Data & Research January 3, 2012

Costs and Regulatory Complexity Top Challenges for Sponsors

Four out of 10 employers expect to devote more time addressing retirement plan governance over the next two years. 
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Respondents to the Towers Watson 2011 survey on qualified retirement plan governance expect the top governance challenges organizations face in the next two years to be retirement benefit costs (77%) and regulatory complexity (73%). The greatest risks expected are regulatory compliance, investment volatility and vendor service quality.  

However, the research finds while most employers are concerned with compliance, many are not taking all the steps available to manage the financial, organizational and other risks created by ineffective plan governance.  

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Only one in four plan sponsors (26%) conduct regular compliance reviews. The most common reasons for a review are anticipated new risks and a pending Internal Revenue Service or Department of Labor audit.  

Less than half of respondents regularly measure the effectiveness of retirement plan decisions with specific metrics. Many employers do not use any metrics to measure the effectiveness of their decision making regarding their defined benefit (DB) plans (39%) and defined contribution (DC) plans (45%).  

Nearly half (51%) of respondents use a single committee for all retirement plan governance. The chief HR position (73%) and CFO (67%) are the most common governance committee members.  

The survey report, The New Governance Landscape, analyzes the retirement benefit plan governance practices (both DB and DC plans) of over 245 employers, representing a broad range of industries and sizes.  

The survey report is available at http://www.towerswatson.com/assets/pdf/6080/Towers-Watson-US-Pension-Governance-Survey-2011-Implications.pdf.  

Data & Research January 3, 2012

Living Outside U.S. May Solve Savings Shortfalls

Americans could retire up to 10 years earlier and with a higher standard of living if they did so outside of the U.S.
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“Many Americans are wondering when, if ever, they will be able to afford to retire,” said International Living magazine editor, Eoin Bassett. “What they often don’t realize is the low cost of living in countries like Ecuador can open up the door to an early retirement—and a standard of living way beyond what they could afford back home.”

According to InternationalLiving.com’s Retirement Index 2012, Ecuador is the top place to retire due to the low cost of living. In putting together the Index, InternationalLiving.com’s editors collated data from its own team of experts on the ground in the most popular countries among U.S. expat retirees. Index factors ranged from the price of bread and average humidity to utility costs and the friendliness of locals. The information was then used to score each of the top countries out of 100 in categories such as “Real Estate,” “Climate” and “Healthcare.” Ecuador scored well over a number of categories, most notably under “Cost of Living.”

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Internationalliving.com researchers found American retirees living comfortably on extremely low budgets which covered clean, comfortable rental properties; all bills; the cost of running a car and maid services.

Panama, with its pensionado incentive program for retirees, came in second place in the 2012 Retirement Index while Mexico rounded out the top three.

Full details of the InternationalLiving.com Retirement Index 2012 can be viewed at “The World’s Top Retirement Havens in 2012.”  

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