J.P. Morgan: Retirement Income is Key

J.P. Morgan Retirement Plan Services says ‘income replacement’ is a key metric of success plan sponsors should be using to evaluating total retirement service.  

A news release said J.P. Morgan Retirement Plan Services believes that establishing whether plan participants are on track to replace a minimum of 70% of their current income in retirement is a strategic way for plan sponsors to gauge the effectiveness of their retirement programs.

The firm said it has evaluated income replacement ratios for more than 400,000 participants in its client base and, across the board, has delivered a 25% increase in weighted average income replacement along with a 75% increase in the number of participants on track to replace at least 70% of their income in retirement.

“The industry has traditionally measured the success of defined contribution plans in terms of overall participation, average contribution rates and asset allocation, all of which are good indicators of progress,” said Donn Hess, managing director and head of Product Development, J.P. Morgan Retirement Plan Services, in the news release. “However, the real measure is income replacement. With increasing concerns around the long-term outlooks for defined benefit plans and retiree medical benefits, it’s important to help guide participant behavior change in terms of the resulting retirement income. That’s why we regard income replacement as the key measure of success for plan sponsors.”

The company said the weighted average income replacement percentage increases were from March 31, 2005, to December 31, 2009.

More information is at http://www.jpmorgan.com/pages/retirement.