retirement benefits
Retirement benefits are the monetary and other benefits and incentives provided to the retired officers and employees of the government.
Women have Bigger Retirement Benefits Challenges: Study
A recent white paper has revealed that women are very poorly prepared for retirement. The reason is the higher number of challenges faced by women. Many women work only part time and some are not even offered a retirement plan. The women who are offered a retirement benefits plan are often saving less money in the plan than they should for a secure retirement.
Why Women Don’t Have Access to a Retirement Benefits Plan
The white paper was released by a leading Washington-D.C.-based popular advocacy organization for America’s financial services industry named Financial Services Roundtable. The white paper revealed that about 27 percent women work part time because they need to take care of the kids or any other family members. Part-time workers are often not offered a retirement benefits plan. Moreover, the earnings of part-time workers are so low that even if they are offered a retirement plan, they can hardly contribute to it.
The Workplace Earning Differences
The white paper has also highlighted the fact that women consist of 47 percent of the labor force in America. Women also have nearly equal education to men. About 29.6 percent women hold a bachelor’s degree and this percentage is 30.4 percent for men. But still, women’s weekly earnings for salaries and full-time wages are just 81 percent of what men make.
The Bad News
About half of the millennials who were surveyed accepted that they don’t even have a retirement investment account while the fact is that the millennials need more money saved towards the retirement as compared to baby boomers as the cost of living and healthcare expenses are constantly rising.
Women Need more Retirement benefits than Men
The white paper also shared the fact that women need more money stashed for the retirement than the men because they have a longer average lifespan. The average lifespan for men is 84 years while its 87 years for women. It is also a strong possibility that women will need to spend more money over time towards their health care.
The Participation
The white paper has also found out that women who are saving towards a retirement benefits plan are not doing enough. About 62 percent of women were offered a 401(k) or a similar plan. Just 76 percent participated in the plans and the rate of saving they chose stands at 7 percent of their salary.
OPM Getting Better at Clearing Retirement benefits Backlog
OPM’s struggle to keep pace with the retirement benefits applications of the retirees has been a much discussed issue. We updated you last on the same in April. It’s time for another update. In the month of June, the agency received fewer applications and so the agency succeeded in processing more applications than it received for the month.
June’s Data on Processing Retirement Benefits
OPM got about 6,000 new retirement benefits claims in the month of June. It is about 18 percent lower than the claims received in the months of May. The number of new applications is also sixth lowest since October of 2014. In June, the agency processed just over 6,400 claims. It shows that the agency processed more claims than it actually received. The number of claims processed in the month of June is around 16 percent less than the claims processed in May. The number of claims processed is also the third lowest amount processed by the agency in the last 21 months.
The Total Backlog
The total backlog of the claims now stands at just over 13,500. It is a bit less than around 14,000 outstanding backlog of May 2016. In the report presented in May, the OPM added the steady state line at exactly 13,000 claims but the agency has clearly failed to reach this line. It has just been able to reach half of the goal.
Getting Better
Despite the hiccups, it is clearly visible that the agency is getting good at handling the claims and it seems that it has finally gotten a handle on the inventory backlog of claims. This inventory was out of control in the month of January. The reason behind the sudden escalation in the inventory was the fact that most federal employees file for a retirement in January only.
The 60 Days Factor
OPM data has also revealed that it processed 75 percent of claims in less than 60 or exactly 60 days in June. It has not changed since the month of May. The agency took an average of 37 days to process the claims that were processed in less than 60 days. The average has also remained unchanged. The retirement benefits claims that took more than 60 days to process were 103 in May and it stands at 115 in June.
Reducing Retirement Benefits Could Increase Employee Pay: County Mayor
The mayor of Greene County, Tennessee recently explained that the county’s move to reduce the contribution towards retirement benefits would benefit the employees in the future. He explained that though the county contribution towards retirement benefits would decrease by 2 percent, it will not be at the minimum level. He also said that the money saved from lesser contribution would be used to increase the salaries of the employees.
Clearing the Air on Retirement Benefits Reduction
David Crum who currently holds the position of Greene County Mayor cleared the air on the county’s proposed move to trim down its Tennessee Consolidated Retirement System (TCRS) contribution. TCRS is a defined benefit pension plan that’s trusted by a lot of people. He stated that the proposed move does not aim to cut the employee retirement of the county members. The move is expected to be implemented from the next fiscal year.
Increasing the Salaries
The proposal to cut back on the TCRS came after the mandate that stated elected officials across the state should be given a 2.03 percent pay increase in the upcoming 2016-2017 fiscal year. Crum was then seen saying that if his salary is increased, he would want the county people to get an increased salary too.
