Insights: Trends, Research, and White Papers
Abstract: Given the US defined-contribution market's abundance of competitors, pricing pressure, and the IT-intensive nature of the business, it is no surprise it has gradually consolidated over the past decade. And this consolidation in the US retirement arena continues apace. To maximize deal value, firms must follow some industry-specific best practices.
Source: Mckinsey.com, April 2019
Abstract: Even though millennials often get a bad rap for being frivolous, a new study from New Jersey-based fintech firm LendEDU found 58 per cent are saving for retirement, and with the time value of money on their side, they could be better prepared than some had previously thought. The majority of millennial respondents also said they see the value of advice: 65 per cent would prefer a human advisor over a robo-advisor and only 16 per cent would opt outright for the robo.
Source: Benefitscanada.com, April 2019
Abstract: Recent research reports suggest average employee tenure in the U.S. has trended downward; retirement industry experts agree this fact should inform plan design discussions and participant-level services.
Source: Planadviser.com, April 2019
Abstract: Americans are dramatically underestimating their financial needs in retirement, but they don't seem to realize it, according to a new report released today by Natixis Investment Managers. More than two-thirds (67%) of American workers with access to a workplace retirement savings plan say they expect to have enough money saved for retirement to live as they want, or at least comfortably, as long as they are careful with spending. Yet the findings show their basic assumptions -- about when they can retire, how much they need to save and how long their assets will last -- are flawed.
Source: Natixis.com, April 2019
Abstract: The latest research findings from TCRS based on its 2018 survey of American workers. The Annual Transamerica Retirement Survey explores attitudes about retirement and retirement readiness among American workers. What Is "Retirement"? Three Generations Prepare for Older Age highlights differences and similarities among Baby Boomers, Generation X and Millennials.
Source: Transamericacenter.org, April 2019
Abstract: If strengthening retirement security is the goal, then success can only be measured based on improving long-term outcomes. Unfortunately, as DC savings plans have taken the place of traditional DB plans, the shift has been away from outcomes to inputs. Returning to a true focus on outcomes requires moving away from a myopic focus on savings to evaluating whether retirees will have sufficient income to meet their needs once they stop working. This approach to retirement security considers an individual's retirement life cycle.
Source: Georgetown.edu, March 2019
Abstract: Plan fiduciaries are seeing increased interest in socially responsible, or impact, investing as an option in their plan offerings. However, given the numerous and sometimes conflicting priorities that plan sponsors face, how important should the focus on socially responsible investing strategies be? This report reviews the history behind socially responsible investing and strategies for incorporating ESG investments in your plan's investment menu.
Source: Strategicbenefitservices.com, March 2019
Abstract: Given the shift in participant mindset and demographics, it's important for retirement plan committees to re-think the traditional approach to designing plan investment menus. Article discusses the strategic outcomes fiduciaries should be focused on when designing a fund lineup for their plan.
Source: Greenspringadvisors.com, March 2019
Abstract: A GAO 2015 report on retirement security included estimates on the percentage of households aged 55 and over without retirement savings or a defined benefit plan (traditional employment-based pension plans that offer benefits based on factors like salary and years of service). They have updated these estimates and found that the percent of households headed by someone aged 55 and over that had no retirement savings decreased from about 52 percent in 2013 to about 48 percent in 2016.
Source: Gao.gov, March 2019
Abstract: According to T. Rowe Price, 56% of independent workers are actively saving for retirement. Significantly more traditional workers are actively saving for retirement in comparison (72%). This may be due to the fact that the majority of traditional workers use their employer-sponsored retirement plan (68%) and likely have access to the automatic savings features typically available in those plans, while independent workers are primarily using IRAs (40%).
Source: Troweprice.com, March 2019
Abstract: With an increased focus on retirement income, employers are now turning their attention to how their workers are using their defined contribution plan assets after terminating employment. To help organizations better evaluate the distribution decisions people make when they leave employment, Alight Solutions analyzed the post-termination behavior of more than 2 million DC participants from 2008 - 2017.
Source: Alight.com, March 2019
Abstract: Cerulli Associates found fee sensitivity and the notion that environmental, social and governance (ESG) investing entails a trade-off in performance are two broadly applicable headwinds to ESG adoption.
