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More Plan Sponsors Meeting Members' Retirement Goals in 2021: Survey

A majority (72 percent) of plan sponsors believe their retirement savings plan is meeting its goals this year, up from roughly 66 percent in 2020, according to a new survey by Fidelity Investments Inc. While 68 percent said their employees are saving enough for retirement -- up from 59 percent in 2020 -- 86 percent believe at least some members are delaying retirement due to a savings shortfall and 60 percent believe the coronavirus pandemic has had an impact on employees' retirement decisions.

Source: Benefitscanada.com, July 2021

Limited Access Is Key to Retirement Saving Success

In a voluntary retirement savings system, it is important to provide limited pre-retirement access to retirement accumulations. In the United States, tax rules provide the framework for limited access.

Source: Ici.org, July 2021

The Value vs. Growth Debate and Its Impact on DC Plans and Participant Behaviors

This 6-page paper reviews notable differences between growth and value investing and evaluates the recent performance trends while providing historical context. It also explores how the recent outperformance of growth investing compared to value investing impacts defined contribution plans and plan participant behavior. Finally, it provides conceptual arguments that support the cases for growth and value investing on a forward-looking basis.

Source: Sageviewadvisory.com, July 2021

Data Find That Employer Contributions Are Widespread in 401k Plans

Employer contributions are prevalent in 401k plans, according to an updated study on 401k plans from BrightScope and the Investment Company Institute. The study found that in 2018, 87 percent of large 401k plans (typically those with 100 participants or more, as defined by the DOL) covering more than nine out of 10 401k participants had employer contributions.

Source: Ici.org, July 2021

Plan Checkup for Maximizing Outcomes

Plan Sponsors have a lot on their plates. Not only must they focus on providing competitive employee benefits, but also protecting themselves against potential litigation. For many, retirement plan responsibilities are among several competing corporate responsibilities, all rightfully demanding full attention. Plan committees must work efficiently and effectively to fulfill all of their plan responsibilities. Here are 12 suggested committee agenda items, which when carried out, can help mitigate fiduciary risks.

Source: Porteval.com, July 2021

Percentage of 401k Participants With Loans Dropping

At the end of the first quarter, about 14% of 401k participants had outstanding loans. The percentage fell steadily throughout last year after edging up to 16.3% in the year-ago period from 16.1% in the fourth quarter of 2019.

Source: Pionline.com, July 2021

401k Plan Investors Tilt Further Towards Equities

Average asset allocation in equities rose to 70.2% during June, the highest level in 20 years, though the proportion of new contributions going to equities remained at 69.2%.

Source: Plansponsor.com, July 2021

How Different Generations Define Retirement

There's the conventional way to define retirement: an objective age at which one can exit the workforce, begin collecting Social Security benefits, and have the ability to access retirement savings without penalties. But on the other hand, research has shown the psychology behind retirement to be much more complex. In a review of the literature, you can identify three general perspectives on retirement.

Source: Morningstar.com, July 2021

Top 10 Payroll Issues in 401k Plans

Payroll-related mistakes can not only be time-consuming and costly for a plan sponsor to correct, but they also may jeopardize a plan's compliance with IRS and DOL regulations. Depending on the severity and magnitude of the correction, it may be necessary to involve legal counsel to make a submission into one of the IRS's corrective programs. Here is a list of the top 10 payroll-related matters most commonly identified in 401k plan audits.

Source: Lindquistcpa.com, July 2021

Understanding the Importance of Commonality When It Comes to Retirement Advice

When looking for an advisor, Black and Hispanic Americans were asked if "working with an advisor who has had a similar upbringing or life experience as you" was an important criterion: 61 percent of Black respondents and 57 percent of Hispanic respondents, vs. 41 percent for White respondents, said this criterion was important. However, one cohort that expressed less interest in having an advisor with a similar upbringing or life experience was female workers, with 45 percent saying this was important.

Source: Ebriorg.wordpress.com, July 2021

Average 401k Continued Climbing in Q2

U.S. stock markets finished at, or near, record highs in the second quarter. Guess what that meant for the average 401k balance? The 401k's of older (age 55-64) workers with more than 20 years of tenure is now 10.4% higher year-to-date, while that of younger (25-34), less tenured (1-4 years) workers has increased 16.3%, according to estimates from the nonpartisan Employee Benefit Research Institute.

Source: Asppa.org, July 2021

The Obvious, if Overlooked, Retirement Crisis Solution

The retirement crisis is real. Most baby boomers have not saved enough. Fully 70% of baby boomers, which is 55 million people, have saved less than $300,000. But a recent SEC report on "Perspectives on Retirement Readiness" says the solution is not to increase investment risk, as has been the justification for target-date fund risk at the target retirement date. Rather, the solution is modifying behavior by encouraging beneficiaries to save more.

Source: 401kspecialistmag.com, July 2021

Is There Demand for Cryptocurrency in Retirement Portfolios?

Most people remain hesitant to invest in cryptocurrency in their DC plans, but a recent survey finds that there's a small "crypto-curious" contingent. With the increased attention of cryptocurrency, Stan Treger, a behavioral scientist at Morningstar, notes that analysts at the firm began to wonder if investors would welcome this asset into their retirement portfolios. As such, they posed this question as part of a larger, nationally representative survey of about 1,400 people conducted in May 2021.

Source: Napa-net.org, July 2021

401k Survey Shows Sharp Increase in Confidence and Demand for Financial Advice

Workers' confidence about achieving retirement goals has risen sharply since last year according to a new survey from Schwab Retirement Plan Services, and so has their appetite for financial advice. The annual nationwide survey of 401k plan participants finds that more than half (53%) say they are very likely to achieve their retirement goals, compared to 37% in 2020. On average, plan participants in 2021 believe they need to save $1.9 million for retirement, the same amount as in 2020. Ninety-one percent say their financial health is very good or pretty good.

