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RETIREMENT SECURITY MATTERS
A forum for retirement innovation information sharing
focused on states, supporters, and service providers.
Vol 87 | October 19, 2023
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Greetings! Lisa, welcome to Retirement Security Matters – where we talk about retirement readiness innovation by states, supporters, and service providers. | |
It's all about Fall here in the Northern Hemisphere. As nature gears up for its final pre-winter splash, we've got you on the retirement security news front. We'll be honest, it's good news, and then some stuff we need to work on together. #wecandoit - grab your joe and read on:
- Ehhh - When “C” Isn't Cool
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State Auto IRA Metrics - the latest
- Key updates from Vermont, California, Colorado & Maine, Delaware, Hawaii, Illinois, Massachusetts, New Jersey & New York, Minnesota, Oregon, and Virginia
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Hot Sauce, and actual Cool Stuff: this week's haps and reads
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... Pix of the week! it's all about the family
| Comments or content suggestions? We welcome both. Have something about your program you’d like to share? We are all ears. | |
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RSM wants your support! Be seen.
Click to grab this space for your brand.
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When “C” Does Not Equal “Cool” | |
There’s light at the other end of this tunnel. Photo credit: Christian Lambert, October 2023 | |
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We’re a fan of good news around here. We love celebrating! But when Mercer gives the US retirement savings system a “C” on the global scale we have to admit we feel a bit meh.
It’s one thing to be beaten by the Netherlands and Australia. Things start to hurt a bit when you’re beaten out of the top 20 by Canada … and even Kazakhstan. So, what have the Kazakhs and the Canucks got right that we don’t? Let’s take a closer look.
We’ll begin with a quick note on methodology. The Mercer CFA Institute Global Pension Index 2023 report evaluates 47 country-level retirement income regimes across three dimensions: adequacy, sustainability, and integrity. With a quick nod to the fact that there is no one perfect system, the report highlights features that are likely to lead to better financial outcomes overall.
Top systems in the Index often incorporate elements of all the pillars available, including:
- A public pension (think Social Security)
- Mandatory occupational private pension schemes with contributions from both employers and employees (Denmark, Australia, Belgium, and a host of others)
- Voluntary personal pensions (Iceland, our friends in Kazakhstan, and many others)
- And they have high levels of system integrity (Canada, Finland, the UK)
Lower ranked systems in the Index often rely on only one or two of the above pillars. They often have sustainability issues driven by lower levels of coverage and participation. In some cases they are also receiving lower than average system integrity scores.
And those of us in the middle? We could do better.
Mercer’s report captures seven ways countries can improve their outcomes. We’ll share two of our favorites, and we quote:
Increasing coverage of employees (including nonstandard workers) and the self-employed in the private pension system, recognizing that many individuals will not save for the future without an element of compulsion or automatic enrollment
Introducing measures to reduce the gender pension gap and gaps that exist for minority groups in many retirement income systems
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Our thanks to Dr. David Knox, lead author and senior partner with Mercer, and to Marg Franklin and the CFA Institute, and to their team members, for this important work. We found this work in the Wall Street Journal as covered by Oyin Adedoyin.
Retirement Security Matters.
- Lisa
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*Fresh!* State Auto IRA Program Metrics | |
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What’s up! Here’s the latest from our reporting Auto IRA states as September 2023 data rolls in, and a quick interpretation for you.
Assets. Saver assets are up 55% year-to-date and 2.4x since December 2021 to $993 million -- we're still flirting with the $1 billion mark - but September was a tough month. Most states' program assets declined, even after contribution inflows. Average account balances across the programs are over $1,300. Longer term balances are higher.
Funded accounts. The six programs shown here now aggregate to over 758,000 funded accounts. For comparison, funded accounts are up 1.8x since December 2021, up about 2.9x since December 2020 and up about 7x since December 2019 – and up in 2023.
Facilitating employers. Over 179,000 employers are now registered to facilitate a state Auto IRA. Of that number, over 60,000 have begun forwarding payroll contributions for savers.
