Employee benefits

For most Baby Boomers, even younger ones, the recession has done such a number on their retirement savings that they are gearing up to work longer, set aside more now and live a more modest lifestyle in their so-called golden years, USA Today reports.

At the hearing on target-date funds that the Department of Labor and the Securities and Exchange Commission is holding tomorrow, the focus is likely to be on better disclosure of holdings.

The Department of Labor and the Securities and Exchange Commission have released the agenda and list of speakers at this Thursday’s hearing on target-date funds.

Americans are increasingly worried about their preparedness for retirement, The Hartford found in a survey. Thirty-four percent were either “extremely” or “very” worried about their ability to save for retirement, and 56% said they feared they would have to cut back on their contributions.

Although there have been reports of one-third of employers cutting back on or eliminating 401(k) matches, for the most part, they have continued to add other features to the plans to increase participation and investment rates, Charles Schwab found. And that has helped most workers stay the retirement savings course.

The U.S. House of Representatives has reintroduced a 401(k) fee disclosure bill, the fifth such bill to be considered by Congress.

Although there have been reports of about one-third of employers cutting back on or eliminating 401(k) matches, for the most part, they have continued to add other features to the plans to increase participation and investment rates, Charles Schwab found. And that has helped most workers stay the retirement savings course.

Citing the positive effects of diversification and continued contributions, Vanguard announced that the median decline in the three million defined contribution accounts it administers fell 17% in the 15 months ended March 31, as opposed to the market’s overall 44% decline.

The growing trend for companies to suspend or even eliminate 401(k) matches in this recession will inevitably translate into fewer people contributing to their retirement savings, writes Rockefeller Foundation Associate Vice President Janice M. Nittoli in an editorial in The Wall Street Journal titled, “Now Is No Time to Skimp on Retirement Plans.”

Great-West Retirement Services has launched an updated set of target-date funds that it believes will address some of the problems that were found with target-date funds in 2008.

After so many 2010 target-date funds came up short last year, Prudential Retirement investigated how they might be improved, and decided that including retirement income guarantees would be a key benefit. They would freeze the asset allocations of target-date funds five or 10 years prior to retirement, in exchange for guaranteed income.

Financial Engines has improved its 401(k) advice services with the launch of the Financial Engines Retirement Plan, a personalized statement that addresses each investor’s savings, investments and retirement income needs.

Older workers are much less confident about the outlook for their retirement security than they were two years ago, according to a survey of 2,200 workers by Watson Wyatt. Understandably, those with a pension plan are far more confident than those handling their own retirement savings through a 401(k).

In an interview with the Newark Star-Ledger, AARP CEO A. Barry Rand said he is intent on alleviating the “shock and pain” that is causing some people to believe it’s no longer possible to achieve the American dream.

Only 33% of parents are investing in college savings 529 plans, and only 20% of households earning $150,000 or more are taking advantage of them, according to a Gallup survey commissioned by Sallie Mae.

In a challenge to one of mutual funds' strongholds, exchange-traded fund providers are targeting defined contribution plans.

How far the 401(k) has come since employers first introduced the savings plan in 1981. And how far it has yet to go. 401(k)s, I predict, will become universal in our lifetimes, supplanting all forms of pension plans.

While index funds already have a place in the lineup of most 401(k) plans, a proposed federal mandate to require at least one index fund option in these plans is intrusive and unnecessary, according to industry experts.

Vanguard Group has just announced it will lower its costs for the 19 investment options in the Vanguard 529 College Savings Plan sponsored by the state of Nevada by an average of 12%.

How far the 401(k) has come since employers first introduced the savings plan in 1981. And how far it has yet to go. 401(k)s, I predict, will become universal in our lifetimes, supplanting all forms of pension plans.