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Retirement Assets Held Steady in Third Quarter

Despite a number of challenges, total U.S. retirement assets were down only slightly at the end of the third quarter of 2021, according to new data from the Investment Company Institute.

Source: Asppa.org, January 2022

Auto-Enrollment Retirement Plans in OregonSaves

This new study looks at the impact of the first state-sponsored auto-IRA program on those who previously lacked access to a plan. It analyzes participation choices, inflow and outflow data between August 2018 and April 2020, and the evolution of account balances.

Source: Umich.edu, January 2022

More Employers Put 401k Savings on Autopilot

Employers are increasingly putting retirement savings on autopilot for their workers. About 62% of businesses with a 401k plan used automatic enrollment in 2020, up from 60% the year prior and 46% a decade ago, according to the Plan Sponsor Council of America, a trade group. Auto-enrollment leverages worker behavior (inertia, in this case) to their advantage. Workers receive a paper or digital notification ahead of time and can opt out, but most do not.

Source: Cnbc.com, January 2022

Employers Adding Roth 401k Option at a Fast Clip

The share of employers allowing Roth 401k savings has surged, giving more workers access to the financial benefits that accompany such contributions. But there are some roadblocks to employee use, such as automatic enrollment and the structure of 401k matching contributions.

Source: Cnbc.com, January 2022

Increasing DC Plan Default Deferral Rates a Better Driver of Higher Savings

A new research paper suggests that defined contribution plan sponsors should focus on increasing the default savings rate to help boost participants' retirement savings for new employees rather than increasing employer matching contributions.

Source: Plansponsor.com, December 2021

White Paper: Top Considerations for DC Plans in 2022

The memories of the last two years serve as motivation to focus efforts on the continued improvement of the financial stability and retirement preparedness of DC plan participants. Mercer believes that an approach with flexibility and participants at the center is key for plan sponsors who wish to have a resilient retirement strategy for 2022 and beyond. Here are five themes to consider as you plan for 2022.

Source: Mercer.us, December 2021

Most Common 401k Default Deferral Rate No Longer 3%

Perhaps the most interesting finding in the recently released 64th Annual Survey from the Plan Sponsor Council of America is that 3% is no longer the most common default deferral rate for automatically enrolled 401k plan participants. For the first time, 6% is now the most common deferral rate.

Source: 401kspecialistmag.com, December 2021

A Visual Depiction of the Shift From DB to DC Plans in the Private Sector

This 3-page report from the Congressional Research Service illustrates the shift from defined benefit plans to defined contribution plans that has taken place in the last 40 years.

Source: Congress.gov, December 2021

Total U.S. Retirement Assets Dip Slightly in Q3

Total U.S. retirement assets were $37.4 trillion as of September 30, 2021, down 0.5% from June 30, 2021, according to the Investment Company Institute's latest Quarterly Retirement Market Data report.

Source: 401kspecialistmag.com, December 2021

Measuring DC Plan Success Requires Going Beyond Common Metrics

Greater engagement and education from plan sponsors and recordkeepers are key, but better insights into employees' retirement readiness require being able to access a greater range of participant data points, including information about personal savings and assets outside of participants' DC plans, according to retirement planning professionals.

Source: Plansponsor.com, December 2021

DC Specialists and Their Value to Plan Sponsors

A recent Voya survey was developed to help DC specialists better understand the needs of their clients and prospects while giving plan sponsors a chance to voice their hopes and concerns. It found that plan sponsors are paying more attention to the value DC specialists bring to the table, including increased attention to plan design review.

Source: Plansponsor.com, December 2021

Retirement Plans Are Looking More SECURE

A record number of employees are eligible for and participating in 401k plans, and employers are increasing their default deferral limits in the wake of the SECURE Act, the Plan Sponsor Council of America has found. Several factors shaped the 2020 retirement plan year.

Source: Napa-net.org, December 2021

Would 401k Participants Use a Social Security "Bridge" Option?

Although annuities would ensure higher levels of lifetime income, reduce the likelihood that people will outlive their resources, and alleviate some of the anxiety associated with post-retirement investing, the market for annuity products is minuscule. To address this, employers could increase the availability of lifetime income by adopting a Social Security "bridge" strategy within their 401k plans. The bridge option would use 401k assets to pay retirees an amount equivalent to their Social Security benefits so they can postpone claiming benefits, thereby increasing their monthly payment when they do eventually claim. This paper gauges workers' potential interest in a bridge option.

