Plan sponsors that fully automate their plans are more likely than others to believe their workers are on the path towards a financially secure retirement, J.P. Morgan found.
Tag: automatic escalation
At year-end 2018, 66% of new plan entrants were enrolled via automatic enrollment.
A bipartisan pair of Senators introduced another retirement-focused piece of lame duck legislation, including more than 50 provisions aimed at increasing savings in DC plans and IRAs.
While automatic enrollment gets participants into plans, a sizable segment are starting their average contributions at a minimum 3.3% rate and failing to take any additional action to increase that, according to J.P. Morgan Asset Management.
Janus Henderson research suggests the vast majority of auto-enrollment programs fund only pre-tax accounts; this is despite the fact that for younger, lower-income employees, funding a Roth account may be a more appropriate long-term option.
Willis Towers Watson offers nine actions for DC plan advisers to help their clients mitigate risks in 2019.
In addition, a person invested in a stable value fund versus someone invested in a target-date fund could end up with a balance as much as 59% lower, BlackRock says.
Monthly expenses are their second concern, The Standard found in a survey.
However, only 33% are confident about their retirement readiness.
Their use of an adviser acting as a plan fiduciary has increased by 40% in the past four years, according to the Plan Sponsor Council of America.
If combined with the Automatic Retirement Plan Act of 2017, the retirement savings shortfall would be reduced by $932 billion, or 22.6%, according to EBRI.
Fifty-two percent think they will be able to retire at their ideal retirement age, and 52% say they either somewhat or strongly agree that their savings will last throughout their lifetime.
To help employees achieve their savings goals, 82% of sponsors are making changes to plan design, and 83% are updating their investment menus.
One measure is to encourage MEPs by eliminating the “nexus” requirement.
They are on track to replace 75% of their income, compared to 64% for Americans overall.
Participants who work with a traditional or online adviser are on track to replace 116% of their income. Those working with any paid adviser, 91%, and those with no adviser, 51%.
Concerned that workers are not saving enough, employers are hoping to improve their financial security, Willis Towers Watson found in a survey.
More plans are auto enrolling at a greater than 3% default deferral rate, and 13% of plans are increasing deferrals at more than 1% annually, a PSCA survey found.
All employees would have 6% of their income contributed to a workplace retirement plan and have these contributions automatically escalated each year.