Data & Research August 20, 2015

More Participants Find Retirement Plan Provider Resources Helpful

A survey shows a significant jump in retirement plan participants’ perception of the helpfulness of provider resources for retirement planning, investing and saving.
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Quarterly statements from retirement plan providers continue to be seen as the most helpful resource to assist participants with planning, saving and investing for retirement, according to Transamerica Center for Retirement Studies’ 16th Annual Retirement Survey. Eighty-five percent of survey respondents in 2015 said quarterly statements are “somewhat” or “very” helpful. This is up from 71% in 2014.

The perceived helpfulness of online tools and calculators to project retirement savings and income needs on the retirement plan provider’s website climbed to 83% in 2015 from 65% in 2014, while mobile applications that provide the same tools were somewhat or very helpful to 59% of participants in 2015, compared to 32% in 2014.

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Other resources saw similar increases in their perceived helpfulness by plan participants:

  • Professional advice on how to invest my retirement savings from the retirement plan provider – 81% in 2015% vs. 59% in 2014;
  • Educational articles and videos from the retirement plan provider that share ideas and insights on how to save and plan for a financially secure retirement – 76% vs. 52%;
  • Informational seminars, meetings, webinars, and/or workshops by the retirement plan provider – 75% vs. 51%;
  • Informative emails sent to my work and/or my personal address from the retirement plan provider – 71% vs. 49%;
  • Mobile apps from the retirement plan provider to manage my account – 56% vs. 31%; and
  • Information on social media (e.g., Twitter, Facebook) from the retirement plan provider – 44% vs. 26%.

“It’s encouraging to see such a strong increase in the percentage of plan participants who find the information, education, and advice offered by their employer’s plan provider to be helpful,” says Catherine Collinson, president of Transamerica Institute and Transamerica Center for Retirement Studies. “This is no doubt a result of the industry-wide focus on improving retirement outcomes for participants by innovating, enhancing, and promoting a broad range of tools and educational resources.”

When asked what would motivate them to learn more about saving and investing for retirement, respondents in 2015 cited larger tax breaks or saving incentives (37%), educational materials that are easier to understand (34%), a good starting point that is easy to understand (34%), a financial adviser (29%), and a greater sense of urgency (or fear) that they need to save (22%). Twenty-two percent said “nothing” would motivate them to learn more, either because they are already educated enough or are just not interested in the topic.

Transamerica Center for Retirement Studies’ report, “A Compendium of Findings About American Workers from its 16th Annual Retirement Survey,” which provides a five-year trend analysis of findings, is available here.

Compliance August 20, 2015

Electric Company Passes Pension Obligation to The Principal

The Principal will assume obligation for pension benefits of certain retirees of the Lincoln Electric Company.
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The Lincoln Electric Company, a subsidiary of Lincoln Electric Holdings, Inc., has entered into an agreement to purchase a group annuity contract from The Principal Financial Group to settle $425 million of Lincoln Electric’s approximate $900 million in outstanding U.S. pension obligations. 

Under the agreement, The Principal will assume the obligation to pay future pension benefits starting November 1, 2015, for specified U.S. retirees and surviving beneficiaries who retired on or before June 1, 2015 and are currently receiving payments from Lincoln Electric’s U.S. Retirement Annuity Program (RAP). 

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Lincoln Electric says it has been committed to meeting its pension obligation responsibly, and it has contributed $375 million to its pension plans over the last ten years. Its U.S. pension plans are fully funded. 

According to Lincoln Electric, the purchase of this group annuity contract allows the company to secure pension benefits for its approximately 1,900 retirees, reduce volatility in pension costs and funding requirements, while maintaining a fully funded plan for the remaining retiree obligations.

Once finalized, the annuity purchase is expected to reduce Lincoln Electric’s U.S. pension obligation by 47%. The purchase will be funded by existing plan assets and requires no cash contribution. The company expects to incur a non-cash pension settlement charge of approximately $132 million in the third quarter. 

The Pension Benefit Guaranty Corporation (PBGC) has begun requiring reporting of pension risk transfer activity, fearing such moves will take away a major source of income for the agency.

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