Data & Research September 1, 2010

Workers Gaining Back Some Retirement Confidence

Older workers’ confidence in their ability to retire comfortably has rebounded modestly in the past year, although confidence levels remain well below those prior to the financial crisis.
Reported by

The Towers Watson survey found that the percentage of older workers (ages 50 to 64) who are very confident about having enough resources to live comfortably five years into retirement rebounded from 44% in March 2009 to 50% this year. In 2007, 63% of older workers were very confident.   

While only 9% of all workers believe their assets will last through 25 years of retirement, that is still a slight improvement since last year, Towers Watson said in a press release.   

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Employees with defined benefits (DB) plans have considerably more confidence in their retirement resources than those with only a defined contribution (DC) plan. More than half (52%) of workers with DB plans are somewhat or very confident of having enough resources to live comfortably 25 years into retirement, compared to only one-third (34%) of older workers with DC plans.   

According to the press release, while concerns among older workers with DB plans have eased, younger workers are growing increasingly worried over their DB benefits. The percentage of older workers who are concerned that their employer will reduce the benefits they earn in the future declined from 44% in 2009 to 39% this year, while the percentage concerned their employer will eliminate benefits they earn in the future dropped from 38% to 30%.   

Among younger workers (under age 40), however, more than two-thirds (68%) are concerned their employer will reduce future benefits, an increase from 61% in 2009, while the percentage concerned their employer will eliminate benefits increased sharply, from 42% in 2009 to 59% this year.  

Other survey findings include: 

  • More than half (55%) of all respondents said they had seen significant declines in their retirement savings over the last two years, a slight improvement from 60% in March 2009. 
  • The percentage of employees who are content with their financial situation today has increased slightly -from 26% in March 2009 to 33% this year.

 

Data & Research August 31, 2010

MassMutual Participants Hang Tight in Q2

 MassMutual's Retirement Services Division has released data for the second quarter, but didn’t find much sign of movement, despite the tumultuous markets.
Reported by

The Springfield, Massachusetts-based provider said that 96% of participants recordkept by the firm either kept their rate of deferral the same, or increased it during the second quarter.  That consistency meant that while the S&P 500 Index lost 11.4%, MassMutual’s average participant account balance declined by only 3.26%, according to the firm.

The percentage of participant assets in equity investments declined from 41.1% to 38.4% during the quarter, with stable value increasing from 26.3% to 28.4%, and investment in bonds increasing from 7.6% to 8.6%. The percentage in asset allocation investments (target date and target risk) was relatively unchanged, according to the firm.

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MassMutual noted that male participants fared better than females for the quarter (-2.7% compared to -5.5%), though the firm attributed that primarily to the impact of higher average deferral rates.

The asset allocation gap by gender during the quarter closed further, according to the report. Male participants continued to be somewhat more aggressive in their allocations; on average, males have about 2% more in equities than do females, while females have 2% more than males in stable value and bonds.  While historically, females have had lower percentages in asset allocation investments than males, female participants have gradually moved some of their assets from stable value to asset allocation.  As such, percentages in asset allocation investments by males and females are virtually the same at approximately 23%, according to the report.

Deferral percentages are highest for participants closest to retirement with participants over age 60 contributing at 7.2%, roughly double the rate of participants under age 30. Visits to MassMutual’s participant website remained virtually unchanged compared to the prior two quarters; there were 3.6 million participant website visits, with asset allocation, rebalancing and tax implications of withdrawals being the most popular topics among participants who visited MassMutual’s RetireSmart Academy education site.

Call center activities increased by 5.2% for the quarter and, while MassMutual participants exhibited a very slight increase in loan and withdrawal activity compared to an unusually low first quarter 2010, only about 2.5% of MassMutual participants actually initiated a loan or withdrawal during the quarter, according to the report.

"Our participants do seem to understand that taking a loan or withdrawal from their retirement plan account should be considered a last resort," says Elaine Sarsynski, executive vice president of MassMutual's Retirement Services Division and chairman and CEO of MassMutual International LLC.

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

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