Products January 31, 2012

White Paper Urges Call to Action for Retirement Industry

A white paper called “The Savings Crisis of Working Americans: The Retirement Industry Call to Action” is available from the Legg Mason Retirement Advisory Council (LMRAC).
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Developed by LMRAC, with significant input from Diversified, the white paper examines the coming retirement savings shortfall and calls on the retirement industry, employers, working Americans, financial intermediaries and the federal government to come together to develop solutions that improve the savings rate.

“Solving the retirement savings crisis has to be a team effort,” said Gary Kleinschmidt, head of Retirement for Legg Mason.”To preserve the American dream of retirement, all key stakeholders must commit to working together to develop new solutions that enhance the financial literacy and retirement savings of American workers.”

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Among the recommendations for key stakeholders highlighted in “The Savings Crisis of Working Americans: The Retirement Industry Call to Action” are:

  • The retirement industry—Defined contribution (DC) providers and asset managers must look to develop products and services that enhance defined contribution plans and platforms to encourage greater participation. The industry should also apply lessons learned from the DC plan design to improve the growth of Individual Retirement Accounts (IRAs)—particularly for employees without access to DC plans.
  • Employers/plan sponsors—Companies offering a DC plan should commit to improving the quality of their communications and educational initiatives and consider offering access to professional guidance designed to help employees better prepare for retirement.  Smaller companies that do not offer a DC plan for their employees should consider taking advantage of solutions developed by payroll service providers and other retirement plan industry participants.

 

 

  • Financial advisers/consultants—In addition to over-communicating the importance of saving more to better prepare for retirement, financial intermediaries must serve as an advocate for their clients by working closely with plan sponsors to promote transparency and enhance their knowledge and abilities.
  • The federal government—To provide the ability for all Americans to save at work, the government should strive to create solutions that incentivize all employers—regardless of their size—to offer retirement plans.
  • Working Americans—Save more. To start, consider a simple saving strategy characterized by the football term First & 10. First, get started by enrolling in a dedicated retirement savings account such as a 401(k) offered by your employer; or open an IRA. With the account in place, try to save at least 10% of your income in this retirement savings vehicle—a savings rate that would be nearly double the national average.

To download a copy of “The Savings Crisis of Working Americans: The Retirement Industry Call to Action,” click here.

Products January 31, 2012

PwC Offers Providers Steps to Prepare for Participant-Level Fee Disclosure

Under new Department of Labor rules, retirement plan sponsors must provide fee disclosures to participants by May 31, 2012.
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In light of the complexity and comprehensive nature of the participant-level disclosure requirements, Employee Retirement Income Security Act (ERISA) plan sponsors will be required to take steps well in advance of the first disclosures being delivered to participants, and will need to coordinate closely with their external recordkeepers and investment option providers, PricewaterhouseCoopers (PwC) notes in its latest HRS Insight. PwC said investment providers and recordkeepers will need to be prepared for such directives from plan sponsors.  

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The firm recommends the following actions: 

  • Become familiar with DoL Model Comparative Chart in order to understand and be prepared to deliver the different components of the information that must be disclosed by plan sponsors; 
  • Closely monitor the developments surrounding the participant disclosure regulations and make adjustment to any participant communications as necessary; 
  • Develop tools and resources to help clients deliver the disclosures and address their communication needs; 
  • Establish and provide for access to the required web-related disclosures; 
  • Meet with clients to commence discussion on the availability and retrieval of the investment-related and expense information; 
  • Assist clients with developing a communication program for such information; 
  • Incorporate the enhanced fee disclosure requirements into existing practices with respect to the disclosure of all fees charged to each individual’s plan account; 
  • Assess the business risk associated with disclosure requirements and train internal staff on clients’ compliance requirements with respect to such rules; and 
  • Consider the additional costs that may be incurred to fulfill client requests for information in order to satisfy the applicable disclosure requirements. 

Visit http://www.pwc.com/hrs for more information.

 

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