Source: Businesswire.com, June 2021

How Does Your 401k Plan Stack up?

An annual 401k plan benchmarking report finds that the top five industries with the best 401k plans continue to outpace the competition in nearly all metrics. The results of Judy Diamond Associates' fifth annual 401k Plan Benchmark Report show that the top five industries with the best 401k plans in 2019.

Source: Napa-net.org, June 2021

Tackling Retirement Risks

Research reveals a remarkable uniformity in the personal risks that people deem important as they approach retirement. Nearly two-thirds of pre-retirees express concern about healthcare costs in retirement; nearly 60% are concerned about depleting their savings; and most place a priority on maintaining a reasonable standard of living. Retirees are also exposed to financial market risks. Two key market risks they may face are a sequence of returns risk and inflation risk. This 10-page paper first describes these four important risks. It then examines four strategies that may help you mitigate these risks.

Source: Bofaml.com, June 2021

Abandoned Retirement Savings: White Paper

Retirement savings abandonment is a rising concern connected to DC systems and default enrollment. Authors use tax data on Individual Retirement Accounts to establish that in 2017, 2.7% of 72.5-year-old account-holders in total abandoned $790 million; the median abandoned account held $5,400. Nearly all of these funds remain with plans and are not sent to state unclaimed property. Regression discontinuity estimates show that abandonment is 10 times higher in automatic rollover IRAs, a type of default account. They nest their findings in a model of retirement savings featuring forgetting to derive implications for passive and active savers.

Source: Ssrn.com, June 2021*

Moving the Needle on Defined Contribution Plans

Does your DC plan need a reset? Learn how plans sponsors can leverage three areas -- inclusion and diversity, plan purpose, and plan management -- to move the needle for their participants.

Source: Willistowerswatson.com, June 2021

2021 Retirement Confidence Survey: A Closer Look at Black and Hispanic Americans

The Retirement Confidence Survey was conducted for its 31st year in 2021 to measure attitudes of American workers and retirees about issues surrounding retirement. The 2021 RCS included an oversample of Black and Hispanic Americans to allow for a closer analysis of the challenges that they face in saving and preparing for retirement. New questions were added this year to explore the impact of the COVID-19 pandemic, evaluate priorities regarding preparing for retirement, and understand experiences with the financial system that may affect Black and Hispanic Americans' retirement preparations.

Source: Ebri.org, June 2021

Helping Sponsors Speak in the New Retirement Income Tongue

Ever hear of an annuity rollover service? What about a money-out report, cognitive risk, or global risk? To help retirement plan sponsors that are thinking of offering retirement income options get a better grasp of this new vernacular, the Defined Contribution Institutional Investor Association has issued a glossary of decumulation terms that will likely get sponsors' tongues wagging.

Source: Plansponsor.com, June 2021

The True Cost of Forgotten 401k Accounts

Experts have suspected that there are a large number of "forgotten" or "left-behind" 401k accounts in the US retirement savings system. These forgotten accounts represent retirement savings that have been left behind by people who have changed jobs or terminated employment. They're often referred to as "inactive" accounts by policy experts, and "stranded" or "orphaned" accounts by the media. This analysis illustrates how large and costly the forgotten 401k phenomenon is.

Source: Hicapitalize.com, June 2021

Overwhelming Demand From Workers, Employers, and Retirees for Retirement Income

A large majority of workers saving for retirement through their employers' 401k plans want options that will help them generate income in retirement, according to the fifth annual DC Pulse Survey from BlackRock. According to the survey, 89% of DC plan participants are interested in owning a product designed to generate retirement income, and almost 9 in 10 said having guaranteed income in retirement would have a positive impact on their financial well-being.

Source: Businesswire.com, June 2021

Study on 401k Participant Activity and Plan Design Released

T. Rowe Price released Reference Point, its annual 401k benchmarking report featuring year-over-year data and analysis on participant behavior and plan design. The report is based on the firm's full-service recordkeeping client data and this year, it features findings derived through the lens of the global pandemic. Key findings are reviewed.

Source: Prnewswire.com, June 2021

Common Factors Mark the Most Confident Retirees

During a recent webinar, Zahra Ebrahimi, a research associate at the Employee Benefit Research Institute, took a deep dive into her organization's latest white paper. As the title suggests, the analysis offers a close look at the spending patterns and financial behaviors of retirees living in the U.S., grouping them according to the level of financial stability and confidence each feels. The white paper placed retirees into five categories: average retirees, affluent retirees, comfortable retirees, struggling retirees, and just-getting-by retirees.

Source: Planadviser.com, June 2021

"Forgotten" 401k Accounts Amount to Nearly $1.35 Trillion in Assets: White Paper

The white paper explains how these "forgotten accounts" represent 401k savings that have been left behind by people who have changed jobs or terminated employment. According to the company's research, as of May 2021, there are an estimated 24.3 million forgotten 401k accounts in the U.S. By the end of 2021, the company estimates that number will rise to almost 25 million forgotten accounts, with each account holding an average balance of approximately $55,000 and representing nearly $1.35 trillion of assets in total.

Source: Businesswire.com, June 2021

Contributions to TDFs Fell As the Market Rebound Increased Assets

A Morningstar report has found retirement savers' contributions continued to suffer even as the markets rebounded from last year's volatility. The findings were reported in Morningstar's 2021 "Target-Date Strategy Landscape Report," which said flows into target-date funds and collective investment trusts sank to $52.3 billion last year, a 59% decline from the previous year.

