One
Page
Magazine
By Roland Salmi
Deflecting the Global
Wave of Retirement Unreadiness
Longevity is well outpacing savings
around the globe. Many countries have
embraced the need to make adjustments
and sometimes major changes to benefit
their countries in the long run. Countries
like Denmark, Australia, and Northern
Europe are already taking a stab at finding
a solution to retirement unpreparedness.
A common theme is raising the retirement
age. Denmark in particular has taken this step
but has a more fluid approach, linking age and
eligibility to life expectancy. Mercer’s retirement index ranked the U.S. No. 13, and
makes specific recommendations including “raise the minimum pension, reduce
pre-retirement leakage of funds from the system before retirement; and introduce a
requirement that part of the benefit must be taken as an income stream.” – Cerulli Edge
Series: International Institutional Edition
I want a Retirement Plan
Yet only 50% of employers offer one. Nearly 80% of employees view benefits
such as a retirement plans as being a key consideration when accepting a new
position, the ADP Research Institute found. However, only 50% of companies
provide a retirement option. While some employers are concerned about
cost and disinterest among management and employees alike, the size of the
company itself may be another reason it does not offer a retirement savings
vehicle, according to ADP. In terms of industry, the percentage of employers
vary widely with Manufacturing (67.1%), Information (63.0%), Professional
and Business Services (55.9%); financial activities (52.4%); Education and
Health Services (51.5%); and Transportation and Utilities (49.7%). Another
major factor is the amount of employees; 5,000+ employees (98.4%),
1,000 to 4,999 employees (96.0%), 500 to 999 employees (93.3%), 50 to
499 workers (85.3%), 20-49 employees (60.3%), and one to 19 employees
(33.0%). The data represents 10 million employees at 161,000 companies,
all between the ages of 20 and 69 and earning at least $20,000 annually.
– ADP Research Institute
Fees Remain a Top Topic
The 2015 edition of Vanguard’s “How America Saves” study found plan
sponsors and advisers are focused on plan fees and bringing meaningful
savings to the participants they serve. The study shows more plan sponsors
have incorporated a wider range of low-cost index funds into their plans. When
factoring in index-based Target-date funds, 82% of participants serviced by
Vanguard held some form of equity index investments. Vanguard also stated
that about half of participants in Vanguard-administered defined contribution
plans are saving 10% or more. The study found that in plans with automatic
enrollment, more than 60% enroll at default rates of 3% or less, showing
significant ground yet to cover. Vanguard says this data clearly shows that
they can boost participation rates with auto-enrollment, but it can lead to lower
contribution rates when default deferral rates are set too low. - Vanguard
4 | Summer 2015
Employer Sued for Reducing
Employee Hours After ACA
An employee of Dave & Buster’s Inc. has filed a
lawsuit claiming the company violated the ERISA
Section 51- interference of benefits provisions when
it reduced full-time employees’ hours following
passage of the Patient Protection and Affordable
Care Act to avoid paying insurance premiums. In a
statement from HR the company said, “Like many
companies, D&B is in the process of adapting to
upcoming changes associated with the health care
reform.” The lawsuit asks the court to reinstate
employees to their full-time positions and restore
their rights as participant in Dave
& Buster’s health plan. It also
asks for an award to plaintiffs
to make them whole for the
loss of wages and benefits,
with interest, from the date
of reduction in their hours
which some records are showing
started in 2013. – Plan Sponsor