Reducing the Retirement Benefits
In order to ensure that the pay of every member of the county is increased, Crum proposed that the TCRS contribution must be reduced a bit. The TCRS contribution was 10.43 percent during the fiscal year of 2015-2016. The contribution is revised annually by the state and it recently stated that the minimum contribution of the county towards TCRS for the fiscal year 2016- 2017 should be 6 percent.
Crum has suggested that the contribution should be 8.4 percent rather than 6 percent or the current 10.43 percent. The money saved from reducing the TCRS contribution can be utilized for increasing the pay scale of the county employees. This strategy would help the state to have enough money for the future expenses as well and it would help the state to avoid a shortage of money.
Who will be impacted?
If the proposal to reduce retirement benefits offered by Crum is implemented, all the people who are covered by the TCRS would be impacted. As per the Tennessee Department of Treasury, TCRS covers all the state employees, K-12 public school teachers, employees of political subdivisions who have opted for the plan and higher education employees.
States Helping Private Sector Employees to Save Towards Retirement Benefits
Saving towards retirement benefits has become a huge concern for public sector employees as well as private sector employees. As private sector employees have got fewer options for retirement savings, the states are thinking about adopting some methods to ensure that the employees get access to more retirement saving options. Many of the state governments are adopting 3 crucial approaches as per the information shared by Pew Research.
Why there is a Need for Better Retirement Benefits Options?
The information shared by Pew Research indicates that most of the private sector employees accumulate a hefty part of their retirement funds in the plans that are employer-sponsored. It also mentions that just 58 percent of employees have access to a retirement savings plan and just 49 percent participate in a plan. Only fewer than 10 percent of all workers are contributing to a retirement plan that’s not job-based. It is pertinent to add here that the failure to save or save enough for retirement has a negative impact on the life of workers later in life.
Seeking the Right Programs
To help the private sector employees, several states are seeking programs that would help private sector employees to save for their later years. Pew Research analyzed the efforts made by 25 U.S. states and found that the objectives of all these states were consistent.
The states seeking programs that aim to increase the retirement savings and reduce poverty among retirees so that the social assistance spending that is straining the budget can be reduced. The policymakers also want to ensure that the new programs have the potential to be implemented successfully, that are sustainable and cost effective. The programs must also place minimal burden on an employee and protect the retirement savings.
The Three Vital Programs
The states are taking help of three approaches. The first approach is to administer and sponsor a plan that is governed in accordance with and under the Employee Retirement Income Security Act (ERISA). The next option is to work within the existing voluntary employer-based system and the final option is to create a state-based plan that is not subject to any federal pension law.
It is a fact that all of the above-mentioned approaches have the potential to help the private sector employees to get better retirement savings options and hence they would have access to better retirement benefits after they retire.
New Updates on Chicago’s Retirement Benefits Accounts Breach
A few days back we reported how investigators were keen on finding the culprit of retirement benefits accounts. The retirement benefits accounts of the municipal workers were infringed and some money was stolen. Earlier, the investigation was leaning towards hacking but as per the new reports, the data was stolen not hacked.
The Money Stolen from Chicago’s Retirement Benefits Accounts Breach
As per the latest reports the city employees in Chicago lost about $2.6 million when their retirement benefits accounts were infringed. Though nationwide, the private firm managing the accounts deposited the money stolen from the accounts within 5 days time, the investigators are still working hard to find the source of the breach and it seems that they have got an idea of how it was done.
The Infringement
Earlier the investigators were suspecting that some professional hacker or a group of hackers were responsible for the stealing but now the reports are different. The investigators now believe that the bad guys had access to personal information of municipal employees and they used that information to set up online profiles with the city’s deferred compensation plan. After creating the accounts, they took out the loans and the city lost the money.
The Statement
In a recent statement given by the Nationwide spokesperson, the company admitted that they believed that the accounts were not hacked but someone stole the information. It is pertinent to add here that the company is playing a major role in investigating the fraud along with the teams of city officials and some federal officers.
Hushed Up Details
When the spokesperson was asked whether it was an inside job, the person refused to offer a comment and stated that no more information would be divulged as the investigation was still ongoing.
Chicago’s Comptroller Opinion
A spokeswoman representing the Chicago’s Comptroller also shared some update. She stated that the fraud was conducted by an individual or group who succeeded in accessing the personal information and created a web profile. Then the profile was used to take out a loan from the retirement account.
The Corrective Measures
Nationwide had started taking corrective measures soon after the breach. It returned the money to all 58 accounts that were infringed within 5 days. The company is now offering two years of free credit monitoring to all the customers who were affected by the retirement benefits accounts breach.
