October 2020

20Oct

US. Employers Need to Reinvent Retirement-Savings Match

One of the building blocks of the U.S. retirement savings system is the employer match. If workers contribute to their retirement savings, 54% of employers will contribute as well, according to a recent report by the Plan Sponsor Council of America (PSCA). By helping people prepare for retirement, the match boosts the financial security of workers while giving employers additional workforce flexibility. The recession threatens to undermine the employer match as we know it. According to a survey by...

October 20, 2020
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15Oct

Financial Literacy and Financial Decision-Making at Older Ages

By Joelle H. Fong, Benedict S. Koh, Olivia S. Mitchell, Susann Rohwedder How well older households manage their wealth holdings is an important determinant of their financial security during retirement, yet little is known about their financial decision-making and how this relates to their financial literacy. Our paper fills this gap by measuring financial literacy among older persons in the Singapore Life Panel and examining its association with timely credit card debt repayment, stock market participation, and age-based investment...

October 15, 2020
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15Oct

US. Real estate investments cost NYC pension funds $370M

In a big investment portfolio, some part of it will inevitably underperform. For the city’s biggest pension fund, that part has been private equity real estate. The New York City Employees’ Retirement System ramped up its exposure to that category, only to see it underperform the stock market by $260 million and rack up at least $110 million in fees between 2016 and 2019, New York Focus reported. During those years, the fund increased its portfolio in private equity...

October 15, 2020
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14Oct

US. Deaths of despair: Not everyone benefits from the ‘longevity economy’

America recently passed a grim milestone of over 210,000 COVID-19 deaths, with little hope the pandemic will come under control soon. While the coronavirus has been devastating to those who’ve lost loved ones, it has also exacted a vicious toll on a particular group of older Americans: lower-wage workers, minorities and women who have labored for decades in jobs with unstable incomes and without employee benefits. Read also 5 retirement security risks that 2020 made worse We hear a lot...

October 14, 2020
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12Oct

Thanks to the Coronavirus, There’s a New Barrier to Retirement Savings

Saving for retirement is hard enough for most Americans, many of whom have far too little money set aside. Unfortunately, the coronavirus pandemic has thrown another wrench into the works: Millions of parents across the country have been left without good child care options. In fact, according to a July study from E*Trade Financial, 46% of parents indicated child care was a barrier to retirement, up six percentage points compared with the first quarter, before the pandemic set in....

October 12, 2020
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09Oct

Pensions for State and Local Government Workers Not Covered by Social Security: Do Benefits Meet Federal Standards?

By Laura Quinby, Jean-Pierre Aubry, Alicia H. Munnell Federal law allows certain state and local governments to exclude employees from Social Security coverage if the employees are provided with a sufficiently generous pension. Approximately 6.5 million such workers were not covered by Social Security in 2018. Retirement systems for non-covered workers have become less generous in recent years, and a few plans could exhaust their trust funds within the next decade, putting beneficiaries at risk. This article examines data...

October 9, 2020
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09Oct

US. Can designing DC plans with deferred income annuity options help fill the pension gap?

Pensions, which provided financial security in retirement for previous generations, are all but a thing of the past today, leaving employees looking for the best strategies to ensure they have sufficient savings and income in retirement to last them for as long as they live. Saving in 401(k) and individual retirement accounts is the primary tool today’s savers are using to achieve financial stability in retirement, but guaranteed income is also appealing. Social Security provides one guaranteed income stream...

October 9, 2020
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07Oct

US. Half the population struggles with retirement

Way back in 1992, an Atlanta Journal-Constitution article warned that “[w]ith savings rates down, the future of Social Security in question and traditional plans going the way of the eight-track tape, experts say there’s a retirement crisis looming in America.” Read also US. Can designing DC plans with deferred income annuity options help fill the pension gap? A non-stop drumbeat of articles featuring similar warnings have continued down to the present day, although “retirement crisis” remains opaque as a...

October 7, 2020
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06Oct

LDI immune to COVID-19 but lack of diversification persists

Bookended by two “once in a generation” crises, the past decade was full of surprises, including a double bull market for both equities and fixed income. However, despite record-breaking returns in equity and fixed-income markets, the funded status of the pension plans of companies in the S&P 500 index, in aggregate, exhibited an L-shaped recovery. To answer why funded status did not keep up with soaring equity and bond returns, Voya Investment Management analyzed publicly available information published in...

October 6, 2020
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05Oct

Lengthy era of rock-bottom interest rates leaving its mark on U.S. economy

Even before the Federal Reserve said it would keep interest rates near zero for at least three more years, Dan Bienvenue knew he had a battle on his hands. As chief investment officer of the nearly $400 billion California Public Employees’ Retirement System (CalPERS), which provides benefits for 2 million current and future retirees, Bienvenue must earn an annual return of at least 7 percent. That’s not easy when the safe investments that pension funds usually rely on are...

October 5, 2020
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