Source: Plansponsor.com, March 2019
Abstract: Tools like managed accounts and target-date funds continue to gain ground, and more than one-third of companies now offer investment advice to participants, more findings from PSCA's 61st Annual Survey reveal. There are several ways that companies provide investment support to participants through the availability of managed accounts, target-date funds, automatic features/QDIAs, and personalized investment advice from professionals.
Source: 401kspecialistmag.com, March 2019
Abstract: If defined contribution plans encourage departing employees to keep their balances in their plans for at least a year, there's a good chance participants will retain their accounts in the plan. That's the conclusion of a study by Alight Solutions, which tracked participants in plans for which Alight is the recordkeeper from 2008 through 2017 and analyzed participants' behavior after they decide to retire or take another job.
Source: Pionline.com, March 2019
Abstract: The insights of behavioral finance have the potential to help employers, plan sponsors and plan administrators make changes that can yield a substantial difference in the actions of employees and plan participants. This 2-page paper provides ten tips based on the principles of behavioral finance for helping workers achieve a secure retirement.
Source: Ifebp.org, March 2019
Abstract: When asked to name barriers to financial independence and early retirement, Americans are less concerned about uncertain market conditions (37 percent) or inflation (35 percent), than they are about healthcare costs (57 percent), according to a new survey conducted for TD Ameritrade, of 1,500 Americans aged 45 and older with $250,000 or more in investable assets.
Source: Amtd.com, March 2019
Abstract: There are many pieces to the puzzle that is retirement security. And one of them, suggests a benefits institute, is the behavior of plan participants. Working with, and influencing, that can help put pieces in place. In a paper recent paper, the International Foundation of Employee Benefits Plans argues that behavioral finance shows "that retirement plan design and communication are too often based on assumptions about people that are wrong." The paper offers 10 suggestions for ways to use behavioral finance to help employees and participants in preparing financially for retirement.
Source: Asppa.org, March 2019
Abstract: In 2018, 59% of Vanguard participants in defined contribution plans were invested in a professionally managed account option, including 52% who were invested in a single target-date fund. Use of TDFs in DC plans continued to grow. At year-end 2018, 9 in 10 plans offered a TDF, three-quarters of all participants had a position in the funds, and the funds accounted for 35% of plans' assets and more than half of total plan contributions. This is an 8-page report.
Source: Vanguard.com, March 2019
Abstract: "Retirement" is different now than for previous generations, and many topics and issues are interconnected. Each section of this thorough and wide-ranging 52-page analysis discusses common misconceptions and retirement challenges and provide the tools to address them.
Source: Jpmorgan.com, March 2019
Abstract: DC plans, as account-based plans present three broad "adequacy" challenges: (1) adequate savings; (2) adequate investment; and, (3) adequate payout. There has been less success developing solutions to challenge (3), translating the DC account into a stream of retirement income that will last over the participant's expected life. This article considers the obstacles to finding a DC "lifetime income solution" and then survey the policy initiatives that have thus far been adopted or proposed to address the challenge.
Source: Octoberthree.com, February 2019
Abstract: The Employee Benefit Research Institute has released a new study examining the level of benefits that 401k plans with automatic enrollment provide compared to final-average defined benefit plans, with some potentially surprising results.
Source: Ebri.org, February 2019
Abstract: This 14-page report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering more than 30 million employer-based DC retirement plan participant accounts as of September 2018. The broad scope of the recordkeeper survey provides valuable insights about recent withdrawal, contribution, asset allocation, and loan decisions of participants in DC plans.
Source: Ici.org, February 2019
Abstract: What happens if you lose track of some of your retirement funds, such as a 401k from a prior employer? The companies holding those unclaimed accounts can take the money out and transfer it to states. States hold the money as lost property until the owners claim it. But whenever money comes out of a tax-deferred account, there are taxes to consider. In this report, the GAO looked at how IRS treats these transfers for tax purposes. While there is some guidance from IRS and the Department of Labor on these transfers, IRS hasn't clarified tax reporting and withholding requirements for employers transferring unclaimed retirement funds.
