Nevin's Data "Points"

I recently ran across a survey that claimed 7 in 10 DC plan sponsors were “taking steps” to solve the retirement income challenge… but that looks to have been “aspirational.” While the survey’s [i] intro cautioned that there was more to be done, that struck me as a remarkably high (and reassuring) finding, though it didn’t mesh with my sense of the world at present. Sure enough, turns out, there is apparently a retirement income “journey”—one that apparently has several stages—all of which were (apparently) classified as “steps.” Those included: 34% – INITIAL (my emphasis, their wording) stages of learning about retirement income approaches 14% – in the process of better understanding participants’ retirement income needs 8% – in the process of evaluating specific retirement income solutions/products 7% – implementing/implemented a retirement income solution/product Indeed, the survey goes on to comment that another 8% have evaluated these type solutions, and decided not ...

Could lifetime income disclosures undermine retirement savings? Over the past several years, a growing amount of attention has been focused on the decumulations of defined contribution plan balances in retirement – and a sense that the emphasis on account growth, and account balances, glosses over the reality that at some point in the future those savings will need to be turned into a retirement paycheck. Enter the SECURE Act, which among its numerous retirement-related provisions added the new “lifetime income disclosure” requirements  to ERISA’s benefit statement rules. It applies to individual account plan benefit statements and the lifetime income disclosure must be provided in one benefit statement during each 12-month period. Simply stated, the new law requires that the participant’s total accrued benefit be expressed as a “lifetime income stream” in the form of a single life annuity and a qualified joint and survivor annuity, assuming the participant has a ...

A recent report suggests that participants are “clueless” about decumulation. And who can blame them? Actually, the issue is perhaps more basic than a decumulation strategy. The report  – by Cerulli Associates – based that conclusion on a survey that merely asked 401(k) investors who were at least 45 what they planned to do with those savings when they retired. In response, a quarter said they didn’t know, and another quarter said they planned to consult with an advisor – an alternative that Cerulli characterized as “a marginally more prepared version” of the same response. I’ve long noted that while workers love pensions, they hate (or are at least ambivalent about) annuities – and while there’s a bit of hyperbole there, at least as things stand today, writ large, plan sponsors still seem to be keeping retirement income options at arm’s length  – and by that I mean outside the plan’s distribution options. Participant interest and takeup is even less enthusias...