Products August 10, 2010

The Principal Announces New TPA Installation Expense Allowance Program

The Principal Financial Group has announced a new TPA installation expense allowance program.
Reported by

The year-long program is designed to help third party administrators and financial professionals capture market share, according to a press release. The installation allowance, which will be available from August 1, 2010, through July 31, 2011, is intended to help offset TPA installation fees and is the latest enhancement to The Principal TPA Edge program.

The Principal TPA Edge program offers financial professionals and TPAs: 

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  • Technology and services that help simplify processes and allow TPAs to focus on growing their businesses;
  • An investment platform offering multiple investment managers with the security of a comprehensive fiduciary support program; 
  • TPA Relations Consultants with more than 18 years experience who are dedicated specifically to TPAs;   
  • Total retirement solutions available for TPA-administered plans for both profit and non-profit organizations including defined benefit, defined contribution plans such as 401(k) and 403(b), nonqualified, and employee stock ownership plans (ESOP); and 
  • Local presence in more than 50 cities across the United States with local personnel and services dedicated to TPAs, financial professionals, and plan sponsors. 

The new program applies to start-up and transfer retirement plans administered with a TPA.  For more information, visit www.principal.com.  

The Markets August 10, 2010

July Brings ‘Modest’ Pension Funding Recovery

After nearing record deficits at the end of June, U.S. pension plan funded positions have recovered modestly during July thanks mostly to rising equity markets, according to Mercer. 

Reported by

A Mercer news release said the deficit in pension plans sponsored by S&P 1500 companies shrank by $20 billion to $431 billion at the end of July. Equity markets returned nearly 7% during the month, partially recovering from the 13% fall in equity prices during May and June, while interest rates used to measure pension liabilities fell slightly from last month. The end of July deficit corresponds to a funded status of 75%, compared to 73% at the end of June.

The estimated aggregate value of pension plan assets of the S&P 1500 companies at December 31, 2009, was $1.25 trillion, compared with estimated aggregate liabilities of $1.50 trillion. Allowing for changes in financial markets though the end of July 2010, changes to the S&P 1500 constituents, and newly released financial disclosures, the estimated aggregate assets were $1.29 trillion, compared with the estimated value of the aggregate liabilities of $1.72 trillion.

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Mercer pointed out that equity values have experienced significant volatility through most of 2010. “As we move into the third and fourth quarters of 2010, recent volatility makes plan sponsors acutely aware of the need to model year-end results, and their impact on plan costs for 2011, under several different scenarios,” said Gordon Young, the Integrated Retirement Financial Management business leader for Mercer in the U.S., in the news release.

In addition to equity volatility, there is concern over the level of the AA bond yield, which has declined to below 5.5% as of the end of July – only about 25 basis points higher than the lowest mark in the last decade for a mature plan. Because pension plan liabilities are valued using the AA bond yield, these lower values translate into higher plan obligations.

 

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