Products October 18, 2010

The Hartford Offers New Participant Education Program

The Hartford Financial Services Group, Inc. launched a new educational program to encourage participation in defined contribution retirement plans, in recognition of national Save for Retirement Week
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A news release said the program provides tools to fit different learning styles and a personalized salary deferral illustration tool to help participants understand the value of saving over the long term.The “Your Retirement. Plan for Life” program and its educational tools are being made available to participants in 401(k), 403(b) and 457 plans with The Hartford and are also available to all new retirement plan sponsors and participants who sign up with The Hartford.  

The deferral illustrator is available to help retirement plan participants and non-participants determine how much of their income to defer. The tool illustrates the effect of different salary deferral percentages on a participant’s take-home pay, taxes, and potential for long-term retirement savings.  The illustrator also indicates the cost of waiting even a single year to begin contributing to the plan, in terms of lost savings potential.   

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According to the announcement, employers can make fundamental investment education available to their employees, including a risk tolerance questionnaire and an asset allocation overview, as well as Brainshark presentations, articles and calculators.    

Also available are special initiatives to target specific groups of employees: 

  • Younger workers ages 18-29 who are less likely to participate in a retirement plan, 
  • Older workers who are age 50 or older who are eligible to increase their retirement plan contributions as they step up their preparations for retirement, and 
  • Existing plan participants of all ages who can increase their contributions or consider rebalancing their investment portfolios. 

The Hartford said it can assist employers in creating an annual education-communications plan to target different employee audiences based on demographics such as age, plan participation status or life cycle.  The educational program can be delivered in multiple locations through multiple media, no matter the number of employees or how many assets the plan has, and at the end of each year, results can be measured against established objectives. 

Data & Research October 18, 2010

Nonqualified Plans Hold Their Own in Tax-Exempt Organizations

A Mercer survey found that about half (49%) of responding tax-exempt organizations offer top executives an employer-paid nonqualified retirement plan.
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According to Mercer’s Executive Benefit and Perquisite Practices Survey for Tax-Exempt Organizations, these plans are most prevalent among health care organizations (60%), followed by foundations and charities (50% and 32%, respectively). Among all tax-exempt sectors, the prevalence of nonqualified plans significantly decreases when moving down the executive ranks.  

The survey shows that more than twice as many organizations (28%) provide supplemental executive retirement plans (SERPs) for top officers than restoration plans (12%) – plans that provide benefits based on the same provisions as the qualified plan without regard to IRS limits. Just 9% of tax-exempt organizations provide both types of plans. In addition, SERPs are most popular among health care organizations and charities, while restoration plans are more common among foundations and educational institutions.  

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Other non-retirement benefits, such as supplemental life and additional long-term disability (LTD) benefits are offered at many tax-exempt organizations. According to Mercer’s survey, almost all participating organizations offer basic life insurance coverage (for all employees) with almost half providing employer-paid coverage of one times pay. In addition, approximately 40% of all organizations (54% of health care organizations) provide supplemental employer-paid life insurance for executives, with a median total coverage of approximately three times pay.   

Executives are typically covered by the same employer-paid LTD plan as all other employees, but it is also common for executives, particularly within health care organizations, to receive additional employer-paid coverage through either a supplemental group plan or an individual policy, according to the press release. Approximately one-third of all organizations and slightly less than half of healthcare organizations provide supplemental employer-paid LTD coverage. 

The survey found the most common executive perquisite is a car or car allowance, provided by half of participating organizations. Country club dues, offered by 18% of participating organizations, are the second most popular. Enhanced vacation schedules and parking privileges are offered by 13% of participating organizations.   

Prevalence of executive perquisites, however, varies among the different tax-exempt sectors. For example, among educational institutions, allowances for housing and college tuition for dependents are prevalent.  

The survey was conducted in September and includes responses from more than 400 tax-exempt employers of all sizes across the U.S.

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