Administration April 24, 2018

Helping Retirement Savers Feel Confident

The latest Retirement Confidence Survey from the Employee Benefit Research Institute shows confidence in specific factors for retirement readiness is lower, and sources offer suggestions for how retirement plan sponsors and advisers can help.

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The 2018 Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute (EBRI) revealed retirees’ confidence in their ability to live comfortably in retirement remains higher than employees’ confidence, with 32% of retirees very confident and 44% somewhat confident.

However, retirees are less likely than last year to feel confident in their ability to handle basic expenses and feel less confident in their ability to handle medical expenses.

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In addition, as fewer employees plan to rely on defined benefit (DB) plans for retirement income and fewer trust that Social Security will be there for them, the RCS found many employees are showing interest in guaranteed income products.

During a media call about the RCS, Lisa Greenwald of Greenwald & Associates said, “While overall confidence is statistically unchanged over last year, confidence in specific factors are lower.”

Craig Copeland, EBRI senior research associate, pointed out that defined contribution (DC) plan ownership is an important factor in Americans’ confidence in the ability to live comfortably in retirement. The RCS found 76% with a DC plan are confident versus 46% without a DC plan. However, four in ten survey respondents say debt affects their ability to save for retirement.

Asked what plan sponsors and advisers can do to improve Americans’ retirement confidence, Copeland said helping them calculate how much overall will be needed to cover expenses in retirement is important. Plan sponsors should offer participants access to financial advisers.

In addition, financial wellbeing programs—including debt counseling—can improve retirement confidence, Copeland said.

He pointed out that plan sponsors are still not embracing in-plan guaranteed lifetime income products due to fiduciary fears; they are not sure what fiduciary due diligence is needed. He also noted that annuities have gotten a bad rap in the media. However, Copeland feels adoption of in-plan products may increase as participant balances grow higher.

Greenwald added that estimating and planning for health care costs is a critical element in retirement planning. The RCS found that, even among near retirees, fewer than half have done this calculation. Seven in 10 employed workers and six in 10 employed retirees say workplace education on health care planning for retirement would be helpful. Greenwald said employers and advisers need to help participants plan for health care costs.

She also said the findings speak to a growing role for health savings accounts (HSAs) in saving for retirement and employees investing their HSA dollars.
Products April 24, 2018

MassMutual Introduces New Report to Guide DB Plan Sponsors

The quarterly Defined Benefit Market Update and Commentary is designed to support DB plan sponsor clients and potential clients in the ongoing management of their plans and includes data on interest rates, bond and equity markets, and commentary on economic and regulatory matters.

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Massachusetts Mutual Life Insurance Co. (MassMutual) is introducing a new quarterly market update and commentary about economic and regulatory conditions and their impact on managing pension obligations.

MassMutual’s Defined Benefit Market Update and Commentary is designed to support its DB plan sponsor clients and potential clients in the ongoing management of their plans. The quarterly report includes data on interest rates, bond and equity markets, and commentary on economic and regulatory matters to help sponsors make informed decisions.

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“Movements in interest rates, regulatory changes in the pension space, and the performance of the asset markets have a deep impact on the risk and performance of pension plans,” says Sumit Kundu, Director and Pension Consulting Actuary at MassMutual’s Institutional Solutions unit. “In tracking the funded status of their plan, plan sponsors are particularly concerned with issues that impact contribution requirements, risk and volatility.”

The tracking report is being generated by MassMutual’s Defined Benefit actuarial and investment consultants with the goal of helping sponsors maintain an integrated actuarial and investment policy to manage their plan. MassMutual’s pension consultants then help plan sponsors to review the data and examine implications on individual plans.

The Update and Commentary is designed to be a quarterly snapshot of the economic environment and its implications for pension plans:

  • Providing updates of recent market returns and trends, movements in interest rates and the impact on pension funding rates and accounting discount rates;
  • Assessing the potential impact of the economy on pensions, including active, closed or frozen, and the impact of volatility on asset returns;
  • Reviewing specific plan’s current asset allocations in collaboration with the plan’s actuarial and investment consultants with the goal of reducing volatility on funding status;
  • Reporting recent movements in the pension accounting discount curve for both MassMutual’s own yield curve as well as the Citigroup Pension Discount Curve for sample pension plans; and
  • Tracking interest rate trends.
The inaugural report is here.

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