Source: Willis Towers Watson, February 21, 2018
Willis Towers Watson’s recent pulse survey on impacts from the new tax law reveals that the most common changes organizations have made or are planning or considering include expanding personal financial planning, increasing 401(k) contributions, and increasing or accelerating pension plan contributions. Other potential changes include increasing the employer health care subsidy, reducing or holding flat the employee payroll deduction, or adding a new paid family leave program in accordance with the Family Medical and Leave Act’s tax credit available for paid leave for certain employees.
Source: Rui Yao, Guopeng Cheng, Family and Consumer Sciences Research Journal, Volume 46 Issue 2, December 2017
From the abstract:
Among the generations, the Millennials are the largest group in the United States. Compared with their parents and grandparents, the Millennials need to assume more responsibility to prepare financially for retirement. Few studies have analyzed this generation’s retirement saving behavior. Using data from the 2013 Survey of Consumer Finances, this study examined the state of Millennials’ retirement savings, including retirement account ownership and balance. Results showed that only 37.2% of Millennials had any account designated for retirement. Among those with a retirement account, the average accumulated amount was $21,333. Factors that affected retirement saving behavior included age, education, total household income and assets, job tenure, self-employment, having a retirement saving motive, having a defined benefit plan, overspending, and risk tolerance. This study provided insight that can help financial planners and educators, as well as policymakers, understand the Millennials’ current retirement savings behavior. Also, the results can help the Millennials engage in saving for their retirement.
Awfully few millennials have retirement accounts
Source: Sheena Rice, Futurity, March 6, 2018
Source: Linda J. Blumberg, Matthew Buettgens, Robin Wang, Urban Institute, Research Report, February 2018
From the abstract:
On February 20, 2018, the Departments of Treasury, Labor, and Health and Human Services released a proposed regulation that would increase the maximum length of short-term, limited-duration insurance policies to one year. These plans, sold to individuals and families, are not federally required to comply with the Affordable Care Act regulations that prohibit annual and lifetime benefit limits, require coverage of all essential health benefits, and otherwise prohibit insurers from setting premiums or choosing whether to sell coverage to particular people based on applicants’ health status and health history. As such, these plans do not meet minimum essential coverage standards under the law; thus, the Congressional Budget Office does not consider them private insurance. If implemented, the rule would permit these plans to compete against the ACA-compliant plans.
Importantly, this change would be implemented on top of an array of other significant policy changes made since the beginning of 2017. We analyze the implications of the 2017 policy changes relative to the ACA as originally designed and implemented, in addition to the potential consequences of the proposed expansion to short-term limited-duration policies. In estimating the effects of these changes on insurance coverage, premiums, and federal spending, we take into account the variations in state circumstances and state-specific laws on short-term plans.
This brief was updated February 26, 2018. The title and notes for table 4 were altered to remove references to current law that had been inadvertently copied from tables 1–3.
Source: Jennifer Erin Brown, National Institute on Retirement Security (NIRS), February 2018
From the summary:
A new report finds a deeply troubling retirement outlook for the Millennial generation. Most Millennials have nothing saved for retirement, and those who are saving aren’t saving nearly enough. The report indicates that many factors are contributing to this generation’s retirement savings challenges – from depressed wages to the lack of eligibility to participate in employer retirement plans.
More specifically, the analysis finds that 66 percent of working Millennials have nothing saved for retirement, and the situation is far worse for working Millennial Latinos. Some 83 percent of Latinos in this generation have nothing saved for retirement.
Source: Allen Smith, SHRM, February 22, 2018
Draft language in CBAs and benefits documents thoughtfully.
Retiree health care benefits end when a collective bargaining agreement (CBA) between a company and a union expires, unless the CBA provides otherwise, the Supreme Court ruled Feb. 20. The decision underscores the importance of giving careful thought to all language proposed and agreed to at the bargaining table, said David Pryzbylski, an attorney with Barnes & Thornburg in Indianapolis. Make sure the language in the CBA clearly expresses the parties’ intent, he stated. Benefits documents should as well, labor relations attorneys say. ….
