Compliance July 19, 2022

Equitable Financial Settles SEC Charges for $50M

The market regulator says the firm provided misleading account statements to investors.

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The Securities and Exchange Commission announced on Tuesday that it has secured a settlement from Equitable Financial Life Insurance Company related to fraud charges it brought against the firm earlier this year.

The basis of the charges, according to an SEC statement, is that Equitable allegedly provided account statements to about 1.4 million variable annuity investors that included “materially misleading statements and omissions” concerning investor fees.

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Equitable has agreed to pay $50 million to the harmed investors to settle the charges. Most of the clients affected are public school teachers and staff members.

As described in the SEC’s order, since at least 2016, Equitable gave investors the false impression that their quarterly account statements listed all fees paid during the period. The SEC’s investigation found that, in reality, the statements listed only certain types of fees that investors infrequently incurred and that the statements often had $0.00 listed in fees.

Gurbir Grewal, director of the SEC’s Division of Enforcement, noted in the SEC statement that it is “essential” that investors are not misled about the fees they are paying.

“This case should serve as an important reminder to investment firms to carefully review their statements to ensure fee information is disclosed properly,” he said.

Specifically, the SEC’s order finds that Equitable violated the antifraud provisions of the Securities Act of 1933. In agreeing to pay the settlement, the firm neither admits nor denies the SEC’s findings. The firm has also agreed to “cease and desist from committing or causing any future violations of these provisions and to pay a $50 million civil penalty that it will distribute to affected investors.”

Equitable also agreed to revise how it presents fee information in its variable annuity account statements.

Data & Research July 19, 2022

Americans’ Retirement Expectations Remain Fluid

Survey results from WTW show the pandemic has changed the way different age groups set retirement expectations.

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Nearly three out of four respondents with an employer-sponsored retirement plan, or 73%, said their employer’s retirement plan is the primary vehicle they use to save for retirement, according to new research from the 2022 Global Benefits Attitudes Survey by WTW, released Tuesday.

Among those respondents, 69% said their retirement plan meets their needs; however, many employees would like more help from their employers. In fact, 44% of all employees ranked retirement in the top three issues they most want their employers to focus on.

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“Employees want help with saving for retirement. So, it’s imperative for employers to ensure their Total Rewards programs provide not only benefits that meet employees’ needs but also the employee engagement resources, tools and technology to make informed decisions about saving for retirement. When their financial wellbeing is strong, employees are more likely to be engaged and productive and less likely to leave their organization,” said Jennifer DeMeo, managing director of integrated and global solutions at WTW, in a statement.

Overall, 69% of U.S. employees surveyed recognize they are not saving enough for retirement, according to the survey of more than 9,600 U.S. employees. Additionally, people closer to retirement are more likely than before the COVID-19 pandemic to say they will retire beyond the age of 70.

The WTW survey found that the top three reasons employees cited for not saving more for retirement were paying off debts (36%); saving money for other reasons, such as holidays, purchasing a car or paying for education (28%); and not being able to afford to save more (27%). More than half of respondents (52%) reported facing key risks to their retirement security. Those risks include saving less than 5% of their salary despite wanting to save more, borrowing from their 401(k) plan and withdrawing funds from their retirement plans.

Additionally, three in 10 respondents (29%) reported expecting to work past age 70 or never retire, which is similar to the pre-pandemic survey results from 2019. However, while just one in four younger workers now plan to retire at age 70 or later, or never retire, the number of workers age 50 and over who plan to do so has risen to 36% compared with 30% in 2019. This suggests the pandemic has changed the way different ages set retirement expectations.

“Saving enough money to retire comfortably while meeting current financial needs remains a significant challenge for a majority of workers,” said Mark Smrecek, senior director, retirement at WTW, in a statement about the survey.

The 2022 Global Benefits Attitudes Survey was conducted online and collected 35,549 responses in 23 markets worldwide during December 2021 and January 2022. Respondents include 9,658 U.S. employees from large and midsize private employers, representing a broad range of industries, according to information from WTW.

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