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The Future of DC Plans, Via PIMCO

Posted on April 27, 2010 by Editor Test -

Are custom target-date strategies, where a retirement plan provider or advisor cobbles together “open-architecture” target-date investment options out of a plans’ existing funds, the wave of the future in defined contribution plans?

PIMCO, the giant bond manager and unit of Allianz AG, thinks so. That’s the gist of a new book by Stacy Schaus (at left), a senior vice president and leader of PIMCO’s defined contribution practice and of PIMCO’s just-released Fourth Annual Defined Contribution Consulting Support and Trends Survey.

Schaus’ book, “Designing Successful Target-Date Strategies for Defined Contribution Plans” (Wiley Finance, 2010), lays out a vision of the DC world of tomorrow—a vision that might also be interpreted as PIMCO’s retirement business strategy.

In this vision, made possible by the Pension Protection Act of 2006, millions of new DC participants would be auto-enrolled and defaulted into custom TDFs, which would be held in low cost collective trusts and be institutionally managed. Their contributions would be “auto-escalated” over the years to enhance their nest egg.

At retirement, according to this scenario, participants wouldn’t leave their plans. They would roll their assets into in-plan “deemed” IRAs, allocate part of their money one of PIMCO’s TIPS payout funds and then cover their longevity risk tail by purchasing an advanced life deferred annuity from PIMCO sibling Allianz Life.

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This, of course, isn’t the only vision that retirement plan providers are pitching to plan sponsors. Another feature in RIJ this week, “Great-West Enters the In-Plan Income Space,” describes Great-West Retirement Services’ SecureFoundation program, in which participants are encouraged to buy off-the-shelf TDFs and protect them with a lifetime income rider starting ten years before retirement. Prudential Retirement introduced this concept with its IncomeFlex program in 2007.

Both the PIMCO and the SecureFoundation/IncomeFlex strategies will inevitably compete with rival strategies that involve individual income annuities, deferred income annuities, or payout mutual funds. In addition, a wide range of retirement income planning tools offer individualized strategies for financial advisors and their high net worth clients. Given the $15 trillion retirement market, there’s likely to be room for many players.

In an interview, Schaus explained the drivers of and philosophy behind PIMCO’s strategy. In designing custom TDFs, she said, PIMCO would focus on helping the participant achieve “retirement income adequacy.” At the same time, the strategy would reflect the “more conservative” approach to investing that might be expected from a company like PIMCO, with its fixed income roots.

Schaus was asked if PIMCO believes in “to” or “through” TDF “glide-path.” In a “to” target date fund, generally speaking, the investor’s bond allocation lands at its permanent maximum—perhaps but not necessarily 100%—at his or her retirement date. In a “through” fund, the investor’s equity allocation might still be 50% or more at retirement, and the fund won’t reach an all-bond allocation for many years, if ever.

“There’s no single answer,” she told RIJ. “Our philosophy regarding the to/through issue is that the allocations are based on each plan’s needs, and the level of certainty that’s required.” She noted that if the retiree adds a TIPS ladder and longevity insurance to their retirement portfolios, those products would absorb much of the market risk, interest rate risk and longevity risk that would otherwise fall on the target-date funds. In that case, the to/through issue wouldn’t be as pressing.

Selected Findings, PIMCO’s 2010 Defined Contribution Consulting Support and Trends Survey*

60% of consulting firms actively promote custom target-date strategies.
100% of firms recommend that clients offer a target date or target risk investment tier.
90% consider custom target-date strategies for plans with assets of $500 million or less.
66% said “insufficient asset size” and 59% said “difficulty of operational setup” deterred plan sponsors from custom strategies.
60% believe collective investment trusts are critical or very important for DC clients.
43% believe exchange-traded funds (ETFs) have no place in DC plans beyond availability in a brokerage window.
73% expect passive strategies in DC plans to proliferate.
82% believed that Treasury inflation-protected securities (TIPS) would bring the most value as an added asset class in DC plans, followed by emerging market equities (57%) and commodities (54%).
75% of plan sponsors would like to retain retiring participants assets in their plans, but only 32% try to do so.
80% believe it is “somewhat to highly likely” that plan sponsors will add a guaranteed income option to their plans over the next two years, but at a slow pace.
Fixed annuities, living benefits, and longevity insurance were the retirement income products most likely to interest plan sponsors.
Hewitt, Mercer, Schwab, Fidelity, JPMorgan and ING are the recordkeepers most supportive of custom strategies.
54% recommend an equity allocation at retirement of 30% to 50%, while 29% recommend less than 30%.
89% said different demographics among companies should drive unique “glide paths.”

*Results are based on responses from 30 U.S. consulting firms serving 2,000 defined contribution plan sponsors with aggregate plan assets of $1.7 trillion.

Life Insurer Capital and Surplus Grew in 2009

Posted on April 27, 2010 by Editor Test -

U.S. life insurers enjoyed double-digit growth in total capital and surplus last year, according to a new report from Moody’s Investors Services, Inc., National Underwriter reported.

Moody’s rated compani es reported a 13% growth in capital and surplus for the year ended 2009. Capital and surplus, including asset valuation reserves (AVR), rose to $237 billion from $210 billion.

Fueling the increases in capital and surplus were improvements in operating income to $41 billion from a loss of $9 billion in 2008. The “robust equity markets” markedly improved earnings in both group and annuity operations.

Offsetting the gains in operating earnings were large realized and unrealized losses in derivatives, the result of losses from hedging variable annuities. In 2009, net realized and unrealized losses totaled $36 billion, as compared to $56 billion in 2008, observes Moody’s.

Other factors contributing to the improvements in companies’ capital and surplus in 2009, says Moody’s, were gains in the carrying values of non-insurance affiliates and equity holdings, both of which show up in unrealized gains (losses). Life insurers also replenished capital by reducing dividends to stockholders (e.g., holding companies) to $4 billion in 2009 from $14 billion in 2008.

Given the substantial capital raises during 2009, operating entities of publicly traded companies were under less pressure to support the needs of affiliated holding companies, says Moody’s. That enabled companies to retain more capital.

A comparison of individual life insurers shows that Hartford Financial Services Group Inc., Hartford, Conn., raised the most capital among Moody’s rated companies in 2009. The total, $6.7 billion, was secured through the federal government’s troubled asset relief program (TARP), plus debt and equity issues.

The three next highest capital raises-$3.65 billion, $2.79 billion, $2.44 billion-were secured, respectively, by Prudential Financial Inc., Newark, N.J., Metropolitan Life Insurance Company, New York; and Lincoln Financial Group (Lincoln National Corp.), Radnor, Pa.