Source: Gao.gov, February 2019
Abstract: For the third year in a row, respondents to the annual Callan Institute "Defined Contribution (DC) Trends Survey" specified reviewing their plan fees as a key area of focus and as the best way to improve their fiduciary position as plan sponsors. Asked in the fall of 2018, 106 defined contribution (DC) plan sponsors, both Callan clients and other organizations, said that for 2019, assessing fees was more important than any other activity they undertook in managing their plans.
Source: Hrdailyadvisor.blr.com, February 2019
Abstract: The report also found that DC assets now account for over 50% of total assets across the seven largest pension markets, for the first time. This continues the trend of DC growing at a faster pace over the last ten years, with DC assets growing by 8.9%, while defined benefit assets have grown by 4.6% during this time.
Source: Willistowerswatson.com, February 2019
Abstract: More than two-thirds of retirees say they live as well or better in retirement as they did when they were working, according to a recent study focused on retirees conducted by T. Rowe Price. Meanwhile, only 39 percent of current workers believe they will live as well or better in retirement.
Source: Troweprice.com, February 2019
Abstract: Five years ago, employers were just starting to provide workers with financial benefits beyond their retirement plan, but now financial wellness appears to be firmly entrenched in the benefits space, according to a recent report. Nearly two-thirds of employers say they are very likely to take steps in 2019 to create or focus on the financial wellbeing of their workers in ways that go beyond retirement savings.
Source: Napa-net.org, February 2019
Abstract: Most American workers are unaware of an important tax credit that may help them save for retirement. The Saver's Credit, also referred to as the Retirement Savings Contributions Credit by the IRS, is available to eligible taxpayers who are saving for retirement. Unfortunately, 62 percent of workers are unaware of the credit, according to survey findings from Transamerica Center for Retirement Studies. p>
Source: Prnewswire.com, January 2019
Abstract: Study looks at how retirement plans have changed since it first conducted its survey of employers 10 years ago, as well as retirement plan sponsors' top goals for their plans in 2019. The top three goals for 2019 include expanding financial wellbeing programs, keeping retirees' assets in the plan and locating missing participants. Sixty-one percent say the threat of lawsuits prevents them from being more innovative with their defined contribution plan.
Source: Planadviser.com, January 2019
Abstract: Research from the Plan Sponsor of America finds that employers are making significant plan design enhancements that are likely driving the record contribution rates. The increases in retirement contributions from both plan participants and plan sponsors confirm the positive impact of company-sponsored retirement savings plans. The survey also finds that a larger percentage of eligible employees are participating in their plan. The percentage of eligible employees with an account balance has increased by more than six percentage points in the last 10 years.
Source: Psca.org, January 2019
Abstract: At current annuity rates, EBRI finds purchasing a DIA at age 65, deferring 20 years with no death benefits, results in an overall improvement in retirement readiness for all ages of death combined, when DIA purchases were up to 20 percent of the 401k balance. However, there is an overall decrease in retirement readiness for DIA purchases starting at 25 percent due in part to the interaction with long-term care costs.
Source: 401kspecialistmag.com, January 2019
Abstract: While a strong economy and better education and awareness are no doubt factors, PSCA finds that employers are making significant plan design enhancements that are likely driving the record contribution rates. They include higher default rates, more generous matches and earlier plan eligibility.
Source: 401kspecialistmag.com, January 2019
Abstract: LIMRA anticipates equity markets will slow modestly this year, while interest rates will continue to rise; the organization expects these conditions to promote growth in annuity purchases by long-term investors.
Source: Planadviser.com, January 2019
Abstract: Offering fewer than 12 categories may mean participants are not being given sufficient opportunity to diversify, and offering more than 20 could lead to lower average investment in each fund, which may cause higher fees, ERISApedia.com says.
Source: Planadviser.com, January 2019
Abstract: By a four-to-one margin (80 percent to 20 percent), workers would choose a job with benefits over an identical job that offered 30% more salary with no benefits, according to the American Institute of CPAs, which released the results of its 2018 Employee Benefit Report, a poll this spring of 2,026 U.S. adults (1,115 of whom are employed) about their views on workplace benefits.
Source: Voya.com, January 2019
Abstract: Defined contribution plan sponsors are continuing their intense scrutiny of fees, according to Callan's 2019 Defined Contribution Trends Survey, while also adding participant communication and financial wellness as top priorities for this year.
