American companies are taking decisive actions to make defined contribution plan participation as easy as possible for employees, according to a survey.
The 2008 401(k) Benchmarking survey—conducted by Deloitte, the International Foundation of Employee Benefit Plans and the International Society of Certified Employee Benefit Specialists—finds that 42% of plan sponsors now have an automatic enrollment feature, nearly double the 23% total in the last survey. Another 26% say they are considering auto-enrollment.
Some employers are helping employees increase their retirement savings by adding step-up provisions and getting more aggressive with the default deferral rate under their automatic enrollment plans.
Two-thirds of respondents report using a default of 3% compared with slightly more than 50% of plan sponsors that participated in the previous survey. Step-up provisions that automatically increase deferral percentages on the participant’s behalf also doubled, to 35% from 18% in the last survey.
Lifecycle funds remain popular, with 57% of respondents offering programs, up from 44% in the last survey and 28% in 2004. Lifecycle funds also emerged as the clear choice for respondents’ default investment vehicles, increasing to 50% among respondents versus 38% in the last survey.
There were 436 plan sponsors that participated in the survey. The respondents were distributed across all regions of the United States and all industries.
For a copy of the survey on Deloitte’s website, click here.
Click here to read about how Canadian plan sponsors are shifting towards auto-enrollment in Switching to Autopilot.
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OMERS Completes Purchase of Office Tower
OMERS Realty Corporation has completed its purchase of a 50% stake in TD Canada Trust Tower from Brookfield Properties for $425 million, or $721 per square foot.
It already owns the other 50% of the Toronto office tower.
The 51-storey, 1.1-million-square-foot tower is one of the two office towers comprising the 2.6-million-square-foot Brookfield Place (formerly BCE Place) office and retail complex in Toronto’s financial district.
TD Canada Trust Tower opened in 1990 and is currently 100% leased.
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Towers Perrin Creates Capital Markets Unit
Towers Perrin has created a capital markets subsidiary in the United States that will advise clients in the areas of risk-linked securities and retirement risk transfer transactions.
With the formation of the subsidiary, Towers Perrin Capital Markets (TPCM), the company extends the scope of its risk and financial services solutions in response to the increasing importance of the capital markets in risk financing.
Prakash Shimpi, a Towers Perrin principal and head of its enterprise risk management practice, has been appointed chief executive officer of TPCM.
“Through TPCM we can now help clients tap into the potential value of employing the capital markets as part of an integrated risk management strategy,” he says.
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Cigna, Marsh Join Forces
CIGNA and Marsh ConsumerConnexions (Marsh) have joined forces to provide employers with a package that eases the financial and administrative burden of providing retiree benefits.
In recent years email and internet-based communications have been the vehicles of choice for employers to communicate benefits information to their employees.
Retirees, however, are more difficult to reach as they may not use the internet and may have relocated after retirement.
Marsh begins managing the communication as an employee retires, providing both toll-free telephone access as well as web capabilities for enrollment, billing and payment, changes to personal information, and general questions about their own healthcare plans as well as Medicare.
“It’s becoming increasingly more difficult for employers to administer retiree benefits on their own. Average retiree call length is two to three times longer than for active employees, making it difficult for employers to staff effectively during open enrollment periods,” says Rob McGinnis, president and CEO of Marsh ConsumerConnexions. “With our extensive call center infrastructure and capacity, this is an ideal collaboration with CIGNA to provide easy-to-access, affordable options to help employers continue to offer their employees health benefits after they retire.”
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Carmichael Moves to OMERS
Ted Carmichael joined the Ontario Municipal Employees Retirement System (OMERS) on July 21.
He will be the managing director, asset mix and capital market research at the pension fund.
Carmichael was previously the chief economist of JP Morgan Chase Canada.
He isn’t the only economist to leave a financial institution to work for a pension fund. Last year, Rick Egelton joined the Canada Pension Plan Investment Board after working for BMO Financial Group.