Data & Research July 16, 2014

Participants Favor Automatic Annual Increase

Fifty-five percent of retirement plan participants favor automatic annual increases to their account contributions.
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“With non-stop family, health and life events and changing financial obligations over the course of one’s life, saving for retirement can easily fall to the bottom of the priority list,” says Marsha Whitehead, vice president of retirement services marketing for OneAmerica, the parent company of American United Life Insurance, which recently published a survey report on automatic plan design features. “Automatic features can help plan participants easily increase their retirement contributions and not get distracted by other financial matters.”

The survey asked workplace retirement investors to rank the financial priorities that compete most with their retirement account contributions. According to the survey, the four most pressing concerns are paying off debt (29%), meeting day-to-day expenses (23%), taking care of family (11%) and saving for college (4%). The research suggests many plan sponsors cite these factors in their resistance to auto-feature implementation—despite a growing body of research highlighting participants’ favorable attitudes towards automatic plan design tools (see “The Plan Sponsors Auto-Feature Paradox”).

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About three in 10 (29%) respondents said they are unsure how they feel about auto-increase, also known as auto-escalation, and 19% said they would opt out of the feature. “We still have work to do to educate consumers about the importance of calculating how much retirement income they need and contributing enough to their retirement accounts to meet those needs,” Whitehead adds.

Automatically increasing the contribution amount each year helps address inflation and cost-of-living increases, she says. “When auto-increase is coupled with educational tools and materials, a feature like this can really help participants stay focused and disciplined in planning and saving for retirement,” Whitehead suggests.

A summary of OneAmerica’s participant survey can be viewed here.

Products July 16, 2014

Rocaton Adopts Pension Risk Analytics Solution

Rocaton Investment Advisors, LLC has adopted RiskFirst’s PFaroe web-based platform to help clients better analyze and manage pension plan risk.
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PFaroe is a real-time, web-based valuation, analytics and reporting platform designed to help risk managers gain deeper insights into their risk exposure across multi-asset portfolios and master regulatory complexity. Since it is delivered in modular form, users can license tools according to their needs for day-to-day management or for specific projects (see “PensionsFirst Broadens Focus to Become RiskFirst”).

“Rocaton prides itself on a tailored approach with our clients, designing investment portfolios to reflect their specific objectives based on robust modelling of market risk and return expectations. We are excited to leverage the advantages of PFaroe’s asset, liability and risk analytics, which gives a holistic view of clients’ plans built on a robust analytical framework,” says Joe Nankof, consultant and partner at the Norwalk, Connecticut-based Rocaton.

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Nankof adds that one aim of offering the PFaroe platform is to enhance the dialogue with its clients and enable them to implement decisions more effectively by directly accessing real-time reporting and enhanced analytical capabilities.

“We are delighted to have Rocaton on board as the first major U.S. investment consultancy to adopt our PFaroe platform,” says Benjamin Reid, president of the London-based RiskFirst. “In today’s complex and ever-changing asset allocation and risk management landscape, we are witnessing increased demand for quality and consistent risk analytics delivered in an easy-to-use format. As a result, PFaroe is now establishing a growing presence in the United States.”

Nankof added, “As an independent firm, Rocaton has the freedom to explore tools offered by the marketplace which can augment our internal capabilities to better advise and serve our clients. We are delighted to be one of the early-adopters in the U.S. of RiskFirst’s innovative technology.”

Rocaton currently has approximately $400 billion in assets under advisement for clients, including defined benefit and defined contribution retirement plans, health care and insurance companies, endowments and foundations, financial intermediaries, and private wealth clients. For more information, visit http://www.rocaton.com.

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