Source: Plansponsor.com, May 2021

How to Prevent Retirement Plan Leakage

In a new report, the Congressional Joint Committee on Taxation estimates that 22% of net contributions to 401ks and other workplace retirement savings plans made by those 50 or younger in any given year are withdrawn early in the form of hardship withdrawals, loans, or cash-outs by people switching jobs. These pre-retirement withdrawals from retirement accounts are often referred to as "leakage." Educating participants about the importance of remaining committed to retirement savings and of the value of consolidating accounts is a good place to start, experts say.

Source: Planadviser.com, May 2021

Impact of COVID-19 on Pensions and Benefits in Canada

The COVID-19 pandemic has had significant implications for workplaces across the world. These implications extend into the realm of employee benefits, where employers and their workers must make difficult decisions regarding their retirement, health, and paid leave benefits. This International Foundation benchmarking survey captures a snapshot of current conditions.

Source: Ifebp.org, May 2021

Achieving Excellence Through a Retirement Plan Operational Review

The world of retirement plan administration can be summarized as good news, bad news, and some downright ugly news plan sponsors need to know. This 4-page paper outlines a path to excellence through a retirement plan operational review. Find out what an operational review is, the steps it entails, and the benefits of the process.

Source: Francisinvco.com, May 2021

Retirement Plan Fees Worsen Enterprise Risk

A new era of employee activism is underway in which plaintiff lawyers find fertile ground for litigation opportunities, catching many employers unprepared. The focal point of the growing number of such lawsuits is the compensation that employers arrange for payment to the vendors of services to the ERISA plans. Underestimating the economic and reputational risks related to deficiencies in the prudent management of ERISA plans threatens an entire enterprise.

Source: Rolandcriss.com, May 2021

The Benefits of Enacting a Plan Sponsor Philosophy

Overwhelmed by a lengthy to-do list, including the perpetual need to meet many ERISA regulatory obligations, plan fiduciaries often lose sight of the foundation for sponsoring a retirement plan: its purpose. Enacting a Plan Sponsor Philosophy is an effective way for committee members to remind themselves of this basic goal.

Source: Porteval.com, May 2021

Two Approaches to Benchmarking Plan Fees

Benchmarking retirement plan fees has become more complex in recent years, as it has moved beyond just scrutinizing recordkeeping and administrative fees. There are two ways sponsors can benchmark their fees. There is the traditional approach of doing an external benchmark by issuing an RFI or RFP. The other approach is to use information from a database of plan sponsors to compare fees paid.

Source: Plansponsor.com, May 2021

401k Plan Balances and Savings Rates Hit Record Highs

Through a combination of increased contributions and high investment returns, workers' retirement accounts bounced back from the early economic turmoil caused by the pandemic to reach historic levels, according to a new report by Alight Solutions.

Source: Alight.com, May 2021

Record Balances: DC Plan System Continues to Thrive

Fresh data shared this week by Principal and Fidelity shows defined contribution retirement plan balances have -- yet again -- reached record highs, but the data also underscores the need to improve access for more workers.

Source: Planadviser.com, May 2021

ESG Options in 401k Plans Could Lead to Higher Contribution Rates According to Survey

According to the Schroders 2021 Retirement Survey, 37% of DC plan participants said they are offered ESG-related investment options by their employer, while 40% said they did not know. Of those who were aware of their ESG options, 9 out of 10 said they invest in them. Further, of those who said their DC plan did not offer ESG investment options or did not know, 69% said they would or might increase their overall contribution rate if offered ESG options. Only 31% said they would not.

Source: Businesswire.com, May 2021

Examining Leakage From Retirement Savings Accounts

Pre-retirement withdrawals -- often referred to as "leakage" from retirement accounts -- are allowed under certain circumstances, subject to certain penalties or additional taxes. The Joint Committee on Taxation recently issued a report to Congress summarizing its efforts to better understand contributions to, and distributions from, retirement accounts, with a particular emphasis on distributions from retirement accounts to pre-retirement age individuals.

Source: Asppa.org, May 2021

Plan Sponsors Mostly Prefer Retirees Stay in Plan

A plurality of plan sponsors prefer that participants keep their DC plan balances in the plan after they retire, according to a new report by T. Rowe Price. Nearly 4 in 10 plan sponsors (39%) prefer that participants keep their DC assets in the plan after retirement, while only 17.8% prefer that participants exit the plan upon retirement.

Source: Napa-net.org, May 2021

The Holy Grail of DC: Income in Retirement

While retirement savings plans have undergone significant evolutions over the last four decades, they still fall short in providing workers with lifetime retirement security. A significant gap given DC plans are a primary source of most participant's retirement income. To better understand the current retirement-income landscape within the DC space, PGIM recently completed a survey of more than 130 plan sponsors that have at least one 401k plan and a minimum of $100 million in 401k assets.

Source: Pgim.com, April 2021

Higher Education Plan Sponsors Seeing More Demand for Participant Investment Help

A study on higher education retirement plans from Voya found 43% of plan sponsors say motivating employees to save adequately and invest wisely are top challenges to helping their employees prepare for retirement. Interestingly, a separate study from Transamerica found more than half (59%) of higher education institutions view motivating faculty and staff to save adequately for retirement as their greatest challenge in managing their retirement plan. Forty-seven percent said it was helping participants invest wisely.

Source: Plansponsor.com, April 2021

Despite Pandemic, Workers Remain Confident About Retirement

Despite the COVID-19 pandemic creating tremendous uncertainty in the labor and financial markets, the 2021 "Retirement Confidence Survey" found that 80% of retirees are confident in their ability to live comfortably throughout retirement, up from the 76% of retirees who held that view last year. Meanwhile, 72% of workers are confident in their ability to retire comfortably, up three percentage points from last year, according to the survey.