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State Facilitated Retirement Programs - Fresh Highlights | |
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Vermont (workforce 336,000) - Vermont's VTSaves Gears Up for a Bright Future - Welcome New Executive Director Becky Wasserman! “She brings a wealth of experience from the private sector financial services industry as a financial regulatory attorney and served for more than a decade as an attorney for the Vermont Legislative Counsel,” said Vermont State Treasurer Mike Pieciak.
The team, alongside partners from various sectors, will tour the state to ensure that employers and employees are well-prepared for the program's launch in 2024 early 2025. For more information check out VT's official statement here.
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California (workforce 19.2 million) – CalSavers continues to roll out its program statewide, offering assistance to employers and employees alike. Covered employers who are not meeting program requirements for facilitation face penalties if they continue in non-compliant status. Separately, the program’s 2023 RFP for Investment Consulting Services closed October 6. Meketa Investment Group has provided these services since the program’s inception.
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Colorado
(workforce 3.2 million)
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Maine
(workforce 674,000)
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Colorado Secure Savings’ Hunter Railey and Anna Stevens joined MERIT Executive Director Beth Bordowitz at the Maine Retirement Savings Board meeting October 18 to provide a brief update and demonstration of the program capabilities Mainers will be using as they join the MERIT retirement savings program beginning this month. Colorado and Maine are the first two states to go live with a partnered Auto IRA solution – individually branded for each state but using a common platform and investment funds. Colorado serves as the “host” state, while Maine provides the state-specific elements, including in-state outreach and employer data. Vestwell is the program service provider to this partnership.
At its meeting and following a public comment period in which the comments received were “very helpful,” the Maine Retirement Savings Board voted to adopt proposed rules which include two 2024 deadlines for Maine employers. The program will be open statewide beginning January 1, 2024. Covered employers with 15+ employees have until April 30 to register and begin the facilitation process. Those with 5+ employees have a deadline of June 30, 2024.
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Delaware (workforce 499,000) – the Delaware EARNS program is making steady progress in-state in the direction of statewide launch. The program has a statutory “launch by” date in 2025 but could open sooner under a partnered approach. Meantime, the program is gaining visibility in the state.
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Hawaii (workforce 647,000) – If you’re following the progress of Hawaii’s Auto IRA implementation, you can find more information here. The program is moving forward with the support of the state’s Department of Labor and Industrial Relations. Among other activity, the Hawaii Retirement Savings Board is working to hire its inaugural Executive Director.
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Illinois (workforce 6.4 million) – Coming right up: Illinois Secure Choice’s registration deadline for covered employers with 5+ employees – on November 1. Nice use of the word “looming” – here. And we like the context that accompanied the piece in Lawndale News – Chicagoland's self-proclaimed Largest Hispanic Bilingual Newspaper.
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Massachusetts (workforce 1.6 million) – Five years in, the Massachusetts CORE Plan, a MEP for small not for profits, is serving a few hundred employers and a few thousand employee savers. Recent research by Pew Charitable Trusts indicates that with the addition of an Auto IRA program, the state could serve another 1.2 million working Massachusans. (Massachusans, right?) The state may take a closer look in the coming season.
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New Jersey
(workforce 4.4 million)
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New York
(workforce 9.5 million)
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The New Jersey and New York programs may be running a little under the radar – but we expect not for long. We recently reported that NJ has selected Vestwell as their program services provider, and New York may be working on something similar. Employers in New York are starting to pay attention. | |
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Also stealthing around – Minnesota (workforce 2.8 million) – statutorily required to hold its first program board meeting by March 1, 2024 and to launch its program in October of next year. That's a fast timeline.
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Virginia (workforce 4.3 million) – Celebratory news from RetirePath Virginia, launched statewide in July of this year with deadlines for covered employees with 25+ employees. The program is recognizing the registration of its first 100 employers – by name, which offers a unique look into the wide range and type of employers covered under the program (and which are facilitating ahead of the deadline, in most cases). Take a gander.