Court Decides Retirement benefits are not a part of Workers’ Compensation
Getting injured on a job can be a tough ordeal for any person. It is a sad fact that the injured person often faces financial difficulty after such incidents. Hence, the employer needs to pay a hefty sum to ensure financial safety of an injured employee. The Supreme Court of Iowa recently cleared the air on whether the retirement benefits are a part of workers compensation or not. It said that they are not a part of workers compensation as they are just a fringe benefit that is not usually spent by an employee on a weekly basis.
Why are Retirement benefits not a part of Workers’ Compensation?
The decision that says that the retirement benefits are not a part of workers’ compensation was made by a district court. However, the Supreme Court of Iowa just recently agreed to it. The reason behind the ruling is that the court believes that retirement benefits are just a part of fringe benefits. They were not a part of his weekly earnings. It is pertinent to add here that it is the very first time the Supreme Court of Iowa has taken any stand on the matter.
The Case
The case that highlighted the need for making a decision on whether the retirement benefits are a part of workers’ compensation or not has also gained some popularity. The case was related to a person named David Evenson who had injured his elbow when he was on the job. He was working for Winnebago Industries when he got injured. The whole incident happened in May of the year 2010.
When the case was in court, he stated that the company contributions to his 401-K plan must be considered when the amount of workers’ compensation payments was to be set. It can be seen that Evenson clearly wanted better workers’ compensation payments like almost all the employees who get injured on the job and he wished for a financially secure future.
The Ruling
After the appeal made by Evenson, the district court didn’t side with him. The court upheld an arbiter’s ruling which stated that the 401-K payments or retirement benefits were just a fringe benefit. The ruling further added that the money is not a part of weekly spendable earnings of the employee and hence they should not be considered when the workers’ compensation payments are to be decided.
MBTA Offers Early Retirement
MBTA has decided to cut down on its workforce by offering early retirement to its personnel. The public transit agency wants to save some money and reduce its deficit by offering retirement. The employees who are not yet near retirement are also encouraged to leave the company if they are interested. The agency has taken this step first time since 1991.
The Early Retirement Plan
The Massachusetts Bay Transportation Authority wishes to save about $25 million by cutting off about 300 workers via the early retirement plan and several related benefits. The savings are expected to be used to ensure that the rising deficit of the agency is narrowed down some. This was stated by the agency officials. It is pertinent to add here that the budget deficit stands at $80 million currently.
What’s in Store for Workers Opting for Retirement
About 1,100 current employees of the agency are supposed to be eligible for the early retirement plan because all these people would be retiring by the end of the year. If one such employee opts for the voluntary retirement plan, he or she is offered a one-time incentive via cash. The average payment of such an incentive is around $16,500.
Voluntarily Leaving the Agency
The agency is also hoping that some of the employees who are not yet eligible for retirement would also be interested in leaving the agency. All the employees who have worked for the agency for over 5 years would be eligible for leaving the agency. Currently, about 2,200 are counted in this category.
If an employee who has served the agency for 5 to 10 years decides to quit the job, he or she is eligible for getting an incentive of $5,000. On the other hand, if the employee has served the agency for more than 10 years of experience would likely get $10,000 for leaving the agency. The agency has over 6,500 employees currently and hopes to see this number considerably reduced in the near future.
The Fact
The Chief Administrator of MBTA, Mr. Brian Shortsleeve recently stated that the agency had taken similar steps in the year 1991. It was done to reduce the expenses related to payroll. This shows that offering early retirement is not a new thing for the agency. It would be interesting to see how the employees will react to these new schemes of the agency that are nothing but an attempt to save money.
Investigators Keen on Finding the Culprit of Retirement Benefits Accounts
The retirement benefits accounts of several municipal employees were breached recently. The breach was detected by the company managing the accounts. Some money was stolen from the accounts and the company returned it soon. The company has also intimated the account holders and federal authorities of the breach and an investigation has begun to pinpoint the source of the fraud.
The Breach of Retirement Benefits Accounts
The breach came to light when the employees working for Nationwide Retirement Solutions, the company that currently administers the accounts on behalf of the city noticed some suspicious activity. The suspicious activity was noticed at about 457 deferred compensation accounts that are meant for municipal employees. It is pertinent to add here that these accounts are very like the 401k accounts.
The suspicious activities were noticed on June 1, 2016, and when the matter was investigated, it was found that the accounts of 91 people were breached. Some money was withdrawn from around 58 of the breached accounts while 33 accounts remained as it is.
The Culprit
The culprit of the breach is unknown as of now. It is being believed that the culprit was a person or a group that apparently created a web profile to take a loan from a retirement account and accessed personal information by using illegal means. These points were highlighted by the officials involved in the investigation.
