NEW YORK - Two recent surveys show that more employers are providing retirement planning and investment education programs and most American workers are confident they will be able to retire comfortably.
Investment education programs are offered by 84% of the 88 large employers surveyed by William M. Mercer Inc., New York, late last year. Such financial education programs are fairly new; more than two-thirds of companies surveyed added their investment education programs after 1990.
More than half of employers surveyed used outside vendors to provide an investment education program extensively customized for their company or to work with in-house staff in designing educational materials.
401(k) plan record keepers were used by 65% of those companies which developed education programs in conjunction with an outside firm; 33% worked with their consultant; 26% had help from one of their 401(k) plan investment managers. One quarter of employers developed their investment education programs in-house. Only 10% bought off-the-shelf materials.
Most employers use traditional media to provide education. Eighty-one percent of respondents offer printed brochures, 63% use newsletters, 42% use customer service representatives and 35% rely on seminars. Employee meetings were judged to be the most effective way to educate employees, according to 44% of respondents using them. Help from a telephone voice response system was also rated to be an effective tool by 39% of companies.
Employees do seem to be absorbing the investment education provided by their employers, according to the results of a survey of 1,000 Americans over the age of 25 released in December by the Employee Benefit Research Institute, Washington. Thirty five percent of workers surveyed are offered a salary reduction plan through work and 52% said they typically contribute the maximum amount permitted. About three quarters (72%) are provided with written materials or attend seminars about their plan; 92% said they read the materials.
As a result of educational efforts, 44% said they changed their asset allocation mix and 33% increased the amount of their deferral. Overall, two in three workers surveyed said they were "very confident" or "somewhat confident" they would have enough to retire comfortably.
The proportion of workers "very confident" they can meet basic expenses during retirement grew 10% between 1992 and 1993.
Manager expands 401(k) offerings
SAN FRANCISCO - Money manager G.T. Global Financial Services Inc. just jumped into the bundled 401(k) plan marketplace, with distribution primarily through the broker/dealer network. The new program will offer G.T. Global's own 18 mutual funds, access to more than 50 other mutual fund families, and participant record keeping services provided through an alliance with W.F. Corroon, Nashville.
The company has targeted the new bundled offering to small and medium-sized plans, traditionally handled by local financial planners and broker/dealers. Investment education and enrollment meetings will be handled by the broker, said a G.T. company spokesman.
Sponsor book updated
NEW YORK - Panel Publishers has issued the second edition of 401(k) Answer Book. The updated 1995 edition of the source book for 401(k) plan sponsors addresses new legislative, tax and compliance requirements.
Like the 1992 edition, the 1995 edition has a question-and-answer format and covers all aspects of 401(k) plan design, installation and administration. The book is written by consultants Steven J. Franz, Joan C. McDonagh, William C. Kalke and John Michael Maier, all of Emjay Corp., Milwaukee.
Panel Publishers also introduced 401(k) Advisor, a monthly newsletter for plan sponsors and benefits administrators. Edited by consultant Gregory E. Matthews, the newsletter provides coverage of changing compliance and regulatory issues, tips for plan management, investment selection and performance reviews and case law reviews.
Daily valuation expansion
PHILADELPHIA - Tanker & Associates added daily valued record-keeping services to its employee benefits consulting practice, which includes 401(k) plan design, administration and employee communications services.
Tanker selected 401(k) plan record-keeping software from the National Pension Alliance Ltd., Jacksonville, Fla., to provide daily record-keeping services integrated with an automated voice-response system. Scott A. Tanker, company president, said the new back-office system can accommodate any outside money manager selection.
Bank, insurer reach trust pact
INDIANAPOLIS - American United Life Insurance Co. and Merchants National Bank, Terre Haute, Ind., have collaborated to provide trust services for 401(k) plans using AUL's investment vehicles.
Merchants National Bank will serve as the contract holder for group annuity contracts written by AUL and will handle reporting and compliance for the plans.