Nevin's Data "Points"

Our view during Super Bowl XLVII. There are some things in life that have to be experienced first-hand. Several years back, my daughter won an all-expenses-paid trip to the Super Bowl for two – and, to my delight, she chose to invite me to go with her. Now, I’m sure some of you have been to a Super Bowl, but it was my first (and, considering ticket prices, I’m guessing my last). And while I’m sure the view from the comfort of home and a big screen TV offered a “better” view of Beyonce’s halftime show, there are things (and people) you see when you are at the event that don’t make a TV producer’s selection (particularly when you happen to be at the Super Bowl where the field lights went out for 34 minutes). Let’s face it, it’s one thing to say you watched the Super Bowl – and something else altogether to say you were there! You wouldn’t know it from the headlines, but there’s actually a lot going on here in our nation’s capital. Like a smoldering ember, in no ...

Rarely a week goes by that a headline, survey or academic paper doesn’t proclaim the reality of a retirement crisis with the certainty generally reserved for topics like the existence of gravity, or the notion that the sun will rise in the east. And certainly based on the data cited, there would seem to be a compelling case that trouble lies ahead for many. That said – as was pointed out by Andrew Biggs at the recent Plan Sponsor Council of America conference – the reality is that good, reliable data is hard to come by. Indeed, many of the reports cited in those headlines rely on what you would expect to be a reliable source; the Census Bureau’s Current Population Survey, or CPS. 1 Unfortunately, that reliable source turns out to be not-quite-so-reliable. It suffers from relying on what people tell the survey takers, but perhaps more significantly, Biggs, resident scholar at the American Enterprise Institute, pointed out that the survey only counts as income in r...

Pundits have long worried that retirees wouldn’t have accumulated enough to live on in retirement, but the data suggests that most retirees aren’t exactly burning through their retirement savings. I remember my one and only conversation with my father about retirement income. He had already decided to quit working, and had gathered his assorted papers regarding his savings, insurance, etc. for me to review. Determined to “dazzle” Dad with my years of accumulated financial acumen, I proceeded to outline an impressive array of options that offered different degrees of security and opportunities for growth, the pros and cons of annuities, and how best to integrate it all with his Social Security. And when I was all done, he looked over all the materials I had spread out before him, then turned to me and said – “so how much will I have to live on each month?” See, my dad, like many in his generation, were accustomed to living within their means. And, according to new ...

It is a question that has puzzled philosophers and scientists for centuries: which came first – the chicken or the egg? Similarly, an updated version of a classic survey of retirement confidence finds some interesting attributes among those who are more confident about their prospects – but are those attributes a result of that confidence, or is it the confidence that preceded them? The 28th annual Retirement Confidence Survey (RCS) from the non-partisan Employee Benefit Research Institute (EBRI) and Greenwald Associates found that Americans are feeling a bit better about their retirement prospects. However, the RCS also found  – as it has in previous years – that certain factors are tied to higher confidence, specifically if they have access to a defined contribution plan, are relatively free from debt, are already retired – or, in a new finding from this year’s RCS – that they are healthy. Now, the connection between access to a retirement plan and saving...

My schedule – and aversion to crowds – means that I rarely see a new movie the first weekend it comes out (a rare exception – Avengers: Infinity War this weekend). While this means that there are times when I’m the only one in the office the following Monday who hasn’t seen the latest blockbuster (and thus can’t offer an opinion), more often than not, it’s also spared me the time, money (and potential aggravation) of rushing out to see a movie that is more likely to be up for a “Razzie” than an Oscar. However, I’ve also found myself in situations where the hype surrounding a new blockbuster is so compelling that it builds up my expectations beyond the reality – leaving me… underwhelmed. Doubtless that was the sense of many in reading the Best Interest Regulation proposal published by the Securities and Exchange Commission last week. Those who had hoped that a uniform fiduciary standard might emerge were surely disappointed, as were those who might have antic...

