PLAINSBORO, N.J. - Americans may think they're getting better at savings for retirement, but they're not doing enough to avert a crisis in the 21st century, the seventh annual Merrill Lynch retirement survey found.
The 1995 Merrill Lynch Baby Boom Retirement Index found workers ages 31 to 49 need to nearly triple their savings rate to maintain their standard of living during retirement.
Of the 809 employees surveyed, 83% said they are saving for retirement, compared with 74% in 1991. Respondents believe they are saving about 12% of income annually. If they are saving at that level they are way ahead of the average American, who, figures from the Department of Commerce indicate, is saving just less than 5%. About half of those surveyed believe they will outlive their retirement savings, and 75% said they wished they had begun saving earlier.
Despite their apparent need to make up for lost time, Merrill Lynch's survey found that 30% of male employees and 38% of female employees still do not participate in a defined contribution plan, either by choice or because a plan is not offered by their employers. The gender gap is apparent in both 401(k) plan participation and investment selection. Fewer women (63%) allocate yearly income to a 401(k) plan than men (67%).
Men are much more likely to invest in riskier 401(k) options that allow for greater upside potential than women (74% of men, vs. 56% of women). More women (23%) are likely to seek the assistance of a professional for financial planning than men (17%).
Overall, investment education and plan-related communications haven't appeared to meet the needs of the majority of respondents. Some 53% said their employers don't provide sufficient investment education materials and 80% indicated educational materials or more assistance would help them make better decisions about their retirement plans.
LANGHORNE, Pa. - A new hands-on guide to retirement planning will be published in the next month, written by R. Theodore Benna, president of the 401(k) Association. Mr. Benna is popularly known as the "father of the 401(k)" for his pioneering efforts in establishing the plan vehicle in the early 1980s.
Mr. Benna's book, Escaping the Coming Retirement Crisis: How to Secure Your Financial Future, is a how-to primer to help employees understand the basic issues affecting their future retirement needs.
Mr. Benna explains how the American retirement system has reached "crisis" point and the political and governmental forces that affect retirement planning. Like other books of its ilk, it uses graphs and work plans to help participants understand their risk tolerance and savings needs.
Personal examples abound in the book, including one profiling Mr. Benna's own career choices when he was faced with early retirement at age 51.
Plan participants probably will find the book easy to understand and possibly more interesting than many other how-to guides, primarily because Mr. Benna so easily incorporates his expertise with the 401(k) and its history into every page. Mr. Benna is clearly a 401(k) advocate, but readers will recognize his depth of knowledge and likely respond to his prose and suggestions simply because he is an objective and enthusiastic coach.
CHICAGO - Morningstar Inc. introduced custom mutual fund reports for defined contribution plan clients.
The reports will provide plan participants with the same detailed analysis and performance history it provides for retail mutual fund investors. Reports on specific retail funds offered within a plan will be included, as well as similar analysis for both separate accounts and commingled funds, said Paul Reis, 401(k) product manager.
Private and commingled funds also can be compared to mutual funds in the same asset class for better performance comparison.
The $3 billion 401(k) plans of American Stores Co., Salt Lake City, Utah, is Morningstar's first client for the service. The first customized, 40 page report has been distributed to American Stores' 62,000 plan participants. Morningstar will be producing the custom report twice yearly for American Stores, said Mr. Reis.
BRAINERD, Mass. - Consultants United Pensions Inc. hired Cascade Technologies Inc., Edison, N.J., to provide record keeping software for defined contribution plan administration, record keeping and interactive communications.
United Pensions will install Cascade's ProCAS 2000, a client/server record-keeping service for support of more than 3,200 plans, with both daily and periodic valuation. The system is based on client/server technology from Microsoft Corp. and uses a relational database management system to maintain plan and participant data.
United Pensions also is implementing a new system for interactive employee communications, CAS Voice. The system uses various data delivery systems, including interactive voice response, electronic mail, interactive fax and call center access for plan administrators. The system also can support automated work flow processes such as collateral fulfillment, data collection and editing and intelligent call distribution.
United Pensions spokesman David Lauer declined to name the former system.
WELLESLEY, Mass. - The Insight Group, publishers of Fidelity Insight, a retail-oriented newsletter analyzing the mutual funds offered by Fidelity Investments, introduced a quarterly newsletter specially designed for defined contribution plan participants.
Retirement Insight follows the same format as the retail newsletter, but is more educational and user-friendly, for use by 403(b), 401(k), 457 and other defined contribution plan investors.
Fidelity funds are discussed in detail, performance is evaluated and a review of the economy and markets in the last quarter is provided.
Plan participants also are provided with model portfolios, based on risk tolerance.
PHILADELPHIA - Insurer and money manager Provident Mutual Pension Services and third party administrator EMJAY Corp., Milwaukee, have formed an alliance to offer a daily valued, bundled 401(k) program.
EMJAY will administer record keeping and trust services.
Provident Mutual will include the investment options in its Selector+ group annuity contract and virtually any mutual fund available on the market in the program.