Products March 28, 2016

Plan Sponsors Can Get Student Loan Solution from Prudential

Through a partnership with Student Loan Genius, Prudential clients can offer a student loan repayment benefit that will help employees save for retirement.
Reported by

Prudential Retirement has partnered with Student Loan Genius, becoming the first retirement plan recordkeeper to offer the start-up’s new 401(k) contribution feature.

The new partnership with Student Loan Genius will enable Prudential Retirement to offer an innovative benefit to clients that gives their employees an opportunity to build retirement savings while paying down student debt. Employers who offer this retirement savings vehicle gain a competitive advantage, as it enables them to attract and retain top talent, Prudential says.

Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.

If an employer elects to add this feature to their plan, employees who make student loan payments processed through Student Loan Genius receive a pre-tax contribution to their retirement account from their employer based on that student loan payment, whether or not they contribute to their 401(k) plan or receive any matching contributions.

The contribution, paid as a flat dollar amount, or a percentage of the student loan payment or of the employee’s compensation, can be offered annually, monthly or for each payroll period. For example, an employer could offer a $75 monthly contribution to an employee who pays a $400 loan repayment each month.

“As student loan debt grows, workers are having to choose between paying off their student loans or prioritizing other important financial goals,” says Jamie McInnes, senior vice president and head of Total Retirement Solutions for Prudential Retirement. “For example, our research tells us many workers will choose to pay down debt rather than save for retirement. As an industry, we need to understand this and provide solutions to help maximize retirement security for American workers.”

A recent survey from Beyond, a job placement website, found 89% of job seekers with student loan debt believe companies should offer student loan repayment as part of the benefits package, and 10% ranked student loan repayment higher than a paid vacation policy as the “most important” benefit.

Data & Research March 28, 2016

Bankrate Measures Big Jump in Millennials' Savings

Millennials are saving more money than any other age group, with 62% stating they are saving more than 5% of their incomes, according to a Bankrate.com survey. 
Reported by

There was an impressive jump in the number of Millennials saving at least 5% of their income towards retirement or other long-term financial goals during the last year, a new Bankrate.com survey shows.

Today 62% of Millennials are stocking away at least $5 of every $100 earned, up from 42% last year. The survey further shows just 50% of other generations (ages 30 and older) are saving more than 5% of their pay, putting Millennials in the lead on healthy savings behavior.

For more stories like this, sign up for the PLANADVISERdash daily newsletter.

“The survey shows an evident migration to higher savings rates,” explains Bankrate.com Chief Financial Analyst Greg McBride, “with 29% of millennials saving more than 10% of their incomes, up from 22% last year. The good news is that many working Americans, millennials in particular, are saving, and saving more than last year. The bad news is that 21% of employed Americans claim not to be saving any of their paycheck—nothing for retirement, nothing for emergencies, and nothing for other financial goals.”

Also positive, the research shows a sizable increase in the number of Americans overall saving more than 10% of their incomes, up from 24% to 28% since last year. “One in six working Americans (16%) is saving more than 15% of their current incomes, up from one in seven (14%) last year,” McBride adds. “The percentage of working Americans saving 5% or less of income dropped, from 28% to 21% since last year.” 

Among income groups, higher savings rates predictably skew toward higher incomes and lower savings rates toward lower incomes, the research shows. “But even still, 27% of Americans with an income between $30,000 and $50,000 per year are saving more than 10% of their incomes, besting the 24% of households with an income between $50,000 and $75,000 doing the same.”

The news heading into the end of the first quarter of 2016 wasn’t all positive, however. The Bankrate.com Financial Security Index “was a touch lower, at 102.7, from the February result of 103.0.” Still, this is the third-best reading in the past nine months, McBride observes. “While job security and comfort level with debt are big contributors to improving financial security, rising net worth was the biggest,” he concludes.

Bankrate.com worked with Princeton Survey Research Associates International on the latest survey report, available here.

«