Your Whole Story
It is with excitement that I announce the theme of the NAGDCA-sponsored National Retirement Security Week 2016 campaign – Your Whole Story. The goal of the campaign is to build trust and confidence with participants, which then results in improved financial decision-making. The campaign is centered on 12 “postcard messages” showing best practices for individual retirement savers in a brief, meaningful and tangible way. A “savings journey map” provides a visual way to pull participants into thinking about their own story. These materials can easily be used in flyers or emails.
Plan sponsors and industry partners alike can plan to join the Your Whole Story campaign and use the items in the turnkey toolkit – not the least of which is the new NRSW logo -- in the ways most suitable for their organizations. Click here to view a sampling of the materials. All of the NRSW materials for the campaign will soon be available on the NAGDCA website where you can get print-ready files or files to customize with your own logo and message. We’ll also be holding webinars in August so you can learn about the behavioral underpinnings of the campaign from NARPP, the designer of the campaign.
The vision we have for using this campaign in Wyoming is to combine the postcard messages and map with some other events that have been effective for us. Hosting a special appearance by Social Security has been very successful in my huge but sparsely populated state, which results in low access to in-person Social Security information. We are going to make a flip book out of the entire 12 postcard messages and use them during a specially facilitated Social Security presentation. We’ll use the savings journey map as a give-away item and as a poster. We’ll pick the five postcard messages that best suit our participants, feature each one in a daily email during the week of October 16-22 and hold an online raffle for those who participate and complete a survey. We’ll also build a webpage and have it available all year long to motive participants.
I hope you are inspired to join the campaign for NRSW 2016. The Participant Engagement Task Force has guided the campaign development and anticipates expanding on the same theme for next year. I already have the logo up on the monitor in our lobby!
2016 Scholarship Winners Named
The Arthur N. Caple Foundation (ANC Foundation) has selected one of the nation’s most promising financial planning students as the 2016 ANC Foundation Scholar. Six additional students also received scholarships. Each year the ANC Foundation provides scholarship awards to juniors, seniors or graduate students who demonstrate academic excellence and an understanding of the issues facing public sector retirement plans. This year’s scholars will be honored during the National Association of Government Defined Contribution Administrators (NAGDCA) annual conference September 18-21 in Denver, CO.
The students were chosen from 25 applicants nationwide for the ANC scholarships. Scholarship awards are based on academic performance and written responses to set essay questions. The top scholarship recipient receives $5,000 to be used toward educational expenses, registrations, travel and hotel accommodations for the NAGDCA annual conference, as well as, enrollment in the Certified Retirement Counselor certification program, including materials and exams. The remaining six recipients receive travel scholarships that include full registration, travel and lodging expenses to attend the NAGDCA annual conference.
2016 scholarship recipients:
Lu Fan, University of Georgia (top scholar)
Daniel Wendt, Louisiana State University
Christine Sand, University of Nebraska-Lincoln
Jeffrey Holden, Utah Valley University
Jessica Parks, University of Georgia
Parker Thomas Gallegos, University of Texas Rio Grande Valley
Tyson Gillies, Utah Valley University
The Arthur N. Caple Foundation was formed to advance knowledge in the field of public sector retirement security. The Foundation, established in 2006 as a supporting organization of the National Association of Government Defined Contribution Administrators (NAGDCA), supports both individual educational opportunities and research to expand knowledge related to the importance of retirement readiness.
Research Brief: Star Ratings and Fund Performance
How predictive are star ratings when it comes to investment performance?
"The Elusive Predictive Powers of Star Ratings," examines the Morningstar RatingTM, how star ratings in general can be misunderstood, and how they may be misused in determining fund performance.
Many investors perceive that star ratings can predict a fund’s future performance. However, ICMA-RC’s research brief takes an in-depth look at the persistence of ratings for mutual funds across multiple Morningstar style categories and time periods, and concludes that ratings are rarely persistent. As the paper notes, past performance does not necessarily indicate future results.
