Data & Research October 2, 2012

Americans Uninformed About Retirement Savings Options

More than one-third (37%) of adults would like a professional to help them manage retirement accounts but do not think they have sufficient investments.
Reported by

Many Americans are uninformed about their retirement savings options, an E*TRADE survey found. Thirty-two percent who have not rolled over a 401(k) from a former employer cited a confusing, intimidating and/or time consuming process as the reason for not doing so.

More than half (56%) think managing an individual retirement account (IRA) requires more financial prowess than they currently have, and 41% believe opening an IRA requires more time than they currently have.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

Of the 50% of respondents with a 401(k) account who say it is a critical part of their retirement plan savings, 32% are not confident it will ever grow enough to meet their retirement needs. In addition, 28% do not regularly review their statements or have a hard time tracking account performance, and 21% are unsure what fees are being charged. 

The survey was conducted online by Harris Interactive on behalf of E*TRADE among 2,399 U.S. adults ages 18 and older between August 20 and August 22. 

 

The Markets October 2, 2012

Pension Funding Gains Modestly in September

The aggregate deficit in pension plans sponsored by S&P 1500 companies decreased $38 billion during September, to $593 billion, according to figures from Mercer.
Reported by

This deficit corresponds to an aggregate funded ratio of 73% as of September 30, 2012, compared with a record low funded ratio of 70% as of July 31, 2012, at which point the aggregate deficit was $689 billion.   

The combination of domestic and international equity markets rising approximately 3% during September and discount rates remaining relatively flat helped spur the rebound, Mercer said . Rates had been at a record low at the end of July. Mercer projects a significant increase in year-end balance sheet adjustments and P&L expense for many plans for 2013 and beyond.   

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

“While it is good to see some improvement over the past few months, the funded status of most U.S. pension plans has declined over the past year,” said Jonathan Barry, a partner with Mercer’s retirement risk and finance business.“From last September 30, which is a fiscal year end date for some plan sponsors, to this September 30, the deficit has increased $81 billion, from $512 billion to $593 billion underfunded, despite significant contributions being made to these plans over the past 12 months. Since December 31, 2011, the deficit has increased by $109 billion. Plan sponsors need to brace themselves for the balance sheet and P&L implications of these funded status declines as they budget for fiscal 2013. Time is running out for major positive market moves to significantly reduce pension deficits for this calendar year.”   

Barry added that following final guidance from the Internal Revenue Service (IRS) about MAP-21 [Moving Ahead for Progress in the 20th Century Act] funding relief, Mercer is getting a sense of cash requirements for 2012.“While most sponsors have an opportunity to lower near-term contribution requirements, companies should be sure to consider the true deficit they are now facing, and may want to contribute more than these new requirements to help address this shortfall,” he said.

 

«