Data & Research October 26, 2009

MassMutual Finds Participants More Engaged

MassMutual Retirement Services' quarterly analysis of plans it administers indicates plan participants are more engaged in their retirement planning and saving, and are also more confident in the stock market.

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A MassMutual press release said all three key participant contact measures have increased in Q3 vs. Q2, including call center activity (+12%), visits to MassMutual’s participant Web site (+7%), as well as activity on the company’s RetireSmart Academy educational Web site (+51%). Visitors to the RetireSmart Academy were most interested in topics related to asset allocation, Social Security, and Medicare, the announcement said.

The Q3 analysis shows participant assets continue to migrate back into equities. In Q3, 42% of MassMutual’s participant assets were in equities, compared to 38% in Q2. Asset allocation options account for approximately 21% of total assets, while assets in stable value investments declined to 28% from 32% in Q2.

The average participant’s balance increased by approximately 11% in Q3 and 20% YTD.

Among plans that provide participant deferral data to MassMutual, more than 93% of participants made no changes to their savings rate in the third quarter 2009. The percentage of participants who increased their savings rate (2.44%) was twice as high as those who decreased their deferral rate (1.25%), and among those who increased their deferral, the average savings rate increased from 6.15% to 10.46%.

Although loan initiations increased in the third quarter, the percentage of participants who actually took a loan was only 2.2% overall.

MassMutual’s data covers approximately one million participants across more than 6,000 plans.

Products October 26, 2009

Merrill Lynch Introduces Retirement Income Solutions

Merrill Lynch Global Wealth Management (MLGWM) has announced the launch of My Retirement Income, a feature within the Merrill Lynch Retirement Income Service that connects retirement income planning with the Bank of America retail banking network.

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My Retirement Income allows clients nearing, or in, retirement to automatically transfer funds from a Merrill Lynch cash management account into a Bank of America deposit account on a periodic basis for simplified retirement income distribution and management, according to a press release.

MLGWM said it has recently enhanced its Retirement Income Service to enable Merrill Lynch financial advisers to help clients track their spending behaviors in retirement. Through this service, financial advisers can provide more holistic advice around managing cash flow and adjusting retirement investment strategies to help clients manage their savings so it will last throughout their lifetime.

The firm also announced the Merrill Lynch Retirement Income Framework, a proprietary retirement income planning and investment approach designed to complement Merrill Lynch financial advisers’ existing retirement income strategies when working with clients.

According to the announcement, the foundation of the new framework is a segmented investment approach best suited for clients nearing, and in, retirement that divides assets into three distinct portfolios designed to better enable clients to address short-term consumption needs, optimize long-term investment opportunities, and marshal excess savings to help maximize the value of their legacies and intergenerational transfer of wealth.

The investment approach also takes into consideration a client’s individual risk tolerance, and is designed to help mitigate common risks associated with retirement income plans, including longevity, inflation, asset allocation, and health care.

More information is in a white paper entitled “A Framework for Managing Retirement Income.” The white paper is here.

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