Data & Research October 4, 2012

Day-to-Day Finances Detract From Retirement Saving

 

Employees are making some positive changes to their retirement planning, but poor money management skills and long-term economic challenges present major obstacles.

 

 

Reported by

Financial Finesse’s second annual research report about the state of U.S. employee retirement preparedness says 32% of questions received by the company’s on-staff Certified Financial Planner professionals in the second quarter of 2012 were about retirement planning issues versus 25% in Q2 2011, and a greater percentage of employees reported running retirement plan projections (39%) in the first half of 2012 versus the same period a year ago (33%).  

However, as of June 30, 51% of employees said they did not have an emergency fund in place, and 33% reported not having a handle on their cash flow. The firm’s research division believes this may be why employees are not making more dramatic improvements to their preparedness despite short-term economic improvements.   

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According to Greg Ward, the firm’s research group director, “It is also the reason that we are seeing an increase in the percentage of employees reporting that they have taken a retirement plan loan or hardship withdrawal, at 34% in the first half of 2012 versus 27% in the first half of 2011.”  

The full report is here.

 

The Markets October 4, 2012

Corporate Pension Funding Rises for Second Month

According to BNY Mellon, the funded status of U.S. corporate pensions increased for the second straight month to 75%, the first two-month winning streak since February.
Reported by

The funded status of the typical U.S. corporate pension plan increased 1.8 percentage points in September, benefiting from a decline in liabilities as interest rates rose, the BNY Mellon Pension Summary Report for September 2012 said. 

Assets for the typical plan increased 1.7% as stock markets in the U.S. and internationally continued to rally. Liabilities for the typical plan declined .7% as the Aa corporate discount rate rose six basis points to 3.78%. Plan liabilities are calculated using the yields of long-term investment grade bonds; higher yields on these bonds result in lower liabilities.

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Year to date, the funded status of the typical U.S. corporate plan is down .3 percentage points.

“Pension plans have been benefiting all year from rising equity markets but have had their gains offset by persistent low interest rates that have sent liabilities higher,” said Jeffrey B. Saef, managing director  of BNY Mellon Asset Management and head of the BNY Mellon Investment Strategy and Solutions Group.

 

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