The Investigation
The investigation into the serious matter began when Nationwide learned of the breach and notified the federal authorities. The account holders were also intimated of the breach. Ryan Ankrom, who is serving as a spokesperson for Nationwide Retirement Solutions recently stated that the company is working in conjunction with the federal authorities and city officials in order to pinpoint the source of the breach. He also added that they think it’s a fraud at this point.
The Money
The total amount of money stolen from the accounts is not clear yet. Ankrom said that the company has returned the stolen amounts to each of the account holders within 5 days of the breach.
The Future Plan
Erin Keane who is serving as the acting city comptroller has also made a statement. He said that the company and the city are working together right now to ensure that the security of the deferred compensation accounts that are like the retirement benefits accounts is maintained.
Does the Federal Employees’ Retirement System Have a Downside? by Nelson Secretario
Nelson Secretario investigates the potential downsides of the Federal Employees Retirement System (FERS)
If you’re a federal employee who is enrolled in FERS (the Federal Employees’ Retirement System), then you are probably well aware of the many benefits that this program has to offer as far as saving for the future.
For example, as soon as you have reached your minimum retirement age – which ranges between 55 and 57, this program allows you to retire using an immediate, unreduced annuity if you have put in 30 years of service. In some cases, an employee may even be able to retire at a younger age, provided that they have had either 20 or 25 years of service.
However, while working for the government may allow you to leave the world of employment at a younger age than many other professions can, there can also be some drawbacks to relying solely on the FERS program as your only source of retirement income. Some of these can include:
- Cost-of-Living Adjustments – If you do happen to retire prior to age 62, you won’t be able to receive a cost-of-living adjustment on your annuity (unless you are a disabled retiree or a survivor annuitant). Therefore, you could essentially go for several years receiving the same amount of income, while the prices of goods and services that you’re paying for continue to go up. And, if you are receiving a special retirement supplement (SRS), the funds from this source do not ever receive a cost-of-living adjustment.
- Possible Benefit Reduction – You may also be subject to having your benefit amount reduced, based upon when you actually retire. For instance, the MRA+10 (Minimum Retirement Age) program that is a part of FERS, can allow you to retire at any age, as long as you have at least ten years of service. However, if you do end up retiring early, the amount of your annuity will be reduced by 5% for each year that you are under age 62. So, depending on just how early you leave the workforce, you could see a significant reduction in your retirement income amount.
With this in mind, it can be a good idea to have other retirement income sources available to you that can be used to supplement your FERS benefits. That way, you will be able to both fill in the “gaps” that are left between your income from your FERS retirement income and your living expenses, and you can also provide yourself with a way to compensate for the increased income that you will need in the future.
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Combination of Strategies is the best bet for Steady Retirement Benefits
People who are looking for steady retirement benefits income cannot rely on a single strategy, says a recent study. The study also stated that the expectations of retirees are very high and contradictory. It pointed out the strategies that offer mental peace to retirees. It also stated that all strategies have their own side effects and none of them can outperform.
The Study Judging the Strategies for Steady Retirement Benefits
The study that examines the strategies was conducted by the TIAA Institute. It studied three strategies opted by retirees. The list includes a systematic withdrawal, a guaranteed lifetime withdrawal benefit, and a partial variable immediate annuity. The study has concluded that none of these can offer long term satisfaction to the retirees. A combination of all these strategies might be the answer.
The study also revealed that the retirement income security can be enhanced depending on the withdrawal strategies only when the participants start to withdraw the benefits. But, the goals of every participant can affect the strategy that’s offering the best results for a particular situation.
High Expectations
The study also revealed that most retirees look for many things when they get retired. They want strategies that offer inflation protection, retirement security, asset growth, liquidity and the potential for an estate. All these goals might conflict with each other which make it impossible to satisfy a retiree with a product for the long term.
Peace of Mind
The guaranteed lifetime withdrawal benefit strategies and partial variable immediate annuity strategies perform better when it comes down to offering peace of mind to the retirees. The systematic withdrawal strategy allows for greatest flexibility in the management of retirement assets by the retiree.
The Side Effects
The study has also exposed the fact that there is no strategy that has no side effects. Some of the side effects are high fees that are a part of guaranteed lifetime withdrawal benefits, loss of liquidity that comes by adopting partial variable immediate annuity strategies and less retirement income security which is a part of systematic withdrawal strategies
No Strategy Outperforms
The study also compared the three strategies by making use of the historical monthly returns data. It announced that though many people use their conventional wisdom and put their faith in a guaranteed lifetime withdrawal benefit product strategy because it allows a guaranteed minimum amount of lifetime income, no strategy is a clear winner and can assure steady retirement benefits.
