Benefits August 11, 2008

Aon Study: $50K Employee Will Need 81% Retirement Replacement

August 11, 2008 (PLANSPONSOR.com) - The latest version of an annual study finds that workers trying to keep their standard of living when they retire will need to be able to generate from $15,000 to around $185,000 annually.
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An Aon Consulting Worldwide news release said its latest Replacement Ratio Study conducted with Georgia State University found that a worker earning $50,000 at retirement will need to replace 81% of that amount annually to continue the same standard of living. On a yearly basis, this worker may receive 51% ($25,500) from Social Security (including spousal benefits), while the remaining 30% ($15,000) needs to come from an employer retirement plan and/or the worker’s own savings, according to the study.

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Meanwhile, a worker earning $150,000 at retirement will need to replace 84% of that salary to continue the same pre-retirement standard of living. Social Security will provide only 23% ($34,500), while the employer retirement plan and/or worker’s own savings must account for the remaining 61% ($91,500) each year.

The study also reveals the number of years an average person should plan for their retirement assets to last. If a married couple is comfortable with a 50% chance they will not outlive their assets, they need to plan for 27 years, the study asserts. In terms of dollars, if this couple were earning $80,000 annually before retiring, then accumulating $420,000 from an employer retirement plan and/or their own savings by the time they retire will allow them to maintain their pre-retirement standard of living.

If the couple were more conservative and wanted a 95% chance they would not outlive their assets, they should plan for at least 38 years, the study says. This translates into approximately $715,000 in savings by the time they retire.

According to the announcement, the study shows the percentage of a person’s earnings that need to be saved annually until age 65, if a worker were to start saving at various ages and salary levels.

For example, a 25-year-old male earning $30,000 who has not started saving for retirement will need to save at least 4.2% of his pay each year until 65 to have a chance of retiring with an appropriate amount of savings. If this worker were age 35 making $60,000, the number jumps to 7.5% of pay each year until 65.

The primary data source for this information is the U.S. Department of Labor’s Bureau of Labor Statistics’ Consumer Expenditure Survey (CES). Aon Consulting and Georgia State University used data from the most recent years available – 2003, 2004, and 2005. This data includes information on approximately 12,823 working consumers and 6,498 retired consumers.

Compliance August 8, 2008

Appellate Court Revives Boeing Sex Harassment Suit

August 8, 2008 (PLANSPONSOR.com) - A federal appellate court has breathed new life into a sexual harassment and retaliation lawsuit filed against the Boeing Company on behalf of a female helicopter mechanic.
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An Arizona Republic news report said the 9 th U.S. Circuit Court of Appeals threw out a ruling by a federal judge in Arizona that the U.S. Equal Employment Opportunity Commission (EEOC), which filed the suit on behalf of Kelley Miles, had not proven its case.The suit alleged Miles was sexually harassed and was later retaliated against while working at Boeing’s Mesa, Arizona,   Apache helicopterplant (See EEOC Claims Harassment At Boeing ).

Unlike U.S. District Judge   Paul Rosenblatt who dismissed the suit, the appellate panel found that there was enough evidence to allow a jury to find Miles was harassed and retaliated against.   The 9 th Circuit sent the case back to the lower court for additional hearings.

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Appellate judges said there were also remaining questions of fact about whether the company took adequate steps to deal with the reported harassment and whether it retaliated against Miles for reporting the problem.

According to the suit, Miles had been the subject of repeated sexual harassment by male co-workers who stole her tools and shook a helicopter while she was inside in addition to using offensive and sexual language and making physical advances.

An EEOC announcement about the appellate ruling said the 9 th Circuit judges found that   although Boeing terminated one offending male employee and disciplined another, “a reasonable jury could find that these two employees were part of a much larger problem with respect to Miles’ treatment.”

According to the court, there was evidence that the employee who was eventually terminated had been transferred into Miles’s department because he had repeatedly harassed other female employees. The court added that evidence also existed showing that the harassment continued even after Boeing took its initial measures, and the company knew or should have known that the problems were continuing.

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