David Laibson, the keynote speaker at the National Association of Government Defined Contribution Administrators’ annul conference, did not come bearing good news.
“The state of financial literacy in the United States is abysmal,” Mr. Laibson said at the conference, held Sept. 14-17 in San Antonio.
He didn’t have much good to say about the education and communications materials participants receive about their retirement plans. “I happen to be a pension geek so I love reading pension documents. But most people think it’s the seventh circle of hell,” said Mr. Laibson, the Robert I. Goldman Professor of Economics at Harvard University, Cambridge, Mass.
Mr. Laibson also relayed statistics that don’t say much about retirees’ financial prospects: The median net worth, excluding Social Security, was $232,000 in 2013 for a person age 65 to 74.
In other bits and pieces from the NAGDCA conference:
- Target-date assets in DC plans now exceed stable value assets, said Steve Ferber, senior vice president at Pacific Investment Management Co., Newport Beach Calif., citing 2014 data from the Aon Hewitt 401(k) index.
- A 20% to 30% allocation to alternatives through target-date funds is needed to make a difference in enhancing returns and diversifying risk, said Donna Chapman Wilson, New York-based director of portfolio management at Invesco Ltd.
- Overheard — several conversations about the possibility of further record-keeper consolidation following the Putnam Investments’ Great-West Financial/J.P. Morgan combination earlier this year. One consultant mentioned MetLife Inc. as the next record keeper likely to merge or be acquired.
- Susan J. White, NAGDCA’s legislative counsel, said she is most worried about myRA, President Barack Obama’s retirement savings bond program announced in his State of the Union address in January. She also expressed concern about a bill sponsored by Sen. Orrin Hatch, R-Utah. The bill would give states the option to use what would have been their defined benefit plan contribution to purchase annuities.
- A record 880 people registered for the conference.