Products November 15, 2018

Vanguard Integrates Health and Wealth With HSA Offering

In partnership with HealthEquity, Vanguard will offer plan sponsors the ability to provide an HSA solution to their employees that features low-cost Vanguard funds or the same investment options as their DC plan line-up.

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Vanguard announced a partnership with HealthEquity, an independent health savings account (HSA) custodian, to provide defined contribution (DC) plan sponsors and their participants a new service integrating health and wealth planning for retirement.

Vanguard will offer plan sponsors the ability to provide an HSA solution to their employees that features low-cost Vanguard funds or the same investment options as their DC plan line-up.

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HSAs can be an effective, highly tax-efficient means to save for health care expenses in retirement. For Vanguard participants who elect to save in a HealthEquity HSA, Vanguard’s Retirement Readiness Tool technology will integrate their HSA information with their DC plan balance and other assets to give them a comprehensive view of their current and future retirement savings. Participants will also benefit from highly personalized communications that are rooted in behavioral finance and proven to successfully encourage their next best action.

“Consumers who learn to use HSAs and DC plans together are on the fast track to retirement readiness. Our partnership with Vanguard offers plan sponsors a powerful solution to connect health and wealth,” says Jon Kessler, president and CEO at HealthEquity.

As a supplement to its new HSA solution, Vanguard plans to introduce a new proprietary health care cost calculator that will help participants to better plan and save for health care expenses in retirement.
Data & Research November 15, 2018

Half of Small Businesses Have Researched Offering a 401(k)

But 55% decided to take no action.

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Fifty-one percent of small business companies with 10 or more employees have researched offering a 401(k) plan, according to the Millennium Trust Small Business Retirement Survey.

Fifty-five percent of small businesses looked at a retirement plan but didn’t decide to offer anything, and 45% have spent no time researching retirement programs.

Twenty-two percent say their lack of knowledge about retirement savings options is the biggest barrier for adoption, signaling an opportunity for advisers. Twenty-three percent have researched other types of workplace benefits.

Only 23% of small businesses think that offering a retirement plan would help them attract and retain workers.

Nonetheless, 70% are planning to offer a retirement savings program within the next two years, and 86% say such a program is much more attractive if it does not impose any additional costs to the company. Seventy percent are willing to share in the cost, up to $60 a year per employee. Seventy percent said they also would be interested in a retirement savings program if it also allowed them to save for retirement.

Ninety-three percent of small business owners and 95% of employees say that Americans are not on track to have enough money saved to maintain their lifestyle in retirement. Twenty-five percent of employees have no retirement savings.

Eighty-eight percent of employees say offering a retirement plan is an important factor when considering a new position, but only 67% of small business employers think that offering such a benefit is important.

Ninety percent of Millennials say that working at a company with a retirement savings plan is important, and 61% say that offering this benefit is an important factor when considering a new employer.

“Our latest survey is a wake-up call for small businesses,” says Gary Anetsberger, CEO of Millennium Trust Company. “Time and again we hear the value and importance employees place on having retirement plans. The misperceptions in the market about costs and limited options are hurting small businesses and employees. Traditional 401(k) plans have been great for Americans, but they aren’t a fit for every business. It’s time employers educate themselves on other viable savings solutions that can increase retirement readiness for Americans.”

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