Investment Firm Seeks to Expand Access to Retirement Benefits
State Street Global, an investment giant of Boston seeks government help to ensure that all the private sector employees to get better access to retirement benefits. The company has asked the government to make some laws that will increase the retirement benefits coverage of private sector employees. The company does not wish the government to launch an expensive retirement plan and applauds the steps taken by the government to boost retirement saving opportunities.
The Open Letter Seeking Better Retirement Benefits
The Boston Investment giant released an open letter to the government recently and insisted on ensuring that steps to boost retirement benefits for private sector employees are taken soon. The letter suggested steps like making it mandatory for employers to enroll all employees in 401(k)-type savings plans. The letter also proposed that the private employers must offer default investments like target-date funds that include some stock and some bond funds. These basic investments should be based on the risk appetite and age of the employee.
Tax Credits
The company also expects the government to offer some tax credits to small employers. It will allow them to cover the administrative costs related to the retirement plans. It was also suggested that businesses must be allowed to group together to offer retirement plans.
The Need
Ron O’Hanley, who serves as the State Street Global’s Chief Executive recently stated that the problem of lack of retirement funds for the private sector employees is a direct threat to the overall society and the well-being of future generations. He also shared that the company does not want the government to launch any other expensive plan but just wishes for better access to retirement benefits to the private sector workers.
The Plan
O’Hanley also revealed that the company planned to seek the help of other investment managers so that the concept can be pushed at the lawmakers.
Seeking Betterment
O’Hanley has appreciated the efforts made by the Congress and the White House for expanding the retirement savings opportunities. But the company also thinks that there is a need for a national and bipartisan answer that promises workplace coverage in a retirement savings plan.
The Progress
It is pertinent to mention that as per the latest report of the Government Accountability Office on retirement security about 40 percent of working households don’t have any means to access an employer-sponsored defined-contribution retirement benefits plan.
About 50 Percent Decline in Small Businesses offering Retirement Benefits
A recent report has found out that most small business owners are shying away from offering retirement benefits to their employees. The report also highlighted that the small business owners might not be hiring much this year and the business sentiment is not too optimistic.
Dropped Retirement Benefits
Image Credits
The Capital One’s Spark Business Barometer shared that the percentage of small businesses that offer retirement plans has dropped by about 50 percent. The report also pointed out that only 13 percent of small business owners offer a 401 (k) plan to the staff members. In the final quarter of 2014, about one in four small businesses offered a retirement plan to the employees. About 30% of the businesses that have employed 20 to 49 people are offering a 401 (k) plan and just 7% of businesses having less than 5 employees are offering this plan.
The Reason
When asked about the reasons for the decline, the small business owners told the researchers that they were not offering a retirement benefits plan because they could not afford the high costs associated with them. Some business owners also confessed that they were too small to offer such plans to employees. This data was shared by the President of ShareBuilder 401k, Stuart Robertson.
New Hires
The recruitment plans of the small businesses are not so great, revealed the report. Just 26 percent of small business owners stated that they would hire new staff in the next 6 months time. Out of these 26 percent, nearly half admitted that they cannot afford to hire full-time employees. The reasons behind the low hiring are the poor retail conditions and political uncertainty.
Overcoming the Misconceptions
ShareBuilder 401k now plans to use the report to enlighten small business owners that 401 (k) plans can be very affordable, straightforward and accessible. Any owner of any business no matter how small the business is can establish a plan without even needing to make matching contributions, said Robertson.
Poor Business Conditions
The report also found that the business optimism was also low. Only 34% of business owners confessed that the business conditions were good in this year until now. About one in five companies that were part of the survey have admitted that the business had been poor this year. It can be assumed that when the business sentiment gets better, small business owners might be more inclined to offer retirement benefits.
Many Americans Lack Access to Retirement Benefits Plans
A new study has revealed that many Americans lack access to a retirement benefits plan. The study also showed that Americans prefer retirement plans offered by their employer when compared to the 401(k) like plans. The study also found out how living in a state or working in a particular sector impacts the access to retirement plans. Recommendations to correct the situation were also given to the policymakers.
Americans Don’t Have Access to Retirement Benefits Plans
Over 40% of Americans have admitted that they don’t have access to an employer-based retirement savings plan or a pension in the study conducted by the Pew Charitable Trust. The study analyzed Census Bureau data and found that about 49% of Americans take part in the 401(k) through the workplace or a pension plan. It also found that 58% Americans have access to a plan through their employer.