Source: Katherine Barrett & Richard Greene, Governing, February 23, 2018
When pension reform happens, new workers often carry the biggest financial burden. But they don’t always have to.
Source: Rebecca A. Sielman, Milliman, February 2018
From the summary:
In the fourth quarter, there was a $60 billion improvement in the estimated funded status of the 100 largest U.S. public pension plans as measured by the Milliman 100 Public Pension Funding Index. From the end of September through the end of December, the deficit shrank from $1.392 trillion to $1.332 trillion. As of December 31, the funded ratio stood at 73.1%, up significantly from 71.6% at the end of September.
Milliman analysis: Corporate pensions’ $61 billion funding gain in January may cushion early February market slide
Source: Charles J. Clark, Zorast Wadia, Milliman, February 2018
From the summary:
In January, the funded status of the 100 largest corporate defined benefit pension plans improved by $61 billion as measured by the Milliman 100 Pension Funding Index (PFI). As of January 31, the funded status deficit narrowed to $221 billion due to investment and liability gains incurred during January. As of January 31, the funded ratio rose to 87.2%, up from 84.1% at the end of December. January’s impressive funded status improvement was greater than that seen in any of the prior months of 2017.
The market value of assets grew by $13 billion as a result of January’s investment gain of 1.20%. The Milliman 100 PFI asset value increased to $1.505 trillion from $1.492 trillion at the end of December. The projected benefit obligation decreased to $1.725 trillion at the end of January.
Over the last 12 months (February 2017-January 2018), the cumulative asset returns for these pensions has been 11.88% and the Milliman 100 PFI funded status deficit only improved by $50 billion. The funded ratio of the Milliman 100 companies has increased over the past 12 months to 87.2% from 83.8%.
Source: Max B. Sawicky, Jacobin, February 13, 2018
Warnings of looming pension bankruptcy aren’t just overblown. They’re politically dangerous.
Source: Diane Oakley, Issue Brief, February 2018
From the summary:
A new case study examines the impacts of the actions of the Town of Palm Beach when substantial changes were made to the retirement plans offered to the town’s employees. The case study details the 2012 decision by the Palm Beach Town Council to close its existing defined benefit (DB) pension systems for its employees, including police officers and firefighters. Retirement Reform Lessons: The Experience of Palm Beach Public Safety Pensions outlines how the “combined” retirement plans offered dramatically lower DB pension benefits and new individual 401(k)-style defined contribution (DC) retirement accounts. Following a large, swift exodus of public safety employees to neighboring employers that increased costs in human resource areas, the town reconsidered the changes. In 2016, the Town Council voted to abandon the DC plans and to improve the pension plan.
Source: Dennis Campbell, John Case, Bill Fotsch, Harvard Business Review, January-February 2018
….Tomorrow’s blue-collar jobs will be largely in services.
That means the good jobs of the future are going to look rather different from those of the past. What we mean by “good” is well understood: The jobs provide a decent living. But we’ve come to realize that a decent living in the new economy entails more than a generous wage; it involves sharing the company’s success with employees. It’s also about more than money: People want to learn new skills and to understand how their work contributes to that success. Those insights have generally taken hold in high-end, knowledge-work settings. But a healthy free-enterprise society must offer promising employment opportunities for all its citizens, not just the well educated and highly skilled—and that means figuring out how to make blue-collar jobs more engaging as well as better paid. Otherwise the toxic combination of anger, demoralization, and cynicism that we already see among many Americans will spread.
So what should blue-collar jobs in the 21st century look like? Let’s begin by considering compensation. Arguably, we’ve already figured out that we ought to change the way we pay—even if relatively few companies are doing so yet. But as we’ll see, no benefits of progress on compensation will be fully realized or sustained unless we also make blue-collar jobs more engaging. In this respect, much remains to be done…..