Source: Planadviser.com, April 2021

Confidence in Retirement Security Resilient in Face of Pandemic

Despite a global pandemic that created uncertainty in the employment and financial markets, the 2021 Retirement Confidence Survey found eight-in-ten retirees are confident in their ability to live comfortably throughout retirement, similar to the 76 percent of retirees who were confident when the survey was last fielded in March 2020. Workers also remain optimistic, with 72 percent of workers expressing confidence in their ability to retire comfortably, up three percentage points from last year.

Source: Ebri.org, April 2021

Millions Speed Up Retirement in Pandemic

More than 3.1 million Americans age 55 or older plan to apply for Social Security benefits earlier than they once thought because of the pandemic, according to the Census Bureau. That's offset by 1.4 million people in the same age group who anticipate working longer due to the impact of Covid-19, according to the bureau's latest Household Pulse survey conducted between March 3 and 15.

Source: Treasuryandrisk.com, April 2021

Reboot, Rewire, or Retire: The Future of Phased Retirement

The author writes, "About 50 years ago, I became interested in demographic patterns and their impacts on society. That led me a focus on distinct life cycle patterns and ways to gradually exit the labor force. First I took an employer perspective, but more recently I have taken the individual perspective. For the last 15 years, I have experienced phased retirement, continued my research, and talked to other people about their experiences."

Source: Pensionresearchcouncil.wharton.upenn.edu, April 2021

An Updated Look at 401k Participant Behaviors During the COVID-19 Crisis

When markets tumbled, volatility reached unprecedented levels, and interest rates hit record lows in early 2020, it made sense that investors may have questioned what they should be doing with their portfolios. But what did their behavior look like later in the year after the initial shock of the year's unexpected turmoil wore off?

Source: Morningstar.com, April 2021

Managed Accounts Help 401k Savers Prepare for Retirement: Cerulli

Managed account programs can be beneficial for some participants in 401ks and other defined contribution plans, most importantly for those approaching or already living in retirement, according to the latest Cerulli Edge.

Source: Thinkadvisor.com, April 2021

The Impact(s) of Automatic Enrollment

A new study finds that automatic enrollment not only triples the participation rate of new hires, but that over time the vast majority increase their deferral rates. The report from researchers at Vanguard, found that among new hires, participation rates triple to 91% under automatic enrollment, compared with 28% under voluntary enrollment. Over time, 9 in 10 participants increase their deferral rates, either automatically or on their own, and more than three-quarters of participants remain exclusively invested in the default investment fund.

Source: Asppa.org, March 2021

Longstanding Savings Gaps by Race, Ethnicity Persist

A new EBRI analysis of data taken from the Federal Reserve's Survey of Consumer Finances underscores the persistently and perniciously unequal distribution of retirement savings in the United States.

Source: Plansponsor.com, March 2021

Retirement Planning: What Women Do Right

Women, it seems, have the temperament and resolve to potentially manage their money more effectively than men, character traits that could help counter some of the significant financial headwinds against them as they seek to build a retirement nest egg. Indeed, amid the reality of lower earnings potential and longer life spans, studies reveal women may plan, earmark money for savings, and avoid costly knee-jerk reactions to stock market turbulence better than their male counterparts.

Source: Massmutual.com, March 2021

How Participants Weathered the Challenges of 2020

This John Hancock report looks at saving and investing behavior -- and progress toward retirement readiness -- over the course of an unprecedented year. Despite obstacles associated with the pandemic, participants held the line with their retirement savings.

Source: Johnhancock.com, March 2021

How Retirement Readiness Fared in 2020; Ideas for Improving

Despite one of the most challenging periods in recent memory, a new study finds that DC plans continued to perform their critical role in preparing workers for retirement. Throughout 2020, the majority of the more than 1.1 million participants in over 1,000 John Hancock open architecture DC plans lost relatively little ground in their efforts to save for a secure retirement, the firm notes in the "State of the Participant 2021."

Source: Asppa.org, March 2021

2021 Best in Class 401k Plans

For the seventh year, PLANSPONSOR has awarded its Best in Class 401k Plan designation. The Best in Class 401k Plans were rated by way of a proprietary system that weighted usage/implementation of more than 30 criteria related to plan design, oversight/governance, and participant outcomes. Also, because plans must requalify every five years to maintain their Best in Class status, the 26 plans honored in 2016 were likewise reviewed.

Source: Plansponsor.com, March 2021

Most Retirement Savers Don't Know How Their Money Is Invested

If knowledge is power, many retirement savers in America are feeling pretty powerless. Half of the people in their mid-40s to late 50s saving for retirement don't know how their money is divvied up between stocks, bonds, and cash, according to a survey released on Thursday by Schroders.

Source: Financial-Planning.com, March 2021

DC Plans Reign Among Individual Account Plans

A new study by the Employee Benefit Research Institute examining individual account retirement plans finds that defined contribution balances grew modestly between 2016 and 2019, but their prevalence is much higher than they were in 1992.

Source: Asppa.org, March 2021

Self-Directed 401k Balances up 13% Year-Over-Year

Self-directed participants who stood pat in the face of volatility and early 2020 market lows were rewarded with solid gains, according to the latest findings from Charles Schwab's SDBA Indicators Report.

Source: Asppa.org, March 2021

Consolidating Gains from a 401k Portability Program

When research performed eight years ago reveals that your 401k plan, by turning on portability and consolidation for all participants, has halved cashout leakage and dramatically reduced its small account problem, what do you do for an encore? Plenty, it turns out. In a follow-up to the 2013 study by Boston Research Group.

Source: 401kspecialistmag.com, March 2021

Managed Account Programs Help DC Participants Tackle Retirement Readiness

Some defined contribution participants, particularly those nearing or living in retirement, stand to benefit from the professional, personalized investment management and advice offered through a managed account program, according to the latest Cerulli Edge - U.S. Retirement Edition.