Vanguard Sees Institutional TDF Flows Triple in Five Years

Posted on April 27, 2010 by Editor Test -

Target-date fund use among defined contribution plans administered by Vanguard skyrocketed between 2004 and 2009, with 75% of the plans offering the funds last year compared with only 13% five years earlier, Vanguard said.

According to a Vanguard research report, 12% of those plans’ assets were invested in target-date funds in 2009, compared to only 3% in 2004.

Participants in Vanguard-administered plans put $21.4 billion into target-date funds in 2009, up from $680 million five years earlier. The number of target-date fund investors jumped to 1.2 million last year, from 40,000 in 2004.

“This level of support indicates the funds’ importance in the future of retirement savings and runs counter to the views of some critics that they are not suitable investment options,” Jean Young, a researcher at the Vanguard Center for Retirement Research, said in a release.

The analysis was based on records of 2,200 DC plans administered by Vanguard in 2009 and 2,100 Vanguard DC plans in 2004.

Financial Reform Bill Blocked, But Derivative Bill Proceeds

Posted on April 27, 2010 by Editor Test -

Senate Republicans voted on Monday to block debate the Democrats’ legislation to tighten regulation of the financial system, most recently known as the Wall Street Reform Act.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, filed a 1,408-page version of the bill April 15. A compromise version of that bill was to be debated on Monday.

Meanwhile, members of the Senate Agriculture Committee have approved the Wall Street Transparency and Accountability Act, a bill that would regulate the use of derivatives by insurers.

The committee passed the bill, which does not yet have a bill number, by a 13-8 vote. Sen. Charles Grassley, R-Iowa, joined 12 Democrats in supporting the measure, which was sponsored by Sen. Blanche Lincoln, D-Ark., chairman of the Agriculture Committee.

The proposed bill would not regulate the use of custom derivatives by commercial users such as airlines, farmers, and others who use derivatives to lock in the cost of the fuel or other raw materials used in the products or services they make or sell.

But life insurance companies would face new constraints. Insurers who use derivatives to hedge life insurance policies or other policies against interest rate risk would have to use standardized derivatives contracts listed on exchanges, an insurance industry lobbyist says.

The House financial services reform bill provides an exemption for insurers that use custom derivatives, however.

The April 15 version of Senate Bill 3217-the Dodd bill-included sections that would:

Create a Financial Stability Oversight Council with some ability to oversee non-bank financial companies.
Create an “orderly liquidation authority” for large, troubled financial companies.
Form an Office of National Insurance.
Promote uniformity in regulation of reinsurance and surplus lines coverage.
Create new derivatives markets regulations that might affect how insurers hedge credit and default risk.
Change the rules governing asset-backed securitization.
Overhaul rating agency rules.
Impose new executive compensation system rules.
Create “senior investor protection” rules, including annuity marketing standards developed by the National Association of Insurance Commissioners.
Reorganize and consolidate the federal bank and thrift regulatory agencies.
Impose a federal regulatory system on hedge fund advisors.
Put new restrictions on banks’ capital markets activities.
Revamp securities arbitration system rules.
Increase the borrowing limit on Treasury loans.
Establish a Bureau of Consumer Financial Protection that would not oversee insurance products.

The April 15 version of the bill would also call for studies on mutual fund advertising, conflicts of interest, the use of financial designations; municipal bond disclosure rules, and “harmonization” of the customer relationship standards that apply to brokers, dealers and investment advisors.

Democrats need support from at least 60 senators to have S. 3217 come up for a vote. Observers are speculating that at least one Republican, such as Sen. Scott Brown, R-Mass., might agree to vote for the bill, and then might have some ability to fine-tune the bill.

AXA Equitable VUL Offers Downside Risk Buffer

Posted on April 27, 2010 by Editor Test -

AXA Equitable Life has introduced a Market Stabilizer Option on its variable universal life insurance product. Using upside caps and a downside buffer, the Market Stabilizer Option “can help smooth the impact of equity volatility on a policy,” the company said.

The MSO offers a rate of return tied to the S&P 500 Price Return index*, up to a growth cap. It also provides a downside buffer of up to 25% if the index underperforms.

“The last two years have been among the most turbulent periods ever for equity investors. The related economic insecurity has actually increased consumer awareness of the need for life insurance,” said Christopher M. “Kip” Condron, chairman and chief executive officer of AXA Equitable.

The following hypothetical example, using a 15% growth cap rate, illustrates the MSO:

If the S&P 500 rate of return (excluding dividends):

Increases 15% or more, the linked rate of return on The Market Stabilizer Option indexed-linked rate of return on the Segment Mature Date will equal 15%.

Increases less than 15%, the linked rate of return on The Market Stabilizer Option indexed-linked rate of return on the Segment Mature Date will equal the index performance, excluding dividends.

Stays flat or declines 25% or less, the linked rate of return on The Market Stabilizer Option indexed-linked rate of return on the Segment Mature Date will equal zero.

Declines 30%, the linked rate of return on The Market Stabilizer Option indexed-linked rate of return on the Segment Mature Date will decline by 5% (or the excess beyond the first 25% decline).

AXA Equitable’s MSO, option available for an additional fee, is offered along with more than 50 other investment options to purchases of IL Optimizer. Gains from other policy investment portfolios can be swept into a new MSO segment, without triggering a taxable event.

New Stable Value Unit at New York Life Investments

Posted on April 27, 2010 by Editor Test -

New York Life Investments has launched Stable Value Investments (SVI), a new unit that will create and distribute proprietary fixed income money management solutions backed by book value guarantees from the New York Life Insurance Company.

Aruna Hobbs, who joined New York Life in November 2009 from AEGON Insurance, will lead the new unit. As director and head of Pensions and Savings at AEGON, she was elected to the Stable Value Board of Directors for two terms and was a member of the LIMRA Marketing Officers Round Table.

“Although this is a new group at New York Life Investments, the asset class represents over $8 billion in assets under management firm-wide,” Hobbs said. She estimated the current stable value market at $600 billion.

Wells Fargo Tops Bank Annuity Fee Chart

Posted on April 27, 2010 by Editor Test -

Income earned from the sale of annuities at bank holding companies (BHCs) reached $2.62 billion in 2009, up only 0.5% from the 2008 figure of $2.61 billion, according to the Michael White-ABIA Bank Annuity Fee Income Report.

Of that amount, Wells Fargo & Co. accounted for $678 million, or almost 26%, thanks to its acquisition of the perennial leader in bank annuity sales, Wachovia Bank, during the depths of the 2008-2009 financial crisis. The ten largest bank holding companies accounted for about three-fourths of annuity fee income. (See chart on RIJ homepage, April 28, 2010.)