Source: Callan.com, January 2019
Abstract: The 32-page 2019 Hot Topics in Retirement and Financial Wellbeing report is based on an annual survey that Alight Solutions administers to employers in an effort to capture the changes they intend to make to their retirement and financial wellbeing plans in the year ahead. The 2019 version is the 15th installment of the report and comes from the responses of nearly 175 organizations that employ 7.6 million workers. The survey was administered in the fall of 2018.
Source: Alight.com, January 2019
Abstract: Research shows Americans' top financial concern is affording a comfortable retirement and access to a workplace savings plan is the most effective way to get people to start to save for retirement. However, when it comes to small businesses (2-99 employees) only 42 percent offer retirement benefits. The good news is that the research finds 40 percent of small business employers feel retirement benefits are more important now than three years ago.
Source: Limra.com, January 2019
Abstract: The retirement coverage gap can and should be narrowed. While a variety of solutions are possible, there is a growing consensus in Washington that one of the broadest and most expedient ways would be to expand access to multiple employer plans, or MEPs, for small employers and their employees. This 12-page paper outlines the legislative and regulatory actions that would be needed to broaden access to MEPs. It also describes the features that a model MEP might incorporate.
Source: Prudential.com, December 2018
Abstract: When it comes to investing for retirement, a frequently asked question is, "How do defined contribution plan participants make decisions regarding their investment elections?" Very often, participants do not possess the technical skills to assess the appropriateness of an investment for their DC portfolio. Therefore, it is important to understand what characteristics of an investment they value most and least.
Source: Napa-net.org, December 2018
Abstract: Survey shows a clear relationship between employees' financial worries and their work performance, engagement and absence. Specifically, the survey finds that employees who are financially struggling: Lose 41% more work time to absence than peers without financial worries; Have lower engagement levels than peers without financial worries (51% vs 29%); and, Are less productive compared with peers without financial worries (32% vs. 5%).
Source: Willistowerswatson.com, December 2018
Abstract: A survey of 2,043 retirees by the Transamerica Center for Retirement Studies shows two-thirds (66%) say their most recent employers did "nothing" to help pre-retirees' transition into retirement, and 16% are "not sure" what their employers did. Among the 18% of retirees whose employers helped pre-retirees, the most frequently cited offerings are financial counseling about retirement (6%), seminars and education about transitioning into retirement (5%), the ability to reduce work hours and shift from full- to part-time (5%), and accommodating flexible work schedules and arrangements (5%).
Source: Plansponsor.com, December 2018
Abstract: Most workers at small to mid-size businesses trust information from their banks and credit unions, but those who do not may be less likely to participate in a retirement savings plan if offered one, according to a survey by The Pew Charitable Trusts.
Source: 401kspecialistmag.com, December 2018
Abstract: Financial wellness programs were greeted with great hopes when they first debuted. But is the prognosis for their long-term success starting to flag? Amid signs that such programs have not been as impactful as expected, this white paper takes a 360-degree look at three sets of stakeholders -- plan sponsors, plan participants and retirement plan advisors -- to construct a clearer picture of the state of financial wellness initiatives.
Source: Marketstrategies.com, December 2018
Abstract: According to Willis Towers Watson, just over 80% of organizations acknowledge the importance of their older workers and managing the retirement process; however, only about half believe they understand the process well, and just one-quarter feel they have found an effective approach.
Source: Planadviser.com, December 2018
Abstract: An ongoing study of how real-life participant saving patterns interact with target-date design continues to show that suboptimal participant behaviors and the consequent increase in cash flow volatility remain much more prevalent than many plan sponsors might expect. This series of three articles discusses findings and the steps plan sponsors can take to place participants on a path to a more secure retirement.
Source: Jpmorgan.com, December 2018
Abstract: John Hancock announced the results of its annual Financial Stress Survey of 1,352 retirement plan participants, revealing a majority of workers (69 percent) are stressed over their finances, costing companies approximately $2,000 per employee. Most respondents (72 percent) admitted to worrying about personal finances while at work, with one-third doing so more than once per week.
Source: Jhrps.com, December 2018
Abstract: There is a sea change underway in the retirement industry. As many as five different generations are now participating in retirement plans. New technologies are emerging to engage participants and streamline back-office operations. All the while, the regulatory environment continues to shift with new and proposed rules. Amidst dramatic change lies unprecedented opportunity.
