With the growing uncertainty over Social Security’s future, America’s workers are relying more than ever on their employers to ensure they’ll have enough money to retire—and this growing trend toward paternalism is being embraced by mutual fund and insurance companies.
This week, both Putnam Investments and Russell Investments announced new programs designed to help companies track whether their employees’ 401(k) plan choices will afford them adequate savings in retirement.
These announcements came the same week that the U.S. Senate Finance Committee held hearings on tax reform options for promoting retirement security.
Putnam on Wednesday said in a news release that it is bringing its Lifetime Income Score metrics, currently used by defined-contribution (DC) plan participants, directly to the plan sponsors so they can “help positively influence the retirement preparedness of their workers.” Boston-based Putnam is a money management and mutual fund firm.
Russell on Monday said it is proposing “a new framework to help DC plan sponsors better answer the question ‘Are my participants saving enough?’ and in turn to take measured steps through plan design in an effort to improve participant behavior.” Based in Seattle, Russell is a subsidiary of the Northwestern Mutual Life Insurance Co.
Senators on the powerful panel wrangled Thursday with retirement experts from the Employee Benefit Research Institute, the Brookings Institution and the American Society of Pension Professionals and Actuaries over the fate of Social Security and how it can be funded in light of the nation’s crushing deficit and weak economy.
While Democrats favored preserving Social Security and Republicans spoke in favor of the private sector, all agreed that DC plans have become a significant part of the American retirement system.