From the November 2009 issue of Investment Advisor • Subscribe!

November 1, 2009

Retirement News

A new 33-country survey by global consulting firm Mercer of organizations that sponsor defined contribution (DC) retirement plans reveals widespread adoption of automatic enrollment and other relatively new "automatic" features designed to boost employee enrollment and limit the number of decisions employees need to make. The plans surveyed represent more than $440 billion in assets. One-third of the employers surveyed offer automatic enrollment, one-third automatic contribution escalation, and over one-fifth automatic rebalancing features, Mercer reports. Among the close to 80% of companies that have a default investment option, lifecycle funds are the most common, used by 67% of those respondents.

New York Life Retirement Plan Services said it is launching a major technology initiative and has already hired 13 people for the project, with plans to hire up to 17 more by the end of 2009 and an additional 30 by the end of 2010. According to New York Life, the newly hired team will be charged with a number of high-priority technology projects including enhancing New York Life Retirement Plan Services' client Web site and upgrading its data warehouse, helping the firm and its clients to better understand and act on data about retirement plan participants.

Women are increasingly dissatisfied with the offerings provided by investment institutions, banks, insurers and other financial services companies, according to a global survey of 12,000 women in 22 countries conducted by The Boston Consulting Group (BCG). Nearly 50% of women polled say they feel pressure related to managing household finances, but financial institutions have yet to provide the kinds of products that would make women's lives easier. In fact, the survey found that 47% of women say they are dissatisfied with investment providers, 46% say they're dissatisfied with banking services, and 44% say life insurance providers don't meet their needs. The Boston survey argues that "women play an outsized role in generating income and controlling household finances. With 1 billion women in the workforce earning over $9.8 trillion annually, and soon to earn $5 trillion more, the role of women in the global economy will be even more important." BCG says that financial services firms "are only beginning" to understand how women think about money. Among women's worries, the survey says: 81% don't think they are saving enough for retirement; 73% are concerned that they don't consistently save; and 41% save less than they would like. BCG says that financial services firms need to understand that "women do not have a desire to accumulate money for its own sake or to experiment with complicated financial instruments." Rather, "they value money only as a means for caring for their families and themselves, improving their lives, and assuring long-term security. They do not need or want products and services that offer access to a huge array of financial tools and techniques. Women say that they want advisors and services that recognize their need for short-term simplicity and long-term stability. They want solutions that help them with their most challenging task: Managing household finances from day to day and month to month."

The U.S. division of Wellesley, Massachusetts-based insurance company SunFinancial Life has been experiencing increased success in its variable annuity business, as the demand for these instruments has risen. For the first half of 2009, SunLife Financial said its VA sales rose 35%, the company noted in a release, well above the Morningstar/VARDS Industry average of -25.4% for the same time period when compared to the first half of 2008. Sun Life's VA assets rose the first six months of 2009 by 10.7%, also beating the comparable 5.1% industry average gain for the same time period.

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