The report is based on data from all 7,247 commercial and FDIC-supervised banks and 913 large top-tier bank holding companies, of whom 391 or 42.8% participated in annuity sales activities during the year.

Their $2.62 billion in annuity commissions and fees constituted 13.0% of their total mutual fund and annuity income of $20.17 billion and 17.5% of total BHC insurance sales volume (i.e., the sum of annuity and insurance brokerage income) of $14.96 billion.

Of the 7,247 banks, 985 or 13.6% participated in annuity sales activities. Those participating banks e arned $824.2 million in annuity commissions or 31.5% of the banking industry’s total annuity fee income.

Sixty-eight percent (68%) of BHCs with over $10 billion in assets earned annuity commissions of $2.48 billion, constituting 94.7% of total annuity commissions reported. This was an increase of 1.2% from $2.45 billion in annuity fee income in 2008.

Among this asset class of largest BHCs, annuity commissions made up 15.7% of their total mutual fund and annuity income of $15.84 billion and 17.6% of their total insurance sales volume of $14.11 billion, the highest proportion of insurance sales volume of any asset class.

Annuity fee income at BHCs with assets between $1 billion and $10 billion fell 9.8% in 2009, to $116.7 million from $129.4 million in 2008, and accounted for 2.7% of their mutual fund and annuity income of $4.32 billion, the lowest proportion of investment sales of any asset class.

Top 10 BHCs in Annuity Fee Income (Millions)
Bank Holding Co.	2009 Fees	2008 Fees	% Change
Wells Fargo & Co	$678.00	$118.00	474.6%*
JPMorgan Chase & Co.	328.00	363.00	-9.6%
Morgan Stanley	253.00	N/A	N/A
Bank of America Corp.	251.83	145.89	72.6%
PNC Financial Services	121.28	69.50	74.5%
Regions Financial Corp.	93.53	109.50	-14.6%
SunTrust Bank Inc.	80.46	123.84	-35.0%
US Bancorp	66.00	100.00	-34.0%
KeyCorp	60.73	56.42	7.6%
BB&T Corp.	46.07	45.94	0.39%
Source: Michael White-ABIA Bank Annuity Fee Income Report *Reflects acquisition of Wachovia Bank.

BHCs with $500 million to $1 billion in assets generated $21.9 million in annuity commissions in 2009, down 15.2% from $25.8 million the year before. Only 35.4% of BHCs this size engaged in annuity sales activities, which was the lowest participation rate among all BHC asset classes. Among these BHCs, annuity commissions constituted the smallest proportion (13.6%) of total insurance sales volume of $160.7 million.

Among BHCs with assets between $1 billion and $10 billion, leaders included Stifel Financial Corp. (MO), Hancock Holding Company (MS), and NewAlliance Bancshares, Inc. (CT). Among BHCs with assets between $500 million and $1 billion, leaders were First Citizens Bancshares, Inc. (TN), CCB Financial Corporation (MO) and Codorus Valley Bancorp, Inc. (PA).

The smallest community banks, those with assets less than $500 million, were used as “proxies” for the smallest BHCs, which are not required to report annuity fee income. Leaders among bank proxies for small BHCs were Vantage Point Bank (PA), FNB Bank, N.A. (PA) and Sturgis Bank & Trust Company (MI).

Among the top 50 BHCs nationally in annuity concentration (i.e., annuity fee income as a percent of noninterest income), the mean Annuity Concentration Ratio was 8.5%. Among the top 50 small banks in annuity concentration that are serving as proxies for small BHCs, the mean Annuity Concentration Ratio was 22.7% of noninterest income.

Among the top 50 BHC leaders in annuity productivity (i.e., annuity income per BHC employee), the mean Annuity Productivity Ratio was $2,775 per employee. Among the top 50 small banks in annuity productivity, the mean Annuity Productivity Ratio was $4,574 per employee.

The Goldman Touch

Posted on April 27, 2010 by Edward Jay Epstein -

The SEC might have a great conspiracy case against Goldman Sachs if it could come up with a plausible conspiracy. Its complaint alleges that Goldman Sachs defrauded the investors in its Abacus 2007-AC1 fund by allowing the CDO’s portfolio of securities to be selected by a hedge fund operator who stood to make an immense profit if the fund failed.

The hedge fund operator is John Paulson, who famously made a great fortune by betting that the housing bubble would burst. In early 2007, he wanted to make a billion dollar wager that subprime-backed mortgages would collapse. So he went to Goldman Sachs, which, like the other major financial houses, is in the business of creating such customized gambling products for clients.

For a $15 million fee from Paulson, Goldman Sachs created Abacus 2007-AC1, a synthetic collateralized debt obligation. It provided exposure to $2 billion worth of subprime (mostly BBB-rated) home mortgage-backed securities (MBS) through the device of selling contracts on them that paid off if the underlying mortgage-backed securities defaulted on their payments or suffered a write-down in value.

If the housing bubble did not burst, and the underlying securities (which Abacus did not own) did not default, Abacus would continue to collect handsome premiums on the contracts. If not, Abacus would lose heavily. So the vehicle provided a highly effective means of placing a bet, long or short, on the subprime sector.

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Goldman found three participants to take the long side of the wager on subprimes—ACA Capital Holdings, a bond insurer, IKB Bank, a German-based specialist in mortgage securities, and itself. ACA went long by providing a $900 million credit default swap on Abacus itself (earning a $45 million premium from Paulson, via Goldman) and then investing $40 million of the premium in Abacus. ACA’s wholly owned subsidiary, ACA Management, had sole authority to make the final determinations of the 90 securities in the referenced portfolio, and would receive a management fee.

IKB Bank bought $150 million worth of Abacas’ notes (which, through the magic of structured finance, were rated higher than any of the 90 referenced MBS) in return for a variable rate of LIBOR + 85 basis points on part of the investment and LIBOR + 110 basis points on the rest. Goldman put up $90 million to complete the financing.

Paulson was the only short. He bought the credit default swap that ACA Capital had furnished. All four participants had the same data about the 90 underlying securities, and received the same Offering Circular or “flip book.”” (Unregulated securities do not require a registered prospectus.)

What separated the long and shorts in this billion-dollar bet was their opinion of the direction of the housing market. Paulson, as the lone short, held the view that a “subprime Residential Mortgage-Backed Security wipeout scenario” was possible. In this scenario, homeowners would not pay mortgages, the value of their houses would decline, and the subprime bonds backed by the mortgages would go bust.