The Location Impacts Retirement Plans
The study also revealed that access to retirement plans varied more in the metropolitan areas than across the states. The report found that the access rate for employees living in McAllen, Texas was just 23% while it was 71% in Grand Rapids, Michigan. The study also exposed the fact that metropolitan area with the lowest rate of retirement plans access are heavily concentrated in the states as the bottom 25% belong to Texas, Florida, and California.
Other Factors Impacting Retirement Plans
The report of the study also stated that factors like workers’ race, ethnicity, employer size, employee earnings and sector are among the key factors that can decide on the availability of retirement plans. This was proven by adding in relevant data that states about 69% of workers in the manufacturing sector have access to a retirement plan while just 34% of workers in the leisure and hospitality industry have that access.
Challenges of the Policymakers
The Pew Charitable Trust stated that the study clearly points out the fact that the state, city and federal level policymakers need to deal with complex challenges such as increasing the availability of workplace retirement benefits plans. The policymakers need to ensure that the retirement plans are customized as per the local needs.
The policymakers also need to create effective policies by understanding the existing gaps in retirement benefits savings. The study concluded by adding that the policymakers need to understand the nature of taxpayers, workers, and businessmen working in the metropolitan areas.
Manning City Council to get Retirement Benefits
The members of Manning City Council will have access to health insurance and retirement benefits starting spring 2018. This decision was made recently. A few people have shown their displeasure with the decision. They argue that the decision should be taken when it is to be implemented rather than 2 years before. Some even stated that people should have a say on the issue.
Why are Retirement Benefits and Health Insurance Benefits being offered now?
The Council members had the option of getting the retirement benefits and the health insurance benefits because of the state insurance and they were considered to be full-time employees. Now the ordinance needs to be modified so that the members can get the employers portion of it. These details were shared by Scott Tanner who serves as the Manning Administrator.
He also added that the ordinance would not be effective until April 2018 when the next council is supposed to be elected.
The Opposition
Pro Prothro who is a local businessman as well as the Clarendon County Chamber President has challenged the decision taken to amend the ordinance. He says that the timing of the proposal is not good. He admitted that the council members had the right to take the decision legally but he didn’t like the fact that the change is approved today while it will be effective after two years. The situation after 2 years is hard to guess. No one can decide the cost of retirement benefits and health insurance benefits at that time accurately.
Prothro accepted that the council members should get paid for their time. But he insists that the change should be tabled till January 2018 because getting statistical data on healthcare costs would be an easy thing to do then.
Another Opponent
Another opponent of the change, Art Lambert said that the council’s Rules of Procedure don’t allow the council members to fix their own salaries especially when they are in the office. He thinks that the council members should consider whether it’s appropriate for them to take this step.
Lambert also expressed doubt on the exact date when the council’s decision to change retirement benefits and health insurance was proposed. He claimed that he had studied all the minutes and could not find the record of this change. He also had the opinion that people should get the opportunity to vote on the matter and so it should be a referendum.
Americans Improving at Saving towards Retirement Benefits
A recent survey has revealed that Americans are becoming more aware of contributing towards retirement benefits savings. The people of Britain are also becoming more vigilant in this regard. The survey further reports that the retirement readability of the Americans has increased since the last survey that was conducted in the year 2012.
Main Reason Behind Better Retirement Benefits Contributions
The key reason behind the increased retirement benefits savings done by people of America and Britain is that in both nations, more people got automatically enrolled in retirement plans. In Britain, the legislation makes it mandatory to participate in the automatic enrollments and in America, the employers are playing a key role in ensuring the same. All these details were highlighted in the study done by Aegon Center for Longevity and Retirement and Transamerica Center for Retirement Studies.
Retirement Readiness
The researchers asked six questions with regard to retirement readability. It included questions related to responsibility for retirement security, income replacement in retirement, and the quality of people’s retirement plans. The answers to the questions were mapped on a scale of one to 10.
The Improvement
The study revealed that the retirement readiness of the people all across the world improved from 5.2 in 2012 to 5.5 in 2016. The retirement readiness of the Americans saw a great improvement in these 4 years. It now stands at 6.7 while it was 5.6 in 2012.
The Executive Director of the Aegon Center, Catherine Collinson shared the fact that the U.S. respondents improved on all six questions regarding retirement readiness while most of the other nations offered a mixed result. She also added that the country is among the topmost while gauging by the need to save for retirement and the level of personal awareness.
Quality of Retirement
According to Aegon, the high score is not such a big achievement as the country still ranks as medium in the quality of retirement readiness. The survey also pointed out that even with the automatically enrolling in retirement plans the default contribution rate is just 3 percent, lower than what people generally need to save in order to attain retirement security.
It was also highlighted that many Americans were sticking to the 3 percent rate. Many Americans (75 percent) also acknowledged that they were agreeable to the automatic enrollment at 6 percent of their salary to get better retirement benefits.
