Deals & People November 2, 2018

Auto-IRAs Could Reduce Retirement Savings Shortfall by 16%, EBRI Says

In an attempt to better understand the retirement savings shortfall and to promote potential solutions, EBRI decided to look closer at the way a number of states have launched their own automatic retirement savings initiatives.

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The Employee Benefit Research Institute (EBRI) estimates that the national retirement deficit, or retirement savings shortfall (RSS), is $4.13 trillion for households headed by those between the ages of 35 and 64.

In an attempt to better understand the shortfall and to promote potential solutions, EBRI decided to look closer at the way a number of states have launched their own automatic retirement savings initiatives. According to EBRI, the first one to come online was OregonSaves. In this program, private sector employees’ contributions are made to individual retirement accounts (IRAs) post-tax, with the initial deferral rate being 5%. It also includes escalations of 1% a year up to a 10% threshold.

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EBRI looked at two scenarios in OregonSaves to see how much it could reduce the RSS. In the first instance, EBRI assumed a 25% opt-out in the first year but none thereafter. In the second instance, EBRI assumes, again, a 25% opt-out but also that some participants decide to defer less than 5%.

For those between the ages of 35 and 44, the RSS in scenario one is 16.1% and 11.6% in the second scenario. For those between the ages of 45 and 54, the RSS in the first scenario is 15.5% and 10.7% in the second. For those between the ages of 55 and 64, the impact is much less, with the RSS declining 4.8% in both scenarios.

“It is clear that younger age cohorts will benefit more from OregonSaves,” EBRI says. “When additional information is available on the opt-out rates across all employer sizes and information on the opt-out rates for auto-escalation are available, EBRI will update this analysis and provide a much wider array of assumptions.”

Products November 2, 2018

Cetera Launches ‘My 401(K) Assistant’ Process Outsourcing

The back-office support program provides investment monitoring reports and generates RFPs, among other capabilities.

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Cetera Financial Group has launched a new back-office support platform for retirement plan advisers, dubbed “My 401(k) Assistant.”

According to Cetera, the service provides “automatically generated investment monitoring reports and proposal comparisons from multiple potential recordkeeper partners for any adviser looking to do retirement plan business.” The underlying services are provided by Cetera’s Retirement Plan Solutions team, and are aimed at helping increase efficiency for retirement plan advisers.

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Jon Anderson, head of Cetera’s Retirement Plan Solutions team, says the new solution will help advisers spend more time on core, value-added client service priorities without the need to implement new systems or alter their business practices.

“My 401(k) Assistant enables our advisers to ‘in-source’ critical yet time-consuming functions like comparing complex proposals from recordkeepers and performing detailed monitoring of investment performance,” Anderson says. “This allows advisers to upgrade their efficiency and focus their efforts on relationship-building client service activities.”

According to the firm, the solution’s “Reporting Assistant” outsources the work of generating plan investment monitoring reports to the Cetera Retirement Plan Solutions team. Same with the “RFP Assistant,” which leverages the Cetera Retirement Plan Solutions team to conduct proposal comparisons for up to five prospective recordkeeping partners.

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