and their participants become focused on the preservation of capital rather than its growth, there will be more scrutiny and interest in these types of investments. 

By NAPA Net Staff8/12/2014 • 0 Comments

A retirement savings demonstration has found its way into the record books — the Guinness Book of World Records, in fact. Prudential Financial turned up at the NASCAR Hall of Fame courtyard in Charlotte, NC last week with a unique lesson plan on the importance of turning small savings into big bucks. READ MORE

By John Iekel3/24/2014 • 0 Comments

“Right now is a pivotal time for the retirement plan industry,” declared Wagner Law Group president Marcia S. Wagner -- capturing the tenor of a discussion about longevity planning at a March 23 panel discussion at the NAPA 401(k) Summit in New Orleans. Guaranteed income does not come from systematic withdrawals or managed payouts; the best solution, Wagner said, are guaranteed lifetime withdrawal benefits (GLWBs). READ MORE

By Fred Barstein9/17/2013 • 1 Comments

As the retirement industry is fighting to keep money market funds in pension plans and the SEC considers reforms spurred by the Great Recession, others are questioning whether MMFs belong in DC plans at all. In comment letters to the SEC, pension executives argue that MMFs offer stability, liquidity and low cost, with half of DC and DB plans offering them as an investment option. READ MORE

By Fred Barstein8/12/2013 • 0 Comments

In what could be a watershed decision, the 7th Circuit U.S. Court of Appeals reversed a lower court decision denying plaintiffs in the Abbott v. Lockheed Martin case class action status. The plaintiffs, who were represented by Jerome Schlichter, were able to win class action status by splitting the classes into those that invested in the same funds. READ MORE

By Fred Barstein7/26/2013 • 0 Comments

According to British politician Ed Miliband, “…the only time we made progress, we did it by challenging the conventional wisdom.” Taking that challenge, Schwab’s Rande Speigelman exposes what he calls the Five Big Lies about retirement. READ MORE

By Fred Barstein7/25/2013 • 0 Comments

Though appealing in theory, the use of managed accounts (MAs) in DC plans has not only been low but also seems to be declining. According to research by the PSCA, only 3.6% of plans offer MAs, and plans using MAs as a QDIA have dropped from 7.2% in 2010 to 1.2% in 2012. READ MORE

By Fred Barstein7/24/2013 • 0 Comments

People are watching the Detroit bankruptcy filing carefully, wondering whether it is the start of a trend for other cities and municipalities in financial trouble – many driven by underfunded pension plans. Many state and local pensions have either invested poorly or have not realistically calculated their liabilities using fuzzy math. READ MORE

By Fred Barstein5/7/2013 • 0 Comments

In another bit of fallout from the 2008 Great Recession, major providers of variable annuities are invoking contract provisions they rarely if ever used previously to restrict or ban new money from current clients, especially on the richest guaranteed contracts. Needless to say, account holders are angry, and the SEC is reviewing contract language. READ MORE

By NAPA Net Staff3/20/2013 • 0 Comments

Stable value is one of the most popular investment choices in DC plans — and one of the least understood. Some advisors use this lack of understanding by plan sponsors and their competitors as a differentiator and prospecting strategy. The Blue Prairie Group, which provides quarterly updates and a succinct comparison of different types of products and questions advisors should be asking their providers, recently completed their report for 4Q 2012. READ MORE

By NAPA Net Staff3/15/2013 • 0 Comments

With many investors concerned about capital preservation, more focus is being paid to stable value, which is one of the leading investments in that category. Research commissioned by MetLife, a stable value provider itself, shows that most plans are not considering making changes to their stable value lineup in the next 12 months. READ MORE

By NAPA Net Staff3/1/2013 • 0 Comments

Quoting Fed governor Jeremy Stein — and perhaps channeling Alan Greenspan — Bill Gross, in his latest investment outlook, ponders the question of whether we’re experiencing another bout of irrational exuberance with the recent run-up of the market. Is it sustainable, or are we playing a game of musical chairs? Is now the time to be hovering close to a seat? READ MORE

By NAPA Net Staff1/11/2013 • 0 Comments

Using annual return data for large-capitalization stocks and corporate bonds from 1926 through 2011, researchers from Boston College’s Center for Retirement Research studied the distribution of historic returns and then used that distribution to determine optimal consumption and portfolio asset allocation for a risk-averse household facing labor-income uncertainty and longevity risk. READ MORE

By Sean Murray11/28/2012 • 0 Comments

Forbes’ Janet Novak highlights many of the benefits of a stable value fund, especially in a rising interest rate environment. For example, with $650 million in assets, the stable value asset class is widely misunderstood, creating a great opportunity for retirement plan advisors to differentiate themselves; and with proper protections in place, most stable value funds — even in an extreme rising interest rate environment — should maintain their principal and most of their yield. READ MORE

By Sean Murray11/26/2012 • 1 Comments

New research from Wells Fargo details the differences in the savings and spending habits of affluent investors (those with assets in excess of $250,000) and those with less than $250,000 in savings. More than 50% of affluent investors utilize equities as a large portion of their asset allocation, the survey found (among other things), while just 35% of the non-affluent prefer stocks and would rather invest in cash, CDs, fixed income, etc. — a key point for many retirement plan advisors who are dealing mostly with less affluent investors. READ MORE

By NAPA Net Staff11/7/2012 • 0 Comments

Predicting continued slow growth of the U.S. economy and continued lower interest rates from the Fed, PIMCO’s Bill Gross predicts bite-sized future returns and the growing risk of misguided monetary policies leading to disruptive financial markets in the future. Citing lower capital spending and continued high household spending, the U.S. economy is not using cheap money to rebuild itself for the future. READ MORE

By Sean Murray11/6/2012 • 0 Comments

A white paper by PIMCO’s stable value portfolio management team and the head of their DC practice describes in detail some of the steps that advisors should go through when making decisions about which fund(s) they should select for the capital preservation space in a DC menu. READ MORE

By NAPA Net Staff10/23/2012 • 0 Comments

The recent recession had a greater impact on adults aged 36-40 than on any other age group, according to a study by the Pew Research Center. Fewer of these adults will be covered by pension plans than their baby boomer parents, and many may be concerned about the viability of Social Security — making them much less confident about their ability to retire than they were just three years ago. READ MORE

By NAPA Net Staff10/9/2012 • 0 Comments

As stable value investments become more popular in DC plans — falling somewhere between money market funds, where returns are low but so are risks, and mutual funds, where both returns and risks may be higher — advisors need to understand how stable value works. In a simple but comprehensive article, an advisor gives an overview about how GICs and stable value works — explaining, among other things, the difference between funds held in a general account and subject to general creditors vs. separate accounts as well as the various hidden costs above and beyond management fees. The author raises the question of whether these fees are subject to the 408(b)(2) and 404(a)(5) fee disclosure rules and opines about the future of stable value funds given the real possibility of rising costs resulting from lower interest rates. READ MORE

By NAPA Net Staff10/8/2012 • 0 Comments

The firm’s second annual study finds that employees are making some positive changes to their retirement planning, but poor money management skills and long-term economic challenges present major obstacles. With looming increases in health care expenses, taxes, inflation and life expectancy coupled with decreases in government and corporate retirement benefits more employees are taking plan loans and making hardship withdrawals. Sounds like a recipe for disaster. READ MORE