Those on the long side continued to hold a more optimistic view. ACA, which had already insured over $21 billion worth of similar subprime-backed bonds, considered the “wipeout scenario” so unlikely that it gave 20:1 odds on the credit default swap it sold in the deal. Paulson proved right, however, and won the bet.

So where is the fraud? Goldman, to be sure, designed a gambling mechanism for clients, including Paulson, to go short or long the subprime sector. But that is no different from designing index funds that allow gamblers to go short or long stocks, bonds, and commodities.

The core of the SEC case is that Goldman withheld vital information from ACA and IKB by not disclosing the identity of the counterparty. ACA knew of course that someone was short the deal, since it sold Goldman Sachs a $900 million credit default swap precisely so someone could take the short side. While Goldman did not say that Paulson was that counterparty, his identity may not have been a mystery to ACA.

Paulson’s top lieutenant in the deal, Paolo Pellegrini, testified to the SEC in 2008 that he had informed ACA Management that the Paulson hedge fund was betting against the transaction. If so—and Pellegrini had no reason to perjure himself—ACA possessed the information that Goldman withheld, and went ahead with the deal.

The other participant, IKB bank, which bought Abacus’ AAA-rated notes, may or may not have been kept in the dark about Paulson, but Goldman stated in the offering material for the notes that it might not disclose information about other Goldman clients, and specifically warned, “this presentation may not contain all information that would be material to the evaluation of the merits and risks of purchasing the Notes.”

The issue here goes beyond non-disclosure of the identity of a counterparty. The SEC’s fraud theory contends that Paulson undermined Abacus by “heavily influenc[ing] the selection of the portfolio to suit its economic interests.” Yet ACA’s Management unit had the sole authority to select each and every bond referenced in the portfolio. It also was experienced in selecting subprime portfolios: it had managed 22 other such deals valued at $15.7 billion.

Paulson clearly made suggestions to ACA, but he wasn’t necessarily able to “heavily” influence ACA to choose bonds it would not have otherwise selec ted, as the SEC claims. Since ACA’s parent was risking over $900 million to insure the deal, why would it choose any but the least risky subprime bonds? It had reason to suspect Paulson’s neutrality because Pellegrini revealed to it, as he testified, that Paulson planned to short Abacus.

In any case, ACA picked the subprime securities to reference in the portfolio, and t hey failed. But 99% of all securities based on subprime loans were marked down by the rating agencies in 2008, so it is not clear that Abacus would have suffered a different fate had ACA picked 90 other subprime securities. In fact, ACA’s losses on Abacus were less than five percent of the $22 billion in losses it suffered in the subprime collapse.

By the time it came to pay off the wager, ACA, overwhelmed with losses from its other credit default swaps, couldn’t pay off the loss on Abacus. The Dutch bank ABN-AMRO, which had backstopped ACA’s debts, had to be taken over by the Royal Bank of Scotland. So the Royal Bank of Scotland wound up paying an $842 million loss on the credit default swap, which went to Paulson.

No one can fault the SEC’s objective of restoring badly shaken public faith in the casinos of Wall Street by ferreting out financial frauds. To this end, it chose to go after Goldman Sachs, a powerful bank that is identified in the public’s mind with rapacious profiteering.

Unfortunately, the SEC’s fraud case against Goldman does not add up. It implies a conspiracy without co-conspirators. If Goldman Sachs had designed its own fund to fail, why didn’t it go short the fund? It could have retained the credit default swap it got from ACA for its own account rather than selling it to Paulson. Instead, it went long by putting $90 million of its own money into Abacus. If it was in cahoots with Paulson, how did it get its share?

The SEC scrutinized Paulson’s records and found no evidence that he did anything with the proceeds other than distribute them to the investors in his funds (including himself). Goldman’s records showed it lost $75 million (after taking its $15 million fee into account).

Not only is there no motive or logic for Goldman to have sabotaged its own fund, the SEC complaint fails to cite a single witness or document to substantiate that theory. Nevertheless, SEC has brilliantly succeeded in implanting that idea in the media.

The New York Times, for example, citing the SEC as its source, reported in its front page on April 15 that “Goldman created and sold a mortgage investment that was secretly devised to failed.” On April 18th, its Nobel Prize-winning columnist Paul Krugman added, “the SEC is charging that Goldman created and marketed securities that were deliberately designed to fail, so that an important client could make money off that failure. That’s what I would call looting.” And a Google search reveals over 600 other similar stories in other newspapers.

The message: If Wall Street deliberately betrays investors in this manner, the government must extend its oversight to every nook and cranny of the financial universe. So however the SEC legal case is settled, the SEC has already won in the court of public opinion.

Edward Jay Epstein is the author of The Big Picture: Money and Power in Hollywood (Random House, 2006) and its sequel, The Hollywood Columnist: The Hidden Financial Reality Behind the Movies (Melville House, 2010).

RIIA Weighs In on In-Plan Income Options

Posted on April 21, 2010 by Editor Test -

The Retirement Income Industry Association’s Retirement Plan and IRA Committee on Lifetime has submitted its recommendations to the U.S. Department of Labor in response to the government’s request for input on how best to bring some of the income benefits of defined benefit pension plans to defined contribution plans.

Among RIIA’s recommendations:

Lifetime income options should become mandated options for all defined contribution plans; but RIIA is not advocating that such lifetime options become mandated elections for all participants.

At a minimum, DoL needs to create a safe harbor detailing the circumstances under which information and assistance can be given to participants without the risk of fiduciary liability.

Further, DoL may want to promote the dissemination of education materials, to participants, that focus on the process of retirement income planning (flooring and upside) and retirement income distribution (investment vehicle and product selection), including the consideration of their human, social and financial sources of capital.

The DoL should consider the following lifetime income options within the context of a decumulation QDIA:

One or more annuities, providing income for life or to a covered life and survivor on a joint and survivor basis.
One or more stable value funds where the fund is an investment option available to participants within the plan. Such stable value fund options should be extended to IRA accounts, subject to the development of sophistication criteria applicable to the trustee or custodian.
One or more products that combine lifetime income and risk premium applicable to insuring certain catastrophic risks (e.g. long-term care) that serve to deplete accumulated assets.
One or more products or funds that are principal protected (e.g. laddered maturities), issued or managed by the U.S. Government or an instrumentality thereof or by a state or federal regulated creditworthy financial institution.
One of more products or funds that combine (i) items 1 through 4 above and (ii) a money market fund.

