Data and Research March 18, 2015

Women Need Retirement Planning Nudge

Research from the LIMRA Secure Retirement Institute suggests women could use a nudge to complete certain retirement planning activities.
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LIMRA research consistently shows that the top financial concern for both women and men is saving enough money for retirement (83% of women compared to 77% of men).

But, taking action to prepare for retirement seems especially hard for women. Only 20% of women surveyed indicated they are comfortable with their level of financial knowledge. In addition, LIMRA finds that women are less likely than men to have done basic retirement planning activities.

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Nearly half (48%) of men have calculated the amount of assets and investments they will have available to spend in retirement, but only 40% of women have done so. Two-thirds (66%) of men have determined what their Social Security benefits would be at different retirement ages, compared to 63% of women.

Fifty-four percent of men have determined what their income will be in retirement, while 53% of women have done the same.  Forty-eight percent of men have determined what their expenses will be in retirement, versus 47% of women.

The only retirement planning activities more women than men reported doing were determining health care coverage needed in retirement (44% of women vs. 39% of men) and estimating how many years assets and investments will last in retirement (35% vs. 34%).

LIMRA notes there are valid reasons why saving is tougher for women. According to Bureau of Labor statistics from 2014, the median wage for women was 83% of men’s wages. Lower salary over a working career, combined with breaks in employment to care for children and other family members diminishes retirement savings and results in lower Social Security income.  The fact that women usually live longer than men only adds to the challenges of retirement planning for women, LIMRA says.

However, women recognize they need help. Six in 10 agree that professional advice is needed for retirement and evaluating current savings plans. Fifty-one percent of women also said their need for professional advice has increased over the last few years, compared to 45% of men. 

The data comes from LIMRA Secure Retirement Institute’s “U.S. Consumers” study, which surveyed 6,015 consumers ages 25 to 64.

Compliance March 18, 2015

DOL Adds Flexibility to Investment Disclosure Requirements

The DOL says a new direct final rule provides a grace period for plan sponsors to furnish plan-related information to participants.
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The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) announced a direct final rule that provides a two-month grace period for participant-directed individual account plans, such as 401(k)s, to provide annual investment and plan-related information to participants.

According to EBSA, the rule changes the requirement that annual disclosures be made at least once in any 12-month period to at least once in any 14-month period.

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“The additional two months provided by the rule are in response to comments received by the department that plan administrators need more flexibility for these annual disclosures to avoid potentially unnecessary costs and burdens,” EBSA explains. “The information that is currently required to be disclosed, which helps workers make informed plan and investment decisions about their retirement savings, remains unchanged.”

The direct final rule is accompanied by a notice of proposed rulemaking. If EBSA receives significant adverse comment during the public comment period, it says it will withdraw the direct final rule and then address the comments in a subsequent final rule. The direct final rule is otherwise effective on June 17, 2015.

The DOL also announced a temporary enforcement policy that is “effective immediately and generally will apply until the direct final rule takes effect.”

“EBSA, as an enforcement matter, will treat a plan administrator as satisfying the current 12-month rule if annual disclosures are made within the new 14-month deadline, provided that the plan administrator reasonably determines that doing so benefits the plan’s participants and beneficiaries,” EBSA says.

The proposed rule will be published in the March 19, 2015, edition of the Federal Register. EBSA is soliciting comments on the rule which are due 30 days from the date of publication.

The direct final rule can be viewed here. The accompanying proposal can be viewed here. 

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