Data and Research February 3, 2023

Public Service Workers Face Retirement, Financial Security Concerns

State and local government employers can bolster the retirement and overall financial security of workers with expanded access to emergency savings benefits.  

Reported by

Public sector employers are concerned their employees are not prepared for retirement, financial security of these workers has decreased, new MissionSquare Research Institute data shows.

The report, Examining the Financial Wellbeing of the U.S. Public Service Workforce, finds both public sector employers and employees are concerned about the retirement security of the state and local workforce: 41% of public sector human resources professionals say their employees are financially prepared for retirement and 81% of public employees worry about having enough money to last through their retirement.

“It’s always going to be difficult for public employers to compete on salary, so they have to take full advantage of their strong benefit offerings to build financial security for the public service workforce,” stated Lynne Ford, CEO and president of MissionSquare Retirement, in a press release.

The 2023 MissionSquare research found retirement and financial insecurity have increased for public service workers, from 2017 through 2019:

Get more!  Sign up for PLANSPONSOR newsletters.

  • 14% of all households employed in the public sector indicated that they could not pay all their bills, as did 11.3% of those employed in public education.
  • Nearly one third of public employee households would have trouble coming up with $400 in an emergency; and
  • close to one-fifth of all public employees and close to one-in-six employees in public education reported skipping health care because they could not afford it.


The onset of the COVID-19 pandemic in 2019, likely worsened retirement security for many public service workers, according to a separate 2022 MissionSquare Research Institute survey, as 52% of public sector workers were prepared to leave their jobs, either voluntarily—to change jobs, retire, or leave the workforce—because of burnout and compensation issues, exacerbated over the course of the pandemic.

Public employees often have access to strong employer-provided retirement benefits—defined benefit pensions and defined contribution plans—according to the report.

“The bottom line is that economic security gaps exist, but the public sector already has several tools at its disposal—most importantly, efficient, widespread benefits—to help meet employees’ needs,” advises the 2023 report. “State and local governments can build on those tools, for instance, by providing more short-term liquid savings vehicles, additional benefits such as more access to telework, or other non-traditional or optional benefits tailored to meet each employees’ interests and circumstances”

Employers also may want to explore additional benefits, including emergency savings accounts.

“Emergency savings were less common among single women, Black, and Hispanic public employees,” states the press release.

Several additional studies have shown a connection between workers’ access to emergency savings accounts and likelihood to contribute to a defined contribution retirement plan.

For low- and moderate-income workers, access to emergency savings accounts is also likely to bolster retirement contributions, explained Natalie Blain, a senior innovation manager at Commonwealth, at the Plan Progress webinar in August 2022.

“Emergency savings [are] really a great option to help address in the moment what’s happening … and also open up opportunity for longer-term growth,” Blain said in the webinar.

Another tactic employers can use to improve the financial wellbeing of their workforces is helping employees with existing or proposed student loan forgiveness programs because almost 33% of public employees have outstanding student loan balances, the report concludes.

Data for the MissionSquare Institute Financial Wellbeing of the U.S. Public Service Workforce report was sourced from the Federal Reserve Board Survey of Household Economics and Decision-making and the Survey of Consumer Finances.

The report was prepared by Christian E. Weller, professor and chair, department of public policy and public affairs, McCormack Graduate School at the University of Massachusetts Boston, and researcher Beth Almeida, along with input from MissionSquare Research Institute.

Products February 2, 2023

Investment Product and Service Launches

Morningstar debuts personalized investment planning tool; eMoney Advisor has tax-planning solution incorporating SECURE 2.0 changes; Morgan Stanley Investment Management launches ESG-driven ETF fund platform; and more.

Reported by

Morningstar Debuts Personalized Investment Planning Tool

Morningstar Inc. announced the launch of a new investment planning tool available on its adviser workstation and designed to help advisers create comprehensive, personalized investment plan recommendations to clients.

The Investment Planning Experience brings together Morningstar’s independent investment data, research and ratings with investment-planning capabilities. The tool is designed for advisers to optimize and propose an investment plan catered to a client’s personal preferences.

