Deals & People October 18, 2011

Marcks Discusses Pru Retirement Changes

The realignment of the company’s business into three business lines is an “evolution of the previous structure,” said Christine Marcks, president of Prudential Retirement.
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Previously, Prudential Retirement’s business had been organized by function, but the reorganization integrates products and services to better align with the goals of the company, she told PLANADVISER (see “Prudential Retirement Reorganizes“).

Deciding to put the Strategic Relationships unit reporting directly to her was a recognition that the company works with many types of intermediaries and their importance to Prudential Retirement’s business. Intermediaries include advisers, actuarial consultants, investment banks, and recordkeepers with which Prudential has an investment-only relationship, she noted. “I will have that insight to intermediaries at the table with Harry,” Marcks said, referring to Harry Dalessio, who previously reported to George Castineiras, head of Total Retirement Solutions.   

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As part of the reorganization, MullinTBG, the nonqualified plan provider within Prudential Retirement (see “Prudential Retirement, MullinTBG Meld Platforms“), has now been brought into the Total Retirement Solutions unit now led by Castineiras. Previously, this group reported directly to Marcks.

Bringing together the previously separate units of client relationships and business development and plan operations together into a single Total Retirement Solutions unit allows the company to build on its total retirement offerings, including its consulting capabilities, plan administration and recordkeeping functions, and its participant and plan sponsor communication, she commented. Also contained within this unit are the day-to-day relationships with intermediaries, though the planning of those relationships falls under Strategic Relationships.

“I felt like we needed more senior leadership,” she said, in explaining the company’s formation of the Institutional Investment Solutions business unit. This is due partially to the rapid growth in the company’s stable value business and partially because “there is a lot of room left for product innovation,” Marcks noted. This group, under Jamie Kalamarides, will continue to work with product manufacturers within the company to develop new, and enhance existing, products, she noted.

After the company’s first buy-in risk transfer with a pension plan this spring (see "Pru Completes Nation’s First Pension Buy-In"), the company has seen much interest from other plans, Marcks said, and so integrating the operations function with the relationship and business side seemed like a natural fit, leading to the formation of the Pension & Structured Solutions unit under Phil Waldeck.

Data & Research October 18, 2011

Forty Percent of Americans Not Saving for Retirement

A LIMRA survey revealed that many Americans who have access to an employer-sponsored defined contribution plan do not take full advantage of the tax-deferred savings.
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“These findings are alarming,” said Matthew Drinkwater, associate managing director, LIMRA Retirement Research. “Our research indicates that fewer future retirees will have pensions to pay for their living expenses and more will be relying on their personal savings to fund their retirement.  Without a significant change in savings behavior, many Americans will not have enough money to afford to retire.”

The survey also found that 19% of adults not yet retired typically save less than $100 a month, while more than a quarter (27%) of consumers save $100 to $499 a month.  Even those with household incomes of $50,000 or more, a sizeable proportion (42%) are either saving $100 or less, or nothing, each month.

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Looking at pre-retirees, the results were not much better.  Forty-one percent of pre-retirees are not putting aside any money for retirement and a little more than one-fifth (21%) of pre-retirees save less than $100 a month.   

“People may think they will just continue to work until they die, but our research shows that 56% of retirees retired before they expected; 43% were involuntary.  So the option may not be theirs,” noted Drinkwater.   

Employer-sponsored retirement plans (401(k), 403(b), etc.) are an easy way for employees to save for retirement tax-free, says LIMRA.  It’s study revealed that many Americans who have access to one of these plans do not take full advantage of the tax-deferred savings.   

While 55% of surveyed adults do not contribute at all to an employer-sponsored plan, of those that do, 48% contribute less than five percent of their annual earnings.  Women are more likely than men to contribute less than three percent of their earnings (19% versus 13%, respectively).

The silver lining would be that despite the poor economy, LIMRA says only 12% of plan participants have decreased their contribution rate over the past year. Twenty-four percent increased their saving rate (i.e., the percent of annual earnings saved) and 64% kept their contribution rate constant.

“Obviously, educating people about the benefits of systematic saving is critical,” said Drinkwater. “But research proves that auto-enrollment and auto-escalation programs within employer-sponsored retirement plans are valuable tools to help employees get to adequate contribution levels that will help them reach their financial goals in retirement.”    

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