Benefits August 28, 2018

Retained and Invested HSA Assets Grow

Those who have HSA assets invested have a $16,007 average total balance, more than eight times larger than a non-investment holder’s average account balance, Devenir finds.

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Through the first half of 2018, total contributions to health savings accounts (HSAs) were $19,753,000,000, while withdrawals totaled $13,695,000,000, revealing retained assets so far this year of $6,058,000,000, or 31% of balances, according to Devenir’s 2018 Midyear HSA Market Statistics & Trends.

The study also estimates that $9.8 billion of HSA assets are invested as of June 30, 2018—an estimated 45% year-over-year increase. Nineteen percent of all HSA assets are in investments as of June 30th, 2018. Further, those who have HSA assets invested have a $16,007 average total balance, more than eight times larger than a non-investment holder’s average account balance.

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These stats are revealing as more plan sponsors and advisers see HSAs as a way to save for retirement expenses, and investing options in HSAs improve savings potential.

Other trends

The study found account growth in the first half of 2018 was in-line with recent years. Overall, accounts grew by 5.2% in the first half of 2018, compared with 5.0% in 2017, 8.5% in 2016, and 5.5% in 2015.

Devenir continues to see seasonality in the percentage of accounts that are unfunded as accounts are opened during the fall open enrollment season, but often not funded by employers until the beginning of the following year. Halfway through 2018, about 15% of all accounts were unfunded, down from 20% a year ago. The company notes this drop off in the percentage of unfunded accounts can largely be attributed to a continued uptick in the closure of accounts, with many HSA providers noting that they were cleaning up dormant accounts.

Nearly one-third (32%) of all HSA dollars contributed to an account came from an employer. The average employer contribution was $658 (for those making contributions). More than half (52%) of all HSA dollars contributed to an account came from an employee. The average employee contribution was $1,086 (for those making contributions).

The 2018 Midyear Devenir HSA Research Report may be downloaded from here.
Administration August 28, 2018

Weyerhaeuser Takes Steps to Reduce Pension Liabilities

The company is offering a lump-sum window, transferring some liabilities to a group annuity, making a contribution to its pension plan and transitioning to a liability-matching investment allocation.

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Weyerhaeuser Company announced actions to reduce the liabilities of its U.S. pension plan.

First, Weyerhaeuser will offer select U.S. pension plan participants the opportunity to elect an immediate lump sum distribution. Distributions to those who elect to receive a lump sum will be paid from plan assets during the fourth quarter of 2018.

Following the lump sum distributions, Weyerhaeuser intends to transfer a portion of its U.S. pension assets and liabilities to an insurance company through the purchase of a group annuity contract. As part of the purchase, the insurer will assume responsibility for annuity administration and benefit payments to select retirees. This transaction would also be funded with plan assets and would be expected to close in 2019.

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The company currently expects the lump sum and group annuity transactions will reduce the pension liabilities of its U.S. plan by approximately 30% and reduce the number of plan participants and beneficiaries by approximately 50%.

To maintain the plan’s current funded status in connection with these transactions, the company intends to contribute approximately $300 million (or approximately $186 million after-tax) to its U.S. pension plan during the third quarter of 2018. This contribution will be deductible at the company’s combined 2017 federal and state tax rate of 38%. Additionally, Weyerhaeuser’s U.S. pension plan assets will be transitioned to an allocation that will more closely match the plan’s liability profile going forward.

“We are committed to maintaining financially secure pension benefits for our pension plan participants,” says Doyle R. Simons, president and chief executive officer. “These actions will position us to better manage future pension plan costs while maintaining continued benefits security. Additionally, we will benefit from favorable tax treatment on our pension contribution.”

Recently LIMRA Secure Retirement Institute (LIMRA SRI) reported strong growth in pension risk transfer transactions, mostly due to large pension buy-out contracts, and it expects the pension risk market to exceed $23 billion in 2018.

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