Source: Cerulli.com, March 2021

Study Finds Misplaced Concerns About COVID and Retirement

While there is a lot of discussion about how COVID-19 has affected retirement security, a new paper suggests that things could have been a lot worse. COVID could have worsened the picture for 401k plans if financial markets had collapsed, the recession had led to widespread withdrawals, or more employers had suspended their match. But these things did not happen, according to the report by the Center for Retirement Research at Boston College.

Source: Asppa.org, March 2021

Retirement Ages Geared to Life Expectancy

For most of the 20th century, life expectancy was on the rise. Yet older Americans were retiring at younger and younger ages. That changed in the 1990s. Life expectancy continued to rise, but retirement ages started increasing too. Given the change, Urban Institute researchers wondered whether the dramatic longevity gains experienced by the people who make it to their 50s and 60s could be counted as another reason for the delayed retirement trend. Their evidence suggests that growing lifespans are keeping men over age 55 in the labor force longer and postponing their retirement, particularly in areas with strong job markets and more opportunity.

Source: Bc.edu, March 2021

Over Half of Americans Surveyed Falsely Believe They Pay Low or No Fees to Manage their Retirement Accounts

Nearly three-quarters of Americans surveyed do not know how much they are required to pay in fees to manage their retirement accounts, according to a recent survey commissioned by investment management firm Rebalance. Over half of Americans surveyed (57%) falsely believe that they pay either no fees, or very low fees, to maintain their retirement investment accounts. Also, nearly one-quarter don't even know how much they pay in fees.

Source: Prnewswire.com, March 2021

Sponsors' Retirement Plan Priorities Shift Due to Pandemic

Callan surveyed plan sponsors and found that their priorities for their DC plans shifted considerably due to the pandemic. Sixty-nine percent of sponsors said they are now most interested in supporting their employees' immediate financial needs. In years past, employers' overriding priority has always been "aspirational goals for their total benefits or total rewards."

Source: Plansponsor.com, March 2021

Is Auto-Enrollment "Not Optimal"?

A recent industry trade article questions the efficacy of saving early for retirement and notes that there "may even be such a thing as saving too much." What launches that premise is a research paper titled "Is Automatic Enrollment Consistent with a Life Cycle Model?" That turns out to be a relatively fancy academic title for a simple concept: Does automatic enrollment make sense for younger adults?

Source: Asppa.org, March 2021

Women Outperform Men in Managing DC Plans: Morningstar

Women who are administrators of DC plans do a better job of managing than their male counterparts in key areas considered progressive practices by Morningstar. The research firm found that female administrators were more likely than their male counterparts to use auto-enrollment, offer default investments, and practice good governance according to ERISA guidelines.

Source: Pionline.com, March 2021

How to Effectively Measure Retirement Plan Success

According to Vestwell's "2020 Retirement Trends Report," plan advisers and sponsors use different metrics to determine the success of retirement plans. But it is important for plan sponsors to define plan goals and what they are going to measure, and the defined metrics should be things they can influence.

Source: Plansponsor.com, March 2021

Pandemic Forcing Many to Retire Earlier Than Anticipated

Allianz Life's 2021 "Retirement Risk Readiness Study" finds that the COVID-19 pandemic is having a detrimental impact on people's retirement, with 68% of those who have retired in 2021 saying they retired earlier than they had wanted to, up from 50% in 2020. Exactly one-third, 33%, said health care issues were the reason for their early retirement, up from 25% in 2020. However, only 22% said it was due to unexpected job loss, down from 34% in 2020.

Source: Planadviser.com, March 2021

Industry Group DCALTA Issues Operational Framework for Valuation of Alternative Assets in 401k Plans

Numerous studies have shown the inclusion of a diversified portfolio of private assets within a long-term focused, multi-asset fund option offered by DC plans can materially improve the retirement security of those participants. However, operational considerations, including daily valuation of private assets, have often limited the utilization of private assets in defined contribution plans. The industry group DCALTA (the Defined Contribution Alternatives Association) has published a practical framework to provide plan sponsors clarity on the implementation of daily valuation of private assets.

Source: Dcalta.org, February 2021

Seven Changes to 401k Plan Design Driven by Behavioral Finance

A new whitepaper from behavioral economist Dr. Shlomo Benartzi details some specific ways plan sponsors can help employees get back on track with retirement savings in light of the COVID-19 pandemic and associated economic crisis. In the new paper, Benartzi examines several retirement plan design considerations for employers that can significantly improve the financial security of American workers.

Source: 401kspecialistmag.com, February 2021

Fidelity: Retirement Balances Hit Record Levels in 2020

Despite ongoing economic uncertainty, Fidelity Investments reports today that individual contributions to all three retirement account platforms remained strong in Q4 2020, which helped boost average retirement account balances to record levels for the quarter. Fidelity's quarterly analysis of retirement savings trends includes account balances, contributions, and savings behaviors across more than 30 million 401k, 403b, and IRA retirement accounts.

Source: 401kspecialistmag.com, February 2021

Study Finds Misplaced Concerns About COVID and Retirement

While there has been a lot of discussion about how COVID-related economic shutdowns have affected retirement security, a new paper suggests that things could have been a lot worse. The shutdowns could have worsened the picture for 401k plans if financial markets had collapsed, the recession had led to widespread withdrawals, or more employers had suspended their match. But these things did not happen, according to the report by the Center for Retirement Research at Boston College.

