This summer, there’s one topic that everyone in Washington, D.C. seems to agree upon: the importance of consolidation in protecting Americans’ retirement security.
Consolidation Corner Blog
Consolidation Corner is the Retirement Clearinghouse (RCH) blog, and features the latest articles and bylines from our executives, addressing important retirement savings portability topics.
“Make the smart decision the easiest decision” seems like an obvious goal for plan sponsors when designing participant-directed retirement plans, and it’s certainly driven the rapid adoption of the autos—auto enrollment, auto deferral escalation, and auto investment options, such as target-date funds and managed accounts.
In his most recent article in MarketWatch, "Are you still feeling luck, 401(k) saver?" RCH’s Spencer Williams reprises last year’s 7/10/15 article where he channeled Clint Eastwood’s iconic movie hero “Dirty Harry” Callahan. Just like the movie villains whose luck ran out at the hands of Dirty Harry, retirement savers who strand their 401(k) accounts must run a gauntlet of decidedly unlucky outcomes – including involuntary cashouts, automatic rollovers and savings-depleting fees.
In November of 2015, Congress enacted the Federal Civil Monetary Penalties Inflation Adjustment Act Improvements Act to apply inflation adjustments to various penalties defined under the Federal Civil Inflation Adjustment Act of 1990. One of those penalties was the $10 per employee penalty for failure to furnish reports to certain former participants and beneficiaries or maintain records. The new penalty, as published in the Federal Register (Table C), is now $28 per employee, effective August 1, 2016.
According to the recently released 2016 Willis Towers Watson U.S. Retirement Governance Survey, a major trend in retirement plan governance is the growing concern employers have for employees’ retirement benefit adequacy and financial well-being. To address this concern, sponsors indicated plans to increase monitoring of participant behaviors, using metrics such as plan participation and contribution rates, as well as carefully tracking the performance of their plans’ investment managers.
In his most recent article in MarketWatch, RCH’s Spencer Williams cites the recent market trauma experienced in the wake of the United Kingdom’s decision to exit the European Union (“Brexit”) as a good reason for retirement-savers to consolidate their accounts.
In his 6/30/16 MarketWatch article, RCH President and CEO Spencer Williams suggests an inter-generational dialogue on the pitfalls to avoid when saving for retirement.
Cash out leakage – the premature withdrawal of retirement savings for non-retirement expenses – is a persistent problem in the retirement industry, and growing more pervasive as employee mobility increases.
As they set out into the working world, RCH President & CEO Spencer Williams counsels the Class of 2016 on the importance of developing good saving habits from the very beginning.