Posts in Saving for Retirement
SECURE Retirement Legislation on HOLD in the Senate

“Congress will soon be returning to Washington from its summer recess. The question for those interested in retirement policy is whether pension reform will finally move forward this year. The answer will depend on whether several key senators agree to lift the “holds” they have placed on the legislation.”

Click here to read the update.

Source: Trucker Huss

Retirement Summit: Key Takeaways

Written by Christian O’Dwyer, CFA
Christian is a Vice President at Innovest Portfolio Solutions

Innovest joined more than two hundred plan sponsors, advisors, and asset managers in New York City in May to discuss how the industry can continue improving products and services that drive better outcomes for retirement plan participants. The discussions, which took place at the J.P. Morgan Retirement Summit, included a variety of topics: auto enrollment and escalation, target date funds, fee-related regulatory and legislative updates, and protecting personal and plan information from cybercrime.

As the retirement landscape evolves, new trends have emerged. Total industry assets currently stand at approximately $27 trillion and are split evenly between defined contribution, defined benefit, and individual retirement accounts. Among defined contribution plans, 64% of plans have adopted autoenrollment, and 62% offer target date funds. Of the plans offering target date funds, 78% use them as the Qualified Default Investment Alternative. (1) These statistics demonstrate that many plan sponsors are facilitating retirement savings and helping younger employees to invest earlier. However, of the plans with auto enrollment, only 50% also use auto escalation, which has led to lower average contribution rates. Participants who are not actively engaged in monitoring and managing their retirement savings most likely will not save enough to fully fund retirement with average auto enrollment amounts of 3% to 6%. Therefore, plan sponsors should consider the appropriateness of adding auto escalation to their plans.

The retirement summit also focused on litigation pertaining to fiduciary responsibilities. As Innovest consistently reminds its clients, one of the key fiduciary responsibilities is to act prudently and in the best interest of plan participants. Two important court decisions in 2018 helped to clarify how plan sponsors can meet that standard when selecting investments. In White v. Chevron, participants in Chevron’s retirement plan alleged the plan sponsor breached its fiduciary duty by failing to select the cheapest investment vehicles and failing to monitor asset-based revenue sharing. In November 2018, the Ninth Circuit Court of Appeals affirmed the district court’s dismissal of the case. (2) According to the district court’s decision, “Fiduciaries have latitude to value investment features other than price (and indeed are required to do so)”, for example “potential for higher return, lower financial risk, more services offered, or greater management flexibility.” (3) Similarly, the Eight Circuit Court of Appeals recognized that the duty of prudence does not require selecting the investment strategy that ultimately performs best. (4) In the words of the district court’s opinion in that case, “one would expect the Wells Fargo and Vanguard funds to perform differently because the Wells Fargo funds have a different investment strategy than the Vanguard funds. …Therefore, it does not necessarily follow that the Wells Fargo funds were substandard compared to the Vanguard funds.” (5)

The summit provided Innovest with a great opportunity to discuss pressing issues with other industry professionals. Some of the key takeaways were that adding auto escalation, when appropriate, is an important complement to auto enrollment; selecting appropriate investments involves assessing the funds’ value, not only their costs; and protecting against cybercrime looms as a large challenge for sponsors and participants.


1 J.P. Morgan Plan Participant Research 2018

2 White v. Chevron Corp., 752 F. App’x 453 (9th Cir. 2018),

3 White v. Chevron Corp., 2016 WL 4502808 at *9-10 (N.D. Cal. Aug. 29,

2016), citing Tibble v. Edison Int’l, 729 F. 3d 1110 (9th Cir. 2013).

4 Meiners v. Wells Fargo & Co., 898 F.3d 820 , (8th Cir. 2018)

5 Meiners v. Wells Fargo & Co., 2017 WL 2303968 (D. Minn. 2017 ;)

The Society for Resource Management's 2019 Survey Reveals Most Popular Employee Benefits

“SHRM conducts the survey annually to gather information on the types of benefits employers are offering their employees and to report on trends. The survey revealed that employers were more likely to increase, rather than, decrease, their benefits offerings.”

See what trends managers are moving towards by clicking here!

Source: Xpert HR Blog

SECURE Retirement Act: Ten Potential Impacts

The U.S. House of Representatives made a significant step toward retirement reform by passing the Setting Every Community Up for Retirement Enhancement (SECURE) Act in May. While the act has not been taken up by the Senate or signed by the President, it points to some significant changes impacting individuals and plan sponsors. Click here for a three-page overview from Plante Moran.

Source: Plante Moran

Social Security is About to Pay Out More Than it Takes In -- for the first time in decades

“By 2020, obligations to retirees and disabled Americans will cost more than Social Security’s revenue from payroll taxes, taxes on benefits, and interest earned on investments.

That imbalance is expected to continue until the SSA’s main trust fund—the Old-Age and Survivors Insurance fund—is depleted in 2034, at which time scheduled benefits would be cut 23 percent to retirees. This year’s projection is inline with last year’s Trustees Report.” Click here to keep reading.

Source: BenefitsPro

Boosting Effectiveness of Retirement Plan Communications

“Words have the potential to inform, encourage and empower. But the wrong words can be powerful in negative ways, leaving people uncomfortable, overwhelmed or confused. Using the right words is especially critical in financial matters. Employees need to understand their retirement plan options so they can make the best decisions for their future, but the general public often misunderstands words that are commonly used by financial providers, employers and others in the retirement planning industry.” Click here to keep reading.


Ways and Means Moves Comprehensive Retirement Reforms Foreward

“The most powerful committee in the U.S. House of Representatives has advanced a powerful piece of retirement reform legislation – unanimously.

Signifying the importance of the issue, the first markup meeting of the House Ways & Means Committee for the 116th Congress on April 2 featured the approval of wide-ranging legislation to make it easier for businesses to offer retirement plans and for individuals to save for retirement."  Click here to keep reading.


Janus Henderson Outlines Next-Generation Automatic Plan Features

“Automatic retirement plan features have put significant numbers of employees in the U.S. on a path towards retirement readiness, but employers could still do a lot more to overcome participant inertia.  

This is according to a new white paper published by Janus Henderson, “Defined Contribution Redefined.” According to Janus Henderson researchers, since the enactment of the Pension Protection Act of 2006 (PPA), automatic features have become common within defined contribution (DC) plans such as 401(k)s, 403(b)s and 457s. In particular, the main trio of automatic features—auto-enrollment, auto-escalation and automatically diversified qualified default investment alternatives (QDIAs)—have helped increase DC assets from $3.0 trillion in 2007 to $5.3 trillion in 2017.” Click here to keep reading.


Why Finanical Wellness is a Must-Have Employee Benefit

“A recent PwC survey of U.S. employees showed that financial wellness is the most desired benefit exceeding even student loan repayment. According to the SunTrust National Financial Confidence Index, 43% of Americans don’t have $500 saved for emergencies and two-thirds report that financial stress keeps them up at night. That worry follows them to work, often leading to lower satisfaction in pay, decreased productivity and poorer health.” Click here to read more.

Source: EBN