Employee Retirement Income Security Act

Proposed legislation could encourage Americans to roll over 401(k) plans into retirement annuities. The legislation would amend the Employee Retirement Income Security Act of 1974 to bring about sharper lifetime income retirement planning.

Under the bill, sponsors of 401 (k) plans and other private defined contribution plans would be required to show annually, on one pension benefit statement, how the value of retirement accounts translates into guaranteed monthly payments based on such factors as age at retirement. Currently, most private retirement plans only provide participants with lump-sum values.

Retirement Confidence Survey

In 2009, only 13 percent of American workers said they were “very confident” about having enough money for a comfortable retirement, according to the annual Retirement Confidence Survey by market researchers Matthew Greenwald & Associates. This is the lowest number since Greenwald started the survey in 1993.

Australia and New Zealand Retirement: Strategic Ethos Good Examples

Strategic Ethos, a business ethics consulting firm, is calling for a complete overhaul of the U.S. retirement system. It contends that the U.S. should create a mandatory retirement system modeled after those in Australia and New Zealand. A New Zealand retirement is a good one.

Normal Retirement Age for Government Pension Plans

Four years ago, the IRS published a rule regarding how low the normal retirement age (NRA) may be for government pension plans. The IRS has twice extended the effective date of the rule. The current effective date is January 1, 2013.

In simple terms, the regulation provides that:

• An NRA below age 55 years is presumed unreasonable unless the federal Tax Commissioner determines that the age is justified under the facts and circumstances of the plan.
• An NRA between 55 and 62 years is deemed reasonable if the employer makes a good faith determination, based on the applicable facts and circumstances that the plan's NRA reasonably represents the typical retirement age for the industry in which the covered workforce is employed.
• An NRA of at least 62 years (or age 50 for plans in which substantially all the participants are qualified public safety employees) is presumed to comply.

Better Disclosure of 401(k) Fees

Lawmakers and others are pushing for new retirement-plan rules and policies in the aftermath of the recent financial crisis’ huge blow to 401(k) retirement accounts.

If the Democrats maintain control of the Senate and health-care reform moves off center stage, efforts to overhaul the entire retirement system, including defined-benefit and 401(k) plans, might make headlines by early summer.

If Republicans gain control after the mid-term elections, there will likely not be major changes to retirement-plan rules.

Regardless of who wins there will likely be some tweaking of existing regulations. Most importantly, most experts agree we need a law requiring better disclosure of 401(k) fees.

What Americans Don’t Want

According to a survey by the Investment Company Institute, the lobbying group for the mutual-fund industry, the things Americans don't want in retirement plan reform are the for the government to remove or reduce tax incentives for retirement savings, make investment decision for them, take away their ability to invest in their defined-contribution accounts, or replace all their retirement accounts with a government bond.

Help(2) retire ______________

Bank of America has announced the debut of "help(2)retire______", a new, U.S.-based marketing campaign designed to illustrate individuals' evolving retirement priorities and personal aspirations. The campaign encourages individuals to "fill in the blank" by identifying aspects of their working and financial lives that they want to put an end to, such as guesswork and confusion

This theme builds on an ongoing Merrill Lynch Wealth Management "help(2)" campaign, first launched in October 2009 to demonstrate a commitment to delivering personalized, insightful financial advice, along with a broad platform of financial solutions, to help clients pursue their financial goals. It further reflects results from the latest Merrill Lynch Affluent Insights Quarterly survey, released Jan. 14, 2010, which found that roughly half (51%) of retired respondents would have focused more on their 'life goals' and less on 'the numbers' when planning for retirement if they could do it all again. These respondents indicated that they would have spent more time determining how they wanted to live in their retirement years (38%) and based their retirement income needs, not just on a number that would sustain them but on one that would help them live their ideal lifestyle during these years (13%).

Bank of America will spend roughly $20 million on the new "help(2)retire______" campaign, which launches on Jan. 25, 2010, and will run through the end of April 2010. The campaign is scheduled to air during both broadcast network and national cable programming, including on Bloomberg TV, The Golf Channel, and CBS College Sports. It will also appear in a variety of print and online daily and weekly publications and trade magazines, including the Wall Street Journal.

Asset Recovery in South Dakota

A state Senate committee has endorsed a plan to limit annual increases in retirement benefits to improve the South Dakota Retirement System's financial condition after two years of investment losses. The Retirement Laws Committee approved three bills aimed at helping the system recover asset losses. The bills next go to the full Senate for debate.

The main bill would reduce the annual cost-of-living adjustments at least temporarily in the retirement system that covers public employees throughout South Dakota.

The Retirement System's assets fell to $5.6 billion by the end of the last fiscal year ending June 30, down more than 20 percent from $7.3 billion a year earlier, because of a loss in value of stocks and other investments. It also lost 8.7 percent of its value in the previous year.

Officials have said that about $1 billion of the loss has been recovered in the past six months as the stock market has risen.

Defined Contribution Plans: Working? And For Whom?

401(k) plan participants using professional investment help provided by their employer enjoy better returns on their retirement investments than those who do not, according to a joint study from Hewitt Associates entitled Help in Defined Contribution Plans: Is it Working and for Whom? The study also found that a participant’s age is the key predictor of the type of help used, with younger, less-tenured participants more likely to seek out target date funds and older, more-tenured participants more likely to use managed accounts.

Popular Early-Out in California

Pomona (California) Unified School District's early retirement incentive program has attracted 128 employees who have submitted their paperwork for participating in the program. This is a good fraction of the 265 employees deemed eligible.

The program awards a retirement supplement averaging $65,000. It is expected to help lower district personnel costs and reduce layoffs as administrators prepare for $36 million worth of budget reductions.