The Accidental Plan Sponsor -- and the evolving future of retirement

PGIM is the asset management businesses of Prudential Financial – we’re a top 10 asset manager. I head the institutional defined contribution (DC) effort. My role is to raise PGIM’s presence in the DC market by providing insights and thought leadership to DC decision makers at plan sponsors and their consultants, and helping them when there may be PGIM products and solutions that could benefit their plans and participants.

         What podcast? Check it out here!

Yes. We looked at a lot of different facets and the evolving nature of DC plans. One area I would highlight is the use of alternative investments. This is something we also talked about in a few podcast episodes, including Episode Four. 

         And here’s that 2021 Annual Survey

You know we had to cut a bunch of great stuff but you’ll find it HERE in the full article.

Want more Josh Cohen wisdom? You can connect directly with Josh here. You can follow Josh’s work at PGIM here. You can also connect with Josh on LinkedIn here.

What is new! These figures reflect July 31 data for all three states. Assets are creeping up on $300 million and funded accounts have crossed the 370k mark. It’s close to the end of August, so you can bet these numbers are higher now. At July, assets were up 86% for the year; funded accounts were up 40%.

Average account balances are over $804 – first time we’ve seen them in this zone. Keep in mind that these are an average across all accounts with a balance, including brand new accounts. Longer term savers have balances that much higher, and in line with an average savings rate of $1,200 to $1,500 a year.

Just fewer than 37,000 employers have registered to facilitate retirement savings, with 15,188 of those employers having achieved transmission of first payroll deduction. Saver retention rates are running at about 68%.

California (workforce 17.9 million) – CalSavers Hits $100 Million Milestone! According to a recent press release, California workers have saved over $100 million for retirement through the CalSavers Retirement Savings Program, which now has 400,000 enrolled savers and more than 170,000 accounts already funded. “We continue to demonstrate that access works. When all workers have a way to save for retirement at work, most do it. That’s why we are focused on ensuring all eligible employers sign up and make the program available for their employees.” Executive Director, Katie Selenski said. “This is just the beginning.”

Colorado (workforce 3.2 million) – The Colorado Secure Savings Program Board met on August 16, 2021. The agenda (not yet posted but available by request) covered an overview of the proposed program timeline, which includes planning and implementation phases, with informal provider engagement beginning this year and pilot launch about a year from now, in October 2022. In this case a (low-res) picture may be worth a thousand words. Here’s a quick view:

Connecticut (workforce 1.6 million) – The Connecticut Retirement Security Authority meeting set for August 20, 2021 was canceled. In its place the CRSA has held a series of six subcommittee meetings, most of which have been held in executive session. They’re making good progress, but it is *top secret*! Connecticut’s MyCTSavings site has great information for employers and employees, and offers employers in the state the opportunity to sign up for the program’s pilot phase.

Illinois (workforce 5.7 million) – The Illinois Secure Choice Board met on August 19, 2021. You can see their agenda here. Staff updates: employers without plans sized 16-24 (employees) have a program enrollment deadline of November 1, 2022, and employers sized 5-15 will have a November 1, 2023, deadline. The program will provide its first general auto-escalation on January 1, 2022, for savers who have been in the program six months or more. Formal enforcement is being initiated for employers in the program’s earliest waves who are not meeting their statutory requirements. The Board reviewed full fiscal year 2021 financials.

Pew also provided a preview of their current survey results for the Illinois Secure Choice program. A few tidbits: more than 2/3 of the eligible Black population stated that they were participating in the program. (Impressive!). The average age of participants is 37. Interestingly, those opting out of saving through the program reported slightly higher financial security than those who did not opt out. What could this mean? It’s possible that opter-outers are covered by a spouse’s retirement plan or are already saving on their own. Pew reported that 38% of participants say the program “makes me feel more financially secure”. And finally, 62% of participants are “very or somewhat” satisfied – to which Pew’s Mark Hines @MarkCHines commented, “in our business, these are crazy good numbers.”

Hawaii (workforce .7 million) – Hawaii’s Retirement Savings Task Force is active following June 21 passage of Senate Resolution 76. Expect to see a report on the Task Force’s findings and recommendations in mid December of this year.

North Carolina (workforce 5 million) – Legislation still progressing … the budget passed by the NC House of Representatives includes funding for start-up costs for the North Carolina Work and Save Program that would be established with the passage of HB 899. Read more about it here.

Stay tuned! / Grant

Columnist and Senior Associate Grant Boyken is based in California. You’ll see his Golden State perspectives reflected here – along with 50-state insights into retirement security innovation around the country. He’s also a good sport when we mess with his head shot.

This piece came out earlier in the month but we would be remiss not to share it. Companies like Target and Walmart covering tuition for their workers seems like a game changer for some segments of the workforce. Are we wrong?

And, because this is accidentally becoming the “CalSavers edition” -- do you subscribe to the CalSavers updates? They’re awesome. This month’s editions is full of refreshing facts, a YouTube channel, digital toolkit, and links to live weekly webinars.

What we are watching: as humans who do a lot of laundry, I never wash my pants by Matt D’Avella caught our eye. If our pants come walking toward you even when we’re not wearing them, you’ll know we tried this one out. For more tips on minimalism, try Matt’s channel.

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Massena Associates provides process, policy, and implementation consulting on retirement savings programs and products.

Our clientele includes states, governments, policy organizations, and private sector providers. Our specialty – efficient, targeted results. We are an active speaker on retirement security topics, including state-facilitated programs, MEPs and more.

If you’d like to explore working together, we welcome the conversation. Connect with us here, and at 339-236-0684.

Looking for a great retirement savings innovation resource? Led by Dr. Alicia Munnell, the Center for Retirement Research at Boston College develops and hosts terrific content and proprietary research related to states, financial security, social security, and more.

The Georgetown Center for Retirement Initiatives, Exec Angela Antonelli, provides excellent information on state-based and other retirement security innovation and policy.

Pew’s Retirement Savings Project studies the challenges and opportunities for increasing retirement savings and is another great resource - check out the work of John Scott and his terrific team.

If you want a great source of broad-based, consumer-focused retirement news, Jeffrey H. Snyder’s The Morning Pulse is your ticket. You can subscribe here.