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401(k) Plan Sponsors Restoring Contributions While Focusing Heavily on the Investments
PSCA’s just-released survey, 401(k) and Profit Sharing Plan Response to Current Conditions, shows that companies are restoring plan contributions that were suspended or reduced since the beginning of 2008; in fact, many companies are increasing and adding new contributions to the plan. While companies are in the process of restoring contributions... Read More >>
Evaluating Retirement Plan Success
Plan sponsors want to know if their retirement plan is delivering a successful outcome for their employees. Some collectively coordinate information about each individual employee and the prospective level of their federal benefits to project how a plan is doing. Each employee’s date of birth, plan balance (and how it’s invested) and savings rate... Read More >>
Small Plans-Let's Fix the Rules
Small employers would be more likely to offer a retirement plan if they were not required to make contributions when times are tough. This is understandable as many small companies have uncertain cash flows and a required contribution to a retirement program could jeopardize a company’s survival. Unfortunately, ERISA requires that small companies... Read More >>
Dollar-Cost Averaging: It's Automatic
As 401(k) evolves we are adding more and more automatic features. However, we should not overlook an automatic feature that has been there from the start—dollar-cost averaging. Dollar cost averaging is preached but rarely followed because life’s financial swings make it hard to set aside money to invest paycheck after paycheck, year after year.... Read More >>
Without 401(k), it Would be Worse
As the DOW rides waves of volatility, lurching up and down by hundreds of points, there is one island of stability in this stormy sea – – 401(k). Because we constantly remind participants of the benefits of dollar cost averaging; because we provide them with solutions like target date funds and managed accounts; because inertia is easier than... Read More >>
Annuities, the Law, and the Future
The number of companies offering an annuity as retirement distribution option continues to decline. Only 16.6% reported doing so in 2010 according to PSCA's soon to be published 54th Annual Survey. This trend is well-established as the percentage has dropped year after year. 33.6% of companies offered an annuity as a retirement distribution option... Read More >>
Automatic Enrollment - Not The End, A Great Beginning
The July 7 Wall Street Journal article suggesting that the decline in the average 401(k) participant savings rate is the result of companies recently implementing automatic enrollment (AE) misses the bigger picture. It may be a minor contributing factor, but the principal reason for that decline has been the economy. The match matters. Companies... Read More >>
DC Plans and Deficit Reduction
Currently one-third of Federal spending is financed by new borrowing. This is unsustainable. However, with the two parties locked in mortal combat in preparation for the 2012 election it is likely that the changes made as part of the debt limit extension in August will be only a down payment. More will have to be done in 2013 and our political... Read More >>
DC System Passes Its Stress Test
In the late 1980’s, employer-sponsored defined contribution plans were beginning to emerge as the primary retirement vehicle offered by private employers. Some in the retirement community forecast that a drastic fall in asset values, like that experienced from the fall of 2007 to the spring of 2009, would lead to the collapse of the defined... Read More >>
GAO Should Redo Its Recent Retirement Plan Study
The Government Accountability Office recently reported its study “Private Pensions: Some Key Features Lead to an Uneven Distribution of Benefits.” Unfortunately, the study relied heavily on the Federal Reserve System's 2007 Survey of Consumer Finances (SCF) to identify characteristics of individuals participating in DC plans. The GAO could have... Read More >>