Products July 28, 2016

Empower Offers Guide for Checking Recordkeeper Security

The guide includes questions to be asked of a recordkeeper.
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Empower Retirement is offering “Plan Efficiency Through Technology: A Guide to Recordkeeping Solutions and Security” for advisers, consultants and plan sponsors.

Empower developed this guide because the issues of keeping up with current technology and data security management and protection are at the forefront of its clients’ minds.

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The 10-page guide provides detailed capabilities and benefits of modern recordkeeping systems and addresses the issues of data security with specific questions to be asked when choosing a recordkeeping provider. It is jargon-free and describes the key concepts in lay terms.

The guide describes some of the key considerations around:

  • Server- based networks vs. mainframes;
  • Real time processing vs. batch processing;
  • Integrated systems vs. separate systems; and
  • Single system vs multiple systems.

The guide offers an extensive list of questions that should be raised when discussing technology and data security with a plan provider. A few of these questions include:

  • How do you pass encrypted files?
  • How often are updates and enhancements made to your recordkeeping system?
  • Do you have mature controls against threats within all the following functions: Identify, Protect, Detect, Respond, and Recover?
  • Do you have a strong security training program for your employees and users?
  • Do you have solid processes around patching, anti-virus and anti-malware that are effectively designed and effectively operating?

A copy of the guide may be requested from http://www.empower-retirement.com/plan-sponsors/.

Data and Research July 28, 2016

Most DC Plan Sponsors Still Leery of Lifetime Income Products

Of those offering lifetime income solutions to participants, the majority prefer systematic withdrawals and education rather than guaranteed insurance-backed products.
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Employers are gradually warming up to lifetime income solutions in their retirement plans, Willis Towers Watson found in its Lifetime Income Solutions survey.  However, they are more interested in educating participants about drawdown strategies or partial withdrawals than using guaranteed insurance-backed products.

Twenty-three percent of retirement plan sponsors have adopted at least one lifetime income solution, and another 18% are considering it. Among those who are not considering lifetime income solutions, 81% say it is because they are worried about fiduciary risk, 66% cited cost and 60% said the solutions available on the market are too new.

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Among this minority offering lifetime income solutions, 71% say the reason is to help their workers convert their defined contribution (DC) balances into lifetime income. The most prevalent approach is systematic withdrawals, cited by 73% of those offering a lifetime income solution, followed by income planning tools (64%), education (60%), managed account services with a non-guaranteed payout (33%), out-of-plan annuities (19%) and in-plan annuities (10%). However, 21% are considering offering out-of-plan annuities.

The survey also found that participants themselves are slow to use lifetime income solutions; 61% of sponsors said that 25% or fewer of their participants use in-plan managed account services with a non-guaranteed payout service, 50% said 25% or fewer of their participants take advantage of lifetime income education, and 50% said 25% or fewer of their participants use partial or systematic withdrawals.

“Employees and retirees face major obstacles as they try to save for retirement so that they have a regular, adequate income that secures their future,” says Bill Dewalt, senior investment consultant at Willis Towers Watson. “This is particularly true at a time when employers are increasingly concerned about financial well-being and retirement readiness, life spans have lengthened, and competing financial responsibilities make it hard to save for retirement. Lifetime income solutions allow plan sponsors to continue their mission of preparing employees for life in retirement.”

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