Deals & People July 24, 2012

Mercer Selects Millennium Trust for IRA Rollover Solution

 

Mercer's Outsourcing business selected Millennium Trust Co. as the exclusive provider for its clients' automatic IRA distribution needs.

 

 

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Through this strategic relationship, Mercer and Millennium will present and execute a comprehensive, streamlined mandatory rollover solution that enables Mercer’s clients to mitigate the administrative burden, cost and liability associated with terminated plan participants with small balances.

“This mandatory rollover program will be integral to our clients as they continue to look to Mercer to provide solutions that help manage the costs and risks associated with their retirement plans,” said Matt Benjamin, Mercer’s defined contribution product manager.

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In conjunction with Millennium, Mercer will deliver a fully integrated solution by facilitating various administrative, regulatory and communication tasks required for the forced rollover of low balance accounts. The solution will help Mercer’s clients comply with tax rules and the Department of Labor’s (DOL) fiduciary safe harbor.

 

Data & Research July 24, 2012

Living Expenses Worry Boomers on Brink of Retirement

One-third of those ages 55 to 65—Transition Boomers—are unsure how much money they will need for living expenses in retirement, a survey found.
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Allianz Life Insurance Company of North America also said one-quarter of this group appears to be uninformed about the effects of inflation and more than 40% may not have a realistic idea of when retirement planning should begin.

“It’s alarming that so many Boomers on the cusp of retirement are still unclear about the basic factors which determine their ability to fund their lifestyle once they stop working,” said Allianz Life President and CEO Walter White. “When you consider rising health care costs and the devastating effects of inflation on purchasing power, the fact that so many Transition Boomers are still confused about retirement income planning is a significant issue which urgently demands more education.”

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Of the one-third of Transition Boomers who indicated uncertainty about their retirement income needs, more than half (64%) were ages 55 to 60 and about one-third (36%) were between 61 and 65. When asked about their biggest concerns in retirement, 28% of Transition Boomers responded “not being able to cover basic living expenses.”

Boomers also significantly underestimate the effect inflation and taxes will have in retirement. While health care costs ranked as the a top retirement concern at 32%, only 10% chose keeping up with inflation and just 6% identified taxes in retirement.

The majority of Transition Boomers (94%) said they expect Social Security to play the biggest role in their retirement income, followed by pension plans (46%), defined contribution (DC) plans such as 401(k)/403/457 plans (43%) and “other investments” (30%)—all sources that make up a well-rounded retirement income portfolio. However, 30% indicated they expect some retirement income from part-time work and 20% anticipate income from either an inheritance (9%) or “other sources” (11%).

Unfortunately, many Transition Boomers are starting the retirement income planning process late. Forty-three percent said they will not focus on retirement income strategies until they are less than five years from the start of retirement, with 16% waiting until six months to one year prior.

 

Some, however, are planning well. Those who indicated they will use income from a defined contribution savings account (43%) also said they have spoken to someone about what to do with that money once they retire. Of those, nearly three-quarters (71%) said the conversation was with a financial professional, such as an adviser or attorney.

Ipsos U.S. eNation online conducted the survey from June 6 to June 8, with 1,095 respondents ages 55 to 65. Allianz Life Insurance Company of North America commissioned the study.

 

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