Source: Bc.edu, December 2021

Real Estate Investments Increasing in DC Plans

A new report suggests defined contribution plan investors have grown more sophisticated in their knowledge of the real estate asset class and many are looking closer at asset-level and manager performance.

Source: Plansponsor.com, December 2021

CITs, Retirement Income Products and ESG Investing Poised for Growth

As registered investment adviser aggregator firms continue to acquire smaller players in the defined contribution space, investment managers are starting to take notice of their growing influence in deciding DC plan investments, a recent study suggests. There has been a shift in distribution dynamics as many RIA firms look to centralize their investment analysis and research.

Source: Plansponsor.com, December 2021

TCRS Study Suggests Substantial Retirement Risks Remain

While most U.S. workers say they are saving for retirement through employer-sponsored plans or other means, a much smaller percentage say they are "very confident" they will be able to retire fully and comfortably. According to findings on the retirement outlook of U.S. Workers from the Transamerica Center for Retirement Studies, more than four out of five workers (82%) say they are saving for retirement through their current employer's 401k or similar plan and/or outside of work.

Source: Napa-net.org, December 2021

Worker Participation in Employer-Sponsored Pensions: Data in Brief

This 7-page report provides data on the percentage of U.S. workers who have access to and who participate in employer-sponsored pension plans. The data are from the National Compensation Survey, conducted by the Bureau of Labor Statistics.

Source: Congress.gov, November 2021

The 2022 Retirement Landscape Takes Shape

The widening retirement savings gap, improving financial wellness, and adjusting to lower return expectations are three themes shaping the U.S. retirement landscape going into 2022. A new study shows the events of the past two years have either accelerated these themes or shined a spotlight on them, and the response of individual savers, employers, and those that advise them are evolving as well.

Source: Planadviser.com, November 2021

CITs Continue Taking Over in 401ks, but the Change Isn't Always Easy

Investment providers launched just one target-date mutual fund series in the U.S. in 2020, while six pulled the plug on them, marking the second year in a row that the number of products on the market went down. Behind that trend, according to data from Cerulli Associates, is the rise of collective investment trusts, or CITs. The products, which are sponsored by banks or trust companies, function similarly to their mutual fund corollaries but don't have the same reporting requirements.

Source: Investmentnews.com (registration may be required), November 2021

Three Themes Shaping the 2022 Retirement Landscape

In its inaugural U.S. Retirement Market Outlook, T. Rowe Price offers insights on the major themes professionals at the firm expect to shape the retirement landscape in 2022. According to the paper, given the impact of the significant global events over the past two years, the three themes that the firm sees for next year are reviewed here.

Source: Napa-net.org, November 2021

2021 Best Practices Conference: Benchmarking Investments and Fees

During the final session of PLANSPONSOR's virtual 2021 Best Practices Conference, experts talked about the mechanics of benchmarking plan investments and fees, what to look for when benchmarking, and where to get help. Plan sponsors should consider two necessary elements when benchmarking investments. Meanwhile, whether fees need to be benchmarked depends on how they are paid.

Source: Plansponsor.com, November 2021

Pandemic Weakens Women's Retirement Security

Women have taken a disproportionate hit on retirement savings and financial well-being, says Transamerica report, which could have lingering repercussions.

Source: 401kspecialistmag.com, November 2021

Shining a Light on What Participants Want

Fintech has broad acceptance among younger people. As digital natives, younger generations are more open to digital-first ways of managing their finances. Results from the 2021 PLANSPONSOR Participant Survey indicate that 87% of respondents age 23 to 29 reported using some sort of fintech, and that percentage also holds for the 30 to 39 age demographic. The number drops to 75% for the 40 to 49 age group and 58% for 50- to 59-year-olds. The survey also suggests that the use of fintech correlates with participants' engagement with their plans.

Source: Planadviser.com, October 2021

The "Defensive" 401k Plan

While ERISA litigation has proliferated in recent years, the Supreme Court has pointed plan sponsors toward a way to help control plan disputes. The Roberts Court's ERISA jurisprudence has re-awakened the idea that one of ERISA's key tenets is that a plan's written terms matter. In other words, if plan sponsors want to reduce their exposure to litigation, one way to do so is by adding certain plan terms that mitigate risk. This column identifies some ways in which plan sponsors can amend plan language to manage and/or mitigate exposure to claims for benefits and other ERISA claims.

