Retire2Enjoy : Louisiana Retirement Systems Hassled, National Save for Retirement Week, Research from Aon Consulting and Retirement Security Coalition

Louisiana Retirement: Shifting from Defined Benefits to Defined Contributions

Louisiana lawmakers are considering a sweeping change in the retirement plans given to state government workers and teachers, a shift that would strip the guarantee of a benefit tied to salary and years of service.

They are mulling over an idea to switch incoming state government workers and new teachers to a retirement offering similar to a 401(k) plan. Employees and employers would pay into the plans, the dollars would be invested and employees would manage and choose those investments. Workers would retire with those contributions for their retirement -- which would either be bolstered by investment earnings or deflated by losses.

Lawmakers want to switch from the longstanding defined benefit plan to a defined contribution plan because of worries about the outstanding, multibillion dollar debts of the statewide retirement systems. Changing the type of retirement offering for those who get their benefits from the state would shift the risks to workers. The state would be required to put a certain amount into the retirement account, but wouldn't be vulnerable for having to fill in a large gap to pay benefits if retirement system investments tank or the stock market crashes.

A Wait-and-See Attitude from Aon Consulting

Many employees are waiting for an economic recovery before moving forward with retirement, and employers are taking the same attitude with retirement program changes and risk issues, according to Aon Consulting, a global human capital consulting organization.

Aon Consulting surveyed 1,313 employers nationwide in its 2009 Benefits & Talent Survey, and found that more than 90 percent are not changing their retirement programs, either in terms of benefits or management. Eighty-seven percent of respondents said employees are delaying retirement due to economic conditions. All the while, a third of employers have less than 70 percent of their employees enrolled in their defined contribution (DC) plans, with the majority (67 percent) saying they believe workers are not enrolled because they can't afford it.

MyRetirementSecurity from the Retirement Security Coalition

The Retirement Security Coalition has unveiled www.MyRetirementSecurity.org, a website designed to serve as a portal to the best information on the web about saving for retirement.

The Website features a collection of the best thinking on retirement security from both the private and public sectors, with links to helpful leading non-profits that focus on retirement security, as well as to information and services offered by the federal government.. It enables you to:

-Estimate what you will need to save to enjoy a comfortable retirement

-Learn how to avoid financial pitfalls--or find help in digging out

-Discover some of the big issues facing current and future retirees

-Get help in thinking about how to manage your retirement de-cumulation (your "retirement paycheck")

-Take quizzes to test your knowledge about saving for retirement

The Retirement Security Coalition was created by The Financial Services Roundtable with the goal of increasing the totality of the nation's retirement security by empowering individuals to take responsibility for their own retirement security. 4

Louisiana Retirement System Bothered in Texas

An opulent Texas golf course development put together by pro golfer Hal Sutton is the target of foreclosure, putting into question $24 million invested by Louisiana's retirement system for municipal police officers.

The Louisiana Municipal Police Employee Retirement System provided a $30 million credit line in 2004 for Boot Ranch, a residential and golf complex covering some 2,000 acres in the Texas Hill Country near Fredricksburg, about 60 miles north of San Antonio and 60 miles west of Austin.

Lehman Brothers, which provided $73 million in additional financing to keep the project afloat in 2007, has posted a foreclosure notice for Nov. 4 at the Gillespie County Courthouse. After Lehman became involved, the retirement system's credit line was converted to a $24 million note.

Foreclosure is not expected to affect homeowners, golf operations and staff, the statement said. But the future of the retirement system's investment is not known.

National Save for Retirement Week

How Can I Afford Retirement?

The University of Arkansas is collaborating with public libraries throughout the state to conduct a series of workshops on “How Can I Afford Retirement?” The workshops will start in Fayetteville and Little Rock with hopes of expanding them throughout the state.

$250,000 Short

The average American working household will have only 63 percent of what it will need for a dignified retirement, leaving millions of Americans to face very difficult choices about housing, food, and health care upon retirement, according to new report by McKinsey & Co. This study concludes that the average American household will be facing a savings shortfall of nearly $250,000 at the time of retirement.

$27 Trillion Short

The McKinsey & Co. report also found that for every five years our nation puts off addressing retirement security, there will be a 10 percent decline in the typical American's standard of living in retirement. If nothing is done, McKinsey & Co. estimates that by 2035, Americans will face a staggering $27 trillion shortfall in retirement savings.

Reducing the Retirement Gap

The McKinsey report also showed that the U.S. could reduce the "retirement gap" by nearly half, and increase retirement assets by $3.5 trillion over the next decade, through a consistent focus in the following areas:

-Improving the accessibility of retirement plans

-Increasing plan participation and savings rates for all Americans especially lower and middle income households

-Helping Americans to better manage their in-retirement risks in order to draw a stable "retirement paycheck

-Enabling Americans to work longer

“Future of Retirement” North Carolina State Study Commission

North Carolina State Treasurer Janet Cowell has announced the formation of a Future of Retirement Study Commission. The Commission will be charged with evaluating and making recommendations for the retirement benefits of North Carolina state and local government employees hired in the future.

Recommendations will include how to:

• Provide adequate retirement income at reasonable retirement ages after an acceptable period of employment.

• Effectively manage investment, longevity, inflation, and other retirement-related risks.

• Attract, retain, and manage the workforce needed by state and local governments as well as public education systems in the state.

• Assign responsibility for investment, contribution, and other retirement planning decisions to either employees or employers based on which is best able to make those decisions.

• Fund benefits in a sound manner that promotes intergenerational equity through an appropriate mix of reasonably stable employee and employer contributions together with a professionally managed investment earnings program.

• Comply with applicable laws, keep administration costs low, and be easy for stakeholders to understand.