Nevin's Data "Points"

Our industry has long disparaged the apparent “overindulgence” 1 of participants in the stock of their employer as a retirement investment. However, for plan fiduciaries – and those who advise them – there may be a more pressing concern. Anyone who has been paying attention to 401(k) plan litigation these past several years knows that a common trigger – perhaps the most common trigger – for litigation is the presence of company stock in the plan; more specifically, the presence of company stock that has sharply declined in value. In fact, these days no sooner does some big earnings surprise or unanticipated business calamity make the headlines than the plaintiffs’ bar is out “trolling” for potential clients. And let’s face it, a 401(k) plan is a class action litigant’s dream – potentially thousands of similarly situated and comparably injured plaintiffs in one place (so to speak).   But if the instances of litigation have been numerous, the odds of success –...

A recent headline screamed that 401(k) savings rates have “stagnated” – but that’s missing the point. Several of them, actually. “Stagnated” in this case apparently means that the average savings rate in 2018 — both employee and employer contributions — was 10.6%, roughly the same as the 10.4% rate reported in the survey in 2004. The point seems to be that, despite roughly a decade of automatic enrollment and other plan design enhancements, Americans aren’t saving any more. That’s a perfectly obvious point to draw from those two datapoints – in this case from the recent 2019 How America Saves report from Vanguard which, while it only covers plans recordkept by Vanguard, the experience of 1,900 plans and 5 million participants in the survey always provides some interesting insights. First a couple of basics; what do you suppose the odds are that we have the same plans (and participants) in the 2004 and 2019 surveys? Exactly. So, while it may not be apples to or...

The headline in a recent  New York Times  piece cautions that “Confusing Options May Be Coming to Your 401(k). It Could Cost You.” Those “confusing options”? Retirement income. And, ironically, they might undermine support for the most significant piece of pro-retirement legislation in a decade. In fairness, the article  begins by acknowledging to its readers that there might soon be some “welcome changes to the rules governing their retirement savings plans,” but quickly moves on to take to task the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 , which not only brings with it those welcome changes, but a key element that has some consumer advocates all atwitter (literally) – a fiduciary safe harbor for the selection of a lifetime income provider. For years the retirement industry has bemoaned the lack of a lifetime income option in defined contribution plans. Indeed, for all the vaunted talk of the so-called “DB-ificat...

Life has many lessons to teach us, some more painful than others – and some we’d just as soon be spared. But as graduates everywhere look ahead to the next chapter in their lives, it seems a good time to reflect on some lessons learned along the way. It’s handy to know at least a little about sports and the weather. Paying the minimum due on your credit cards is dumb. Be willing to take all the blame – and to share the credit. Know that there actually  are  stupid questions. Try not to be the one asking them. Shun those who are cruel to others – and don’t laugh at their “jokes” – sooner or later, you’ll be a target. Never say you’ll never. “Bad” people eventually get what’s coming to them, though you may not be around to see it. Always sleep on big decisions. When it seems too good to be true, it’s generally not good nor true.  Never let your schooling stand in the way of your education. Sometimes the grass on the othe...

Whether you are a Game of Thrones aficionado – or haven’t watched a single episode – there are lessons to be learned nonetheless. Last week I recounted some fiduciary admonitions from the HBO series. Turns out there are words of wisdom for individual retirement savers as well. Check these out. “When you play the game of thrones, you win or you die. There is no middle ground.” All the way back in Season 1, Cersei Lannister explained what has certainly been a theme for the series as a whole. That said, retirement isn’t a game of thrones, nor is it precisely a “win or die” scenario. We all die, eventually of course (no “wights” here), but there are those who “win,” at least if you consider those who have sufficient resources to fund retirement as “winning.” The non-partisan Employee Benefit Research Institute (EBRI) has previously  found  that current levels of Social Security benefits, coupled with at least 30 years of 401(k) savings eligibility,...