PLANSPONSOR - October/November 2018 - 12

Industry Analysis
The Complete Picture
E
mployees who have access to an
employer retirement plan often have
been adding to their overall nest
egg, elsewhere, too, according to recent
PLANSPONSOR research. Depending on
past work history, employees may have
one or more employer-sponsored plan
accounts-e.g., a previous defined contribution
(DC) plan or defined benefit (DB)
plan, or a nonqualified executive benefit
plan-or have savings in an individual
retirement account (IRA).
For instance (see chart), results of the
2018 PLANSPONSOR Participant Survey
indicate that 24% of workers over 40
years old have prior employer plans with
assets greater than $50,000; 23% have
over $50,000 in IRAs. This may come as
a surprise to sponsors.
The sponsor and recordkeeper may
see only a narrow slice of participants'
savings, as only their current investments
appear in recordkeeper statements. Unless
a participant has a managed account
for which he mentions other plans, the
sponsor would unlikely know about them.
This information gap has implications for
measuring retirement readiness, as the
numbers suggest many participants' " readiness "
excludes much of their savings.
In 2013, the Department of Labor
(DOL) issued for comment an advanced
Spotlighting industry data from PLANSPONSOR's proprietary research
a similar goal. Through amending the
Employee Retirement Income Security
Act (ERISA), it would require statements
to include at least a yearly disclosure indicating
the lifetime-income-stream equivalent
of the participant's accrued assets.
The sponsor and recordkeeper
may see only a narrow slice of
participants' savings ...
notice of proposed rulemaking, to
encourage the sponsors of DC plans to
project the income a participant's balance
would provide at retirement. Shifting
focus from balances to monthly income
flows would, the DOL said, give the participant
a better sense of what expenses his
plan account would cover post-employment.
The rule never came to fruition, yet
many recordkeepers updated their participant
statements to add this perspective.
The Lifetime Income Disclosure
Act, proposed in the spring of 2017, has
Participants With Savings in Various Retirement Accounts
All Ages
>$0
Employer plans
at current employer
Employer plans at prior
or other employer(s)
IRAs
(Traditional, Roth or rollover)
Nonqualified plans
(Top hat/Executive)
Other retirement accounts
82%
51%
57%
>$10k
62%
37%
42%
29% 22%
46%
Source: 2018 PLANSPONSOR Participant Survey
34%
>$50k
40%
21%
26%
13%
21%
>$0
84% 60%
61%
58%
41%
49%
42%
42%
31%
34%
Age = <40
>$10k
The bill suggests that the DOL would
issue assumptions that plan administrators
could use in these calculations,
without concern of liability.
Many recordkeepers have calculators
on their website that let participants total
all of their savings. Also, sponsors can let
participants roll other accounts into their
plan to aggregate assets, yielding a better
overall picture of readiness. If nothing
else, the data suggest that a sponsor should
realize there may be more to the story.
-Judy Faust Hartnett
>$50k
35%
24%
23%
18%
22%
>$0
81%
40%
54%
15%
43%
Age = 40 - 64
>$10k
66%
30%
42%
12%
33%
>$50k
48%
18%
28%
8%
19%
12 PLANSPONSOR.com October-November 2018
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PLANSPONSOR - October/November 2018

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