Nevin's Data "Points"

. Call me old-fashioned, but at a time when it seems like everyone is advocating “automatic” solutions to get participants to do the right thing(s) about saving for retirement, I can’t help but wonder at the irony of participation solutions that don’t require a “participant” to participate. In the second in a series, IMHO offers another non-automatic alternative to help involve and engage participants. As always, I would appreciate your reactions, comments, and suggestions. (2) More is Less – Put that Fund Menu on a Diet Remember the first time you walked into Starbucks looking for coffee? Well, I do – and I was awfully glad that the line was so long that I had a chance to try and figure out something to order without sounding like a total idiot. I’m sure you’ve seen those studies about participant choice and inertia – the studies about how people given 24 jellies to choose from chose to buy none, while those with a mere six flavors were significantly more likely to actually buy one...

. Call me old-fashioned, but at a time when it seems like everyone is advocating “automatic” solutions to get participants to do the right thing(s) about saving for retirement, I can’t help but wonder at the irony of participation solutions that don’t require a “participant” to participate. For the next several weeks, IMHO will focus on some non-automatic alternatives. As always, I would appreciate your reactions, comments, and suggestions: (1) Make employees fill out and return their enrollment forms. There was a time when participants’ contributing to a retirement plan was a means of enhancing a retirement that was primarily funded by a traditional pension plan and Social Security – a time when the so-called three-legged stool of retirement security actually had three legs. Now, of course, things are different, and while savings remains – and should remain - a voluntary action, there is no reason that we have to let employees simply ignore the option. And yet, in many – if not most...

Many in the provider community appear to have given up on participants, and you see study after study purporting to document the futility of the cause. Studies that show employees don’t participate when they could, studies that show that participants don’t save enough when they participate – that show that they don’t invest “properly” when they do participate – that they don’t know a bond fund from a bond issue. In fact, as an industry we’ve become so convinced that participants can’t do it properly – or at least have no interest in doing it properly – that we have crafted a whole set of solutions that require no participant involvement whatsoever, other than to provide the funding. There is a point to be drawn from these studies, of course, and there clearly is a challenge looming, even if we once thought that all we had to do was conduct a few enrollment meetings, hand out several hundred thousand prospectuses, and provide a Web site link to turn participants into savvy and enthusi...

' On Friday, the Government Accountability Office, or GAO, issued a report reflecting its analysis of cash balance plans and their impact on worker pensions. Before turning to the results of that report, we should start with some basic points of understanding. Simply stated, cash balance programs are widely described as “hybrid” benefit plans – technically a defined benefit plan, but with many of the characteristics of defined contribution plans. Like DB plans, they are typically employer-funded and insured by the Pension Benefit Guaranty Corporation (PBGC). They are like DC plans in that the benefit is a function of interest credited to your account each year, there is generally a regular statement of your account, and there is a lump sum payment option. The GAO report acknowledged, “CB plans may provide more understandable benefits and larger accruals to workers earlier in their careers, advantages that may be appealing to a mobile workforce.” However, most of the controversy aro...