Category Archives: Retirement planning

Retirement income covenant considerations for Australia’s superannuation system

The riddle of the superannuation system is that the needs of workers saving for retirement are relatively simple while the needs of retirees are incredibly complex. Those saving for retirement want to generate the highest long-term investment returns within certain tolerances for risk. Retirees want to generate the highest lifetime income possible with both certainty and flexibility.

Super fund trustees will soon need to balance these competing objectives thanks to a proposed Retirement Income Covenant. This covenant will codify their requirements and obligations to improve retirement outcomes for members.

The challenge for super fund trustees centres on Comprehensive Income Products for Retirement. Funds must take care in constructing a retirement income strategy, especially one that focusses on the “collective needs of members” as described in the covenant position paper.

To read more about the challenges facing trustees as they begin to grapple with the proposed Retirement Income Covenant, see this article by Milliman’s Jeff Gebler and Adam Shao.

Milliman joins Alliance for Lifetime Income as part of firm’s larger vision to improve and protect Americans’ retirement security

Milliman today announced that the company has joined the Alliance for Lifetime Income as a founding member. The Alliance, a newly launched nonprofit organization supported by 24 leading insurance and financial services organizations, is focused on educating Americans on the risk of outliving their savings and about the importance of protected retirement income.

“There are an estimated 10,000 Baby Boomers retiring each day in the U.S., and many lack adequate sources of protected retirement income,” said Ken Mungan, Chairman of the Board, Milliman, Inc. “As people move from their working years to retirement, the retirement planning narrative has to shift. Milliman is privileged to play a role in this unprecedented industry collaboration.”

Milliman clients include pension plan sponsors, defined contribution plan sponsors, and providers of guaranteed lifetime income solutions. The firm brings a broad perspective on retirement security to the Alliance, while also providing some of the sharpest minds on the retirement income challenge facing many Americans.

“The insurance industry is poised to play a major role in solving the retirement income crisis in America,” Mungan added. “Through the pooling of risk, a cornerstone of insurers, retirees can help fill the income gap between their Social Security and employer-provided retirement, and their true lifetime income needs.”

The Alliance will offer thought leadership, research, third-party expert views, and tools on an ongoing basis. To learn more, visit RetireYourRisk.org. Follow the Alliance on Twitter @alincome.

Helping Australians make effective savings decisions today for a better retirement future

Superannuation is one of the most valuable products working Australians own. Yet it’s one of the products they care least about.

Forcing people to buy a product when the value can’t be unlocked for many years is not a good starting point for engagement. Attempting to persuade members to save more super by using broad-based one-size-fits-all targets has failed.

But research suggests that when members are able to see their future selves in vivid and realistic detail, they are more willing to make choices today that may benefit them in the future. Super funds can play a role in connecting the two.

In this article, Milliman’s Jeff Gebler says that the super industry’s dominant comfortable retirement savings target is not indicative of who its members are or who they will become. He says that funds can help members see themselves in meaningful, positive terms, thus sparking genuine engagement and better long-term decisions.

Lifelong income solutions for retirees

While employers may want to provide better options to their employees, the fiduciary, financial, and administrative hurdles are steep. Retirees will have to pick from a small list of solutions until new alternatives are developed. This article by Milliman’s Kari Jakobe summarizes some of the existing approaches commonly used by retirees to convert their retirement distributions into a lifetime of retirement income.

Employers honored with Save 10 award for helping their employees save for retirement

Save 10 awardees at the Seattle event with their Milliman consultants and special guests Milliman Chairman Ken Mungan and Francis Creighton of Financial Services Roundtable. Photo by Ryan Hart

Twelve employers based in the Pacific Northwest were recognized with the Save 10 award during the 45th annual Milliman Employee Benefits Conference held in Seattle on April 6. The Save 10 award honors their work helping their employees save for retirement.

The Save 10 initiative is a movement to reinforce a “Save 10” rule of thumb, recognizing employers who help their employees to save at least 10% of their income toward retirement. Why Save 10? According to Francis Creighton, Executive Vice President of Government Affairs of Financial Services Roundtable, which sponsors the initiative, 10% is easy to remember and reflects the old adage of saving at least 10% of your income for retirement. While this may not be the ideal contribution rate for everyone, getting employees to save for retirement, and providing employers the tools to allow their employees to do so, remains fundamental.

The Save 10 initiative emphasizes the effectiveness of auto features in retirement plans, such as auto enrollment and auto escalation. Research shows that auto features encourage employees to save, even though they may not remember to sign up and start saving from their hire date. The rate of success in saving increases even more for employees with auto escalation of contribution rates.

Milliman is proud to work with companies that want to provide the best benefits for their employees. Milliman works closely with employers to help provide best-in-class retirement plans for their employees that reflect the philosophy and unique identity of each organization.

Employers honored at the April 6 event were: Expeditors International of Washington, Inc., ICOM America, Inc., McKinstry Co., M Financial Group, Nelson Irrigation Corporation, Olympia Federal Savings, PACCAR Inc., Swanson Group, Inc., Usibelli Coal Mine, Inc., Valley Medical Center, Washington Permanente Medical Group, and Zimmer Gunsul Frasca Architects, LLP.

More information about the initiative is available at www.save10.org.

Painters and Allied Trades District Council 82 chooses Milliman for its defined contribution services

Milliman announced today that we have added the Painters and Allied Trades District Council 82 DC Plan as a defined contribution client. The plan covers collectively bargained members in the states of Minnesota, Wisconsin, and North Dakota with approximately 2,300 participants and $155 million in plan assets.

Milliman is providing recordkeeping, consulting, and communication services for the District Council 82 defined contribution plan.

We are thrilled that the Trustees of the Painters and Allied Trades District Council 82 DC Plan chose to hire Milliman. The Trustees decided to merge two different plans together and it was necessary they had a solid solution in place for their members. The Trustees were confident in our reputation for client service and the solution and approach we discussed resonated with them.