Compliance December 18, 2008

Obama Gives Labor Nod to Solis

President-elect Barack Obama is expected to tap U.S. Representative Hilda Solis (D-California) as the next Secretary of Labor, according to widespread media reports Thursday.
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Solis, the daughter of Mexican and Nicaraguan immigrants, who has been the only member of Congress of Central American descent, just won a fifth term representing heavily Hispanic portions of eastern Los Angeles County and eastern portions of Los Angeles.

She will be the third Hispanic in the Cabinet (in addition to Bill Richardson and Ken Salazar), and the fifth woman (in addition to Hillary Rodham Clinton, Susan Rice, Janet Napolitano, and Lisa Jackson), should she win Senate confirmation, according to the Washington Post.

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According to the Post report, the next Labor Secretary will likely spend a good deal of time dealing with what is expected to be a particularly contentious battle over the Employee Free Choice Act. Supported by Obama, the measure would make it easier for unions to organize workers and is being actively opposed by business interests.

She the only member of Congress on the member of American Rights at Work, which the Post said was a pro-labor group run by former Congressman David Bonior.

Happy Unions

Labor unions hailed the Solis choice. “We’re thrilled at the prospect of having Representative Hilda Solis as our nation’s next labor secretary,” said AFL-CIO president John Sweeney in a statement that also noted that Solis has an overwhelmingly pro-labor voting record, according to the Post. “We’re confident that she will return to the labor department one of its core missions—to defend workers’ basic rights in our nation’s workplaces.”

The Post report pointed out that Solis has pushed in Congress for more training for jobs that advance industries toward greater energy efficiency and that she successfully advocated in 1996 to increase California’s minimum wage from $4.25 to $5.75 an hour, while serving in the California state Senate.

As for her own priorities, among those listed on her House Web site were expanding access to affordable health care and improving the lives of working families.

Her Background

Solis attended California State Polytechnic University, Pomona, and earned a Master of Public Administration from the University of Southern California, beginning her career in the Carter White House Office of Hispanic Affairs, the Post said.

She later worked as a management analyst with the Office of Management and Budget.

Her Congressional Web site is http://solis.house.gov/.

The Markets December 18, 2008

Only 7% of 401(k) Assets Invested In Lifecycle Funds

At year-end 2007 more than 7% of 401(k) assets were invested in lifecycle funds and one-quarter of 401(k) participants held lifecycle funds, according to an analysis conducted by the nonpartisan Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI).
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The findings are part of the annual update of the EBRI/ICI 401(k) database, and reflect that assets in lifecycle funds represent 7.4% of total 401(k) assets in the database, and 25.1% of participants in the database were invested in lifecycle funds. The analysis found that about two-thirds of 401(k) plans included lifecycle funds in their investment lineup at year-end 2007.

Across all age groups, more new or recent hires invested their 401(k) assets in balanced funds, including lifecycle funds, the data show. At year-end 2007, 28% of the account balances of recently hired participants in their 20s were invested in balanced funds, compared with 24% in 2006. At year-end 2007, almost 19% of the account balances of recently hired participants in their 20s were invested in lifecycle funds, compared with 16% at year-end 2006.

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Other Investments

The bulk of 401(k) assets continued to be invested in stocks. On average, at year-end 2007, about two-thirds of 401(k) participants’ assets were invested in equity securities through equity funds, the equity portion of balanced funds, and company stock. However, the share of 401(k) accounts invested in company stock continued to shrink, falling by 0.5 percentage point to 10.6% in 2007.

About one-third of 401(k) assets were in fixed-income securities such as stable value investments and bond and money market funds.

Plan Demographics

At year-end 2007, the average account balance in the EBRI/ICI database was $65,454, compared with $61,346 at year-end 2006. 401(k) account balances varied with participant age, tenure, and salary. Individuals with account balances of less than $10,000 were primarily young workers or workers with short job tenures, and those with account balances in excess of $100,000 were primarily older workers or workers with longer job tenure.

In 2007, 18% of all 401(k) participants eligible for loans had a loan outstanding against their 401(k) account, the same percentage as at year-end 2006. Most loans tended to be small, amounting to 12% of the remaining account balance, on average, similar to year-end 2006.

A report of the analysis, written by Jack VanDerhei, EBRI research director; Sarah Holden, ICI senior director of retirement and investor relations; Craig Copeland, EBRI senior research associate; and Luis Alonso, EBRI director of information technology and research databases is published in the December 2008 EBRI Issue Brief and the ICI Perspective.

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