Get more!  Sign up for PLANSPONSOR newsletters.

“Advisers are increasingly facing pressure to differentiate themselves because clients today expect personalized investment recommendations,” Vimal Vel, Morningstar’s head of enterprise advisor software, said in a statement. “As regulatory changes require all firms to demonstrate their advisers are acting on investor’s best interests, this robust and customizable solution clearly establishes an understanding of client preferences, whilst meeting all requirements.”

Capital Group Releases 12 Active-Passive Model Portfolios

Capital Group, parent company of American Funds, has launched 12 active-passive model portfolios featuring Capital Group as the strategist.

The models are made up of American Funds’ actively managed mutual funds and passively managed exchange-traded funds from Vanguard, Schwab and BlackRock, according to the announcement. As the strategist, Capital Group will select the passive ETFs in each model and manage the allocations.

“As the needs of financial professionals and investors continue to evolve, so has the way we think about delivering our investment solutions to them,” Kris Spazafumo, head of portfolio solutions and services at Capital Group, said in a statement. “We know that financial professionals are increasingly creating active-passive portfolios for their clients because they want both a low-cost, tax-efficient portfolio with the potential for excess returns.”

According to Capital Group, the model portfolios business is a strategic focus of the firm and has more than tripled in assets under management since 2018. The firm now offers 31 model portfolios.

Morgan Stanley Investment Management Launches ESG-Backed ETF Platform

Morgan Stanley Investment Management, a division of Morgan Stanley, announced an exchange-traded-fund platform with the listing of six ETFs that use Calvert Research and Management’s approach to responsible investing.

The ETF suite offers investors access to four indexed environmental, social and governance strategies and two active ESG strategies across a range of asset classes, according to New York-based MSIM.

“These new ETFs will resonate strongly with investors who seek competitive investment results while promoting positive change and supporting companies that are leaders in improving long-term shareholder value and societal outcomes,” Ted Eliopoulos, CEO and president of Maryland-based Calvert, said in a statement. Calvert is also a division of Morgan Stanley.

The fund focus areas include investing in companies that are advancing diversity, equity and inclusion, as well as those addressing global environment or societal challenges, according to the announcement.

AllianzIM Launches 2 Buffered ETFs That Hedge S&P 500 Exposure

Allianz Investment Management LLC announced two U.S. large cap buffered exchange-traded funds to offer investment professionals and investors risk-mitigating strategies amid market uncertainty and recession fears.

The ETF suite is designed to provide a downside buffer of 10% or 20% against market drops, while allowing investors the opportunity to participate in the upside potential of the SPDR S&P 500 ETF Trust up to a stated cap, the Minneapolis-based firm said in the announcement.

“Our buffered ETFs make it easier for investors sitting on cash to get back into the market without jumping headfirst into the deep end,” Johan Grahn, head ETF market strategist at AllianzIM, said in a statement.

The funds are offered at an expense ratio of 74 basis points.

eMoney Advisor Releases Tax Planning for Advisers to Show Roth Conversions

eMoney Advisor LLC, a technology solutions and services firm, announced the launch of features that allow financial advisers to show their clients the impact Roth conversions and other tax strategies have on their financial plans.

The Tax Bracket Report provides advisers with the ability to demonstrate the impact of strategies like Roth conversions, according to the Radnor, Pennsylvania-based firm. The report overlays a client’s tax bracket floor with their annual income tax base and the taxable portion of any Roth conversion. It also includes further insight into what remains in the federal marginal bracket for each year, identifying new opportunities and topics for conversation.

The Automated Bracket-Based Roth Conversion accessible tool quickly converts assets until reaching the breakpoint between marginal tax brackets, according to the firm.

“These new capabilities easily enable advisers to have dynamic tax planning conversations with their clients, which are then brought to life in the Decision Center,” Josh Belfiore, advisory product manager at eMoney, said in a statement. “These conversations are especially top-of-mind for advisors as they navigate the SECURE 2.0 Act changes.”

«