Much remains unsettled – and, as yet, largely unadjudicated – in the large, and growing series of excessive fee litigation directed at university 403(b) plans. However, certain trends in the litigation have emerged – some very different than 401(k)s, others not. Here’s what to look (out) for. The list of these so-called university 403(b) suits – the first were filed in August 2016 – now includes plans  at Cornell University, Northwestern University, Columbia University and the University of Southern California, as well as Yale. Meanwhile, some of the earlier suits are just getting to hearings on motions to dismiss, specifically Emory University  and Duke University – both of which are currently proceeding to trial – and the University of Pennsylvania , which recently prevailed in a similar case. Another – involving Princeton University’s 403(b) plans – is on hold awaiting an appeal in the University of Pennsylvania litigation. By my reckoning, here are the grounds upon w...

Nevin and his mom. This weekend will mark the 12th anniversary of my father’s passing. There’s sadness associated with that date, of course, but he left behind a rich legacy in friends, family, and his life’s ministry that manages in the oddest ways to touch me at least once a month, even now. At 76, Dad lived longer than I think any of the men on his side of the family had to that point (as a lineal descendant, I’m happy to note that on my mother’s side, my grandfather and great-grandfather made it past 90). Ultimately, he was with us longer than he expected to be – but a lot less time than I ever anticipated. However, for all the good that Dad did in this life for others, as I have thought about my father this week, it’s my mother that is more often in my thoughts. Because she, like many women, have spent longer in retirement than their husbands. As is the case in many families, “Mom” was our family’ CFO. She was the one who encouraged me to start saving in my ...

The title of a new report by the Society of Actuaries poses an intriguing question: “Retirement Adequacy in the United States: Should We Be Concerned?” When all is said and done, the answer from the report’s authors seems to be “it depends.” And, as it turns out, it depends on a lot of things: who is asking the question, who you are asking the question about, and what you think the answer should be. And that doesn’t even take into account the questions about the assumptions one makes to come up with the answers. The SOA report draws some conclusions: The current system of voluntary employment-based retirement plans has been largely successful from the perspective of companies sponsoring plans for individuals with long-term employment covered by such plans. The mandatory Social Security system has done much to reduce poverty in old age, though adequacy studies using replacement ratios may overstate the success of this safety net for those in the lowest-income grou...

While it’s hardly a new topic, the subject of missing participants is much in the news today – and arguably a growing concern for plan sponsors, particularly with the expansion of automatic enrollment. Earlier this year the Government Accountability Office published a report – and some recommendations – on the subject of (re)connecting participants with their “lost” account balances. That report noted that from 2004 through 2013, more than 25 million participants in workplace plans separated from an employer and left at least one retirement account behind, “despite efforts of sponsors and regulators to help participants manage their accounts.” The report acknowledged that there are costs involved in searching for these “lost” participants, going on to note that there are no standard practices for the frequency or method of conducting searches. Once upon a time the IRS provided letter-forwarding services to help locate missing plan participants, but with the Aug. 31...

There’s a new proposal being floated that proponents say would “increase retirement income security and reform Social Security.” And yes, a mandate is involved. The proposal involves something tagged “Supplemental Transition Accounts for Retirement” (a.k.a. “START”), and it’s being touted by AARP. The proposal is the work of Jason Fichtner of George Mason University, Bill Gale of the Brookings Institute and Gary Koening of AARP’s Public Policy Institute. The basic concept is to help people postpone claiming Social Security benefits (the most common age to start claiming remains 62) since – as an executive summary  of the proposal indicates – between the ages of 62 and 70, monthly Social Security benefits increase by about 7% to 8% for each one-year delay in claiming. This is accomplished by creating the aforementioned START accounts, which are funded by a new layer of mandated withholding: 1% each from workers and employers (2% combined) up to the annual max...

