401(k) Retirement Report * - Survey Says: Economy Drives Confidence to Record Lows

Written by: 401k Advisors, MMC's affiliated company
 

Survey Says: Economy Drives Confidence to Record Lows

The Employee Benefit Research Institute recently released their 2009 Retirement Confidence Survey. According to the survey, only 13% of workers say they are very confident about having enough money for a comfortable retirement, which is the lowest level in 13 years. As for retirees, only 20% reported that they were very confident in having a financially secure retirement.
 
The leading cause of the drop in confidence is economic uncertainty, followed by inflation and cost of living.  Negative experiences such as job losses, wage reductions, retirement account losses and increased debt also contributed to the lower level of confidence. Also, only about 25% of workers felt they would have enough money to cover basic health care expenses in retirement.
 
The results of this survey have led 28% of workers to indicate that they expect to extend the age at which they wish to retire. Most are delaying the date with the intention to increase their retirement assets. 72% of workers plan to work while retired to supplement their retirement income.

Finally, workers are responding to this loss in confidence in several ways:

• 43% are changing the way they invest in their Retirement Plan;
• 25% are actually saving more; and
• 25% are seeking advice from an investment professional.

How to Respond to Participant Requests for Information

Specific guidance is provided by ERISA on how to respond appropriately to participant requests for plan related documents and information. The many court cases on this topic should act as a reminder to fiduciaries to take each participant request seriously. For this reason fiduciaries are strongly encouraged, as with most other fiduciary obligations, to follow procedural prudence. This entails understanding your responsibilities, establishing a process for responding to participant requests, and documenting the activity.

Whenever a participant requests plan-related documents it is essential that your delivery of them be prompt and complete. Failure to do so can involve substantial monetary penalties.

Employee Benefits Security Administration (DOL) Investigations

The Employee Benefits Security Administration (EBSA) is an enforcement arm of the Department of Labor (DOL) that investigates the most basic and fundamental aspects of qualified plan administration. An EBSA investigation is typically triggered by participant complaint(s), tips from other regulatory agencies (IRS, SEC, etc.), or information gleaned from 5500s.

It is important to note that an EBSA investigation does not necessarily mean that evidence of a violation exists, but rather that some fact led the EBSA to gather further information. The EBSA typically focuses their investigation on one (or more) of the following:

• Missing plan assets
• Significant drop in assets
• Investment performance and monitoring
• Required participant disclosures
• Title I of ERISA reporting
• Whether fiduciaries are prudently meeting their prescribed functions
• Whether assets are being used improperly

The DOL encourages plan sponsors to voluntarily correct violations. To that end they provide two non-investigation compliance programs, the Voluntary Fiduciary Compliance Program (VFCP) and Delinquent Filer Compliance Program (DFCP). (Note: If a plan sponsor is currently under investigation they may not use either of these programs.)

* “Retirement Report" is published eleven times a year by 401(k) Advisors. This material is intended for informational purposes only and should not be construed as legal advice and is not intended to replace the advice of a qualified attorney, tax adviser, investment professional or insurance agent. 401(k) Advisors, Inc. All rights reserved. 090630

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