Compliance April 30, 2013

Institute Raises Budget Concerns to Legislators

The SPARK Institute submitted a letter to legislators raising concerns about proposed 2014 budget provisions that could impact retirement savings.
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The statement, submitted the House Committee on Ways and Means and the Working Group on Pensions and Retirement, addresses budget provisions that would cap the total amount of savings an individual can accumulate in tax-favored retirement plans and limit the value of exclusions for employee deferrals in 401(k) plans.

“At a minimum, the proposals will increase the costs ultimately borne by all American workers trying to save for retirement, not just the higher-income workers whom the provisions target,” said Larry Goldbrum, general counsel of The SPARK Institute. “At worst, the proposals will adversely impact the availability of plans and the amounts contributed by employers, particularly among small businesses.”

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The SPARK statement expresses concern about the complexity that the proposed savings cap would add to the administration and operation of all retirement plans. According to Goldbrum, “Although the proposed cap on its face may appear to only impact higher-income individuals, it will have implications for everyone who saves for retirement. The administrative, compliance and reporting costs resulting from it will ultimately be borne by all individuals trying to save for retirement, not just higher-income workers.”

There is also concern that the budget provisions would limit the value of exclusions for employee deferrals in 401(k) plans with the most-recent iteration including language intended to address criticisms about an earlier version that would have resulted in double taxation of deferrals that exceeded the limitation.

"The proposed correction to address the unintended consequence of double taxation would require tracking individual taxpayer basis on the disallowed amounts, which will add further complexity for employers who already struggle with administering complex plan rules," Goldbrum noted.

While recognizing the need to resolve the country's budget and deficit problems, Goldbrum said that The SPARK Institute urges the Committee on Ways and Means and Working Group on Pensions and Retirement not to do so by adding complexity and costs to the voluntary employer-sponsored retirement plan system, which is already burdened by regulatory complexity.

A copy of the statement is available at http://www.sparkinstitute.org/comments-and-materials.php. 

Products April 30, 2013

Mercer Launches Retirement Education Website

Mercer has launched an online retirement planning and education program for 401(k) plan participants to better prepare them for their financial future.
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The website, “Uncover the Numbers,” uses a theme of numbers related to retirement and offers game-like interactivity to engage participants while also delivering information about retirement planning. The site features a tile-based design modeled after social and consumer websites, and allows for easy sharing of information with others. It also allows users to group content by career stage or by investing topic.

The Uncover the Numbers site addresses findings from the recent Mercer Workplace Survey, which revealed that employees are worried about being financially ready for retirement, are considering delaying retirement in record numbers and agree that saving for retirement is their personal responsibility (see “Older Employees Delaying Retirement”).

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“The survey results tell us that after enduring the struggles and frustrations of a weak economy, employees want to become better prepared for their financial future,” said Dave Tolve, retirement business leader for Mercer’s U.S. Outsourcing Business. “Unfortunately, many lack the knowledge and confidence to take the appropriate steps to achieve this goal. In fact, a record 44% are considering delaying retirement, a clear sign that employees do not feel their saving strategy is on track. Uncover the Numbers was carefully designed to make retirement planning more approachable, understandable, and actionable.”

Users of the site begin by clicking on one of the prominent numbers displayed on the homepage. Then a short clue about the number’s meaning for retirement savers is shown, which leads to a complete answer along with more related educational content such as videos, calculators, and infographics.

“Numbers are an important part of the retirement planning process, whether it’s estimating how much you may need to save or understanding the impact of health care costs on your retirement expenses,” said Suzanne Nolan, marketing and communications leader for Mercer’s U.S. Outsourcing Business. “We wanted to create an educational program that demystifies these numbers, offers exciting technology to enhance the learning experience, and allows for instant customization by bringing the most relevant information to the forefront.”

The site is designed to be viewed on multiple platforms such as smart phones, tablets or desktop. More information about the site can be found here.

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