Source: Jenner.com, October 2021

Unanimous Support Seen for Workplace Retirement Plans

With anxiety running high about not having enough saved for retirement, a new survey finds that virtually all respondents want help saving for retirement while they are working. AARP's survey of 1,000 registered voters aged 25 or older reveals that 99.7% of respondents agree about the importance of being able to save for retirement through their paychecks. AARP notes that the views are similar regardless of political affiliation, income, or gender.

Source: Napa-net.org, October 2021

Only 31% of Hispanic Workers Participate in a Workplace Retirement Plan

While they're one of the fastest-growing population demographics in the country, Hispanic workers face major challenges in allocating enough money to retirement savings compared with other groups. In the report "A Closer Look Into The Finances of Hispanic American Households," behavioral researchers at Morningstar dug into the underlying causes of the lower savings rates for this group.

Source: Planadviser.com, October 2021

Surprising Findings on 401k Participant Student Loan Debt

Nearly one-in-three Baby Boomer and Gen-X 401k plan participants who have student loan debt also have outstanding 401k loans, a much higher percentage than Millennials or Gen Z participants. The research also shows Gen-Z joining the ranks of workers increasingly burdened by debt, entering adulthood with $27,900 in student debt on average. But notably, Boomers hold more than twice as much debt as these younger borrowers.

Source: 401kspecialistmag.com, October 2021

Changes in 401k Plan Asset Allocation Among Consistent Participants, 2010-2018

This paper provides an update of a longitudinal analysis of plan participants drawn from the EBRI/ICI 401k database. It examines how asset allocations change over the years within the accounts of consistent participants, that is, those who maintained accounts in each year from 2010 through 2018.

Source: Ebri.org, October 2021

Study Reveals That Americans Are Shifting Retirement Due to Pandemic

New research from Northwestern Mutual shows that Covid-19 has changed many Americans' retirement plans, with over one-third (35%) saying it has either moved up or pushed back their target retirement age. Almost a quarter (24%) plan to retire later than previously expected while 11% plan to retire earlier.

Source: Prnewswire.com, October 2021

Managed Accounts and TDFs Better Together Than Apart, Research

For years plan sponsors and consultants have compared the outcomes of managed accounts and target-date funds within workplace retirement plans. The thinking was that plan sponsors and consultants should choose one or the other to offer retirement plan participants. New research and analysis from Empower Institute show that managed accounts and target-date funds instead complement each other and together can improve investors' retirement savings outcomes.

Source: Empower-retirement.com, October 2021

Department of Labor Teases Cryptocurrency Interest

Hinting that the DOL is currently working on guidance related to cryptocurrency, the Acting Assistant Secretary for the DOL's Employee Benefits Security Administration recently commented that the DOL finds the prospect of cryptocurrency investments in 401k plan lineups "troubling." This may be a sign of DOL focus on the increasing frequency of ERISA plan investments in cryptocurrency vehicles, including funds with cryptocurrency exposures.

Source: Morganlewis.com, October 2021

Addressing Racial Inequities in Retirement Savings

Lower 401k contribution rates by Black employees are often overlooked. The latest survey, conducted in December 2020 among 2,104 U.S. adults with $50,000 or more in household income, found that historical disparities remain pronounced, even when excluding low-paid workers. HR leaders need to take a broad look at what they can do to help employees save, bearing in mind the challenges faced by members of historically disadvantaged communities.

Source: Shrm.org, September 2021

Cumulative Benefits of Retirement Income Solutions in Our DC System

This 13-page paper seeks to summarize the primary benefits of in-plan income solutions and will break down the benefits by participants, sponsors, and the societal benefit of enhanced retirement security achieved through the adoption of guaranteed income options within our DC system.

Source: Iricouncil.org, September 2021

How DC Plan Defaults Can Evolve to Improve American Retirement Security

From auto-enrollment to auto-escalation to auto-income. This is a 14-page paper on the evolving solutions available to sponsors, addressing fiduciary and portability concerns, and next steps for plan sponsors, recordkeepers, insurers, and consultants.

