Data & Research October 19, 2010

Women Less Confident Than Men about Retirement

Women feel more overwhelmed, less confident and less in control than men when it comes to financial planning and retirement, a survey by the Penn Mutual Life Insurance Company found.
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The second annual Worth Survey for Women published by Penn Mutual Life revealed that  fewer women than men report feeling confident (17% of women versus 28% of men), organized (11% versus 19%), and in control (15% versus 22%). Women are more likely to feel overwhelmed than men (22% versus 14%) and are more likely to believe their standard of living during retirement will be lower than today (44% versus 34%).

The survey also found that women have about half the life insurance coverage that men do, with the median individual amount for women being $96,000 as compared to $189,000 for men. This led researchers to conclude that women “undervalue” who they are and the contribution they make to home and family.

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The discrepancy in life insurance coverage between men and women is startling because women are more likely than men to value the benefits offered by life insurance, according to Penn Mutual Life. However, fewer women than men acknowledge that life insurance is a viable source of these benefits. For example, 79% of women and 70% of men said a steady stream of income during retirement is important; only 39% of women versus 50% of men reported being aware that life insurance could provide it. Similarly, 70% of women and 64% of men felt it was important to have access to quick cash in the event they need it, yet only 41% of women and 49% of men were aware of the permanent cash value life insurance could provide.

The annual tracking study was conducted by Penn Mutual during March 2010 and included interviews with women and men ages 25 to 64. The sample included women and men across a wide income spectrum, those with and without life insurance, and both married and single parents.

Products October 19, 2010

Securian Helps Sponsors Decide if They Need Fiduciary Help

A new article from Securian will help plan sponsors decide if they need help with investment decisions.
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In a press release, Securian points out that some employers are fine with making the selection of retirement plan investment options themselves because they have in-house investment expertise. Others have some knowledge, but not enough to make the investment selections without some advice from an expert. A third group prefers to delegate that responsibility completely.  

In the article, “Choosing the right level of investment liability: 5 questions for plan sponsors,” Kirk Paulsen, senior associate actuary, Securian Retirement, describes the three fiduciary roles available to plan sponsors under sections 3(21) and 3(38) of ERISA (Employee Retirement Income Security Act). In general, the plan sponsor holds complete fiduciary responsibility for retirement plan investment selection; however under a properly structured ERISA section 3(38) program, the employer’s fiduciary responsibility extends only to the selection of an investment manager, according to the press release.  

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In the paper, Paulsen offers five criteria employers can use to determine the level of investment fiduciary liability to keep or transfer: 

  • Do conflicts of interest exist? It’s a conflict of interest when a fund company requires employers to select a pre-defined group of investments rather than single options that best fit that company’s plan. 
  • What’s my investment knowledge? Does the plan sponsor have enough in-house expertise to handle investment selection and the liability that accompanies it? 
  • What’s my preferred level of involvement? In other words, how much time do I want to spend analyzing, comparing, and selecting retirement plan investments? An employer that does not want to divert senior management from core responsibilities may decide to hire an expert. 
  • What’s my liability comfort level? As plan fiduciary, the employer is responsible for all investment selection discussions and outcomes. The least risky option is to transfer those responsibilities to an investment manager under a properly structured section 3(38) arrangement. 
  • What’s my price point? The more outside expertise a company uses to manage the retirement plan, the more it’s going to cost. However, the risk reduction may be worth it.

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