Retirement Planning: News & Products

On May 28 the House passed the American Jobs and Closing Tax Loopholes Act (H.R. 4213), which not only gives various tax cuts, but provides relief for pension plan sponsors and imposes new disclosure requirements on 401(k) plans. The bill was expected to be debated in the Senate the week of June 7. H.R. 4213 gives pension plan sponsors additional time to account for the losses brought about by what James Klein, president of the American Benefits Council, said is a “perfect storm” of economic factors, including depressed financial markets, low interest rates, and the 2006 pension funding rules. Sue Breen-Held, consulting actuary at The Principal Financial Group, says that the provision in the bill providing relief for DB plans has “the potential to reduced funding levels for companies that really need it, so overall, in broad strokes” the relief “is a good thing, but it’s certainly not designed for everybody.”

A new report by GDC Research and Practical Perspectives has found that advisor practices are experiencing significant growth in serving retirement income clients as planners, brokers, and RIAs express heightened concern with managing investment risk for these investors. The report, The Continued Evolution of Retirement Income Delivery: An Analysis of Leading Practices in Advisor Support, found that that 63% of advisors have experienced net growth in the past year in serving retirement income clients. Advisors also find these clients are receptive to consolidating relationships. “While 91% of advisors believe they have the abilities to effectively serve new retirees, practitioners across channels are increasingly wary of how to manage investment risk for retirement income clients,” the study, written by Howard Schneider and Dennis Gallant, says. “In general, one in four advisors are now less confident in their ability to manage investment risk compared to one year ago, reflecting a combination of factors including the pace of market recovery, the potential for slow economic growth, and the low interest rate environment.”