Affluent Still Nervous, Merrill Lynch Survey Shows

Posted on April 21, 2010 by Editor Test -

The percentage of affluent Americans who are concerned about the economy’s impact on their ability to meet financial goals has fallen to 49% from 58% in October 2009, according to the third and latest Merrill Lynch Affluent Insights Quarterly survey.

But worries about health care costs in retirement and longevity risk appear to be rising. Of the 62% survey respondents who identified health care as a top concern, 56% felt unsure of how rising medical costs should factor into their retirement planning, up from 40% in January 2010. The number of those concerned about whether their assets will last throughout their lifetime rose to 61% from 53% during the last quarter.

The survey also showed:

Two out of three affluent people over age 65 say they are spending more time with friends and family. About 45% plan to dedicate more time to philanthropic endeavors and the same percentage intend to spend more time traveling during retirement.
73% of affluent baby boomers ages 51-64 are concerned about whether their assets will last throughout their lifetime and 61% wonder if they will be able to live the lifestyle they had hoped to in retirement.
40% of survey respondents ages 51-64 expect to retire later than they did one year ago. Nearly one-third (31%) currently support both their children and parents to some extent.
Of these members of the “Sandwich Generation, ” 45% have had to make lifestyle sacrifices to support the needs of their family, 44% have significantly cut back on personal luxuries, 26% percent are now saving less for retirement, and 19% have invited their adult-age children and/or parents to live with them to save money.
Of all groups, 35 to 50-year-olds struggle most with balancing short-term financial priorities and concerns, such as funding their children’s education (52%) and knowing how best to manage a proper cash flow and liquidity strategy (31%).
Younger affluent individuals ages 18-34 say they lack the financial education needed to make the best decisions early in life to maximize their long-term savings and investments. In that group, 23% said they don’t “know where to begin” while 24% said “understanding tax implications associated with retirement savings vehicles” was most challenging.
52% of survey respondents believe the government should do more to assist individuals in their retirement saving efforts. For instance, 50% of these respondents believe that health care coverage should be provided to all retirees, while 44% believe that more financial resources should be put toward Social Security.
Nearly half (47%) of affluent Americans ages 35-50 assume Social Security will not play a role in their retirement, and nearly 70% are skeptical about the future availability of Medicare benefits.
Nearly 65 percent of affluent Americans under the age of 50 would like to see higher contribution limits for IRAs and employer-sponsored retirement plans, and 44% want more retirement education in the workplace. (such as a 401(k)) raised. More than 60% of those under the age of 64 either currently do or would take advantage of financial education or advice services if offered by their employer.
Among the nearly half (44%) of affluent Americans working with a financial advisor, 75% engage with their advisor at least quarterly, and 41% at least monthly. While this frequency is fairly consistent with the previous two quarters, the number of individuals speaking with their financial advisor weekly has steadily risen from 8 to 13% during the last six months.
Approximately 63% of affluent Americans who work with a financial advisor have been doing so for more than six years, and nearly 40% for more than 10 years. More than one quarter (27%) wish they had started working with their financial advisor earlier, indicating many affluent Americans believe financial planning should begin at an earlier stage in life. Among the 56% who do not work with a financial advisor, 25% believe they would benefit from such a one-on-one relationship.
When asked about what they want from advisors, affluent Americans cited proactive investment advice, check-ins to help ensure they’re on track, advice on maintaining their desired lifestyle, holistic planning, help with ensuring adequate liquidity and a plan for charitable giving.

Braun Research conducted the Merrill Lynch Affluent Insights Quarterly survey by phone in March 2010 on behalf of Merrill Lynch Global Wealth Management. Braun contacted a nationally representative sample of 1,000 Americans with investable assets in excess of $250,000, and oversampled 300 affluent Americans in each of 14 target markets.

Volcker’s Minsky Moment

Posted on April 21, 2010 by Kerry Pechter -

At 6’7″ tall, Paul Volcker dwarfed the lectern on the podium at the Ford Foundation in New York last week. He was one of the headliners at this year’s Hyman P. Minsky Conference, and the audience of economists and officials fell silent as he spoke.

“There is something the matter in Washington…,” the 82-year-old former Federal Reserve chairman began.

What followed was not a critique of government, however, but rather a call for better federal regulation of financial institutions in the future. Washington’s problem, he said, was that 16 months after the financial crisis, two key senior positions at the Treasury Department were still vacant.

By the time Volcker finished speaking, in fact, he sounded in sync with the current administration. He asserted that the Fed should keep on regulating the banks, that the financial sector has grown at the expense of the rest of America over the past several decades, and that the “banks shouldn’t be running casinos on the side.”

His sentiments were not out of line with those of most of the people who gathered for the three-day conference, which has been sponsored by the Levy Economics Institute of Bard College for the last 19 years in honor of the late Hyman P. Minsky, who taught economics at Bard prior to his death in 1996.

Minsky developed a cautionary theory that periods of prosperity tend to breed complacency in financial markets, making them vulnerable to crises. Some people thought Minsky’s theory predicted the 2008 financial crisis, which in some circles was dubbed a “Minsky moment.”

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The title of this year’s Minsky conference was “After the Crisis: Planning a New Financial Structure.” Given the ongoing efforts in Washington to pass a financial regulatory reform bill—and the debate over whether the Federal Reserve deserves blame for not preventing the crisis or credit for subduing it—the topic was especially timely.

The atmosphere was charged, even heated at times. A buzz was created by the presence of speakers like former New York governor (and “Sheriff of Wall Street”) Eliot Spitzer, Nobel Prize winning economist and journalist Paul Krugman, and the legendary cigar-chomping Volcker.

Volcker had been in the news for over a year, having been appointed by President Obama in early 2009 to chair the newly created Economic Recovery Advisory Board. His so-called “Volcker rule,” a proposal that the largest banks be prohibited from speculative trading on their own accounts or investing in hedge funds, is favored by the Obama administration. Diluted versions of it have also been proposed.

At the conference, where proposals to present the next financial crisis ranged from passing rigid new laws to passing flexible regulations to allowing banks to insure each other or write “living wills” for use during bankruptcies or reorganizations, Volcker expressed skepticism that anything less than laws could effectively rein in bankers from speculative excess.

“You cannot manage the system by relying on regulations,” he said, suggesting that regulations can often be fudged and regulators captured. “How long would an aggressive regulator last? I know he won’t be the object of great affection in the financial community.” Instead, we need a “structural solution,” with laws instead of regulations, so that a regulator can say, “I’m sorry but the law won’t permit it.”

Regarding the wisdom of controversial 1999 repeal of the Glass-Steagall Act of 1933, the Depression-era law that barred commercial banks from underwriting securities and to which the Volcker rule has been compared, he said that “the problem is that we didn’t replace Glass-Steagall with anything good.”