Source: Iricouncil.org, September 2021

Recordkeepers Planning to Amp Up Cyber Staff

In response to an increased threat of retirement account fraud, nearly a third of recordkeepers expect to boost their cybersecurity staff going forward, a new report from Cerulli finds. Even though plan providers have always been subject to cyberattacks, this is an issue that has become more acute in recent years, particularly during the remote work environment when many employees are working on less secure home networks and personal devices during the pandemic.

Source: Napa-net.org, September 2021

How Retirement Concerns Vary Among Ethnicities

A new study finds distinct differences among ethnicities regarding how they view their retirement risks and worries, as well as their interest in getting help from a financial professional. According to Allianz Life's 2021 Retirement Risk Readiness Study, the majority of Americans who identify as “BIPOC” -- black, indigenous, and people of color, including Hispanic and Asian Americans) -- believe they won't have enough saved for retirement (52% black, 56% Hispanic, and 62% Asian).

Source: Napa-net.org, September 2021

Five Plan Committee Missteps

There is frequently a difference between doing what the law requires and doing everything that you could do as a plan fiduciary. That said, there are things that plan fiduciaries must do, and things that, while not required, can keep the plan, and plan fiduciaries out of trouble. Here are five of those latter things.

Source: Napa-net.org, September 2021

ERISA and the Challenges of Using ESG in Retirement Plan Investing

It can be helpful for employers and retirement plan fiduciaries to understand the ERISA issues created by using ESG criteria in selecting and managing retirement plan investments, including why this remains an area of changing legal standards, especially in the last few years. This 2-page piece looks at the issues.

Source: Morganlewis.com, September 2021

Six Things Employers Need to Know Before Offering Cryptocurrency in 401ks

Cryptocurrencies are currently one of the hottest topics in the world and for good reason. Bitcoin's fluctuations over the past year have some employees and retirees asking to include cryptocurrencies in their employer-sponsored 401k retirement plans. The potential for negative valuation swings, on the other hand, has others saying they might be too risky for retirement savings. This Insight will provide six key considerations for Plan sponsors before considering including a cryptocurrency option in your retirement plans.

Source: Fisherphillips.com, September 2021

Exploring the Process of Adding an Income Solution to Your Retirement Plan

The author provide plan sponsors with a foundation from which to approach the fulfillment of fiduciary duties and confidently select an appropriate product to add as a retirement income solution to their plans.

Source: Iricouncil.org, September 2021

The Impact of 401k Cash-Outs on Retirement Income

Due to the power of compound interest, seemingly small amounts that leak from 401k accounts when people change jobs can cause major erosion to retirement nest eggs down the line. Fortunately, new and innovative ideas, such as auto portability, can help curb this leakage and preserve retirement assets. This paper seeks to examine what people do with their 401k balances when they leave an employer and looks at the demographics of people who roll in balances to their new employers.

Source: Alight.com, September 2021

What Participants Want From Employers' Retirement Plan Websites

More employers have been using retirement plan participant websites as a means of communication and education than they did in the past. A recent study found 81% of participants have logged into their accounts, with most signing in to check account balances or review investment options. Research finds that using certain strategies can make websites even more appealing to participants.

Source: Plansponsor.com, September 2021

CIT's Role in the Retirement Space

The expanding retirement industry means plan sponsors will want to diversify their investment options and look to their asset managers to meet the need. Asset managers should take note of plan sponsors' need for more efficient and affordable ways to diversify their investment options. Part of that involves looking to the products that can help. Collective investment trusts are a natural choice for multiple reasons.

Source: Northerntrust.com, September 2021

Analyzing the BrightScope DC Plan Data in the Context of Excessive Fee Lawsuits

The annual report provides insights into plan design and trends and represents the most comprehensive data available to understand defined contribution plan fees. BrightScope has an express disclaimer that its report is for general information on fees and is not intended for benchmarking the costs of specific plans. But plaintiff lawyers often ignore this disclaimer and cite the report to support their excessive fee claims, and thus it is important to analyze the BrightScope data to evaluate how your plan compares. This article documents the significant trends and statistics in the BrightScope report.

