Benefits August 29, 2012

Executives Need Help Filling Retirement Income Gap

August 29, 2012 (PLANSPONSOR.com) –The typical executive will only be able to replace about one-quarter of pay during retirement through Social Security and a 401(k) plan.
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The Todd Organization estimates that an executive earning $300,000 annually who plans to retire in 20 years will receive less than 30% of final pay from Social Security and maximum participation in a qualified 401(k) plan.  

The retirement planning gap is daunting for many executives, particularly those affected by the Internal Revenue Service’s (IRS’s) $17K annual limit on individual contributions to a qualified 401(k) plan, The Todd Organization said in “Executive Benefit Plans: Has the Pendulum Swung Too Far,” its first of a series of thought leadership pieces. The report suggests executives strive to have retirement income that will replace 80% of their final pay, adjusted for inflation, over a period of 20 years or so.

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Amid today’s shareholder activism, it is crucial that executive benefits be strategically and effectively structured so they retain and attract quality executives, the organization said. Executive compensation does not just refer to the CEO or other top leaders—anyone who makes more than $115K a year is a highly compensated employee, Rich DeVita, principal at The Todd Organization, told PLANSPONSOR. 

“We’re all living longer, we’re living healthier, that’s a good thing,” DeVita said. “But it comes with the challenge of stretching our money. Participants need a place to save on a pre-taxed basis.”

The 401(k) by itself is not an adequate tool to replace the levels of income that “rank-and-file” executives will need in retirement, he added. In sponsoring an executive deferred compensation plan, employers must recognize that they are giving these executives a chance to save their own money. So how do they go about helping executives reach their retirement goals?

DeVita said employers should determine whether the 401(k) match and limit are adequate to help participants save enough for retirement. Many deferred compensation plan do not offer a match, for example, so he suggests companies mirror the 401(k) match.

“Employers can also extend the match past the [IRS’s] considered compensation limit of $250,000,” he added.

Products August 29, 2012

Morningstar Launches Commodities Platform

August 29, 2012 (PLANSPONSOR.com) - Morningstar Inc. launched Morningstar Markets Commodities Edition, a platform for trading desks and risk managers with real-time and historical commodity and energy market data.
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Users can customize the platform to create multiple work spaces, select news feeds and export data. Morningstar Markets Commodities Edition also offers advanced charting capabilities and interactive watch lists to monitor and track specific commodities.   

For the most up-to-date information, the platform streams real-time news and weather from a variety of providers. It also provides a calendar of scheduled economic reports, such as for labor and inventory. Morningstar’s energy market information includes price and fundamental data in the oil, natural gas and electricity markets as well as coal, emissions and hydroelectricity.   

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In addition to the physical markets, Morningstar Commodity Data offers data from futures exchanges, electronic trading platforms, over-the-counter markets and brokers, including forward curves for daily pricing and risk management. The company has also just added real-time power data from all major independent system operators (ISOs).   

Users can also import their own proprietary data into the platform via the Commodity DataServer, Morningstar’s time-series database.   

This new Web-based platform can be accessed on any device with an Internet connection, including smartphones and tablets.  

For more information, visit www.morningstarcommodity.com.

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