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6/18/2014 0 Comments

Participants on Steady Course

Vanguard for over a decade has been providing valuable data on retirement plan participant trends, based on its own client base. The latest edition, How America Saves 2014: A Report on Vanguard 2013 Defined Contribution Plan Data, for the most part shows steady progress. A few of the highlights:
  • The 2013 median account balance was $31,396, while the average was $101,650. Since 2008, both the median and average account balances have improved by about 80%, mostly reflecting the market rebound. For continuous participants over the 2008-2013 stretch, the median improved by 182%.
  • There has been significant growth in the use of professionally managed investments. In 2008, some 22% of participants used a single target-date or balanced fund, or a managed account advisory service. This rose to 40% in 2013. For those joining the plan in 2013, three out of four opted for the single, professionally managed option.
  • 60% of new participants in 2013 were enrolled via automatic enrollment. Virtually all auto-enrollment plans chose a balanced investment strategy (98%), with 90% using a target-date fund as the default.
  • Loan activity was relatively flat.
  • For participants who could have taken a distribution in 2013, 85% left the assets in the employer's plan or rolled them over to an IRA.

What we see from the Vanguard data is a growing, strong preference by many participants for assistance in getting them to a better place in saving for retirement. Most participants recognize that they are not financial experts. The professionally managed  and auto-enrollment data would appear to reconfirm that as well.

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8/29/2013 0 Comments

Healthcare Industry Retirement Plans Adjust to Changes; Older Employees Take to Web

Recent legislation and a flurry of merger & acquisition (M&A) activity have led to dynamic changes in the healthcare industry. The Affordable Care Act (ACA) is resulting in many healthcare employers reexamining their organizational structures and operations. The related pharmaceutical industry similarly has seen significant M&A momentum. Fidelity has released a report, Defining Excellence: Plan Design and Retirement Readiness in the Not-For-Profit Healthcare Industry, that focuses on the challenges faced by these plan sponsors. Data was gathered from 600+ plans serviced by Fidelity, representing about 2 million participants and $72 billion in plan assets. One particularly interesting trend reported by Fidelity is that as employee tenure increases, the gap in participation levels tends to narrow between those in plans with automatic enrollment (AE) and those in plans without AE. While this result is somewhat to be expected as few tend to opt out of participating in their employer's plan, what is notable is that the gap never fully closes, even for employees with 25+ years with their employer. In AE plans, the participation rate hovers within four percentage points on either side of 80%, regardless of tenure. By contrast, in non-AE plans, the participation rate for employees with one to three years of tenure is only 35%. This does improve to 70% for those with 25+ years, but still falls short of the 84% for those in AE plans with a similar tenure.

Surfing Boomers. Another interesting finding in the Fidelity study is that across all age groups except those 70+, participants preferred engaging with their plan through Fidelity's participant website than via phone. The level is very consistent for those in their 30's through those in their 60's, with a slight uptick as one approaches age 65. WIth the continued growth of the smartphone and tablet markets, it would appear that access through a portal will remain strong for the foreseeable future.

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10/1/2012 0 Comments

Labor Department Updates Participation Stats

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The Bureau of Labor Statistics has released its latest update on the degree of access to and participation in retirement plans by private industry workers. As of March 2012, 65% of private industry workers had access and 48% participated. Access and participation are significantly higher for professional and managerial employees as compared to those in the service industries. Similar trends are found for union vs. non-union members, full-time vs. part-time, higher-paid vs. lower-paid, and large companies vs. small companies.The attached chart and its related data are from the BLS website at http://www.bls.gov/opub/ted/2012/ted_20120921.htm

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8/20/2012 0 Comments

Report says more people working in retirement 

The Society of Actuaries (SOA) has released a new report, Key Findings and Issues: Working in Retirement, focused on its 2011 Risks and Process of Retirement study. Among the key findings:
  • The transition from employed to retired status is now more of a progression than a sudden change.
  • The maturing of the Baby Boomer population is creating increasingly important societal and financial challenges.
  • 35% of retirees do not think they will retire, and that is primarily due to financial reasons (45%)
  • There is a significant gap between when pre-retirees expect to retire and when actual retirees did, in fact retire (i.e., half of retirees retired before age 60 while only about one in ten expected to do so).
  • Involuntary retirement and health issues often are the leading reasons for not continuing in the workforce.
  • Many individuals do not understand the economic benefits of delaying retirement.
  • For pre-retirees, continuing to receive health coverage from one's employer is the main advantage in delaying retirement. 

The July 2012 Working in Retirement report is available on SOA's website at http://www.soa.org/files/research/projects/research-key-finding-working-retire.pdf
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8/13/2012 0 Comments

GAO Report Highlights Women's Retirement Security Challenges

The Government Accountability Office has released a 96-page report, Retirement Security: Women Still Face Challenges. The GAO notes that while women's access to and participation in retirement plans has improved over the past decade relative to men, women contributed to their DC plans at lower levels than did men. For those women in or near retirement, divorce, widowhood, or unemployment tended to have an adverse effect on retirement income security. The full report is available on the GAO's website at http://www.gao.gov/assets/600/592726.pdf.
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    Blog Author - Ken Felsher

    With over 25 years of writing, editing, and research experience. I enjoy sharing with my readers my love of working with content on a variety of subjects.

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    Categories

    All 401(k) 402(g) Boomers Catch-up DB Dc Deferral Limit Defined Benefit Defined Contribution ERISA Healthcare Participation Pension Professionally Managed RCS Retirement Retirement Confidence Tax Code Vanguard Women Working

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