Products June 7, 2017

Nationwide Tool Gathers Workers’ Data to Locate Their Savings Gaps

Including information from outside sources, the Retirement Readiness Report projects a clearer picture of participants’ retirement outlook.

 

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Estimating retirement income needs can be a daunting process, which requires evaluating and projecting multiple factors. According to a study by the Employee Benefit Research Institute (EBRI), less than half of participants have even attempted this process. In response, Nationwide is offering a Retirement Readiness Report.

The tool aims to provide participants with a total picture of their retirement outlook by gathering data as to their potential Social Security and pension benefits, as well as spousal assets and other external retirement savings. After answering a few questions, participants will be provided with a look at potential income gaps along with suggested solutions such as increasing contributions, reviewing investment options or speaking with a financial professional.

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“Nationwide understands the retirement challenges America’s workers face, and has the expertise and experience to help them address those challenges,” says Eric Stevenson, senior vice president of retirement plan sales for the company. “This report, along with the educational services Nationwide provides to participants, helps simplify the retirement income picture so participants can quickly see and understand their unique situation.”

Nationwide notes that the report utilizes a fully responsive mobile design, making it accessible through various devices.

Later this summer, the company will begin offering additional plan-level reports to plan sponsors and advisers to help them better measure the retirement readiness of the participants they work with.

Stevenson added, “Nationwide has a long history of supporting its plan sponsor and adviser clients with the tools, resources and digital capabilities they need to help participants prepare for and live in retirement. The Retirement Readiness Report is another example of our commitment to improving the retirement planning process through customized support.”

Data and Research June 7, 2017

ICI Data Reveals No Increase in DC Plan Withdrawals and Loans

DC plan participants also continue to contribute and mostly keep their investment allocations the same.
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Withdrawal and contribution data indicate that essentially all defined contribution (DC) plan participants continued to save in their retirement plans at work last year, according to “Defined Contribution Plan Participants’ Activities, 2016,” by the Investment Company Institute (ICI).

ICI data shows that in 2016, 3.3% of defined contribution plan participants took withdrawals from their  plan accounts, with 1.5% taking hardship withdrawals. These levels of activity are similar to 2015, ICI says.

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Loan activity in 2016 remained in line with more recent quarters, when it stabilized after a three-year rise. The percentage of defined contribution plan participants with loans outstanding rose from the end of 2008 (15.3%) through 2011 (18.5%). That percentage leveled out in 2012 through 2014. At year end 2016, the percentage was 17.0%, compared with 17.4% at year end 2015.

The ICI research also found the share of participants that stopped making contributions last year was similar to activity in prior years. In 2016, 2.7% of DC plan participants stopped contributing, compared with 2.6% in 2015 and 2.8% in 2014. It is possible that some of these participants stopped because they had reached the annual contribution limit, ICI says.

During 2016, 9.4% of DC plan participants had changed the asset allocation of their account balances, compared with 9.7% during 2015. Reallocation activity regarding contributions in 2016 was slightly lower than in recent years: 5.6% of DC plan participants changed the asset allocation of their contributions in 2016, compared with 7.6% in 2015 and 6.6% in 2014.

Defined contribution plan assets are a significant component of Americans’ retirement assets, representing more than one-quarter of the total retirement market and about one-tenth of U.S. households’ aggregate financial assets at year end 2016, according to ICI data.

ICI has been tracking participant activity through recordkeeper surveys since 2008. The recordkeeping firms represent a broad range of DC plans and cover more than 29 million employer-based defined contribution retirement plan participant accounts as of December 2016.

The full report is here.

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