Volcker said he was against giving hedge funds the protection of a government safety net, in favor of establishing a clearinghouse or exchange for trading derivatives, and for bringing money market funds under the Fed’s regulatory umbrella. Money market funds were rescued with public money when they “broke the buck” during the financial crisis.

“If [the money market funds] want to walk and talk like a bank, they need reserves and capital requirements like banks,” he said. “They’re the same as banks without the oversight and without the regulation. They’ve taking trillions of dollars out of the banking system and out of supervision. It creates a classic case of regulatory arbitrage. I’d love to see that taken care of.”

One of the most contentious issues at the conference was whether the Federal Reserve should have its supervisory powers over the U.S. banking system expanded, be restricted to regulating only the largest, systemically-important financial institutions, or even give way to a more politically accountable, consumer-driven regulatory regime.

Like several other current and former Fed officials who spoke at the conference, Volcker took the side of the institution he once led. “The Fed is in the best position to regulate,” he said. “Somebody should have been paying more attention to the development of the subprime mortgage market. But the Fed is in the best position [to regulate the banks] and it would be a big mistake to shut them out of supervision and regulation. The danger of regulatory capture is inherent in the system, and no agency is immune to it. The Fed is in a good position to resist regulatory capture because it also does monetary policy. It isn’t just a regulator.”

As for how well the government intervention worked in 2008 and 2009, he noted that fears that the government might nationalize the banks were a media exaggeration rather than ever a real possibility. “As it turned out, the idea of a stress test and the complicated process of getting rid of toxic assets worked reasonably well,” he said.

Commenting on the repeal of Glass-Steagall and the subsequent merger of commercial banking and investment banking cultures, Volcker regretted that commercial bankers had become infected by the desire for the “higher multiples” of pay that investment bankers enjoyed. He called that a “destructive cultural fact.”

Male 65 Annuity Price Index, Group vs Individual

Posted on April 21, 2010 by Editor Test -

Principal Financial Introduces Participant Planning Tool

Posted on April 21, 2010 by Editor Test -

A new planning tool from the Principal Financial Group helps streamline the process of participant education by giving financial professionals access to a comprehensive library of education plans and materials, the company said.

Financial professionals can use the Participant Education Planning Tool to help retirement plan sponsors increase participation, salary deferrals and overall participant satisfaction with the plan. The tool helps them find:

Ready-to-use education plans
Modifiable templates for education plans
Flexible materials for creating education plans

The tool expands the slate of participant education resources from The Principal for financial professionals to offer clients. They also have access to local education personnel who conduct both group education meetings and one-on-one meetings with participants.

New York Life Reports 2009 Financials

Posted on April 21, 2010 by Editor Test -

New York Life Insurance Company, the largest domestic mutual life insurer and the predominant issuer of income annuities, announced record sales of insurance and investment products in 2009. Operating revenue reached a new high and the firm expanded its surplus by $2 billion, to $15 billion.

Highlights included:

Surplus and AVR (asset valuation reserve) increased more than $2 billion, or 17%, to over $15 billion. The increase included the issuance of $1 billion in surplus notes.
Operating revenue rose three percent, to $14.38 billion.
Operating earnings were $1.22 billion in 2009, down from a record $1.28 in 2008.
Total insurance sales rose 11% from 2008, to more than $2.6 billion, with U.S. life insurance sales up 14%.
Total investment sales rose to $32.85 billion, up 22% over 2008.
Assets under management reached a record of over $286 billion, a 15% increase.

What the ABACUS 2007-AC1 Offering Circular Says

Posted on April 21, 2010 by Editor Test -

In the offering circular for the synthetic collateralized debt obligation at the heart of the SEC’s fraud case against Goldman Sachs, the investment bank disclaims any fiduciary responsibility.

The unregistered prospectus for the ABACUS 2007-AC1 CDO that the SEC claims that Goldman Sachs sold fraudulently includes lengthy disclaimers from the investment bank and the CDO’s manager, ACA Capital.

For instance, on page 8 of the Circular, a disclosure of transaction risk factors says (our emphasis):

Goldman Sachs does not provide investment, accounting, tax or legal advice and shall not have a fiduciary relationship with any investor. In particular, Goldman Sachs does not make any representations as to (a) the suitability of purchasing Notes, (b) the appropriate accounting treatment or possible tax consequences of the Transaction or (c) the future performance of the Transaction either in absolute terms or relative to competing investments.

Potential investors should obtain their own independent accounting, tax and legal advice and should consult their own professional investment advisor to ascertain the suitability of the Transaction, including such independent investigation and analysis regarding the risks, security arrangements and cash-flows associated with the Transaction as they deem appropriate to evaluate the merits and risks of the Transaction.

Goldman Sachs may, by virtue of its status as an underwriter, advisor or otherwise, possess or have access to non-publicly available information relating to the Reference Obligations, the Reference Entities and/or other obligations of the Reference Entities and has not undertaken, and does not intend, to disclose, such status or non-public information in connection with the Transaction. Accordingly, this presentation may not contain all information that would be material to the evaluation of the merits and risks of purchasing the Notes.

Goldman Sachs does not make any representation, recommendation or warranty, express or implied, regarding the accuracy, adequacy, reasonableness or completeness of the information contained herein or in any further information, notice or other document which may at any time be supplied in connection with the Transaction and accepts no responsibility or liability therefore.

Goldman Sachs is currently and may be from time to time in the future an active participant on both sides of the market and have long or short positions in, or buy and sell, securities, commodities, futures, options or other derivatives identical or related to those mentioned herein. Goldman Sachs may have potential conflicts of interest due to present or future relationships between Goldman Sachs and any Collateral, the issuer thereof, any Reference Entity or any obligation of any Reference Entity.

Off-Track Bettors

Posted on April 21, 2010 by Martin Mayer -

A year and a half after the collapse of the financial markets—and only days after the SEC charged Goldman Sachs with fraud—the debate about necessary “reforms” is still in its early stages, and none of the debaters seriously claims that his or her solution will in fact prevent a new crisis.

The problem is that the proposed remedies deal with superficial matters of industrial organization and regulatory procedure, while the real problems lie on a more profound level.

Banking has always been a business where the profits come over time, as the borrower pays interest on the loan and eventually repays the principal. Principal being much larger than interest, lending officers are paid to have good judgment about which applicants for loans can and will pay what they owe (and which debtors can’t or won’t)—especially on longer loans like mortgages, where one borrower who defaults eats the profits from ten or even twenty of those who pay.

