Data & Research July 12, 2012

DC Retirement Plan Industry Needs Self-Esteem Boost

 

The defined contribution (DC) retirement plan industry has a “self-esteem problem” that must be addressed, one industry expert contends.  

 

 

Reported by

Brian Graff, executive director and chief executive of the American Society of Pension Professionals & Actuaries, told the audience at the ASPPA’s Northeast Area Benefits Conference that the industry is constantly discussing the “crisis”: employees not saving enough for retirement. It would be more productive to speak more positively and dispel the myths that exist in the industry.

“There’s definitely a tendency to attack the system,” he said.

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Graff cited several common myths, such as the misconception that fewer than half of American workers are covered by a retirement plan. In reality, Graff said, there is an 80% retirement plan take-up rate for full-time workers. 

Another myth is that the average account balances in 401(k) plans are minimal. But according to research from the Employee Benefits Research Institute (EBRI), the estimated average account balance for 401(k) participants (ages 55 to 64) with at least 30 years of tenure was almost $300,000 as of March 2012, Graff noted.

EBRI’s research also indicates that workers will not save for retirement without a workplace plan. The participation rate for no employer plan (IRA only) was 4.6%, while the participation rate for those covered by an employer plan was 71.5%.

This research underscores the effectiveness of 401(k) plans, Graff said. “This is a great system,” he added.

 

Products July 12, 2012

The Hartford Adds My Retirement Tracker to Website

The Hartford released a tool that permits savers to set savings and income goals, track their progress and integrate other financial sources.
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Forget the one-size-retirement fits all approach of most 401(k) plan providers. The Hartford’s Retirement Access website has added a number of customizable tools, including the five-step My Retirement Tracker—to make it easier for participants to manage their retirement savings accounts and set goals based on their desired lifestyle in retirement. My Retirement Tracker allows the more than one million 401(k) participants that The Hartford serves in over 28,000 plans to:

  • Set savings and income goals for retirement.
  • Track progress towards these goals.
  • Integrate their current retirement plan with other retirement assets they may have.
  • Project retirement savings at specific ages.
  • Estimate how contributing more to their 401(k) can impact their savings.

 

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“It is critical for 401(k) plan participants to set savings and income goals as part of their retirement planning process and then monitor their progress toward these milestones,” said Sharon Ritchey, executive vice president of The Hartford’s Retirement Plans Group. “Our new tools help participants become more engaged in the retirement planning process and take greater control over their financial future.”

The tools follow The Hartford’s recent introduction of The Hartford Lifetime Income fixed deferred annuity designed for 401(k)s. The solution focuses investors’ attention on the income benefit, selling investors shares that pay $10 of guaranteed monthly income for life beginning with retirement at age 65. (See “Hartford Introducing Retirement Income Solution for 401(k)s).”) Introduced last fall, The Hartford permits investors to contribute to the solution through regular payroll deductions or lump-sum payments. The cost of each income share varies with the plan participant’s age and current interest rates. If an investor retires later than age 65, the income generated from each share rises. Conversely, if the investor retires earlier than age 65, the per-share income declines.

“The Hartford is focused on providing new tools and innovative products that help our retirement plan participants prepare for a more comfortable retirement,” Ritchey said.

 

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