Actuaries expect the number of cash balance plans they
administer to increase by 2,100 this year, a 37% increase from the 5,600 plans
they currently administer, according to the ASPPA College of Pension
Actuaries.
Fifty-five percent have dealt with a plan termination and
cash balance restart in the past five years, 11% have dealt with 10 to 20 of
these occurrences, and 3% have dealt with more than 20.
Forty percent of the actuaries surveyed said they have
worked with a fixed-income credit, while 17% said none of the cash balance
plans they serve have a fixed-income credit. Sixty-two percent said none of
their plans provide in-service distributions, 64% said their plans use a fixed
interest rate for annuity conversions, and 39% said their plans use a segment
rate for annuity conversions.
“ACOPA actuaries support a large and rapidly growing
constituency of cash balance plans,” says Andrew Ferguson, a member of the
ACOPA Leadership Council. “Our most recent survey maps the design directions
this constituency is taking.”
They survey was conducted among 128 actuaries in the summer
of 2014.
A Schwab Retirement Plan Services survey found that people
consider retirement savings more important than their health.
Sixty-eight percent of workers agree making the best 401(k)
investment choices is a key priority, trumping the 59% who cite staying in
shape. Seventy-three percent said they would rather have their 401(k) balance
grow by 15% this year than lose 15 pounds.
Ninety percent said they would think twice about taking a
job if the company did not offer a 401(k) plan. Sixty-four percent said they
pay attention to their 401(k) investment fees, while 60% look into their ATM
fees, 50% airline baggage fees, and 49% gym sign-up fees.
“When it comes to retirement, there’s been a significant
shift of responsibility from employer to employee over the past 30 years,
making the 401(k) a critical part of the retirement system,” says Steve
Anderson, head of Schwab Retirement Plan Services. “Our survey found only one
in five participants would be confident in their ability to save for retirement
without a 401(k) plan. In fact, participants worry as much about having enough
money to enjoy retirement as they do about being healthy enough to enjoy
retirement.”
However, participants face a number of obstacles that are
making it hard for them to save for retirement. Just over a third (35%) say
they don’t want to sacrifice small indulgences like dinners out and vacations.
Thirty-one percent say they get hit with unexpected expenses, 31% say paying
basic monthly bills gets in the way, 24% are burdened with paying off credit
card debt, and 22% say they are saving for education.
Although 90% know what their ideal credit score should be,
but only 58% know how much they should save for a comfortable retirement.
Nearly half (47%) say that the educational materials explaining their 401(k)
investments are more confusing than the materials explaining their health and
medical benefits. Twenty-nine percent have either decreased or not made any
changes to their 401(k) savings rate in the past two years.
NEXT: What employers can do to improve outcomes
“Today, many employers are designing their 401(k) plans to
better address savings obstacles and help their employees take more control of
their investments,” Anderson says. “These employers are at the forefront, using
automatic enrollment, automatic savings rate increases and automatic investment
advice to help their employees prepare for retirement. The industry needs to
focus more on plan design features like these if we are to further our goal of
improving participant outcomes.”
Two-thirds of participants (67%) want personalized advice
for their 401(k), and 79% say they are likely to seek out professional help to
make the best 401(k) investment choices. If they were to get advice, 73% say
they would be confident in their ability to make the right investment
decisions, versus 44% who would share that level of confidence going on their
own. In reality, only 12% are getting professional advice for their 401(k),
even though 49% expect they would see higher returns if they worked with an
adviser.
“Most participants want 401(k) advice, but whether because
of inertia or discomfort, many don’t take that first step of asking for help,”
says Catherine Golladay, vice president of participant services and
administration at Schwab Retirement Plan Services. “We’ve observed that when
advice in built into the plan so that participants start off with it and are
free to opt out if they wish, nearly 86% stick with it. That can make a big
difference.” Golladay points to Morningstar research that shows participants
who work with an adviser can end up with nearly 40% more income in retirement.
NEXT: Participants’ retirement outlook
Ninety percent said they will need to rely on themselves for
the money needed to retire, but 97% believe Americans are not saving enough for
a comfortable retirement. When asked to grade politicians on their efforts to
help Americans save for retirement, 89% gave them a C or less, and among this
group, 29% gave them an F.
Sixty-nine percent say that helping Americans save for
retirement should be a major public policy focus, and 69% want the subject to
be raised in the upcoming presidential debates.
Sixty percent say their 401(k) is their only or largest
source of retirement savings, yet 25% have taken out a loan from their 401(k).
Ninety-one percent receive a company match, and 87% contribute enough to get
the full company match.
Koski Research conducted the survey of 1,000 Americans for
Schwab.