The late Hyman Minsky, whose “financial stability hypothesis,” written in 1966, accurately described what happened to our banks a year and a half ago, liked to say that there was a morality to the lending officer’s work because his prosperity depended on the success of his clients.

In years past, loans were funded from the deposit base of the bank. Bank deposits are the transaction balances of the economy. Banks had the use of this money because they provided the plumbing of the payments system. Their size was determined by the needs of enterprise. Banks could not grow on their own motion; they were forbidden to borrow (except by discounting their customers’ paper) or to acquire bonded indebtedness.

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In the 1950s, the banks began to free themselves from these shackles. What was then Morgan Guaranty established a market for Fed Funds, in which banks “bought” the excess reserves of other banks overnight or for very brief periods. In the 1960s what was then National City Bank of New York began to sell “certificates of deposit” to increase the money available to the bank for lending.

In 1975, I published a book that opened with the words, “A spectre is haunting American business and government: the spectre of banking.” Once the banks could grow by tapping the money markets they controlled, the government was not well equipped—or, to be honest, well motivated—to stop them. What slowed the march of finance was the fact that the profits came at the end of the loan, which had to be financed as long as it lived.

Enter “securitization.” Instead of keeping their loans in their vaults, banks could contribute them to packages of like instruments for sale to investors. Now the money came back to the bank long before the borrower repaid his loan. Absent specific arrangements for “recourse,” the bank didn’t necessarily care whether or not the loan was repaid.

To quote George Shultz, who was an economics professor before he was Secretary of State, the bank no longer had “skin in the game.” The lending officer’s work was supplanted by machines doing complicated and often unrealistic statistical analysis of which loans were likely or unlikely to default.

Moreover, bankers saw no need to make it easier for purchasers to value these pseudo-bonds by limiting the kinds of instruments that could be agglomerated in each “collateralized debt obligation.” The Federal Deposit Insurance Corporation, when cleaning out the S&Ls in the late 1990s, developed the idea of selling “the whole bank” by combining mortgages, credit card advances and business loans in “asset-backed securities.”

Historically, any paper with such characteristics had been “overcollateralized.” That is, it had been backed by loans with total asserted valuations greater than the face value of the bond. The FDIC, working through its subsidiary, the Resolution Trust Corporation, offered another step. If some of the collateral in the initial offer went sour, the FDIC made it possible for the packager of the paper to get a second chance, substituting other assets in the RTC warehouse.

This led to the “total return swap,” and then to the infamous “credit default swap,” an insurance policy disguised as a security. It gave all the little gamblers at the big dice table the opportunity to bet on or against the solvency of some company or government, whether or not they were rolling the dice themselves.

For the participants, these “innovations” were wildly successful. Their triumph, Michael Lewis suggests in his new book, The Big Short, was that the whole world became willing to lend money to instruments—not to businesses or houses, not to land, labor or enterprise, but to artificial contracts created behind closed doors.

The share of the financial sector in the nation’s gross domestic product rose from less than three percent in the decade after World War II to more than seven percent in the first decade of the new millennium. The share of the financial sector in the profits of corporate America grew even more rapidly, to more than 40 percent. The rest of us didn’t do so well.

The labor on Wall Street now is to restore those lovely unexamined days. And Wall Street will pay Washington lavishly—indeed, has already done so—to be of assistance in this effort. We are well on our way to reproducing the disasters of 2008.

Controlling the internal operations of the giant banks is all but impossible, but we can limit their intake and thus their size. Forty years ago, Scott Pardee, then the chief foreign exchange trader for the Federal Reserve Bank of New York, suggested a Food and Drug Administration for financial instruments, with a rule that instruments could not be traded by federally insured institutions unless and until they had a certificate that they were harmless.

Harvard Law professor Elizabeth Warren, chair of the House Subcommittee supposedly policing the government’s solicitude for “troubled assets,” recently offered a similar proposal. The grounds for rejecting would be that the instrument allowed banks to increase their leverage behind the scenes or to book profits from loans the borrowers had not yet repaid.

It’s worth a try. No doubt such a program would stifle innovation, but that’s all right. Honest men can disagree about whether we can afford universal health care, wars in the Hindu Kush, or reduced carbon emissions. But after seven trillion in losses that the taxpayers of the world must find a way to finance, it should be noncontroversial that we can’t afford any more innovation on Wall Street.

Martin Mayer, a guest scholar at The Brookings Institution, is the author of 34 books, including four best sellers—Madison Avenue, USA (1958), The Schools (1961), The Lawyers (1967) and The Bankers (1975).

Annuity Products That Will Sell

Posted on April 14, 2010 by Kerry Pechter -

If a life insurance company could start with a clean whiteboard and map out the ideal annuity product mix for the future, what would that map look like? What would the products be, and what features would they have?

Timothy Pfeifer, an actuary and president of Libertyville, Illinois-based Pfeifer Advisory LLC, challenged himself to provide specific answers to those fuzzy questions in a presentation at LIMRA’s annual Retirement Industry Conference here yesterday.

For an industry that’s still dazed from the Financial Crisis and said to be sitting on a lot of underemployed cash, the topic was timely. And Pfeifer, a former Milliman and Tillinghast actuary, had clearly done a lot of homework.

To achieve reasonable profitability in the annuity business, Pfeifer said, an insurance company should have “tentacles in both the fixed and variable world, have something to sell no matter what the market environment, shouldn’t create undue litigation risk” and use their life insurance and annuity businesses to hedge each other if possible.

Tim Pfeifer Pfeifer defined “reasonable profitability” as about 10% a year. “If you think you can manage to 20% returns, you’ll be disappointed,” he said at LIMRA’s conference. An estimated 350 insurance professionals attended the conference.

An ideal manufacturing strategy going forward would be to put 75% of the time and effort into deferred annuities and 25% into immediate annuities, he said. The lead product on the deferred side, not surprisingly, was variable annuities with living benefits.

On the variable side
Although he conceded that owner behavior is still largely unknown, Pfeifer believed that owners of VAs with guaranteed lifetime withdrawal benefit will use the income guarantee as a safety net that allows them to buy and hold equities without fear, rather than as a market-timing tool to be triggered at the bottom of the market. If that’s true, it would allow issuers to bring prices down.

The 10-year guaranteed minimum accumulation benefit, which guarantees principal, still “resonates with some customers,” he said, while noting that the guaranteed minimum income benefit—which involves annuitization, and which was the first living benefit some 12 years ago—won’t be worth investing time in.

As for investment choices and pricing, he suggested that issuers offer fewer subaccounts and fewer managers, with no more than 20 or 30 fund options and an emphasis on indexing.

