Tag Archives: Stable Value

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MetLife's Second Stable Value Study Finds Most Plan Sponsors "Staying the Course" with Stable Value

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By Business Wirevia The Motley Fool

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MetLife’s Second Stable Value Study Finds Most Plan Sponsors “Staying the Course” with Stable Value

NEW YORK–(BUSINESS WIRE)– According to MetLife’s 2013 Stable Value Study, released today, the vast majority (86%) of plan sponsors have been offering stable value as an investment option in their defined contribution (DC) plans for more than two years, and more than 78% are not planning to make changes to their stable value offerings within the next year. Among those plan sponsors that added stable value as an investment option in their DC plan in the past two years, 47% said they did so to provide participants with a “capital preservation fund,” 37% said stable value “offers higher interest rates than other, comparable investments,” and the same percentage said “it was recommended by their recordkeeper/TPA.”

MetLife commissioned this study of 140 plan sponsors and 19 stable value fund providers to gain updated insights into the current landscape of stable value products since its inaugural study, released in 2010. The new study can be found at www.metlife.com/stablevaluestudy.

Among plan sponsors that offer stable value as an investment option in either their 401(k) or 457 plan(s), 48% say that their plan’s stable value option is backed in part by traditional GIC(s), 31% say they include separate account GIC(s) and 19% have synthetic GIC(s). The largest plans (10,000 or more plan participants) are more likely than small plans (100 to 999 participants) to say their offering is backed in part by a synthetic GIC (45% vs. 12%). About 75% of stable value fund providers also indicated their offerings included more than one investment type.

However, when it comes to understanding the arrangements plan sponsors have selected, more than one in five plan sponsors (22%) who offer stable value to their participants said they did not know what types of stable value contracts back their offering, and the low percentage of smaller plans identifying synthetics as elements of their stable value option suggests they may not be aware that pooled stable value funds often incorporate all three types of contracts. This finding is consistent with the results of MetLife’s 2010 Stable Value Study, though the overall level of familiarity among plans sponsors and stable value fund providers has increased for most factors since the initial study.

“The safety and stability provided by stable value funds have made them a consistently popular choice for qualified plan participants, particularly during challenging economic times,” said Thomas Schuster, CFA, vice president and head of Stable Value Investment Products, MetLife. “That said, as the market stabilizes, plan sponsors and fund …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Prudential Retirement white paper: Stable value a safer and more secure investment option post finan

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By Business Wirevia The Motley Fool

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Prudential Retirement white paper: Stable value a safer and more secure investment option post financial crisis

NEWARK, N.J.–(BUSINESS WIRE)– Prudential Retirement, a business unit of Prudential Financial, Inc. (NYS: PRU) , today released a new white paper, “Assessing Stable Value After 2008: Performing as Designed.”

“Stable value as an asset class performed as it was designed to do during the financial crisis,” said Michael L. Davis, senior vice president and head of Stable Value, Prudential Retirement. “This paper explores how the changes in the stable value industry have made the asset class a safer and more secure investment option, and underscores its important role as a cornerstone of the retirement strategy for millions of plan participants.”

The white paper highlights a number of steps that have been taken to increase the security of the asset class, including a more thorough and accurate risk assessment for the asset class and more conservative investment guidelines making stable value more resistant to future market dislocations.

The white paper notes that stable value has continued to generate strong relative performance and deliver guaranteed yields comparable to intermediate-term bond funds, but with low volatility comparable to that of money market funds. With strong plan participant demand, between 2007 and 2012, savings entrusted to stable value rose from $416 billion to $645.5 billion.

Davis, who joined Prudential in November 2012 from the U.S. Department of Labor’s Employee Benefit Security Administration, notes the stable value marketplace in 2013 differs from the one that existed in 2008.

“The provider landscape has changed and while these changes may have been disruptive in the short term, they are now heralding a return to the conservative investment strategies, risk parameters and performance goals that characterized the asset class when it debuted four decades ago.”

As of Dec. 31, 2012, Prudential Retirement has $106.9 billion in stable value retirement account values. Guarantees are based on the claims-paying ability of the issuing insurance company and are subject to certain limitations, terms and conditions.

Prudential Retirement delivers retirement plan solutions for public, private, and non-profit organizations. Services include state-of-the-art record keeping, administrative services, investment management, comprehensive employee investment education and communications, and trustee services. With over 85 years of retirement expertise, Prudential Retirement helps meet the needs of over 3.6 million participants and annuitants. Prudential Retirement has $289.8 billion in retirement account values as of December 31, 2012. Insurance products are issued by Prudential Retirement Insurance …read more
Source: FULL ARTICLE at DailyFinance