Source: Napa-net.org, February 2021

Impacts of the SECURE Act on Annuities and Retirement Plans

The impact of the SECURE Act on annuities and retirement plans has been swift and strong. Implementation of the SECURE Act in January 2020 brought a flurry of annuity product launches. Meanwhile, investment risk driven by the global pandemic and persistently low-interest rates has spread uncertainty over future earnings for annuity issuers. Industry professionals predict annuities to rebound in 2021. And Annuity Monitor expects the response to the legislation to further take shape with more product offerings and customer incentives.

Source: Corporateinsight.com, February 2021

NEPC's 2020 Defined Contribution Plan and Fee Survey

NEPC's 15th annual Defined Contribution Plan and Fee Survey focuses on measuring financial success for DC plans and participants and benchmarking industry fees. As part of the 2020 survey, it explores how plan sponsors can improve their participants' financial success by using plan features to increase savings rates, professionalize investment decisions, and facilitate the distribution of assets at retirement.

Source: Nepc.com, February 2021

Auto-Enrollment, TDFs Continue DC Plan Domination

It's "business as usual" for defined contribution plans, according to NEPC's DC plan survey. The 15th annual Defined Contribution Plan & Fee Survey includes responses from 142 DC plans covering 1.8 million participants with $191 billion in aggregate assets. Average participation is at 82%, NEPC found, thanks to the steady adoption of automatic enrollment. Plans that utilize auto-enrollment have increased from 21% in 2005 to 64% in 2020. Meanwhile, 49% of plans have implemented automatic escalation. Participants are deferring an average 4%, with auto-escalation capping deferrals at 15%.

Source: 401kspecialistmag.com, February 2021

Four Big Trends in 401ks, Retirement Plans

Key trends in the retirement plan business were the subject of a recent webinar hosted by Vestwell, a digital retirement platform. Although looking at 401ks in particular, the group of industry experts saw ways the advisory industry will keep expanding and changing, especially in the retirement plan area.

Source: Thinkadvisor.com, February 2021

The ABCs of RFPs

One of the most important responsibilities of plan fiduciaries is hiring the right service providers. These providers must do competent-hopefully, superior- work for a fee that is reasonable to the services provided. The best way to fulfill this responsibility is by doing an RFP. Engaging in RFPs can help fiduciaries demonstrate that they haven't hired inappropriate or overly expensive plan providers if their choices are challenged.

Source: Cohenbuckmann.com, February 2021

Survey Finds Limited Use of Alternative and ESG Investments in DC Plans

New research from PGIM, conducted by Greenwich Associates, found that despite having the ability to bring more sophisticated investment options to plan participants at institutional pricing, most DC plan sponsors have chosen not to do so.

Source: Plansponsor.com, January 2021

2021 Hot Topics in Retirement and Financial Wellbeing

In early 2020, few people could have predicted that COVID-19 would have the everlasting societal impact that it has. Fortunately, despite market pressures, many employers remained steadfastly committed to helping their workers save and plan for retirement. This 32-page report shares the latest trends and changes in employer-sponsored defined benefit and defined contribution plans.

Source: Alight.com, January 2021

SDBAs Among 2021 Benefits Trends: Fidelity

More than 20% of workplace savings plans offer an SDBA along with their other benefits, according to Fidelity internal data. The number of employers that offer self-directed brokerage accounts is up three times over 2010, the company said.

Source: 401kspecialistmag.com, January 2021

Americans Need to Change Their Retirement Trajectory

There is a problem with the difference between Americans' current retirement trajectory and where they want to be when they actually get there. A new report from digital financial wellness platform Savology on the current state of personal finance in the U.S. shows Americans need to make changes to achieve the retirement they expect.

Source: 401kspecialistmag.com, January 2021

Poll Finds 60% Raided Retirement Accounts During Pandemic

While we've often seen studies showing that people have largely refrained from raiding their 401ks to help cover expenses during the COVID-19 pandemic, every now and then we hear differently. According to a new poll released Jan. 6, nearly 60% of Americans withdrew or borrowed money from an IRA or 401k during the pandemic, and nearly two-thirds (63%) used those retirement savings to cover basic living expenses.

Source: 401kspecialistmag.com, January 2021

Mutual Fund Revenue Sharing in 401k Plans

Recordkeepers in DC plans are often paid indirectly in the form of revenue sharing from third-party funds on the menu. We show that these arrangements affect the investment menu of 401k plans. Revenue-sharing funds are more likely to be added to the menu and are less likely to be deleted. Overall, revenue-sharing plans are more expensive as higher expense ratios are not offset by lower direct fees or by superior performance. Rebates increase with the market power of the recordkeeper suggesting that third-party funds may revenue share to gain access to retirement assets.

Source: Ssrn.com, December 2020

Another Record Year for Retirement Savings

PSCA's 63rd Annual Survey found record contribution and participation rates for the third year in a row. More employees had account balances in and contributed to, their plans than ever before, and employers contributed an average of 5.3% of gross annual pay to participants, the highest recorded to date. Plan participants contributed an average of 7.6% of pay in 2019, combined with the 5.3% of companies are pitching in gives an average savings rate of 12.9 percent in 2019.

Source: Psca.org, December 2020

Two Million US Workers Dipping Into 401ks for Cash Amid Pandemic

At least 2 million U.S. workers have tapped into their 401ks and retirement plans for funds amid the nearly yearlong coronavirus pandemic, according to the largest financial planning administrators. Fidelity, Empower Retirement, Vanguard, Alight Solutions, and Principal, reported more than 2.1 million Americans have pulled funds from retirement planning accounts since the economy took a hit due to the pandemic in March.

Source: Thehill.com, December 2020

Most 401k Plans Weathered 2020 Without Reducing Employer Contributions

In contrast to the response during the 2008-09 financial crisis, more than 90 percent of employers will make their retirement plan contributions this year, though smaller organizations are more likely to have suspended or reduced employer-matching contributions in the wake of the COVID-19 pandemic. Although the overall share of organizations that reduced 401k plan contributions were relatively small -- around 8 percent -- that still represented nearly 46,000 plans throughout the U.S.

