Retirement benefits

The Securities and Exchange Commission and the Department of Labor will hold a joint hearing on June 18 at DOL headquarters examining target-date funds.

For the first time, the majority, 55%, of Fortune 100 companies now offer new salaried employees only a defined contribution plan, according to Watson Wyatt. This is up from 46% at the end of 2007.

An article in The Dallas Morning News warns investors against the wide discrepancies in the glide paths, or asset allocations, of target-date funds. As a result of too much risk, it says, some target-date funds are “missing the bull’s-eye.”

Education and longevity solutions are two of the biggest opportunities available to 401(k) providers, according to a study by String Financial.

WASHINGTON--Across the board, executives from leading mutual fund companies reported during the Investment Company Institute's General Membership Meeting that investors have held steady during market turbulence, with only 1% to 3% redeeming equity fund shares in the face of huge market drops.

Turning 401(k) Investors Into Educated Consumers

New Internal Revenue Service accounting rules aim to reconfigure the way investors report gains and losses when they sell stocks and mutual funds by putting the burden on those who handle the transactions.

For years, Americans enjoyed the "wealth effect," the sense that their assets were gaining value rapidly enough that they didn't have to save much. This perception of ever-expanding prosperity gave them freedom to spend lavishly and enjoy life. The effect was a function of feeling wealthy as well as being wealthy.

WASHINGTON - Mutual funds remain a sound investment choice, and will, once again, grow through the perseverance of American ingenuity. Investment firms must stress this to investors to restore their faith.

WASHINGTON—At a separate summit on 401(k) reform during last weeks General Membership Meeting of the Investment Company Institute, Putnam Investments CEO Robert L. Reynolds called for sweeping retirement reform, beginning with mandatory automatic enrollment in qualified default options, savings escalation, the inclusion of retirement income options and full advice on asset allocation and retirement planning.

Asking investors to properly maneuver their 401(k) plans in a market like this is akin to an airline pilot stepping aside and telling passengers to take the controls mid-flight. Workers never asked for so much responsibility in controlling their own retirement future, and most have no idea what to do now that the plane is losing altitude. In fact, most investors seem to be in shock and are doing nothing at all. A persistent problem with the mutual fund industry is the lack of education among its customers about how to manage their own retirement savings. Ignorance was bliss when equities were historically delivering 10% average returns, but the tide has turned. The first wave of Baby Boomers realized they did not have enough savings and decided to bet on risky equities to make up for the shortfall. That gamble backfired when equities in nearly every asset class plummeted last year. Now vastly underfunded as they approach retirement, most Boomers are skeptical they will ever get it back. Financial information is very confusing to the uninitiated. The vocabulary is difficult, the products are complicated, and the professional advice isn't always right. If the fund industry can encourage its customers to become more financially savvy, without stepping on any conflict-of-interest tripwires, its investors will be able to shop for the best products at the lowest cost and keep more assets under management. Younger workers-particularly those in my generation-are getting an early and valuable lesson about market volatility. Buy-and-hold investing is obsolete in an era where one bad year can wipe out 20 years of gains. Younger workers still have plenty of time to more than make up for losses, but will be wary going forward of future bear markets. These investors are plugged in to a myriad of information available instantly at their fingertips. As technology continues to advance, this will lead free-thinking investors who will be able to take responsibility for learning how to navigate their savings. Funds would be wise to become the source and the inspiration for that learning. (c) 2009 Money Management Executive and SourceMedia, Inc. All Rights Reserved. http://www.mmexecutive.com http://www.sourcemedia.com/

Robert L. Reynolds loves a challenge. Without question, he certainly faces one. Trying to restore Putnam Investments' stature among America's top mutual fund companies after the firm's involvement in the trading scandal of 2003 and depletion of assets, now at $99 billion, a mere quarter of what they were in 2000-is a formidable task.

Smart401k has hired Impact Communications to promote its 401(k) advice services for plan participants.

Prudential Retirement has entered into an agreement with Hewitt Associates to offer Prudential’s IncomeFlex Target to Hewitt’s retirement plan clients.

The House Education & Labor Committee last week proposed new rules for 401(k) disclosure that will give investors greater transparency into the fees they are paying, but some 401(k) advocates say the new rules are too aggressive and unnecessary.

NEW YORK - After suffering deep losses in their retirement savings accounts, most Americans appear to be in a state of shock, unsure where to move next.

Commenting on the House Savings Recovery Act introduced this week, Rep. Ed Royce (R-Calif.) said, “Along with our struggling economy, over the past 16 months, millions of Americans have seen their personal savings and retirement accounts hit hard. Americans should be given every opportunity to help rebuild their savings. “

The “Sixty Minutes” segment on 401(k)s that slammed them as being mediocre offerings with hidden fees is not the only shot being taken at the defined contribution model—not by a long shot.

The House Education & Labor Committee has introduced the Fair Disclosure for Retirement Security Act of 2009, which would require 401(k) plans to clearly state all fees with the aim of helping workers shop around for the best retirement options.

Seventy-five percent of employees at companies that have had layoffs, furloughs, suspended 401(k) matches or that have taken other cost-cutting measures, have faith their employer is taking the right action to strengthen the company, according to a Zoomerang survey for iDashboards.