Products January 19, 2017

DC Plan Sponsors Should Keep It Simple With Lifetime Income

According to a new whitepaper by MetLife, utilizing fixed income annuities can fix confusion over retirement planning. 
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In a world where technology dominates and new techniques pop up day by day, a recent MetLife white paper highlights how simplicity might just be key to retirement planning.

The simple nature method stems from a 2016 Lifetime Income Poll generated by MetLife, in which it was found that most plan sponsors (85%) would prefer that a DC plan serve as an income source throughout retirement, a pronounced increase from the 2012 study, in which only 9% of plan sponsors believed the same. Not surprisingly, plan sponsors have since been contemplating income annuities in defined contribution (DC) plans in order to secure retirement for plan participants.  

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“The overall theme of simplicity is really important because we see this time and time again with the defined contribution plan world, that any time there’s complexity, inertia sets in,” says Roberta Rafaloff, vice president of Institutional Income Annuities in Retirement and Income Solutions at MetLife.

The paper examines several retirement income products, such as guaranteed lifetime withdrawal benefits (GLWBs), guaranteed minimum income benefits (GMIBs) and guaranteed minimum withdrawal benefits (GMWBs), in comparison to immediate fixed income annuities and qualifying longevity annuity contracts (QLACs), noting how income annuities and QLACs can be the best option for those searching simplicity.

Fixed income annuities or QLACs are means for participants to “complete” their retirement readiness process, according to the whitepaper. These annuities let participants distribute retirement income at significant stages and allows them to be as simple as needed—all while being cost-effective.

“The beautiful thing about income annuities is you can offer benefit options, but to the extent that they can be limited and really focused in on the retiree population,” says Rafaloff.

The paper mentions that while GLWBs, GMIBs and GMWBs offer income flexibility, ensure “retirement readiness,” and incorporate features that can solve a number of problems that participants may have—such as a shortage of liquidity and investment gains failure—many participants refuse to utilize these options because of their complicated nature, making it difficult to understand and tough for sponsors to interpret. While the idea behind a guarantee is favorable among responders, 58% do not believe withdrawal solutions with minimum guarantees are simple enough for participants to understand, according to the study.

The whitepaper can be found here. 

Products January 18, 2017

Zane Benefits Launches Guide to Small Business HRA

The new eBook thoroughly explains this new benefit that many small business owners may not understand or even be aware of.
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Zane Benefits has launched its newest resource, The Comprehensive Guide to the Small Business HRA. 

The eBook provides complete support for businesses considering offering a Small Business Health Reimbursement Arrangement (HRA). The Small Business HRA, just established in December 2016 through the 21st Century Cures Act, allows employees to purchase their own individual health insurance policy independent of the company. The company then reimburses each employee tax-free for their individual health insurance and medical expenses up to a set monthly allowance.

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Whether a small business is looking to offer benefits for the first time or is being forced to cancel a group policy due to cost, the eBook will provide the tools small businesses need to take a simpler approach that offers employees more choice. The new eBook thoroughly explains this new benefit that many small business owners may not understand or even be aware of.

It covers the following topics:

  • What a Small Business HRA is;
  • Why an HRA provides value to your company;
  • How to design and administer an HRA plan; and
  • How to communicate your new benefit to employees.

Each topic includes case studies, examples templates, and real-world numbers.

“Many small businesses choose not to offer employee health benefits because of cost, and they don’t realize this decision is actually costing them more when they try to recruit and retain employees,” says Rick Lindquist, president and CEO of Zane Benefits. “Health benefits are critical for hiring and keeping your people, and the new Small Business HRA provides an affordable alternative to group health benefits. Our new 60-page eBook provides small business owners with a complete guide to evaluating, implementing and administering a Small Business HRA.”

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