October 2018

19Oct

US. Loans could drain U.S. retirement plans by $2.5 trillion

CHICAGO (Reuters) - Americans could dig a $2.5 trillion hole in the country’s retirement system as they fail to pay back loans taken from workplace retirement plans over the next 10 years, according to a new study from Deloitte Consulting. The problem is called “leakage” - borrowing from a 401(k) plan without repaying the money or paying it back so slowly that it disrupts growth. About 40 percent of people borrow from workplace plans. Most repay their loans within five years...

October 19, 2018
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18Oct

AmCham Romania warns new pension law poses risk for budgetary and macroeconomic imbalance

The American Chamber of Commerce in Romania (AmCham), which represents 430 companies, expressed concern in a statement today regarding the significant increase of the social security expenses that the pension law draft, recently approved by the Romanian Government, levies on the general consolidated budget. “We believe that is mandatory for the presentation and consultations around this draft legislation with a major budgetary impact, to include information about the financing sources of the related increases, in accordance with the provisions of...

October 18, 2018
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17Oct

US. Has Connecticut Found A Solution To Underfunded Public Pensions?

Public pensions are underfunded. Okay. I know, I know. We’ve all seen this headline before. Ad nauseum. To add to that, nothing seems to improve. Another year goes by and state employee pensions are still underfunded. The numbers don’t lie: at the close of 2016, the cumulative pension funding deficit stood at $1.4 trillion—the 15thannual increase in pension debt since 2000. It’s not like the states aren’t trying to make up the shortfalls. In fact, contributions to pensions from state...

October 17, 2018
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16Oct

Stars Aligning For Corporate Plans to Take De-Risking Actions

The market volatility experienced in early to mid-October speaks to the importance of plan sponsors having a governance structure and framework in place to effectuate changes to their portfolios in a timely manner when funded levels rise. As we have seen in prior periods, improvements in funded status can dissipate quickly if portfolios are not adjusted to reduce asset and liability mismatches. A well-funded or even fully funded plan can still carry substantial risk for the sponsor if plan...

October 16, 2018
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16Oct

US. Workplace Retirement Coverage Drops And The System Continues To Fail

Despite an aging workforce who are worried about retirement and despite $140 billion annual tax breaks, and despite relatively light regulation, retirement plan coverage at work (including defined benefit and 401(k)-type coverage) has declined over the last two decades. Just 40 percent of workers were covered by a retirement plan through their workplace in 2017 , 4 percentage points lower than in 2014. And retirement plan coverage has fallen in 14 out of 17 years since 2000. The lack...

October 16, 2018
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16Oct

Goldman Sachs Sees Stars Aligning for Pension PRT

Clients with defined benefit plans that are currently enjoying a bump in funded status may want to act soon to lock in those gains while market conditions remain favorable. According to Goldman Sachs Asset Management’s new white paper, “Stars Aligning for Corporate Plans to Take De-Risking Actions,” almost 25% of U.S. corporate defined benefit (DB) plans are now in a fully funded or over-funded position. As the paper’s title indicates, this means many plan sponsors are in a great position to...

October 16, 2018
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15Oct

Companies With Newly Flush Pensions See Chance to Unload the Risk

Some firms with highly funded pension plans are transferring retiree obligations to insurers U.S. corporate pensions are at the highest funded level since the financial crisis, which could lead more companies to turn over to insurers the responsibility for paying retirees, pension consultants say. Higher funding levels mean corporate sponsors get a better deal when transferring retiree obligations to insurers, so many firms are finding this to be the perfect time to transfer the risks associated with carrying pension plans. Defined-benefit pension...

October 15, 2018
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12Oct

Retirement Savings Inequality: Different Effects of Earnings Shocks, Portfolio Selections, and Employer Contributions by Worker Earnings Level

By Joelle Saad-Lessler (The New School for Social Research), Teresa Ghilarducci (Schwartz Center for Economic Policy Analysis (SCEPA); The New School for Social Research), Gayle Reznik (U.S. Social Security Administration) Changes in accumulated retirement savings, particularly in employer-sponsored defined contribution (DC) plan balances, differ by worker’s earnings levels. Earnings shocks, portfolio diversification, and employer contributions to worker’s DC plans affect retirement savings for lower earners more than for higher earners. The authors match Survey of Income and Program Participation data...

October 12, 2018
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11Oct

Trillions in US net worth vulnerable to recession: IMF

A severe recession would slash US public wealth by about $5 trillion, causing vastly more damage to Washington's finances than just an increase in debt and deficits, the IMF warned Tuesday. Yet governments around the world, many of which face similar dangers, do not clearly publicize their overall net worths, the International Monetary Fund said in a new report. This creates a potential blind spot for policymakers who could use this knowledge to head off economic risks, it said. The global crisis...

October 11, 2018
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10Oct

A shocking number of Americans think saving for retirement ‘can wait’—here’s why money experts disagree

Nearly one in three Americans have less than $5,000 saved for retirement. Experts generally recommend trying to accumulate at least $1 million, which gets more and more difficult the longer you put off getting started. And still, an alarming number of adults think saving for retirement can wait. Student-loan provider Navient conducted a national Money Under 35 study of more than 3,000 adults, aged 22 to 35. It reports that only three in 10 respondents are saving for retirement, and...

October 10, 2018
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