July 2021
12Jul

Lack of climate risk analysis in US federal retirement fund sparks concern

The board overseeing the largest public retirement plan in the United States has not comprehensively assessed the risks climate change poses to its investments, a U.S. federal agency says, sparking fears retirement savings pots could be at risk. Read also US. How Benchmarks Keep Pension Stakeholders in the Dark The Federal Retirement Thrift Investment Board (FRTIB) says its investment strategies already price in such risks to its portfolio as they track broader indices of companies coming under new pressure to disclose...

July 12, 2021
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02Jul

Pension Funding Index June 2021

By Zorast Wadia and Charles J. Clark The Milliman 100 PFI funded ratio increases to 98.8% as investment gains counter the effects of discount rate decreases The funded status of the 100 largest corporate defined benefit pension plans increased by $8 billion during May as measured by the Milliman 100 Pension Funding Index (PFI). As of May 31, the deficit improved to $21 billion from $29 billion at the end of April due to strong investment performance. The funded status improvement...

July 2, 2021
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02Jul

US. Public Retirement Benefits Not What They Used to Be

Defined benefit (DB) pension plans are a valuable benefit for employees—offering the option of guaranteed retirement income that is lacking in most defined contribution (DC) plans. Some private-sector employees have been envious of the pension benefits provided to public-sector employees. Over the years some outsiders have even argued that public pensions are too generous, perhaps without understanding that many public employees are required to put a significant percentage of their own pay into the plans. And there has been misunderstanding...

July 2, 2021
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01Jul

US. Now Is The Time To Re-Think Retirement Plan Conventional Wisdom

Retirement plan design can make or break an employee’s ability to maintain their standard of living in retirement. Over the past several decades, many private sector companies implemented a complete overhaul in retirement plan design, shifting from defined benefit pensions to 401(k)-style defined contribution accounts. Originally designed to supplement rather than replace pensions, 401(k) plans have become the primary employer-sponsored plan for many U.S. workers. This transition meant sacrificing a number of important features of pension plans and economic efficiencies....

July 1, 2021
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June 2021
29Jun

US. GAO Studied Retirement Plan Climate Change Risk Assessments

The agency recommended that the Federal Retirement Thrift Investment Board (FRTIB) evaluate the risk of climate change on the Federal Thrift Savings Plan (TSP)'s investment offerings. The Government Accountability Office (GAO) has recommended that the executive director of the Federal Retirement Thrift Investment Board (FRTIB) evaluate the Federal Thrift Savings Plan (TSP)’s investment offerings in light of risks related to climate change. Read also US. Now Is The Time To Re-Think Retirement Plan Conventional Wisdom “Climate change is expected to affect financial...

June 29, 2021
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28Jun

US. Pension risk transfer premiums ease in May

Pension risk transfer premiums fell slightly in May, a Milliman study said. The estimated buyout cost as a percentage of accounting liabilities (accumulated benefit obligation) was 102% as of May 31, down from 102.4% at the end of April. The cost has fluctuated between 101.8% and 102.7% since the beginning of 2021. "As expected, first quarter 2021 pension risk activity was down, but historically each progressing quarter sees an increase in activity," said Mary Leong, Milliman consulting actuary and the study's co-author,...

June 28, 2021
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25Jun

US. American Express boosts auto-enrollment contribution rate to 6% for 401(k) plan

American Express Co., New York, is increasing the amount of automatic enrollment for participants in its 401(k) plan to a before-tax contribution of 6% of total pay, effective Jan. 1, 2022. The company will continue its current policy of an automatic escalation rate of 1% each year until the employee contribution hits 10% of pay, it disclosed in an 11-K filing Wednesday with the SEC. Currently, eligible employees are automatically enrolled to make before-tax contributions of 3% of total pay. The company's...

June 25, 2021
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25Jun

US. Secure Act 2.0 Is Popular, but Not Perfect, Retirement Experts Say

The Secure Act 2.0 provides important benefits to help boost Americans’ retirement savings, but the huge retirement bill does have drawbacks, retirement experts told House lawmakers. Secure Act 2.0 — officially, the Securing a Strong Retirement Act — was part of a review of the nation’s retirement system during a hearing held Wednesday by the House Health, Employment, Labor and Pensions Subcommittee. On May 5, the House Ways and Means Committee passed the Secure Act 2.0, which raises the required minimum...

June 25, 2021
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24Jun

US. Pandemic Magnifies Demand for Retirement Income

The COVID-19 pandemic has increased demand among retirees for retirement income solutions, according to BlackRock’s annual “DC Pulse” survey, which also found that nearly half of defined contribution (DC) plan participants’ finances were negatively impacted by the pandemic. “Workers saving for retirement today are concerned that they are going to outlive their savings, or that they may not enjoy the same kind of comfortable retirement previous generations did,” the report stated. “Plan participants, plan sponsors, and retirees alike all emerge...

June 24, 2021
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18Jun

US. Required IRA, 401(k) withdrawals would start at age 75 under congressional proposal. Here’s who would benefit

The age when older Americans must start making withdrawals from retirement accounts could change yet again. Under a provision in proposed retirement legislation pending in Congress, required minimum distributions, or RMDs, would start at age 75 by 2032, up from age 72 — which only took effect last year after the 2019 Secure Act raised it from age 70½. The proposed adjustment would generally not impact most retirees: The majority — 79.5%, according to the IRS — take more than their...

June 18, 2021
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