The Plan Sponsor Council of America recently released its 60th Annual Survey of Profit-Sharing and 401(k) Plans , documenting increases in participation, deferral rates, target-date funds, automatic enrollment and advisor hiring, among other key trends. Here are five key trends highlighted in the survey that you may have missed. Automatic enrollment is still (mostly) a large plan thing. One of the most celebrated plan design features of the 401(k) era is automatic enrollment. Nearly as old as the 401(k) itself, once upon a time (when it wasn’t as popular) it was called a “negative election.” Regardless of the name, the concept has been extraordinarily effective at not only getting, but keeping, workers saving via their workplace retirement plans. However, adoption of the design, after a surge in the wake of the passage of the Pension Protection Act of 2006, now seems to have plateaued. A decade ago, only about a third (35.6%) of respondents to the PSCA su...

About a year ago, I was asked by an advisor if we had ever written anything about the potential pitfalls of hiring a relative as a plan advisor. We hadn’t, as it turns out, in no small part because some things just seem (painfully) obvious to me – but it resulted in a column  that, as I tried to point out at the time, was applicable to more than just familial relations. In recent weeks I have received similar requests: one from an advisor looking for something on the hazards of “tying” bank business to providing services to a retirement plan, and another looking for validation of the wisdom of using a qualified 401(k) advisor on a plan rather than a part-timer. Now, as someone who has been involved with ERISA and its fiduciary strictures his entire professional life, the responses to these questions are nearly self-evident. But let’s face it: Many, perhaps most, plan fiduciaries haven’t had that much exposure. Before making a decision to hire an advisor – or fo...

A recent Alliance Bernstein survey found that plan sponsors’ awareness of their fiduciary role, much less the responsibility, has deteriorated significantly in recent years. In fact, their survey found that less than half of plan sponsors knew they were fiduciaries. Here are, in my estimation, the three biggest mistakes fiduciaries make. Not knowing they are fiduciaries. As noted above, a significant – and apparently growing – number of individuals who are, in fact, plan fiduciaries are oblivious to that reality. The reasons for that are varied, though the Alliance Bernstein survey  suggests that knowledge gap is wider among those who serve on a plan committee than with those who have primary responsibility for the plan. Of course, fiduciary status is based on one’s responsibilities with the plan, not a title. Simply stated, if you have discretion in administering and managing the plan, or if you control the plan’s assets (such as choosing the investment options...

It has been heartening in recent weeks  to see a number of employers announce plans to expand and increase benefit programs, offer bonuses, and increase the employer match. Better still, a recent survey  indicates that more positive changes could lie ahead. A decade ago , the headlines were filled with stories about a number of large firms announcing that they were cutting, and in some cases eliminating altogether, the employer match. While the vast majority of employers didn’t reduce those matches, it was nonetheless a stark reminder that those defined contributions are “defined” annually, not in perpetuity. The Match Matters There are a number of things that we know about the importance of the employer match; there’s the obvious (though sometimes glossed over) impact that an employer contribution means in terms of retirement security in simple dollars, for one thing. Indeed, the nonpartisan Employee Benefit Research Institute (EBRI) has estimated th...

Will your portfolio soar with the Eagles, or get pummeled by the Patriots? That’s what adherents of the so-called Super Bowl Theory would likely conclude. The Super Bowl Theory holds that when a team from the old National Football League wins the Super Bowl, the S&P 500 will rise, and when a team from the old American Football League prevails, stock prices will fall. It’s a “theory” that has been found to be correct nearly 80% of the time — for 40 of the 51 Super Bowls, in fact. Though last year’s big comeback by the AFC Champion Patriots (who once were the AFL’s Boston Patriots) against the then-NFC champion Atlanta Falcons — alongside the 2017 market surge — surely places its validity in question. Not to mention 2016, and the AFC’s (and original AFL) Broncos 24-10 victory over the Carolina Panthers, who represented the NFC. It was an unusual break in the streak that was sustained in 2015 following Super Bowl XLIX, when the New England Patriots (yes, those ...