July 2024
17Jul

US. Rallying Stock Market May Help Public Pensions Reduce Shortfall This Year, Study Finds

KEY TAKEAWAYS State and local government-sponsored employer pension funds are projected to earn a 7.4% market return this year. However, these pension funds still face a long-run funding shortfall of more than $1 trillion, according to a new study by a nonprofit think tank working with the public retirement system. Public pension funds have increased their investments in hedge funds, private capital, and real estate to boost returns. It’s been a good year for pension funds. While public pension funds...

July 17, 2024
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15Jul

US. The $25 Trillion System of Retirement Savings Needs Fixing

Few Americans today know much about Studebaker or Packard automobiles. Classic car aficionados recall their sleek, innovative designs, but the brands are also a reminder of another bygone era: the traditional defined benefit pension. Studebaker and Packard merged in 1954 and later went out of business. Their pension plans were terminated, leaving thousands of workers without their expected benefits. That, along with other pension plan failures, prompted efforts to make retirement savings safer, culminating in federal legislation that has shaped much...

July 15, 2024
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12Jul

US. DOL may review ‘derisking’ pension risk transfers, says congressional report

A recent Department of Labor report to Congress reaffirming current fiduciary standards for selecting annuity providers in defined benefit pension plans also includes notice that it may review the increasingly common, and controversial, practice of companies transferring pension risks to life insurers, commonly known as “derisking.” The report by the DOL’s Employee Benefits Security Administration (EBSA), which was mandated by 2022’s SECURE 2.0 Act, reviews its 1995 Interpretive Bulletin 95-1 that outlined the responsibilities of fiduciaries under the Employment Retirement Income Security...

July 12, 2024
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11Jul

70% of U.S. employers say benefits critical to attraction, retention efforts: report

Nearly three-quarters (70 per cent) of U.S. employers say their company’s benefits package is critical to attracting and retaining the best workers, according to a new report by LIMRA. It found half (51 per cent) of employers believe their company will be offering more benefits in the future than it does today and another six in 10 (61 per cent) said their employees will expect a wider variety of benefits options. Indeed, many employees — especially middle-income workers, younger workers and those...

July 11, 2024
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11Jul

U.S. companies’ pension funds poised to stock up on corporate debt after big gains

The pension funds of U.S. companies are poised to shift billions of dollars into corporate credit, after months of stock-market gains and higher bond yields have left them awash with cash, analysts and advisers said. Corporate pension plans had 103.7% of the funding they need to meet obligations as of June, the highest level since 2022, according to the Milliman 100 Pension Funding Index. That metric has dropped below 100% only four times since March 2022. Big gains in U.S....

July 11, 2024
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11Jul

Reality bites for Gen X retirement

The Slacker generation might have been slacking off when it came to planning for retirement: Gen X consistently ranks in surveys as the least-prepared group for when they stop earning. Why it matters: The first members of Gen X were born in January 1965, which means they turn 59½ this month and can start withdrawing money from 401(k) and other retirement accounts without paying a penalty. The big picture: As Gen Xers get older, they are getting increasingly worried about looming financial problems in...

July 11, 2024
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10Jul

US Remains Biggest Force in Pension Realm, per Study

The U.S. continues to dominate the world’s pension system, according to a study by the Thinking Ahead Institute, a research organization sponsored by financial services giant WTW. As of year-end 2023, U.S. pension assets (both defined benefit and defined contribution) made up 63.9% of the globe’s 22 highest-value pension-providing nations, up from 56.5% 10 years before, the study indicated. That may have something to do with the large amount U.S. pension providers allocate to equities—42%—over a span when stocks did well. Among the...

July 10, 2024
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09Jul

US. Employer group urges Congress to increase retirement plan awareness for gig workers

In response to a request for information on June 5 from Senator Bill Cassidy (R-LA), ranking member of the Senate Health, Education, Labor and Pensions (HELP) Committee, for ways to allow gig workers access to retirement benefits, the American Benefits Council (ABC) has responded. The employer group sent a letter, including suggestions introduced in the SECURE 2.0. legislation, as well as pooled employers plans (PEPs) established by Congress. "The vast majority of independent workers prefer alternative work arrangements to traditional...

July 9, 2024
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09Jul

US. Retirement Readiness Confidence Robust

Confidence in financial readiness to retire is robust, despite the vagaries of inflation and other economic factors and the after-effects of the pandemic.  And that confidence is especially attuned to participating in a retirement plan. The Employee Benefit Research Institute (EBRI) in its 2024 Retirement Confidence Survey reports much strong confidence. However, it’s more than twice as high among those with retirement plan coverage than among those who lack it. Among respondents who are covered by a retirement plan, 77% of...

July 9, 2024
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08Jul

America’s pension system gets C+ rating, falling behind other countries

America’s pension system is failing to make the grade, according to a recent report from the Schwartz Center for Economic Policy Analysis. “The United States’ pension system consistently ranks below other comparable countries, getting a barely passing grade of C+ in both the 2022 and 2023 Melbourne Mercer Pension Index rankings,” according to SCEPA. Australia, Denmark and the Netherlands each scored grades of B+ or higher. The difference between the United States and those other countries is that mandatory contributions and simple pension management...

July 8, 2024
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