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C O M I N G U P
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Oregon (workforce 2.2 million) – The next meeting of the OregonSaves Board is scheduled for November 14, 2023.
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Maryland (workforce 3.2 million) – The next meeting of the Maryland$aves Board is scheduled for December 4, 2023.
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Massachusetts (workforce 3.6 million) - The next meeting is tentatively scheduled for December 11, 2023.
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New Jersey (workforce 4.6 million) – The next meeting of the New Jersey Secure Choice Savings Program Board is scheduled for December 15, 2023.
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We curate, you peruse. Enjoy!
One. Want to know how we’re paying for our retirements? This new piece by Boston College Center for Retirement Research’s Alicia Munnell says only a small proportion is coming from our 401(k) plans. What? We thought defined contribution savings were essential! Read on for some good thinking about what the numbers are telling us.
Two. If you’re familiar with the CFERS initiative you know we care about retirement savings and income outcomes by demographic. If you do too, you may be interested to read Mortality Differentials, the Racial and Ethnic Retirement Wealth Gap, and the COVID-19 Pandemic by Edward Wolff in the Journal of Economics and Ageing. (We’re not nerds, you’re a nerd!) It’s a bit technical. Focus. The middle and the bottom lines are worth it.
Three. ERISA, ERISA. We hardly knew ye. Back in 1976 we were solving lots of problems related to the security of employee retirement income. 47 years later times have changed. Is it time for a reboot, as PlanSponsor suggests? Our friend David Morse notes three top elements for consideration, including: “universal access to retirement savings, the return of defined benefit pensions and an embrace of defaults and technology.” There’s more. Check it out.
Four. You can still plan your virtual attendance at the 2023 Century Summit hosted by the Stanford Longevity Center on November 6 and 7. Can we afford our very long lives? We’ll be there, and reporting back. Join us if you can, and stay tuned if you can't.
Need a break from all things financial? We just listened to Jen Silverman’s The Miranda Obsession with a crew of stars. #goodfun
We were still escaping something. While driving if you’ve ever looked up at a semi and thought, that’s a different life - this one might be for you: we got A Trucker’s Tale in our subscription. More #goodfun
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We're going family this week. If you're a longtime reader you might see some familiar faces.
One of these guys just had a big birthday. 🎂 Can you tell what his favorite store is? If you’re not from the Pacific Northwest, this may mean nothing to you. If you are, we’ve got some great party ideas for you. We might’ve come close to trademark infringement. A good time was had by all. 🍰 #missedyou!
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That’s it for this edition. ❤️ Hug your people and change the world.
If you like this piece, please stick with us. We’ll be back in about two weeks. If you don’t like it, please unsubscribe below. Comments for us? Please let us know. Want your own subscription? Request one here. All information shared is from public sources or used with express permission.
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Massena Associates provides process, policy, and implementation consulting on retirement savings programs and products.
Our clientele includes public entities, policy organizations, and private sector providers. Our specialty – efficient, targeted results. We are an active speaker on retirement security topics, including state-facilitated programs, MEPs and more.
If you’d like to explore working together, we welcome the conversation. Connect with us here, and at 339-236-0684.
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Looking for a great retirement savings innovation resource? Led by Dr. Alicia Munnell, the Center for Retirement Research at Boston College develops and hosts terrific content and proprietary research related to states, financial security, social security, and more.
The Defined Contribution Institutional Investment Association (DCIIA) is dedicated to enhancing the retirement security of America’s workers. To do this, DCIIA fosters a dialogue among the leaders of the defined contribution community who are passionate about improving defined contribution outcomes. DCIIA's site provides a range of public and member-specific resources.
The Georgetown Center for Retirement Initiatives, Exec Angela Antonelli, provides excellent information on state-based and other retirement security innovation and policy.
Pew’s Retirement Savings Project studies the challenges and opportunities for increasing retirement savings and is another great resource - check out the work of John Scott and his terrific team.
If you want a great source of broad-based, consumer-focused retirement news, Jeffrey H. Snyder’s The Morning Pulse is your ticket. You can subscribe here.
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