PLANADVISER - November/December 2018 - 17

The Value of Detailed Plan Analytics
Report says using more specific data will improve retirment readiness
" DEFINED contribution [DC] retirement
plan sponsors can strengthen
their plan governance and improve
their plan's return on investment
[ROI] by using detailed analytics that
evaluate specific segments of their
employee population, based on age, job
category, tenure and benefit structure, "
says a recent Willis Towers Watson
" Insights. "
In fact,
its research suggests that
using the right analytics can pinpoint
the employees and groups most at
risk, enabling the plan sponsor to then
custom-select tools and strategies to
help them improve their retirement
saving.
The paper points to good intentions
yet to be realized: 83% of respondents
to the firm's 2017 DC Plan Sponsor
Survey cited retirement readiness as
a top priority, yet just 17% said they
allocate time to discuss the subject in
committee meetings, focusing instead
" Only one-third of DC plan committees
analyze retirement readiness annually,
and less than half assess readiness at
least every three years. "
on evaluating investment managers
and monitoring fund performance.
" Only one-third of DC plan committees
analyze retirement readiness annually,
and less than half assess readiness
at least every three years, " it says.
The lack of specific information
that can be useful for setting improvement
goals only compounds the situation,
the report notes.
" We believe plan-wide statistics on
mean or median participation rates,
balances or contribution rates measure
aggregate data on all participants,
but offer little insight into retirement
adequacy and meaningful benchmarks
for individuals or population segments, "
the paper says.
Having use of the proper detailed
analytics, though, should enable plan
sponsors to " develop objectives and
an overall plan strategy that fosters
retirement readiness in two key ways, "
it concludes. " The first considers steps
plan sponsors can take on their own
through plan design to establish participation,
saving and investment. The
second looks at the tactics used to
motivate participants to take financial
action, including improving behaviors
to increase savings, tax efficiency,
investing and spending. " -PA
Monthly Income Projection Needs
Sharing this information can boost participants' confidence-and savings
MANY Americans fail to understand
how their retirement account balances
will translate into income during their
retirement years, LIMRA Secure Retirement
Institute (SRI) research found.
More than half (52%) of U.S. workers
ages 20 through 79 that the institute
surveyed recently for its study said it is
difficult to know how retirement savings
will translate into monthly income. The
study suggests that offering workers
retirement-savings income estimates
can help bridge this gap.
Fifty-two percent of respondents
said they have seen an estimate of
their retirement income. About four in
10 retirees reported wishing they had
seen more frequent estimates of how
much monthly income their savings
would generate in retirement before
they had retired.
Breaking down findings by generation,
Baby Boomers were more apt to
have seen an estimate of their monthly
income than were Generation X or
Millennials. According to a LIMRA SRI
representative, " Viewing their monthly
income in actual dollar amounts, rather
than as a percentage of pre-retirement
income,
is more meaningful
to Baby
Boomers. Because they're closer to
retirement than the younger generations,
they may have a better sense of
what their retirement expenses will be. "
Retirement income estimates help
improve workers' retirement decisions.
After seeing their estimated income,
almost half of all workers (48%)
increased their retirement savings,
they said. " This could have the greatest
impact on the savings habits of younger
workers, as they have more time to
save, " the representative says. " Fiftyfive
percent of Millennials increased
their retirement savings after seeing
their estimated retirement income. "
Among workers who received an
estimate of what their income would
be in retirement, almost seven in 10
expressed confidence they would live
the retirement lifestyle they desired,
and seven in 10 said they were saving
enough to live comfortably in retirement.
-Rebecca Moore
planadviser.com November-December 2018 | 17
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PLANADVISER - November/December 2018

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