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He described the death benefit as a “distraction,” and suggested a shift to a quasi-A share design where the M&E starts relatively large and falls over time, so that the benefits gains value for the consumer.

Regarding age bands and withdrawal rates, he suggested a withdrawal rate that rises by, for instance, 10 basis points a year rather than remains fixed. Issuers could save money, and probably not lose sales, if they limited withdrawals to once a year or once a quarter or on contract anniversary dates.

Pfeifer suggested that companies get a stand-alone living benefit (SALB) business going if they haven’t already. “The marketplace is crying out for wraps around those assets,” he said—referring to the huge amounts of unprotected savings in managed accounts and elsewhere.

“Sales today are low but they should grow,” he said. “SALBs will open up new distribution opportunities and access to new asset managers. They will be critical to our marketplace and getting started now is a good idea.” But don’t try it unless you have expertise in the necessary hedging programs, he warned.

Picks and Pans, Courtesy of Pfeifer Advisory
High-Priority Annuities	Low-Priority Annuities
Variable deferred annuities with living benefits (GLWB or GMAB)	Variable immediate annuities
Multi-year guaranteed rate fixed deferred annuities with a market value adjustment	Longevity insurance (Advanced life deferred annuities)
Inflation-indexed single premium immediate annuities (SPIAs)	Long-term care riders on annuities (unless you already sell LTC insurance)
Simple indexed deferred annuities	Complex indexed deferred annuities
Equity-indexed SPIAS	Conventional one-year guarantee fixed deferred annuities
One-year guarantee fixed deferred indexed to an interest rate	Variable deferred annuities with guaranteed minimum income benefits
Stand-alone living benefits
Data Source: Pfeifer Advisory LLC, 2010.

On the fixed side
The most successful design for fixed deferred annuities is likely to be the multi-year guaranteed (MYGA) product with a market value adjustment, which puts the interest rate risk associated with early withdrawals on the owner rather than the issuer. The MVA adds 10 to 25 basis points to the credited rate of MYGA products.

The MVA should be tied to the same interest index as the securities that the issuer invests in, he added, the return of premium guarantee should be dropped, and the minimum investment should be set at $25,000. He also recommended that products without a rate guarantee be indexed to interest rates. “This is a ‘Trust Me Lite’ strategy,” he said.

A SPIA was also part of the balanced product offering that Pfeifer imagined for the insurer that wants to build a durable foundation. It should include enough liquidity to satisfy the investors’ psychological need for flexibility, as well as some assurance that income would keep up with inflation. That could mean indexing the payouts to the Consumer Price Index or to the S&P 500.

SPIA “must have at least token liquidity that gives the perception of access,” he said. That might take the form of access to cash every five years or when emergencies arise. “Perception is as important as anything.” At the same time, people want some growth. “Only a minority will be satisfied with $1,000 a month,” he said. An index to the S&P500 would offer upside potential.

As for indexed annuities, Pfeifer had cautionary words. Issuers have been facing a lot of litigation, he said, from contract owners who saw “3% gains in a 40% year” in 2009. “Customers should be able to share in the home runs.”

Group Urges Investigation of FINRA

Posted on April 14, 2010 by Editor Test -

The Alliance for Economic Stability (“AES”) has asked the Financial Crisis Inquiry Commission (“FCIC”), which Congress set up to investigate the causes of the financial crisis, to investigate the Financial Industry Regulatory Authority.

AES urged the FCIC to “thoroughly investigate the responsibilities and failures of FINRA in allowing the practices that were the most direct cause of the financial crisis.”

FINRA is the securities industries’ self-regulatory body. According to the AES, a Washington, DC-based advocacy group whose directors are Allan Block, chairman of Block Communications, Daniel Rodriguez, founder of MGR Group, and Glenn Whatley, managing director of West Bay Energy LLC:

“Most recently, FINRA has evaded scrutiny for having failed to uncover the Lehman Brothers Repo 105 program. FINRA’s most direct and specific responsibility is to supervise a firm’s compliance with capital requirements. FINRA failed not just in Lehman, but Bear Stearns and AIG as well, yet has not been the subject of any investigative action. Meanwhile FINRA executives use court-granted immunity and a lack of oversight to enrich themselves, making fortunes as what can only be described as ‘rogue cops.’ FINRA is the only private organization of its kind in the world.

The AES is urging an investigation of FINRA’s responsibilities in the financial crisis as part of the larger effort of the AES to advocate responsible economic and financial regulatory policy to ensure the safety of Americans’ savings. The letter to the FCIC and an AES report on FINRA can be accessed at the AES websites: www.eally.org or www.eallies.org.

MassMutual Retirement Services Offers ‘Virtual Site Visit’

Posted on April 14, 2010 by Editor Test -

MassMutual’s Retirement Services Division has introduced a new online virtual site visit that lets retirement plan advisors as well as existing and prospective plan sponsors “experience” MassMutual from the comfort of their own computer.

Intended to simulate a visit to MassMutual’s Springfield, Mass., headquarters, the virtual tour introduces viewers to the firm’s retirement plan services. The 15-minute tour originates in MassMutual’s grand rotunda and, from there, visitors can choose six different paths and learn more about MassMutual’s offerings.

“We envision our virtual site visit, which is the first of its kind in our industry, as a convenient and innovative way to introduce MassMutual to retirement plan advisors and plan sponsors, and to demonstrate the many reasons to consider MassMutual when searching for a new retirement services provider,” says E. Heather Smiley, vice president and chief marketing officer, MassMutual Retirement Services Division.

The virtual site is available at http://www.massmutualrsdemo.com/virtualvisit/. For best results, viewers should have a processor speed of 2.4 GHz or greater and at least 2 GB of RAM.

‘Graphic Illustrations’ of U.S. Spending via Heritage Foundation

Posted on April 14, 2010 by Editor Test -

The Heritage Foundation has released its 2010 Budget Chart Book, a highly visual and interactive online resource with charts illustrating the historical trends in U.S. government taxation and government spending levels.

Visitors to heritage.org/BudgetChartBook may download, post or e-mail any of 39 information graphics, 12 of which are new to this updated edition. Included are links to relevant Heritage research and tools for bookmarking, embedding and information sharing through Twitter, Facebook and RSS feeds.

“We’ve seen unprecedented concern and curiosity from Congress, the media and regular taxpayers about runaway federal spending and deficits,” says Nicola Moore, assistant director of Heritage’s Roe Institute for Economic Policy Studies. “The Budget Chart Book presents those issues in clear graphics and everyday terms.”

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