Data and Research September 18, 2015

Student Loans Hindering Millennials' Retirement Savings

One-third of Millennials say student loan debt has either delayed them from saving or kept them from saving as much as they would like.
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Student loan debt is putting Millennials in a bind when it comes to retirement savings.

A survey conducted in April by the Investor Protection Institute (IPI) found half of Millennials (49%) have college-related debt, including 20% with debt of $1,000 to $20,000, 16% with $20,000 to $50,000 and 13% with $50,000 or more. More than two out of five millennials (43%) report having additional non-college debt of $1,000 to $20,000.

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Just 38% of the respondents are already saving and investing for retirement. A nearly equal percentage (34%) says that, as a result of college debt, “I have either delayed starting to save/invest for retirement or been able to save/invest much less than I had hoped.”

Forty percent of Millennials say they are “concerned” about their delay in saving and investing for retirement, compared to only 7% who say they are not concerned. More than half (56%) say they worry “about having to work longer as a result of having a late start on saving/investing for retirement.” In addition, more than half (52%) say they do not expect Social Security to be around when they retire and that they will bear the full weight of financing their retirement.  

More than one-third (34%) of Millennials expect to use a combination of financial professionals and their own planning aided by technology to save/invest for retirement.

“In a still tight economy where wages have not improved significantly in recent years, many graduates find themselves with hefty college loan debts and relatively modest means with which to satisfy them. Our message to these young people is very simple: As hard as it is to save, the earlier you start saving the more likely you will be able to support yourself in in the future. These are the years that will make the difference between comfortable and lean golden years. Saving and investing for your retirement should not be viewed as optional,” says Don Blandin, president and CEO of the IPI.

More survey results are online at the IPI’s website.

Compliance September 18, 2015

9th Circuit Weighs In on Successor Withdrawal Liability

The appellate court determined a district court did not properly review successorship factors.
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In determining whether an employer was subject to the Multiemployer Pension Plan Amendments Act (MPPAA) rules for withdrawal liability when a contributing employer ceased operations, a district court misapplied the continuity of the workforce factor in determining whether another company was a successor employer, an appellate court found.

The 9th U.S. Circuit Court of Appeals said the district court had given too much weight to the continuity of the workforce factor. The appellate court held that the most important factor in assessing whether an employer is a successor for purposes of withdrawal liability is whether there is substantial continuity in the business operations between the predecessor and successor, as determined in large part by whether the new employer has taken over the economically critical bulk of the prior employer’s customer base.

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In addition, the 9th Circuit found the district court applied incorrect measures to both the business continuity and workforce continuity factors. The district court had looked at the number of customers of the predecessor that the successor had continued to serve, but the appellate court said it should have considered invoices and calculated the amount of revenue the continuing customers generated—what the court called a market share factor.

As for workforce continuity, the appellate court found that the lower court failed to limit its calculation to just those employees covered by the multiemployer plan. Looking at just bargaining unit employees, the successor had hired a majority who had previously worked for the predecessor.

The 9th Circuit’s opinion in Resilient Floor Covering Pension Trust Fund Board of Trustees v. Michael’s Floor Covering, Inc. is here.

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