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Irresponsible, Unaccountable, Unreliable

BY Jack Towarnicky 10/24/2019

Who are we talking about - plan sponsors or participants? Is there added exposure for plan sponsors who do (more than) the minimum? Nearly a decade ago, my predecessor David Wray wrote a blog post titled: “401(k) Adequacy and Employer Liability.”1 He stated: “… At a recent conference I was asked If DC plan sponsors should be concerned about being... Read More >>

A Focus on Fees – Seven Years Later

BY Jack Towarnicky 10/20/2019

Few read mandated fee disclosures; the disclosures may mislead more than they inform. In 2012, I analyzed the EBSA’s fee disclosure regulations. Here’s part of the abstract from my paper: "Over the next ten years, let’s increase the fees paid by individual account plans, like the 401(k), by hundreds of millions of dollars per year to deliver newly... Read More >>

What’s in Your Plans?

BY Jack Towarnicky 10/13/2019

Please confirm what your advisor(s) recommended for 2020. It is October. By now, you will probably have had an annual review with the advisor(s) for your individual account retirement savings plan. Interestingly, advisors regularly ask us at PSCA to confirm plan sponsor priorities. I guess “inquiring minds want to know” remains a truism.1 So, what... Read More >>

Rock, Paper, Scissors – Average, Median, Mode – Deceiving Data

BY Jack Towarnicky 10/06/2019

“On the average, five times as many people read the headline as read the body copy. When you have written your headline, you have spent eighty cents out of your dollar.” David Ogilvy1 Everything I needed to know about averages and employee benefits I learned long ago. In a 1980’s presentation, I offered many facts and data to support my proposed... Read More >>

HSA Heuristics

BY Jack Towarnicky 09/29/2019

There is No Contribution “Rule of Thumb” That is Best for Everyone A heuristic technique is any approach to problem solving or self-discovery that employs a practical method, not guaranteed to be optimal, perfect, or rational, but instead may be sufficient to make an immediate decision. These are mental shortcuts we use to ease the cognitive load... Read More >>

Rationally Irrational

BY Jack Towarnicky 09/22/2019

The best solutions respond to both rational and irrational actions! A few days ago, I stumbled over a recent controversy regarding a recent Investment Company Institute study.1 Dr. Alicia Munnell offered her opinion that the, “(ICI) study… seems to (say), ‘Don’t worry if young people and others aren’t saving for retirement. Retirement saving isn’t... Read More >>

SECURE, Ben Franklin and Looking For a Few “Good” Plan Sponsors

BY Jack Towarnicky 09/15/2019

You may have noticed that the SECURE Act has stalled in the Senate.1 One much-discussed provision would change fiduciary requirements for adding an in-plan annuity.2 I am a Frank-o-phile - a big-time fan of Ben Franklin. My sister Carol lives in Philadelphia (sisterly love).3 She once took me to Ben’s 300th birthday celebration at the National... Read More >>

Discordant Disclosures

BY Jack Towarnicky 09/08/2019

Simple, Standard, Universal is Best One industry professional recently called for “standardized lifetime income disclosure, ASAP.”1 I agree with his goal. I disagree with his solution. He concludes: “The simplest, least confusing and best way to present this information is to tell the participant what sort of age-65 life annuity he or she could... Read More >>

Staying Liquid via A Sidecar Account = Suboptimal Retirement Preparation?

BY Jack Towarnicky 09/02/2019

Preparing for Emergencies Along the Way to Retirement We are saving in uncertain times – employees may be uncertain about expenses and emergencies and uncertain about future employment and income. Savings is a consequence of consumers rational expectation that they will experience a future decline in income.Savings smooths consumption. Savings is... Read More >>

Pension Promises Without Funding Are Mere Dreams

BY Jack Towarnicky 08/25/2019

To paraphrase a recent Forbes article, poorly-funded defined benefit pension plans are a poor substitute for individual account retirement savings plans.1 Recently, I posted an item titled Mind the (Wealth) Gap to once more challenge the oft-repeated claim that 401(k) plans are inadequate when compared to defined benefit pension plans (DB pensions... Read More >>