Calculating the FERS Supplement by Paul Kalra
A Lesson on Calculating the FERS Supplement by Paul Kalra
There are many FERS annuitants who are able to retire prior to the age of 62, and who are eligible for the SRS (Special Retirement Supplement). You can meet such requirements if you have retired:
- Following the MRA (Minimum Retirement Age) after putting in at least 30 years of service;
- At age 60 with at least 20 years of service; or
- Upon either an early voluntary or an involuntary retirement at age 50 after having 20 or more years of service, or at any age after at least 25 years of service, when it has been determined that your agency is undergoing a major reorganization, a RIF (reduction in force) or a transfer of function. (In this situation, you will not receive the SRS until you have reached your Minimum Retirement Age).
As Social Security retirement benefits cannot be received until you reach at least the age of 62, the Special Retirement Supplement can help you with bridging your income until the time that these benefits are paid out.
In order to determine roughly how much you will receive from your SRS, you should first obtain an estimate of benefits from the Social Security Administration. Each year, Social Security provides a statement of estimated benefits, so you will be able to easily find the dollar amount of estimated benefits that you are likely to be receiving at age 62.
Next, take this dollar amount and multiply it by your years of FERS service (rounded off to the nearest whole number). Once you have done so, divide this figure by 40. This will provide you with the approximate amount of FERS supplement that you should receive.
As an example, if the amount of Social Security benefit that you are estimated to receive at age 62 is $5,000 and you have put in 30 years of FERS service, then the calculation will be as follows:
$5,000 X 30 / 40 = $4,500
In running this calculation, your estimated FERS Supplement benefit would be approximately $4,500 per month. It is important to note, however, that certain situations such as obtaining outside employment following retirement could have an impact on the amount of benefit that you ultimately receive.
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Finding Financial Advisors for Federal Employees by Nelson Secretario
Advice for Federal Employees about Financial Advisors by Nelson Secretario
Nelson Secretario – CLU, ChFC, LUTCF, ChFEBC, NSSAFederal employees have a special set of benefits that are available to them in terms of retirement income. While this can provide a nice advantage for these individuals, it can sometimes make it difficult when working with a general financial planner – especially when that planner is unfamiliar with how the federal retirement system operates.
While there are many well qualified financial professionals who can offer general retirement planning advice, when it comes to providing information that is specific to federal employees, it is therefore best to work with someone who is specifically focused in this particular area.
Where to Find an Advisor with a Focus on Federal Employees?
When searching for an advisor who has a focus on federal employees, you will want to ensure that he or she meets certain criteria. For example, in most instances, the advisor will advertise either on their website and / or other materials that they work with employees of the federal government.
In addition to having a “Fed” focus, you will also want to be sure that the advisor has an ample amount of overall experience – a minimum of ten years, as well as proper licensure. In this case, possessing a Series 7 securities license is a must. You can typically tell if a professional is securities licensed by noting whether or not they have “FINRA / SIPC” noted on their marketing materials.
Once you have found a good potential candidate for your needs, the next step is to contact the advisor and set up a meeting with them. As you will likely be working with the advisor for many years – and turning over a bulk of your life savings to them – it is essential that you are able to work together, and that you have trust in him or her as a professional.
You may even want to bring along some questions to ask the advisor, such as:
- What services to you offer?
- What are your professional qualifications?
- How are you compensated?
- Do you work alone or with a team?
- What licenses do you hold?
- Do you possess any additional professional designations?
While the process of finding the ideal financial advisor may take some time, once you have found one who is well qualified to work with you, and who you are comfortable working with, you will be able to successfully move forward towards your retirement goals.
More from Nelson Secretario
Obama Wants Better Retirement Benefits Plans for Americans
President Obama and the Democrats are working hard to ensure that the common American citizens are not cheated by the financial brokers when they are seeking a good retirement benefits plan. The Republicans argue that the financial brokers already deal with so many rules and the new rules would force them to get rid of main clients and small businesses.
Obama to use Veto for Retirement Benefits
It is also being speculated that the President may use his veto power to ensure that the Labor Department rule on retirement benefits advice is passed. He may be forced to use the veto power because the U.S senate has voted against the bill. The debate on the passing of this bill stretched over the entire day on Tuesday.
The Rule
The rule that is proposed by the Obama government aims to set a fiduciary standard for financial brokers who are involved in selling retirement products. The new rule would make it mandatory for them to put clients’ best interests ahead of their own need to achieve the bottom lines. The arguments in the session mostly focused on whether the new bill would be in the best interests of the lower and middle-income workers or not.
