Employee benefits

Citing the vast disparity in the performance of target-date funds, Morningstar by year-end will begin rating and researching target-date funds to make them more transparent and more easily comparable, for professional and retail investors alike, the research firm announced Thursday.

The Internal Revenue Service has proposed new rules that would grant safe harbor for employers experiencing substantial business hardship that want to suspend or reduce their 401(k) matches.

Besides learning that investors have not bailed out of their 401(k) plans, contrary to scare-mongering media reports, there was one other surprising moment at this month's General Membership Meeting of the Investment Company Institute. And that was when Richard Davis, chairman of U.S. Bancorp, looked directly at ICI President Paul Schott Stevens and urged him to prompt his member mutual fund companies to figure out how the financial crisis has affected various age groups.

Companies are finding that pension plans are far too expensive to offer, despite the tax breaks, USA Today reports. Since the beginning of the year, at least 20 companies have frozen their pension plans; by comparison, that many companies did so throughout all of 2008.

John Hancock Financial has named James R. Boyle president, in charge of all of the company’s core businesses, including long-term care insurance, variable annuities, 401(k)s, fixed products and mutual funds. He had been president of U.S. insurance.

A significant number of 401(k) assets held by workers who leave their jobs has been left behind in the old plans, Charles Schwab found in an analysis of the activity of workers since the first quarter of 2008.

Few investors changed their saving or investing habits in 2008, Hewitt Associates reports, citing data from 2.7 million participants. However, equity fund allocations reached record lows.

The investment community is hopeful that with a little tweaking, target-date funds could be the ideal solution for getting apathetic investors into an age-appropriate asset allocation.

With pension plans headed for virtual extinction, the 401(k) will inevitably become the sole qualified retirement savings vehicle in the nation, and as such, the defined contribution model must be vastly improved, speakers at the Investment Company Institute's General Membership Meeting in Washington said.

Those hoping for a return to the good old days of self-regulated, self-correcting markets need to face reality: Those days are over.

Half of the parents that OppenheimerFunds recently surveyed don’t believe that college is as affordable as it once was, and 43% have saved less than $5,000 for their children’s college education, and another 13% have saved nothing at all. Only 20% have save $20,000 or more.

Investors’ general inertia has caused most of them to stick with their 401(k)s. On the one hand, it’s a good thing they aren’t trading in and out of their retirement funds, but their lack of interest is hurting them, Dow Jones reports.

As the financial crisis continues, employers are beginning to take action with regards to their pension or 401(k) plans, according to the International Foundation of Employee Benefit Plans.

Few investors changed their saving or investing habits in 2008, Hewitt Associates reports, citing data from 2.7 million participants. However, equity fund allocations reached record lows.

The overwhelming majority of investors continued to fund their 401(k)s in the first quarter, Fidelity reports, citing an analysis of the 11.3 million participants it serves through 17,500 defined contribution plans.

The Securities and Exchange Commission and the Department of Labor will hold a joint hearing on June 18 at DOL headquarters examining target-date funds.

For the first time, the majority, 55%, of Fortune 100 companies now offer new salaried employees only a defined contribution plan, according to Watson Wyatt. This is up from 46% at the end of 2007.

An article in The Dallas Morning News warns investors against the wide discrepancies in the glide paths, or asset allocations, of target-date funds. As a result of too much risk, it says, some target-date funds are “missing the bull’s-eye.”

Education and longevity solutions are two of the biggest opportunities available to 401(k) providers, according to a study by String Financial.

WASHINGTON--Across the board, executives from leading mutual fund companies reported during the Investment Company Institute's General Membership Meeting that investors have held steady during market turbulence, with only 1% to 3% redeeming equity fund shares in the face of huge market drops.