Data & Research March 5, 2014

MassMutual Sees Improved Savings

Fourth quarter 2013 data for defined contribution (DC) plans administered by MassMutual shows savings and investing improved for different demographic groups.
Reported by

For MassMutual 58.4% of total DC participants are in the Generation X and Generation Y cohort (born between 1965 and 1995), and are continuing to gain on numbers of Baby Boomers who now account for just 38.5% of participants on MassMutual's platform. For 2013, the percentage of combined assets controlled by Gen X and Gen Y (34.2%) is still below that of Baby Boomers (60.2%), but that gap is gradually closing. At year-end 2012, Gen X/Gen Y held 31.9% of defined contribution assets compared to Baby Boomers at 60%.

Women continue to close the gap in retirement plan account balances as well as in savings rates compared to those of their male counterparts. According to the fourth quarter 2013 data, the average deferral rate for female participants was 5.30%, up from 5.25% in third quarter of 2013. Male participants are saving at 5.67% on average, up from 5.60% in the third quarter.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

While the average account balance for women still trails that of men by 37.4%, compared to 38.25% at the end of 2012, it continues to improve. The current level marks a significant improvement over the highest recorded gap level of 40.5% in the fourth quarter of 2008.

"We see many positive trends in our data overall, and it's particularly gratifying to see that women and Gen X/Gen Y savers are taking such positive action steps," says Elaine Sarsynski, executive vice president of MassMutual's Retirement Services Division and chairman of MassMutual International LLC.

Investments in asset allocation funds more than doubled since 2007 and are at an all-time high at MassMutual. Overall, participants had 26.5% invested in asset allocation investments at year-end 2013, compared to 25% at year-end 2012.

Importantly, two out of every three MassMutual participants who are invested in lifecycle or target-date options are 100% invested in that single option, showing these participants are using these options as intended. Also, 51.9% of assets for Gen Y and 31.4% of assets for Gen X are in asset allocation investments, indicative of very strong use of target-date options.

"We are thrilled to see such a high acceptance of asset allocation funds, as they are specifically designed to simplify the investment decisions for participants," adds Sarsynski.

MassMutual serves approximately 2.6 million participants.

Products March 5, 2014

John Hancock Expands Plan Pricing Solution

John Hancock Retirement Plan Services (JH RPS) is implementing a new way of pricing its 401(k) plan services that will help plan sponsors and advisers address the issue of fairness in allocating plan expenses among participants.
Reported by

JH Signature 2.0, effective in May 2014, not only expands its revenue-sharing allocation solution to plans from startups to $10 million in assets, but it uses John Hancock’s “required revenue” concept to establish pricing for a particular plan based on just what is needed for that plan, independent from a plan sponsor’s fund lineup or what participants invest in, Peter Gordon, president at John Hancock Retirement Plan Services in Boston, tells PLANADVISER.

Gordon explains that John Hancock launched its JH Enterprise solution for plans with $10 million in assets and greater as a way to ensure all revenue sharing was credited back to participants’ account balances, instead of using an ERISA (Employee Retirement Income Security Act ) account in which payments are credited to the plan and allocated to participants via a variety of methods. This is intuitive, Gordon contends. “Intuitively, you would expect credits to go back to participants invested in the fund that pays revenue sharing, and not that what someone else does in the plan would affect participants getting those funds back.”

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

John Hancock carries that same concept to JH Signature 2.0, which focuses on plans from startup to $10 million in assets. In addition, the solution applies individual pricing to the less-than-$20 million market by looking at the demographics of a particular plan and charging a customized price—a concept Gordon says is usually associated with larger plans. “If we charge ‘x’ basis points for a plan, the plan sponsor can choose fund lineup ‘A’ or ‘B’ and the price would be the same. Participants are also paying what they intuitively would expect,” he adds.

The intuitiveness of the solution will make fee disclosures for plan sponsors and participants easier to understand, according to Gordon. “A lot of what we do is hard to explain to the average employee who is not in the retirement business, but with this solution, we can show them charges, credits and net fees,” he says.

“At the very core of it, that is the point, making disclosures more intuitive,” Gordon concludes.

«