Republicans’ Stand
The Republicans are against the bill because they think that the government is not taking into account the fact that there are already so many rules in place that need to be abided by the financial advisors. The Republicans also think that this rule would be very expensive for brokers. If this rule is imposed upon them, it may force them to let go of the small businesses that offer 401(k) plans and the Main Street clients.
Democrats’ Viewpoint
The Democrats are of the opinion that imposing this new rule is vital for ensuring that the profit-hungry financial advisers don’t exploit middle- and lower-class workers anymore. They do that currently by recommending those retirement products that are profitable for them rather than their clients.
The Statements
Johnny Isakson, a Georgia Senator stated that the rule is a solution which is seeking a problem. His fellow, Lamar Alexander, a Tennessee Senator added that the rule should be renamed as only the rich retire rule.
Democrats were not behind in making statements too. New Jersey Senator, Cory Booker said that the new rule will help people to retire with dignity. It will also ensure that people don’t worry whether their financial adviser offering advice on retirement benefits would lead to exploitation or not.
New Retirement Saving Tool that can Improve Your Retirement Benefits
Almost all individuals who are planning to have a comfortable retirement often seek the help of tools that can direct them. Principal, a financial planning company has made things easier for such people by recently launching Move to the Green Challenge. Any person, who is planning to retire, can participate in this challenge by using a financial wellness tool. It tells you whether you are saving enough for your retirement benefits or not.
How the Retirement Saving Tool helps in deciding the Retirement Benefits?
The retirement saving tool works by using a real-time savings graph, interactive sliders, and intuitive prompts. They will let you know how making a few simple changes can help you to have more financial security and a steady flow of retirement benefits.
The tool would also offer every user a personalized score that tells them whether they are on the right path or not. It also has red, yellow and green indicators. Everyone should aim for the green indicator as it means that you will get 70 to 85 percent of our current income after retirement.
The Previous Attempt
The company issued a statement that stated that a similar initiative was started last year and people liked it too. About one-third of people who participated last year increased the retirement plan deferral amount by 3.75% points to get 10% of pay. The statement also announced that there has been about 30% increase in the number of participants who made use of the plan and increased the deferrals since the launch of the Retirement Wellness Planner of the company.
Personalized Experience Helps
The Senior Vice President of Retirement and Income Solutions at Principal, Mr. Jerry Patterson recently stated that the idea of offering a personalized as well as interactive online experience plays a vital role in helping users understand how and where they can make better saving decisions. They are making use of the suggestions. He also added that saving more and earlier is the best thing all people can do to be well prepared for retirement.
The Benefits
People who take part in the Move to the Green Challenge would not only boost their retirement benefits, they have also got a shot at winning a few Plantronics BackBeat FIT wireless stereo headphones. If a person plans to try the challenge, it is not mandatory to have an existing retirement account with Principal.
About 30,000 Federal Employees to get better Retirement Benefits
The federal employees who fall under the designation of police series GS-0083 may soon have the ability to retire early and get better retirement benefits. A new bill has been proposed by the Democrats on the same. This move has been appreciated by many federal unions.
The Bill Impacting Federal Employees’ Retirement Benefits
The bill entitled The Law Enforcement Officers Equity Act was introduced by Senators Barbara Mikulski, D-Md and Cory Booker, D-N.J. It states that all federal employees who have the authority to carry a firearm and who investigate criminals or apprehend them should be given better retirement benefits. It includes all the employees designated in the police series GS-0083 such as Internal Revenue Service officers who are in charge of collecting delinquent taxes, Veterans Affairs Department police officers and U.S. Postal Service Inspection Service employees.
The Retirement Age
If the bill is passed, some of the employees working at the FBI, Defense Department and many such agencies would get the right to retire at age 50 if they have completed 20 years of service. They would also be able to retire at any age after they have completed 25 years on the job. Law enforcement officers get a more generous annuity when they retire and they contribute more from paychecks towards their retirement. Booker said that he wanted to fix that loophole so that all law enforcement officers get the benefits they deserve.
No More Punishments
Mikulski stated that the bill would right the wrong that has been happening with people who defend the nation against terrorists and stop the smuggling of illegal drugs.
The Credit
If the bill is passed, the employees would be able to get credit for the time they have served. They would just need to send a notice to the OPM within 5 years time from the date the bill is enacted or before they have to retire.
The Praise
Many of the federal employees’ union groups praised the bill suggested by the democrats’ senators. The groups stated that the officers deal with the same problems faced by the federal law enforcement so they really deserve the same perks. The President of National Treasury Employees Union, Tony Reardon wrote a letter to Booker and stated that IRS officers deal with critical situations such as assaults, threats, and even gunfire so they must be given the retirement benefits they deserve.
