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U.S. President Barack Obama
envisions spending $1 billion for the creation of a new agency to oversee a
national direct-deposit retirement savings system. The agency would be charged
with overseeing the formation of a retirement program that would require
employers who do not offer a pension program to implement a direct-deposit
retirement savings system. The system would operate alongside Social Security.
Obama wants to broaden the number of workers that could save under
worker-sponsored plans. It would be implemented in the form of an Individual
Retirement Account, which is similar to 401(k)-type plans. The system would
provide some tax advantages for savings and is required to be compatible with
existing direct deposit payroll systems. Employees can choose to not
participate.
Some top retirement gurus are
in the process of developing proposals that could make annuity products a
crucial part of millions of Americans' retirement plans. This movement, led by
retirement experts from the Brookings Institution in Washington, is gaining
steam in its bid to persuade lawmakers and employers that guaranteed-income
products should be a critical component of the nation's 401(k) system. It is
proposing ideas that would allow 401(k) participants to "test drive" annuities,
or perhaps have their employers' matching contributions steered into a deferred
annuity during their working years.
Women at Higher
Risk
Women remain at a higher risk for
retirement insecurity as compared to men, according to a new research brief
issued today by the National Institute on Retirement Security.
The research finds that a woman
with a salary of $50,000 must save $1,000 more per year than her male
counterpart to achieve equitable retirement income because of her longer life
expectancy. Yet according to a 2007 study, full-time female workers in made just
76.2% of their male counterparts’ wages – that means less money for savings.
The study also indicates that
women are more likely to live above the poverty line in retirement when they
have income from pensions. But, just 23.3% of women have their own pension as
compared to 42.0% of men. Among women dependent on their husband’s retirement
plan, those whose husbands have a defined benefit (DB) plan may be better off
than women whose husbands have only a defined contribution plan because DB plans
have special protections for spouses.
A Gallup poll of workers
released in April found 52% of respondents did not think they would have enough
money to live comfortably when they retire. A year before, 44% were worried
about retirement income. Gallup attributed the pessimistic outlook to the
"statement shock" of steep declines in 401(k) and other retirement accounts.
It happens all too often. An
employee changes jobs, moves, and fails to leave a forwarding address. They
become a "missing participant," and their account balance or accrued benefit in
a qualified retirement plan stays behind with their former employer.
PenChecks, an
independent provider of outsourced benefit distribution services, maintains a
nationwide, secure database service that can match missing participants with
their unclaimed retirement benefits at former employers. It currently has
records of nearly $151 million of unclaimed retirement benefits for more than
58,000 missing participant retirement accounts. The average balance is about
$2,600.
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The Obama administration plans to
modify the Saver's Credit program, providing a 50% match on the first $1,000 of
retirement savings for families that earn less than $65,000. The fully
refundable credit will be effective for taxpayers in years beginning after Dec.
31, 2010.
The Saver's Credit consists of tax
credits resulting from workers' voluntary contributions to an employer-sponsored
retirement plan or an individual account.
Is the Tide Turning for Matching
401(k) Contributions
More U.S. companies have trimmed
or eliminated contributions to their employees' 401(k) retirement funds this
year, but top fund industry executives expect benefits will be restored when the
economy recovers similar to the way employers restored 401(k) contributions
after the downturn that ended in 2003.
Is the Tide Turning for the
South Dakota Retirement System?
The South Dakota Retirement System
has lost about 23% of its value since last July but is in better shape than just
a couple months ago, according to the State Investment Officer.
At one point in March, the
Retirement System's holdings were down by as much as 31% from the start of the
fiscal year in July, but the value of assets has grown recently as the stock
market has rallied, Clark said.
Three employees of an Arizona
lobbyist group who were found to be illegally on the payroll of the Maricopa
County Community College District are suing the state and district for money
they say they paid into the state retirement system.
The Arizona Auditor General's
Office determined last month that the college district illegally put twenty-six
people on its payroll, and a majority of them in the Arizona State Retirement
System. The auditor determined they were not eligible to participate in the
retirement system.
The lawsuit alleges that the state
has frozen the retirement accounts of at least three of the participants and
refuses to return the contributions they have made to the fund over the years.
According to a new Royal Bank
of Canada retirement study, the percentage of Canadian baby boomers who say
reducing debt is a top financial priority has doubled in the past six months to
62%, up from 31%.
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