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Newsmakers

Oklahoma Bill Would Create State-Run Retirement Plan

Proposal calls for auto-enrollment IRAs for workers whose employers don’t offer a retirement plan.
By Michael Katz


Oklahoma lawmakers have proposed bills in both chambers of the state legislature called the Oklahoma Prosperity Act that would create a state-run retirement plan for workers whose employers don’t offer one.

Under the bill, which would create the Oklahoma Sooner Choice Trust Act and an accompanying fund, private employers and their employees could participate in the state-run plan using an automatic enrollment payroll deduction individual retirement account (IRA).

Participating employers would be required to offer employees an opportunity to contribute to an IRA established under the program through withholding a minimum of 3% of wages; however, employers wouldn’t be allowed to contribute to the program. Employees of participating companies would be automatically enrolled into the plan unless they choose to opt out of the program.

The program would be administered by the newly created Oklahoma Sooner Choice Trust Board, whose responsibilities would include operating the program and investing the funds in a way that is consistent with best practices, and maximizes participation and savings.

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Enrollment in the program wouldn’t begin until after a two-year implementation period following the effective date of the bill, which could be extended by another year by the board if it deems it necessary. Employees would select a contribution level and investment option, while employers would designate an open enrollment period and facilitate a payroll deposit retirement savings arrangement.

The board would also be required to conduct at least a biennial review of investment vendors who are contracted by the board. Administrative fees for each account would have to be allocated on a pro rata basis, and contribution levels would be the same as those established for IRAs under the Internal Revenue Code (IRC). The board would also have to prepare and adopt a written statement of investment policy annually, and it would be prohibited from borrowing for investment purposes.

Employers that fail to automatically enroll employees who don’t opt out of the program would be subject to certain penalties.

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Home > News > Market Moves > Higher Bond Yields? No Big Deal for Stocks, Says BlackRock’s Rieder
Market Moves

Higher Bond Yields? No Big Deal for Stocks, Says BlackRock’s Rieder

Tech won’t really suffer that much because there’s so much new innovation, he argues.
By Larry Light


Hey, stock investors, don’t sweat the rise in bond yields, says BlackRock’s Rick Rieder. Usually, higher borrowing costs hurt. Maybe not so much this time, he contends.

Rieder, CIO of global fixed income at the world’s largest money manager, said the yield boost isn’t a cause for fretting because it’s not that large. The benchmark 10-year Treasury, which was at a basement level 0.5% in August, had risen to 1.46% by Friday.

The thing to look at, Rieder told CNBC, is the inflation-adjusted yields, aka real rates.

Recently, this number—you subtract the inflation rate from the 10-year note’s yield—was negative 1%. The average over the past quarter century, he said, is positive 1.5%. And it goes way higher when there’s an economic surge, which Wall Street expects, he added. “You’re talking about real rates that go to 3%, 4%, 5% positive,” Rieder said. “There’s a little bit of uncertainty,” and the volatility increases.

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Growth stocks, such as tech names, are often more susceptible to climbing yields because low loan rates have helped boost their business expansion. Higher yields mean borrowing becomes more expensive for them.

Actually, Rieder added, some stocks with high valuations should encounter a pullback due to the higher yields. Ditching stocks that rose to unsustainable levels, he noted, makes sense.  

But that doesn’t mean tech is necessarily the riskiest stock sector. “We’ve rotated, I think others have rotated, where you own technology,” he said. Tech is a large and growing area, with new winners poised to make it big, he maintained.

What shows promise in the tech field, he said: “The semiconductor space, AI [artificial intelligence], cloud oriented, data simulation. I literally just got off a call going through another extraordinarily, newly developing technology that is going to change how commerce works in another way.”

What else does Rieder think looks good? “We’ve added to financials. We like the cyclicals, we like the consumer space quite a bit. The adds have been bigger there than in pure technology,” he remarked.

Higher inflation expectations constitute one factor in the escalation of yields, he said. Still, there won’t be “excessive inflation” like the nation suffered in the 1970s. The inflation outlook is between 2% to “mid-2s, but not that much higher,” he said.

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