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Private Pension Issues
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Pension Issues
Public Pension Funds Are Adding Risk to Raise Returns (March 8, 2010)
While companies are quietly and gradually moving their pension funds out of stocks and buying more long-term bonds to reduce their investment risk,
States and other bodies of government are seeking higher returns for their pension funds to pay all the benefits promised to present and future retirees. However, higher returns come with more risk. Moreover, a growing number of experts say that governments need to lower their assumptions about rates of
return to reflect today's market conditions.
401(k)s Still Fall Short as a
Retirement Strategy (March 4, 2010)
Only about half the US workforce is covered by some type of employer-sponsored retirement plan.
Most of those are 401(k) plans, which usually require employees to contribute and make investment decisions. Moreover, the majority of Americans can't depend exclusively on pension plans because of the substantial losses these accounts sustained during the Great Recession. Consequently, one-third of all workers will likely end up depending on Social Security for all of their retirement income.
Biden Unveils New Rules on US Retirement Savings (February 26, 2010)
Vice President Biden announced new regulations on US retirement savings aimed at protecting employees and their 401(k) and IRA retirement savings plans from financial advisers' potential conflicts of interest. The new rules also protect the rights of workers in collective bargaining agreements and access to the details of
healthcare plans.
Auto Enrollment Grabs Reluctant Retirement Savers (February 16, 2010)
More and more companies use auto enrollment, auto escalation and auto rebalancing, Thus, about 60 percent of companies with 401(k) plans automatically deduct a portion of a new worker's pay and put it in a retirement account. Moreover, among companies using automatic enrollment about half also use auto escalation, which gradually increases a worker's contribution each year. Finally, auto rebalancing is a way to reset the allocation of stocks, bonds and cash in a 401(k) fund every three, six or 12 months to keep it in line with
a desired mix of investments.
Report: Workers' Response to the Market Crash: Save More, Work More? (February 2010)
How well are workers making up for their retirement losses from the 2008 market crash. Experts says that they must be able to save more and work longer in order to improve their retirement prospects. In the summer of 2009, the Center for Retirement Research at Boston College (CRR) surveyed workers approaching retirement, age 45 to 59, on changes in retirement saving and expected retirement ages. The main results show an expected rise in retirement age and little change in retirement savings, with more education on different retirement plans as having the potential to change current trends.
Obama Makes Auto IRA, Retirement Savings a Focus (January 28, 2010)
The government is circulating proposals to help Americans save more for retirement. This article presents the major initiatives and some early reactions to them. The package includes programs to guarantee all workers access to a retirement plan through their jobs-with automatic IRA (Individual Retirement Account); expanding the tax credits that reward saving for retirement; and tightening 401(k) regulations to make them safer and more efficient.
How Retirees Saved the Banks (January 18, 2010)
In order to buy time for the banks to earn their way back to health, the government is keeping the savings yields low. Low yields allow banks to borrow cheaply, so money is rolling in and they don't need to compete with one another for savings depositors, which further depresses the interest offered. The situation is particularly tough on retirees who rely on interest income to supplement their Social Security. It leads some of them to take out reverse mortgages--as risky as they may be--to increase their income.
US Bank Faces Lawsuit for Pension Losses (January 12, 2010)
While the US economy may be starting to recover, individuals are now asking for answers and, sometimes, compensation from the banks. A class action has been filed against Sterling Savings Bank on behalf of staff seeking compensation over the firm's alleged failure to protect pension investments in company stock. The lawsuit alleges that 2,500 employees in five states lost money in their 401(k) plans as a result of the Spokane-based company's negligence in failing to disclose massive financial problems.
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