Source: Shrm.org, December 2020

Nearly 46,000 Businesses Slashed 401k Contributions During Pandemic

Thousands of companies have cut funding they typically pay to 401k investors, due to the coronavirus pandemic, according to a new survey. About 8% of employers slashed their 401k contributions in recent months, according to the Plan Sponsor Council of America, a group that represents companies with workplace retirement plans. Another 1% are considering doing so.

Source: Cnbc.com, December 2020

Another Record Year for Retirement Savings

The Plan Sponsor Council of America's Annual Survey shows that 2019 was a banner year for retirement plans, and doubtless a valuable lifeline for many during the COVID-19 pandemic. For the third year in a row, the survey found record contribution and participation rates. 70% of plans use an investment advisor for the plan; one-third of plans offer investment advice to participants; and a quarter of participants with that access take advantage.

Source: Napa-net.org, December 2020

Plan Design Decisions Can Reduce Overconcentration in Company Stock

A recent analysis from Vanguard explores the gradual abandonment of company stock in DC plans. The Vanguard analysis found demographic characteristics such as age, income, education, job tenure, and nonretirement wealth, while statistically significant, are not strongly related to the percentage of company stock in a participant’s account balance. The researchers found plan sponsor design decisions have the strongest relationship to the proportion of participant holdings in employer stock.

Source: Plansponsor.com, December 2020

Employers Set Sights on Innovative 401k Plan Design Changes

To boost their plans' value and enhance their employees' overall financial wellbeing, U.S. employers are eyeing innovative features for their defined contribution plans, according to a new survey. A Willis Towers Watson plan sponsor survey found that two in three employers either have or are very interested in adding at least one innovative design feature to their plan.

Source: Napa-net.org, December 2020

Income Annuities Are "Best Solution for DC Plans": Cerulli

Annuitization products where an investor converts a lump sum to a guaranteed income stream in retirement are a "better solution for defined contribution plans," according to a recent issue of The Cerulli Edge. But 64% of respondents to Cerulli's 2020 Target-Date Manager Survey still cite lack of plan sponsor demand for guaranteed retirement solutions as an obstacle to adoption.

Source: Retirementincomejournal.com, December 2020

CITs Are Sweeping Through the Retail 401k Market

At the 2020 InvestmentNews RPA Convergence CIO Roundtable and Think Tank, Jamie Battmer, chief investment officer for Resources Investment Advisors, said collective investment trusts were gaining so much momentum that "40 Act funds [in 401k plans] are going the way of checkbooks." There are many compelling reasons for this rather swift transformation in the retail 401k market. There are also still many questions about collective investment trusts, or CITs, but none of them seem to be show killers.

Source: Investmentnews.com (registration may be required), December 2020

401ks Warming to Rainy Day Savings, Student Loan Features

The majority of defined-contribution plan sponsors are interested in adding features that would help employees build emergency savings and pay down student loans, according to new data just published.

Source: Investmentnews.com (registration may be required), December 2020

Half of Americans With Incomes Over $100,000 Think They'll Never Be Able to Retire

Nearly every household with an income of $100,000 or more saves for retirement, but only half of them (49%) believe they will ever be able to retire. These findings were part of the "2020 Financial Insights" study of 2,000 U.S. adults 40-65 years of age with an annual household income of at least $100,000.

Source: Edelmanfinancialengines.com, December 2020

Congressional Research Service Examines Access to, and Participation in, Employer-Sponsored Plans

While a strong majority of employers provide access to a plan, that doesn't necessarily spell participation rates that match, says the Congressional Research Service. In a new report, the CRS provides data on the percentage of U.S. workers who can and do participate in employer-sponsored pension plans, which the report defines as both defined benefit and defined contribution plans.

Source: Asppa.org, December 2020

Exposing Excessive Fee Litigation

This 24-page white paper explores the problems with the recent surge in excessive fee litigation. Plaintiff law firms have flooded the federal courts with cookie-cutter ERISA class action litigation against defined contribution plans. The copy-cat lawsuits -- now nearly 200 in number with over 90 filed in 2020 alone -- attack retirement plan investment options that are commonplace and longstanding. The paper suggests four systemic reforms needed to restore a fair and uniform fiduciary standard of care.

Source: Euclidspecialty.com, December 2020

New 403b Survey Finds Signs of Strength, Concern

The vast majority (83.6%) of non-profit organizations with 403b plans are not changing their contribution levels despite the financial pressures of the COVID-19 pandemic, according to a new Plan Sponsor Council of America snapshot survey. While the vast majority of organizations are not planning on changing their employer contribution levels this year, nearly a third of higher education institutions say they either have -- or will by year-end -- reduced or suspend contributions to their 403b plans.

Source: Napa-net.org, December 2020

Student Debt Cuts Into Retirement Savings for All Age Groups

Even though interest rates are lower, overall student debt has soared during the pandemic, regardless of a borrower's age or occupation. Some 44 million Americans now owe an estimated $1.67 trillion in student debt. The spiraling amounts of debt are having a serious impact on every generation's retirement outlook. A substantial majority (80%) report that student debt is cutting into their ability to save adequately for retirement.

Source: Investopedia.com, November 2020

Retirement Savers Undeterred by COVID-19 Economic Downturn

Americans overwhelmingly continued saving for retirement through DC plans during the first three quarters of 2020, undeterred by the economic downturn brought about by the COVID-19 pandemic, according to ICI. The study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans at the end of September 2020. This study also tracks coronavirus-related distributions among plan participants to provide insight into financial activity related to the pandemic.