Source: Broadridge.com, December 2018
Abstract: To assess the overall impact of an auto-IRA, one would need comprehensive financial data for a household, including debt, income, and saving over a long period of time. But an early look can still be useful, so this 10-page paper examines the experience of Oregon to date, which recently became the first state to implement an auto-IRA program (called OregonSaves). The goal is to answer a limited question: how do workers who gain access to an auto-IRA initially interact with the program?
Source: Bc.edu, December 2018
Abstract: This 68-page report analyzes 403b plans in the Department of Labor 2015 Form 5500 Research File. The focus then shifts to nearly 4,000 audited 403b plans in the BrightScope Defined Contribution Plan Database, which have at least $1 million in plan assets and typically 100 participants or more.
Source: Ici.org, December 2018
Abstract: Working in collaboration with Hispanic civil rights and advocacy organization, the National Institute on Retirement Security has published a detailed analysis of the challenges facing Latino workers in the U.S. as they save and invest for retirement.
Source: Planadviser.com, December 2018
Abstract: Key Findings of this 12-page report include: DC plan withdrawal activity in the first half of 2018 remained low and was similar to the activity observed in the first half of 2017; The vast majority of DC plan participants continued contributing to their plans in 2018; Most DC plan participants stayed the course with their asset allocations as stock values generally rose during the first six months of the year; and, DC plan participants' loan activity was little changed at the end of June 2018.
Source: Ici.org, December 2018
Abstract: It is one of "the most significant labor market trends" in the United States, says Wellesley College researcher Courtney Coile. She's referring to big increases since the 1980s and 1990s in the share of older Americans in the labor force, including one in three men in their late 60s. Given the implications of this trend for retirement security -- the longer people work, the better off they'll be -- Coile and many other researchers have investigated what's driving it. They agree on several things that are changing the retirement calculation.
Source: Asppa.org, December 2018
Abstract: In an era when Americans are responsible for funding their own retirement through the 401k and similar plans, inherent risks are involved. Willis Towers Watson identifies several and offers solutions in its recent report.
Source: 401kspecialistmag.com, December 2018
Abstract: Voya has released new research that examines Americans' retirement preparation efforts. The results also identify ways that working with a financial advisor can help Americans make wiser, more-informed decisions. The transition into retirement involves various financial, emotional and social choices, and a financial advisor can act as a sounding board, helping his or her clients make pivotal decisions and setting them on the right path toward success.
Source: Voya.com, November 2018
Abstract: Student debt may play a large part in the finances of these young (and even not-so-young) employees. That's why a complete picture of employee financial wellness should consider it. In addition, carrying student debt may play a role in how much workers are saving for their eventual retirement. Both of these are good reasons for employers to take an interest in the impact of student debt on their workforce.
Source: Tra401k.com, November 2018
Abstract: This paper uses the National Retirement Risk Index to assess the retirement security of today's working-age households. The earnings and wealth gaps between whites and minorities are enormous. The question is how these disparities translate to retirement preparedness.
Source: Bc.edu, November 2018
Abstract: The survey results show a significant disconnect between employers and employees when it comes to saving for retirement. While 88 percent of employees think it's important to have retirement plans when choosing a new employer, just 67 percent of small business employers think it's important to have a retirement program for employees.
Source: 401khelpcenter.com, November 2018
Taxpayers Generally Comply With Annual Contribution Limits for 401k Plans; Additional Efforts Could Further Improve Compliance
Abstract: Analysis of IRS records showed that the vast majority of taxpayers are complying with tax laws designed to limit the annual amount of compensation that can be contributed to 401k retirement plans. Nonetheless, two areas in which compliance could be improved were identified: 1) some 401k plans did not prevent taxpayers from exceeding the annual limit, and 2) some taxpayers exceed annual limits when contributing to multiple 401k plans.
Source: Oversight.gov, November 2018
Abstract: The average 401k plan account balance of "consistent 401k participants" -- those who remained active in the same 401k plans from year-end 2010 through year-end 2016 --- more than doubled in that period, according to new data published by the Employee Benefit Research Institute.
