Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 2nd, 2016
Editor’s Note
Today, PLANSPONSOR brings you a special edition of NewsDash, sponsored by Franklin Templeton, focused on retirement income.
Context Is Important
Refocusing Perspective on Plan Participants
Are gloomy headlines about the U.S. retirement system bringing our challenges into better focus or distorting our perspective? Incremental changes may help improve participant outcomes without the need for a complete overhaul of the system, according to Drew Carrington, head of Institutional Defined Contribution-U.S. at Franklin Templeton.Read more >
Anyone who has worked for a significant length of time in the retirement planning industry is probably familiar with the risk of being distracted or even misled by overly simplistic “snapshots” of data. Sitting down for a recent interview with PLANSPONSOR, Drew Carrington of Franklin Templeton explained how even the most knowledgeable DC industry experts now and again get bogged down by data.Read more >
Humana Inc. Defeats Class Action Claims of Excessive 401(k) Fees
Rhode Island Becomes 20th State to Pass Retirement Savings Program
Wells Fargo Targeted in New 401(k) Forfeiture Lawsuit
Behaviors of Those Approaching Retirement
Employees Approaching Retirement Defy Conventional Wisdom
To better understand behaviors and attitudes on in-plan retirement income, Franklin Templeton partnered with market research firms to conduct three original studies focused on participants approaching retirement. Contrary to the common belief that plan participants are generally unable or unwilling to prepare for their own retirement, the studies found that participants approaching retirement show higher levels of engagement in their DC plans and a greater willingness to explore new solutions than the general plan participant population.Read more >
Video: DC 3.0
In a recent interview with Alison Cooke Mintzer, editor-in-chief of PLANSPONSOR, Drew Carrington, head of Institutional Defined Contribution-U.S. at Franklin Templeton, discussed the next generation of defined contribution plans.Read more >
PPA’s Impact
The State of the DC Industry, 10 Years Post-PPA
Marking the 10-year anniversary of the Pension Protection Act of 2006 (PPA), industry leaders at Franklin Templeton’s annual Global Investment Forum in May addressed the latest developments in investment and plan design and the path forward to continue helping improve retirement outcomes for plan participants.Read more >
As leader of Franklin Templeton’s U.S. large market institutional defined contribution (DC) business, Drew Carrington says he’s been thinking a lot lately about the legacy of the Pension Protection Act (PPA), which officially turns 10-years old later in 2016. “While the DOL’s fiduciary rule gets the most headlines these days, the PPA is still having a major day-to-day impact on the retirement planning space,” he says, “driving employers towards automation and making them more mindful about their ethical and practical responsibilities for preparing their employees for a successful retirement.”Read more >
Retirement Income
Reframing Social Security for Plan Participants
Plan participants may not make the optimal decision about when and how to claim Social Security benefits because they can be overwhelmed by the array of choices. As part of a broader financial wellness strategy, plan sponsors can host modeling tools to help their participants understand the benefits of different Social Security claiming approaches and fit Social Security into their broader plan for retirement income.Read more >
The income replacement rate (IRR)—income immediately following retirement divided by income immediately preceding retirement—is commonly used as a measure of economic preparation for retirement. Various online calculators, for example, suggest that retirement income replacement rates should exceed 70% of pre-retirement income. In “Measuring Economic Preparation for Retirement: Income Versus Consumption,” a paper by Michael D. Hurd and Susann Rohwedder, two senior economists at RAND Corporation, the researchers contend that the widely accepted concept omits a number of relevant issues.Read more >
Corporate Insight analyzed the retirement calculators of 12 financial institutions—six of them retirement plan recordkeepers and six not—and despite inputting the same data points for each, found exceptionally different results. The monthly income projections ranged from a high of $6,013 to a low of $3,772, a 60% spread, and the differences between the monthly income goals were even wider, ranging from a high of $9,029 to a low of $4,892, an 85% spread.Read more >
“Whatever does not get measured does not get managed,” the adage says. Adviser James Brewer thinks plan sponsors should remember that, should they doubt the usefulness of doing retirement savings gap analyses.Read more >
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Editorial: Alison Cooke Mintzer


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