To better understand how the current Morningstar RatingTM might predict future ratings, the authors evaluated nine Morningstar categories, four star ratings, 10 years of monthly data, and three time periods. They also measured the frequency of a fund’s Overall, three-year, five-year, and 10-year ratings; and calculated the percentage of funds that maintained a star rating in each of the terciles relative to four hurdle rates: 100%; 85%; 70% and 55%.
With a long-term perspective, an evaluation of the 10-year period ended December 31, 2015, resulted in only 1% of funds in the five domestic equity categories and the Foreign Large Blend category maintaining a four- or five-star rating every month during the 10-year period. For the two shorter periods evaluated, the percentage of funds that maintained a four- or five-star rating improved very slightly to mid-single digits. Not surprisingly, lowering the consistency hurdle rate improved the percentage of funds able to maintain a four- or five-star rating over time. In fact, star ratings were generally more persistent, over shorter time periods although the outcomes varied based on category and time period.
Considering this and other analysis, the paper suggests that investors dig deeper than star ratings to gain an understanding of past performance over time, not just a measure of relative risk-adjusted return at a point in time.
See the complete research brief at this link
Between the continued partisanship and the coming elections activity in Congress has slowed down considerably. As a result, but for Zika, opioids, and mental health there is little legislation moving forward as we approach the summer recess for the two national political conventions. Congress will return in September and again after the election. The likelihood any tax or pension legislation moving forward this year is low. But, between offering tax and savings proposals as political statements for the fall campaign, there is a stronger likelihood of consideration in 2017.
The party conventions are being held at the end of the month, and in those conventions it is presumed that Hillary Clinton and Donald Trump will be named as Presidential nominees for their parties. At the conventions, policy committees will help create party platforms for the upcoming elections.
The President released his proposed fiscal year 2017 budget earlier this year, but there was little expected to come from it. Not only is this an election year, but Congress, who has control over the budget and appropriations, is controlled by the Republicans and their priorities are much different than the Administration’s priorities. Congress has begun working on their appropriations bills, but they have passed very few bills and no bills have yet been signed into law. This will likely result in either continuing resolutions to extend current levels of spending for the FFY 2018 and ultimately, an omnibus appropriations bills to cover every federal agency that has not had a funding bill passed.
Tax reform has been a priority of Congress for the last number of years, but with substantial disagreements on how to pursue reform. Speaker Ryan (R-WI) recently released proposals in a number of arenas including taxes. There was very little discussion of pensions within the proposal but it did mention that the House Committee on Ways & Means would work to consolidate and reform the various retirement provisions. As a result of this report, a number of pension associations, including NAGDCA, took part in a meeting with the majority tax counsel for the House Committee on Ways & Means. Consolidation was discussed at that meeting, but counsel explained that it was merely meant to be a reference to Republican ideas of streamlining plans to make them more effective and efficient. While this does not exclude the possibility of consolidation, it also could have referred to making rules for different plans more uniform. There are currently no hearings scheduled on this blueprint for before the election and there is no timetable on when this might be presented as draft legislation.
IRS Draft Regulations
The IRS recently released draft regulations relating to 457 plans. NAGDCA is reviewing the draft guidance and will consider whether to submit comments to the IRS. The immediate reaction is that the proposed regulations are essentially codifications of the underlying legislation that should not significantly affect plan operations. We are in the process of reviewing them and do not yet have a draft of the comments.
Other public interest associations are looking to NAGDCA for leadership on these proposed regulations.
Department of Labor Fiduciary Rules
These rules have become final. The Republican majorities in Congress passed legislation that would override the Administration from enforcing the rule. The override was vetoed by the President. Both houses failed to override the veto. There is discussion to reduce or eliminate the funding for implementing the rule. While this would not abrogate the rule, it would have the effect of doing so as there would be no way to enforce its provisions. The President has said that he would veto this legislation if it were to reach his desk.