Source: Ici.org, November 2020

DC Plan Participants' Activities, First Three Quarters of 2020

This 20-page report covered DC plan participants' activities in the first nine months of 2020. In this period, stock prices declined sharply before recovering. Preliminary data indicate that the commitment to contribution activity continued at the high rate observed in the first nine months of other years. Most DC plan participants stayed the course with their asset allocations despite high stock market volatility at the end of the first quarter of 2020. DC plan participants' loan activity edged down in the third quarter of 2020, perhaps partly reflecting the use of CRDs instead of loans.

Source: Ici.org, November 2020

Emergency Savings = Better Retirement?

Of all the statistics about financial anxiety, one of the most alarming is that 41% of Americans in 2017 reported that they would be unable to meet an unexpected $400 expense without borrowing or selling a personal item. Alarming, yes, but what does that have to do with retirement? A great deal. There are two ways a financial emergency can undermine retirement and why plan sponsors may want to consider taking action.

Source: Blackrock.com, November 2020

2020 DC Consultant Study: Retirement Environment

T. Rowe Price, in partnership with Schaus Group, completed a survey of the nation's 20 leading defined contribution consulting firms, representing over 5,500 plan sponsor clients and $3.9T of assets under advisement. The objective was to understand the view of DC consultants related to retirement and DC matters driving their business, market trends, and plan sponsor decisions.

Source: Troweprice.com, November 2020

What's Next? The Post-Election Future of Employee Benefits Policy (Retirement Policy Edition)

Retirement policy has experienced more bipartisanship than most areas of legislative activity and that is likely to continue. However, a Democratic White House, despite a Republican-controlled Senate, improves the prospects for consideration of many Democratic priorities. A Biden administration will also mean a shift in the regulatory agenda. This is a 16-page detailed summary of the probable impact of a Biden presidency on retirement policy.

Source: Americanbenefitscouncil.org, November 2020

Should You Establish a Retirement Plan Governance Committee?

Retirement plan governance is the system through which key decisions are made about strategy and operations, including plan design, administration, and investment choices. Typically, at the core of plan governance is an official plan governance committee. Although the DOL and IRS do not require a plan to have a plan governance committee, it is considered a best practice to have one.

Source: Orba.com, November 2020

How the Coronavirus Is Affecting Retirement Saving

The coronavirus pandemic has caused upheavals in the markets, the workplace, and the home. What will be the effects on retirement savings? The coronavirus pandemic is exacerbating an already troubling societal retirement saving shortfall as workers look to long-term retirement savings to solve short-term financial problems.

Source: Troweprice.com, October 2020

White Paper: A Retirement Dashboard for the United States

Because most workers change jobs (and hence retirement plans) multiple times during their career, developing a comprehensive picture of one's retirement preparations can be challenging. Other countries have developed national, online retirement "dashboards." These are websites that not only include a registry or tracking system but also offer expanded functions such as recovering and consolidating lost accounts, projecting estimated future income, expanding financial literacy, and providing unbiased financial advice to users. This paper discusses the possibilities for a retirement dashboard for the United States.

Source: Brookings.edu, October 2020

Most Boomer Investors Are Confident About Their Retirement Despite Pandemic and Market Uncertainties

Amidst a global pandemic, economic uncertainties, and an election looming, Boomers invested for retirement are confident that they will still enjoy their golden years. According to the Charles Schwab 2020 Modern Retirement Survey, more than 80 percent of both those who have retired and those who are soon-to-retire are satisfied or confident their lifestyle will be everything that they envision.

Source: Businesswire.com, October 2020

The Evolving DC Landscape: The Expanding Role of OCIOs

New research from PGIM sheds light on the use of outsourced chief investment officers by defined contribution plan sponsors. In a divergence of opinion, OCIOs seem to underweight their expertise in implementing institutional-quality structures, indicating that the top reasons for being hired by their clients were the perceived mitigation of fiduciary risk and the plan sponsors' lack of resources.

Source: Pgim.com, October 2020

Regular Contributions Help Participants Reach Higher 401k Account Balances

Consistent retirement plan participants, or those who had retirement plan accounts at the end of each year from 2010 to 2018, are generating steady savings in their account balances, according to a study from the Employee Benefit Research Institute.

Source: Plansponsor.com, October 2020

Report: What Does Consistent Participation in 401k Plans Generate?

This paper provides an update of a longitudinal analysis of 401k plan participants drawn from the EBRI/ICI 401k database. A few key insights emerge from looking at the 1.9 million consistent participants in the EBRI/ICI 401k database over the eight years from year-end 2010 to year-end 2018.

Source: Ebri.org, October 2020

Combined 401k Plan and IRA Balances by Age and Time

Owning both a 401k plan and an individual retirement account leads to larger balances, but missed opportunities to contribute and leakage reduce those balances. One-page report.

Source: Ebri.org, September 2020

Women's Retirement Confidence Has Ebbed Since Start of Pandemic

Nearly a quarter, 24%, of women who are working or who have recently lost their job say their confidence in their ability to retire comfortably has declined amid the pandemic, according to "Women and Retirement: Risks and Realities Amid COVID-19," a report by the Transamerica Center for Retirement Studies. A mere 17% of women say they are very confident they will be able to fully retire with a comfortable lifestyle.

Source: Planadviser.com, September 2020

Workers Need Help on Retirement Income

Roughly 33% of retirement plan participants are not sure how long their retirement savings will last, according to Charles Schwab's "2020 401k Participant Survey" of 1,000 currently employed 401k plan participants. This uncertainty jumps to 40% for women, compared with only 25% of men. Half said they would benefit from financial advice.

Source: Planadviser.com, September 2020


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