Source: Euclidspecialty.com, September 2021

Most Retirement Plan Savers Aren't Tapping Their Accounts Despite Pandemic

Americans continued to save for retirement through DC plans during the first half of this year despite ongoing economic stresses brought about by the COVID-19 pandemic, according to ICI's "Defined Contribution Plan Participants' Activities, First Half 2021." 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 June 2021.

Source: Ici.org, September 2021

401k Plan Sponsors See Value in Using a Single Recordkeeper

Plan sponsors using a single recordkeeper to manage multiple retirement plans see better overall time savings and fewer administrative drawbacks when compared to sponsors using multiple providers. That's a key finding from a survey released today by Principal Financial Group, which also revealed that respondents with one provider also reported higher rates of employee satisfaction and engagement with retirement benefits.

Source: 401kspecialistmag.com, September 2021

When Fiduciaries Fail

Reports are plentiful of employers trapped in legal proceedings for violating their trusted role as the overseer of their employees' retirement plans. Until recently, we only heard rumors of suspected lethargy among the overseers. But the frequency and number of failed leadership allegations among them on social media, in the 24-hour broadcast news cycle, and print media tends to taint the reputations of all employers in the public eye. Wisdom calls for a change in fiduciary behavior.

Source: Rolandcriss.com, September 2021

Plan Sponsors Should Eliminate Jargon in Their Communications

An Empower white paper makes the case that retirement plan sponsors and advisers should use simpler language in retirement plan communications, finding that participants are more likely to act on their retirement plans if they receive direct language. The report, conducted with research from the Harris Poll, stresses the importance of simplicity in communications, explaining that financial terms such as "deferral" and "allocation" can scare employees away from participating in a plan.

Source: Plansponsor.com, September 2021

How Universal Access and a Refundable Saver's Tax Credit Can Transform Retirement Savings

Expanding access to retirement savings options would give low- and moderate-income workers the opportunity to generate meaningful savings by the end of their careers. By beginning to save and starting sooner, private-sector workers can take advantage of compounding interest investment returns. That, especially if supplemented by other incentives such as a refundable Saver's Tax Credit, would result in significantly improved retirement income outcomes compared to workers who begin saving later in their careers.

Source: Georgetown.edu, August 2021

Rising 401k Contribution Rates, Fewer Plan Loans, Show a Return to Normal

The average annual 401k savings rate for plan participants reached a new high of 9.3 percent of workers' earnings this year, according to new research. Fidelity's analysis, released in August and based on 23,600 Fidelity-administered corporate defined contribution plans as of June 30, 2021, showed workers starting to feel more stability and a sense of normalcy, compared with the results of participant surveys Fidelity conducted last year.

Source: Shrm.org, August 2021

40% of 401k Participants Say Fees a Mystery, GAO Reports

Almost 40% of 401k plan participants do not fully understand the fees they are paying, a Government Accountability Office report released Thursday found. Moreover, 41% of participants incorrectly believe that they do not pay any 401k plan fees, according to the report.

Source: Pionline.com, August 2021

Whitepaper: Portfolio Allocation, Income and Spending in Retirement

How do people manage their income and spending in retirement? How do they adjust their asset allocation as they transition into retirement? Certainly, there is survey data on the subject and much-informed speculation. Yet the full picture -- based on empirical evidence that shows how people actually behave -- has remained elusive. No longer. Drawing on an Employee Benefit Research Institute database of more than 23 million 401k and IRA accounts, and JPMorgan Chase data for around 62 million households, authors studied 31,000 people as they approached and entered retirement between 2013 and 2018.

Source: Jpmorgan.com, August 2021

Employee Financial Stress Costs Companies Nearly $5B a Week

While employees struggled with their finances during the COVID-19 pandemic, a recent survey finds that the financial impact on organizations is even greater. According to results from BrightPlan's annual Wellness Barometer Survey, financially stressed employees reported an average of 15.3 hours of reduced productivity and engagement each week, leading to an estimated $4.7 billion loss per week for employers due to worsening employee financial health.

Source: Napa-net.org, August 2021

Here's How to Spur More DC Plan Participant Logins

Last year, the DOL established an e-delivery rule allowing plan sponsors to communicate retirement plan information electronically. But is there more that can be done to get participants to log in more often? A recent Cogent Syndicated study from Escalent provides some answers.

Source: Ntsa-net.org, August 2021

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