Source: Ebri.org, November 2018
Abstract: Thirty-seven percent of retirees admit they did not consider how taxes would impact their retirement income, a Nationwide Retirement Institute survey found. As a result, the institute says, they may have lost the opportunity to save six years’ worth of income in retirement.
Source: Planadviser.com, November 2018
Abstract: Plans compare their returns by asset class to selected benchmarks that reflect their investment goals for the asset class. Plans pay fees to external asset managers with the expectation that the managers will exceed these benchmarks. As such, this paper focuses on the benchmarks to assess the role of fees. The question is whether higher fees help or hinder the ability for a plan to outperform its chosen benchmarks.
Source: Bc.edu, October 2018
Abstract: After two years of strong stock market returns, people are significantly more likely to say they are in excellent financial health and ahead of schedule in saving for retirement than they were in 2016. Despite this optimism, however, they also report significantly more stress, especially financially related stress, driven primarily by growing debt. Savings-related benefits like 401ks and health savings accounts help employees feel better about their financial well-being, but the data indicate many either do not fully understand the benefit or have overestimated their success using it.
Source: Lockton.com, October 2018
Abstract: A new report from Wells Fargo Institutional Retirement and Trust details the specific features of a well-designed 401k plan that are most effective in helping employees amass the savings they need to replace 80 percent of their income in retirement.
Source: 401khelpcenter.com, October 2018*
Abstract: This 44-page report draws on data about the behaviors of more than four million retirement plan eligible employees. This analysis, in conjunction with key findings from the behavioral finance field, provides useful guidance for how plan sponsors can be effective in helping their employees achieve a more successful retirement.
Source: Wellsfargomedia.com, October 2018
Abstract: How does our retirement plan compare to others? This is a common question when an organization evaluates key characteristics of its defined contribution retirement plan. Plan sponsors and their advisors often benchmark their plans against industry averages to see how they measure up. But, is that what they should strive for -- being average -- or should they aim higher?
Source: Russellinvestments.com, October 2018
Abstract: Recognizing the fact that November will mark the 40th anniversary of the legislation that paved the way for 401k plans, Charles Schwab conducted a survey of Baby Boomers' attitudes towards their 401k plans. Schwab notes that Boomers are the first generation to have access to a 401k plan for a majority of their career. Seventy-five percent of Boomers said they believe their 401k plan is in better shape now than ever before.
Source: Planadviser.com, October 2018
Abstract: Retirement clearly is not a priority for far too many young working adults. Large minorities of the 22- to 37-year-olds who responded to a recent LendEdu survey said their retirement saving every month amounts to less than they spend on various categories of consumer goods. Nearly half of them report they spend more on dining out than on retirement saving. Almost one in three spend more on alcohol or new clothes, and one in four spend more on streaming services such as Netflix and Spotify. What that indicates is that a lot of them aren't saving very much.
Source: Bc.edu, October 2018
Abstract: The DC plan market is increasingly dynamic with a variety of industry forces and innovations at play, and so, too, is the makeup of the DC advisor population. Findings from our newly released Retirement Plan Advisor TrendsTM report reveal important changes in the profile of financial advisors who are active in the DC space, affecting the business relationships these advisors have with plan providers and investment managers.
Source: Marketstrategies.com, October 2018
Abstract: If current employee savings trends continue, half of workers will need to wait for retirement until at least age 70 to be considered financially prepared, according to findings from The Real Deal: 2018 Retirement Income Adequacy study released by Aon.
Source: Aon.com, October 2018
Abstract: How workers will react to its next resurgence, specifically in retirement saving, is the subject of a new paper from three highly-regarded academics, Vanya Horneff, Raimond Maurer and Wharton's Olivia Mitchell.
Source: 401kspecialistmag.com, October 2018
Abstract: 51 percent of private industry workers had access to only defined contribution retirement plans through their employer. An additional 13 percent had access to both defined benefit and defined contribution retirement plans at their workplace, while 4 percent of private industry workers had access to only defined benefit retirement plans.
Source: Bls.gov, October 2018
Abstract: The defined contribution world is poised for change. It will take time -- $20 trillion systems aren't transformed overnight -- but don't let that fool you into underestimating just how big the change will be. This article reviews some of the themes to watch for.
Source: Pionline.com, October 2018