Mercer’s participant website, Mercer BenefitsCentral, now
allows clients to “initiate, manage, and commence their pension plan benefit
completely online.”
The new capabilities are targeted at large market defined
benefit (DB) plans, Mercer says, providing participants with an alternative approach
to joining the pension plan and managing/understanding benefit payments.
Website features help participants track their savings progress
and compare available payment types within the DB plan. Participants are able
to manually set how and where their payments should be sent, and they can
upload any required documents or submit their commencement request for
processing.
The firm notes the online tools already went live for 55,000
plan participants in October. In addition, Mercer BenefitsCentral is being made
available to 189,000 health and benefits plan participants.
Matt Benjamin, participant experience leader for Mercer’s
Benefits Administration Practice, highlights the participant website’s intuitive
design, advanced personalization, and strategically developed education and decision
support tools.
“Our online retirement functionality enables retirees to enjoy
a seamless, hassle-free commencement experience,” he explains, “so that they can
spend less time on their benefits and more time enjoying this stage of life
with family and friends.”
A forthcoming book by Peter Brady at the Investment Company
Institute suggests Americans across the income spectrum get a pretty even shake
when it comes to retirement benefits.
Peter J. Brady is a senior economist in the retirement and
investor research division at the Investment Company Institute, focusing on pensions,
retirement savings, and the taxation of capital income.
In a new book, Brady highlights the importance of tax
considerations in projecting retirement wealth, especially when it comes to setting state and national policy.
“Policy discussions of tax deferral often focus on the
reduction in taxes enjoyed by workers and ignore the higher taxes these workers
will pay during retirement,” Brady explains. The front-end tax deferrals and
tax-free growth in defined contribution (DC) plans obviously benefits
employees, but it’s important to remember there is a difference between a tax
deferral and a pure tax write off.
Considering the impact of taxes paid during retirement on total lifetime income, Brady
argues tax deferral affects “when taxes are paid more than it affects the total
amount of taxes paid over a lifetime,” a trend most apparent in higher-paid
workers analyzed in the study. “For these workers,” Brady explains, “increased taxes
during retirement offset, in present value, more than half of the reduction in taxes
enjoyed while working.”
For those lower on the income scale, Brady highlights the
fact that Social Security is “the primary component of the U.S. retirement
system, and the benefits of the Social Security system are proportionately
higher for workers with lower lifetime earnings.” Brady adds that, “contrary to
conventional wisdom, the marginal benefits of tax deferral (the benefits of
deferring an additional $1 of compensation) are higher, on average, for the
lower-earning workers analyzed in this study than they are for the higher earning
workers. Although the lower earners face lower marginal tax rates while working,
their marginal benefits are higher because they experience the largest drop in
marginal tax rates during retirement.”
NEXT: Approaches to
benefit all
Brady goes on to suggest the incentive to save in DC plans under the
current tax code is not “upside down,” as some like to suggest.
“Normal income tax treatment discourages savings by taxing
investment returns,” he says. “Far from providing an ‘upside-down’ incentive to
save, tax deferral equalizes the incentive to save by effectively taxing
investment returns at a zero rate for all workers.”
Brady’s argument continues: “If a comprehensive reform of
the federal income tax is undertaken, it is important that policymakers
consider how all the changes included in any proposed reform would affect the
progressivity of the overall tax system. The effect of specific tax provisions
on progressivity should not be a concern. Tax provisions that address
legitimate policy goals can be included in a reformed income tax even if they
are not, by themselves, progressive.”
Brady concludes the justification for a progressive tax rate
schedule “rests largely on the assumption that annual income is a reasonable
proxy for a taxpayer’s economic circumstances, but the unevenness of earnings
over an individual’s lifetime makes this assumption problematic.” Few, if any, of
the federal-level tax reform proposals to surface in recent years earn high
marks from this perspective, he adds.
Additional findings and more information about Brady’s upcoming
book (January 2016) are presented in an ICI whitepaper, online here.