cropped-pension-parameters-logo4.jpgIt’s taking-stock time (in a manner of speaking) for the economy, and here’s a second-quarter 2016 overview from Kevin F. McCormack, president, Pension Parameters Financial Services, Inc:

After a difficult winter, the U.S economy avoided the worst fears of investors and remains on a positive trajectory.  The risk of recession has receded, consumer confidence remains strong and financial markets rebounded into positive territory for the year.  The U.S. economy is experiencing the most consistent job growth in a generation but overall U.S. growth remains slow.

After signaling in December that the U.S. Federal Reserve would raise rates four times in 2016, signs of a slowdown early this year caused the Fed to ease the pace of monetary tightening.  While the Fed is still concerned about inflation, which has shown signs of coming back to life, it does not want to jeopardize what is still one of the weakest economic recoveries on record.  Most economists now expect the Fed to raise rates no more than one or two times this year.

Oil prices began a solid ascent at the start of April on hopes that major oil producers might agree to a round of production cuts or at least freezes.  No future agreement was reached however hopes that a future agreement might be in the works and a falling U.S. dollar helped crude prices and oil stocks continue their ascent through much of the rest of the quarter.

While the United Kingdom’s vote to exit the European Union did bring considerable uncertainty in the short run as reflected in global and domestic equity markets as well as credit and foreign exchange markets, investors appeared to reconsider the broader effect of the vote as well as conclude that its implications would play out over the long term.

As there will be continued volatility in the market, it is important to stay disciplined and diversified.


New SEC regulations that change how money market funds (MMFs) will be invested, priced and operated will become effective October 14, 2016.

MMFs are now categorized by their investments.

  • Treasury MMFinvests in U.S. treasury bills, bonds and notes.
  • Government MMF – invests at least 99.5% of its total assets in cash, government securities and/or repurchase agreements that are fully collateralized by cash or government securities.
  • Prime MMF – invests generally in floating/variable rate debt, commercial paper of corporations and securities of the U.S. government and agencies.

Under the new rules, Prime MMFs would be subject to the following restrictions:

Liquidity Fee

  • If a fund’s weekly liquid assets were to fall below 30%, the fund’s board may impose up to a 2% fee on redemptions.
  • If the weekly liquid assets were to fall below 10%, redemptions will be subject to a 1% redemption fee unless the fund’s board determines otherwise.

 Redemption Gates

  • A fund board may halt all shareholder withdrawals for up to 10 days if a fund’s weekly liquid assets fall below 30%.
  • Gate is lifted when weekly liquid assets return to 30% or when the board determines it is no longer in the best interest of the fund.
  • Gates can be in place for up to 10 days in any 90 day period.

Floating Net Asset Value

  • Money market fund will price and transact at a net asset value per share that can change, or “float”, based on pricing the underlying holdings out to four decimal places ($1.0000).

Plan Sponsors of qualified retirement plans should carefully review the MMF choice in their plans and take the appropriate action to avoid these restrictions.


Many financial experts will stress the importance of saving for retirement throughout your entire working life.  Sometimes other events get in the way.  If you have been raising a family and have not been able to save a substantial amount by the time your children have finished school, now is the time to begin a serious saving campaign.

Start by maximizing contributions to your 401(k) plan at work or setting up an IRA to be funded out of current income.  The maximum 401(k) salary deferral for those ages 50 and over is $24,000. Many companies offer a match contribution.  You should at least make the maximum contribution to be matched.   The maximum IRA contribution for those ages 50 and over is $6,500. If you save seriously over 10 to 15 years, you could build up a respectable amount by the time you retire in addition to your Social Security benefits.

Your home has most likely increased substantially in value over the years.  You may want to consider downsizing to a condominium or apartment and investing some of the gain you experience on the sale.  Again, over a 10 to 15 year period, you could have a substantial amount to add to your retirement nest egg.

So if you have not been saving a substantial amount all of your working lifetime, there is still time to make a serious effort to rectify the situation, since Social Security is only a basic minimum to live on in retirement.