Mainspring Partner

Summer 2011

An Unsettling New Normal For Participants

One of the elements defining the age dubbed "the new normal" is a shift in how American workers are approaching retirement. Rather than adjusting their spending and saving behaviors, workers are instead changing their expectations about how they will transition from work to retirement.

According to the 21st wave of the "Retirement Confidence Survey" (RCS), Americans' confidence in their ability to afford a comfortable retirement has plunged to a new low — just 13 percent — at the same time that the recent declines in other retirement confidence indicators appear to be stabilizing. Not surprisingly, the percentage of workers not at all confident about having enough money for a comfortable retirement grew from 22 percent in 2010 to 27 percent, the highest level measured in the survey's history.

With these sobering percentages, your clients may be asking you for advice on how to help their employees become more confident about retirement and actively start preparing for it. Using survey results and feedback from partners, plan sponsors and participants, The Standard has developed an enhanced suite of participant and plan sponsor services. The new approach has been incorporated into everything from The Standard's participant statements and enrollment books to our websites and Contact Center.

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Fee Disclosure Compliance Deadlines Extended

On July 13, 2011, The Department of Labor issued extensions to the compliance deadlines for both plan sponsor and plan participant fee disclosures regulations. The service provider to plan sponsor disclosure (408(b)(2)) effective date is now April 1, 2012, rather than January 1, 2012.

The plan participant disclosures (404a-5) now have separate effective dates for the annual notice and the quarterly notices:

• Annual Notice: The effective date for calendar year plans is now no later than May 31, 2012, (60 days after the effective date of the 408(b)(2) regulations)
• Quarterly Notice: The effective date for calendar year plans is now no later than Aug. 14, 2012, (45 days after the end of the quarter in which annual notice is due; i.e., 45 days after June 30, the last day of the second calendar quarter)

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Market Commentary

By Julie Grandstaff, VP & Managing Director, StanCorp Investment Advisers, Inc.

The market volatility of the last few weeks has been dizzying. Given the big swings in market values, some investors are worried we are on the brink of another financial crisis. The good news is that we are not; however, there is still plenty to worry about. The primary drivers behind the market swings are a dimmer outlook on global economic growth and ongoing concerns about the fiscal crises in Europe.

Economic growth has slowed over the last two quarters, and the outlook for the remainder of the year is weak. There are some good signs, including July's stronger-than-expected retail sales which rose 0.5 percent. The consumer continues to recover from the recession, perhaps in part from the decrease in jobless claims.

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New Stable Asset Fund Offering Now Option
For Managed Plans

Starting this month, we are able to offer the Stable Asset Fund for both Mainspring Managed and non-managed plans on our group annuity investment platform. The fund is now available on our group annuity platform and for custodians other than Reliance as approvals are received and essential systems work is completed. The group annuity platform is the first expansion, with availability to all plans, including those using the Mainspring Managed service, beginning this month. The Stable Asset Fund is available in all states and the District of Columbia (except New York).

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Best Practices For Fiduciary Advice
While Changing Providers

In the past, your clients may have changed retirement plan providers for reasons such as service, fees or advice from you or another advisor. Market recovery, fee disclosure regulations and a new emphasis on compliance now expose this type of decision to a new level of scrutiny.

When navigating a plan conversion in this environment, you can help your clients view the current state of affairs as an opportunity for improving their plans. By creating and applying a consistent framework of best practices, you will be able to offer a stepped-up level of service during what may be a tumultuous time.

To help you start a framework or add to your own, we share three best practices for advisors based on our observations of the industry, Department of Labor (DOL) court cases and guidance, processes for keeping in compliance and ERISA (Employee Retirement Income Security Act of 1974) regulations.

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401(k) Day

Years ago, the Profit Sharing/401k Council of America (PSCA) established 401(k) Day to promote the tremendous value and benefits of cash or deferral arrangements to plan participants and sponsors. This year, many will celebrate 401(k) Day on Sept. 9, 2011, but the PSCA encourages companies to pick any day of the year to focus on 401(k)s. Whenever it's celebrated, the event's ultimate goal is to get employees to enroll, save, increase their savings and rebalance their holdings, if advisable.

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Mainspring Managed Monitor

The data shown here was derived from an internal analysis of participant activity in The Standard's retirement plans. The analysis compares activity in plans that offer the Mainspring Managed service to plans that do not offer the service. This data is current as of June 30, 2011.

• Of the participants with balances in Managed plans, 89.2 percent contributed to their plan during the quarter and made an average contribution of $1,150
• Of the participants with balances in non-managed plans, 81.4 percent contributed to their plan during the quarter and made an average contribution of $1,114

Plans that offer the Mainspring Managed service typically experience high plan participation.