August 2020

11Aug

The Millennial Retirement Puzzle

Millennials now comprise the largest living demographic group in the U.S. Thanks to innovation and advances in technology, this first generation of digital natives has enjoyed opportunities that were unimaginable a few decades ago. Their demand for transparency, relevance and authenticity in the way they interact with service providers has been the driver of unprecedented change across industries, including — and perhaps especially — financial services. Read also Nearly half of young people have lost income due to the...

August 11, 2020
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11Aug

US. Public Funds Lead Institutional Investment Rebound

Institutional plan sponsors posted a median plan return of 10.6% during the second quarter as markets rebounded from the COVID-19 pandemic-induced first quarter crash thanks to a strong performance by US equities, according to the Northern Trust Universe. The Northern Trust Universe tracks the performance of more than 320 large US institutional investment plans that have an aggregate asset value of more than $1 trillion. Public funds outperformed the other institutional segments tracked by Northern Trust, earning...

August 11, 2020
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10Aug

US. California’s immense pension dilemma

California’s public employee pension dilemma boils down to this: The California Public Employees Retirement System has scarcely two-thirds of the money it needs to pay benefits that state and local governments have promised their workers. Moreover, CalPERS’ official estimate that it is 70.8% funded is based on an assumption of future investment earnings averaging 7% a year, which probably is at least one or two percentage points too high. In the 2019-20 fiscal year that ended June 30, CalPERS...

August 10, 2020
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07Aug

How Much to Save? Decision Costs and Retirement Plan Participation

By Jacob Goldin, Tatiana Alexandra Homonoff, Richard Patterson, Bill Skimmyhorn Deciding how much to save for retirement can be complicated. Drawing on a field experiment conducted with the Department of Defense, we study whether such complexity depresses participation in an employer-sponsored retirement saving plan. We find that simplifying one dimension of the enrollment decision, by highlighting a potential rate at which non-participants might contribute, increases participation in the plan. Similar communications that did not include a highlighted rate yield...

August 7, 2020
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04Aug

US. Beleaguered Public Pension Funds Make Record Gains in Second Quarter

Public pension funds set a 22-year performance record in the second quarter, recovering some but not all of their losses from the first quarter. Double-digit stock gains pushed pension returns to a median 11.1% for the second quarter, according to Wilshire Trust Universe Comparison Service. Even with the rebound, median annual returns for the public pensions whose fiscal years ended June 30 were 3.2%, far short of the funds’ long-term investment-return target of around 7%. “That’s the funny thing...

August 4, 2020
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03Aug

Nearly 1 in 5 Americans Is Delaying Retirement Due to COVID-19.

The COVID-19 pandemic has had a huge financial impact since cases first started multiplying rapidly back in March. Now, almost five months later, unemployment is still rampant and the economy is stuck deep in recession territory. Read aslo US. Beleaguered Public Pension Funds Make Record Gains in Second Quarter All of this is causing Americans to rethink their near-term and long-term financial plans, so it's not surprising to learn that 19% of U.S. adults now intend to push back their...

August 3, 2020
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July 2020

28Jul

US. DOL’S ESG proposal would hurt retirement accounts

The Department of Labor lost an opportunity to encourage investors to support causes that they hold close to their hearts with a proposed rule regarding the investment choices they’re allowed in their retirement accounts. It’s a proposal that also could end up damaging Americans’ retirement security long-term if allowed to become part of the Employee Retirement Income Security Act. The June 23 proposal reaffirmed standard thoughts on fiduciary responsibilities that suggest only financial risk and returns can be considered...

July 28, 2020
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27Jul

Gig and older workers need to take control of their retirement

Several retirement trends have been brought into focus by the COVID-19 pandemic. One of the most disturbing is the number of workers between 50 and 65 who are in jobs without retirement benefits. Today half of all workers don’t have access to a work sponsored retirement plan. Read also US. DOL’S ESG proposal would hurt retirement accounts According to a recent study by Alicia H. Munnell and her colleagues at the Center for Retirement Research at Boston College, one-fifth of...

July 27, 2020
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24Jul

US. COVID-19 Underscores Need to Address Retirement Savings Gaps

Addressing the 2020 NAPA D.C. Fly-In Forum this week, two members of the House Ways & Means Committee shared their thoughts on how the economic stress caused by the pandemic has shined a spotlight on the need to better align retirement savings incentives. “I actually believe, long term, the biggest issue for the United States is retirement security,” noted Rep. David Schweikert (R-AZ). “If you look at the U.S. demographics, we have so many of our Baby Boom...

July 24, 2020
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22Jul

US considers restricting ESG in pensions

The US Department of Labor (DOL) is considering imposing strict rules on how pension funds invest, which could see the scope for ethical and responsible investing limited. The DOL has proposed an amendment to the Employee Retirement Income Security Act 1974 (ERISA) "to confirm that ERISA requires plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk adjusted economic value of a particular investment or investment course of action." The...

July 22, 2020
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