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Small Plans, Large Plans

7/29/2013

According to the latest annual DC Recordkeeping Survey from PlanSponsor Magazine, the overwhelming majority of plans have under $1 million in assets. In fact, there are more than half a million plans of this size, more than all the other categories combined. That being said, there are only about 6.3 million participants in this category, compared to 23.1 million participants in plans with more than $1 billion in assets. The under $1 million category is comprised of $127 billion in plan assets; by contrast, the over $1 billion category has $1.9 trillion. In terms of plan assets, the top 10 providers are:

Fidelity
TIAA-CREF
Aon Hewitt
Vanguard
ING U.S. Retirement
Prudential Retirement
Great-West Financial
Wells Fargo
JPMorgan Retirement Plan Services
Principal Financial Group

The data was culled from responses to a survey by 68 leading retirement services providers.

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Apple iOS Leads DC Participant Mobile Access

7/17/2013

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Clearing skies through the clouds

It's almost hard to imagine that over a decade ago, Apple was a struggling company. In the retirement industry and throughout financial services as a whole, Windows-based PCs were the dominant technology. The Palm Pilot and then Blackberry were the mobile tools of choice. In 2013, Apple is now one of the leading companies in the world, led in large part by its mobile products - first the iPod, then the iPhone, and more recently the iPad. With cloud computing at the forefront, people pretty much can have access to information anytime, anywhere. The incredible popularity of the iPhone and iPad has worked its way into the retirement industry. Apple's iOS operating system is the platform of choice for large numbers of defined contribution (DC) participants, followed by Google's Android platform.

According to PlanSponsor Magazine's annual DC Recordkeeping Survey, 38.6% of mobile phone access is via iOS, followed by Android at 30.0%, and Blackberry at 17.1%, and Windows at 14.3%. For tablets, iOS again leads the way, this time at 30.0%, followed by Android at 25.7%. Windows and Blackberry are tied at 11.4%. The survey notes that 80% of DC recordkeepers have a mobile product, with 86% of those having a mobile-optimized participant website. This includes 48% offering an iPhone app and 41% offering an Android app. A minute 5% of DC providers offer mobile access to plan sponsors.

The format might change as research and development leads to new technologies and new devices. The convenience and portability of access to information undoubtedly will continue to be a fundamental part of our everyday lives.

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Cautious Optimism for Retirement Savings

7/8/2013

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Aon Hewitt has released a report analyzing trends among 141 defined contribution (DC) plans it services, comprised of 3.5 million eligible employees. According to 2013 Universe Benchmarks: Measuring Employee Savings and Investment Behavior in Defined Contribution Plans, participation rates are at an all-time high and savings have improved slightly. Automated features have played an important part in improving savings, and account balances have reached pre-recession levels.
Items of note from the survey include:

The participation rate is 78.0%, about two percentage points higher than last year.
72.5% of participants save at or above the company match threshold.
The participation rate for those subject to automatic enrollment is 81.4%; it is only 63.5% for those not subject to auto-enrollment.
The average account balance is $81,240, compared to $57,150 in 2008.
Average allocation to company stock is 13.4%, down very significantly from 41.8% in 2002.

While there have been improvements, Aon Hewitt notes that the job is not done. The report recommends that plan sponsors should (1) leverage the full potential of automated features, (2) offer participants a variety of investment advisory solutions, (3) reduce plan leakage and develop new ways to reach employees, such as by allowing plan loans to be repaid from personal accounts after employment ends, as payroll deduction is no longer possible, and (4) develop new ways to reach employees in light of the new technologies.

While Aon Hewitt's study tends to focus on the large plan market, its findings are very instructive as it is an ongoing challenge to help individuals save for retirement. It would appear that for many the desire to save for retirement is there and the importance of doing so is understood. Competing financial pressures often stand in the way. Narrowing the gap between the desire to save and the ability to do so ideally will help improve the retirement expectations of a large part of the population.

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Small Plans, Large Plans

Apple iOS Leads DC Participant Mobile Access

Cautious Optimism for Retirement Savings

Blog Author - Ken Felsher

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