January 01, 2018
MFS DC VIEW: Year in Review 2017
This special edition of DC View includes a recap of significant defined contribution events throughout 2017, as well as an outline of what we expect 2018 to bring.
Q1 / February 3, 2017: The Retirement Security for American Workers Act was introduced, calling for the IRC and ERISA to modify the qualification requirements for certain multiple employer retirement plans (MEPs). Under this bill, a MEP may not be disqualified or lose its tax-favored status as a result of one or two participating employers failing to take actions required with respect to the plan.
Q1 / February 15, 2017: The American Savings Account Act of 2017 was introduced, requesting the IRC to establish a new retirement option for all employees and self-employed individuals. It is designed to operate in a manner similar to the Thrift Savings Plan, which is available to federal employees, with an American Savings Account Board of Directors formed to establish policies for fund investment and management.
Q2 / May 17, 2017: President Trump signed legislation revoking the Department of Labor’s auto-IRA safe harbor rule, making it harder for states to adopt state-run retirement plans. The House of Representatives and Senate previously voted to nullify the rule. California will move forward despite the loss of the ERISA safe harbor.
Q2 / June 8, 2017: The House of Representatives passed the Financial Choice Act, which is designed to replace the Dodd-Frank Act and block the DOL fiduciary rule.
Q2 / June 9, 2017: The DOL Fiduciary rule officially took effect and is expected to phase in through January 1, 2018. Full implementation of all elements of the rule is expected to occur by July 1, 2019.
Q2 / June 30, 2017: Connecticut’s governor, Dannell Malloy, signed House Bill 7161 to improve 403(b) plan fee transparency. Under this bill, all 403(b) providers are required to disclose to state and municipal workers the fee ratio and net return for all plan investment funds. This legislation will be implemented in 2019.
Q3 / July 1, 2017: Oregon launched its pilot program of “OregonSaves,” becoming the first state to begin a state-based IRA program. Oregon employees who do not have access to an employer-based retirement plan are eligible to join the program. The program will begin more broadly in 2018.
Q4 / October 19, 2017: The Internal Revenue Service (IRS) announced higher contribution limits for 2018. Workers will be able to contribute $18,500 to their 401(k) plans, up from $18,000 for 2017.
Q4 / November 2, 2017: House Republicans released a tax overhaul bill, an attempt at the most thorough transformation of the US corporate tax code in three decades. The Tax Cuts and Jobs Act left pretax contribution limits to 401(k) retirement plans alone in the current version. While opponents of the measure expressed relief, many said they remained concerned the provision could return in a later version of the bill.
DC View: October 2017
This global edition of DC View highlights trends across the defined contribution market and provides an update on regulatory news.
Time to Align: Rewiring the Conversation About Active Management
With a recent MFS survey showing more than three-quarters of institutional investor assets currently allocated to actively managed strategies, the active versus passive debate seems somewhat misguided.
Why Active in Fixed Income?
Active managers seek to mitigate credit risk, rate risks and debt concentration in ways that passive strategies cannot.
2017 MFS Global Retirement Income Survey Methodology
Base: UK Members: 700; UK Retirees: 300
Mode: 15-minute online survey
Sponsorship: MFS was not identified as research sponsor.
Field period: May 30 – June 13, 2017
Weighting: Data were weighted in each country to reflect the age/gender balance of retiree and participant populations. In the UK:
Retiree, Office of National Statistics 2014 balanced gender within each age group: Participant is unweighted — no datasets available.
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