3426-0305 Sponsor WAL FIN - Transamerica Retirement Solutions

WORTH A LOOK
News & Investment Insights for Retirement Plan Sponsors • Vol. 8/No. 1/Spring 2005
2
SOR E
N
O
SP HANG
EXC
HOW TO HELP ECHO
BOOMERS SAVE
3
HELP GUARD AGAINST
INFLATION
4
NEW RETIREMENT
SAVINGS TIPS
Hands-On Education Motivates
Employees and Promotes Plans
the Savings
and Investment
plan.
Situation:
Educate and
increase
participation
Left to right: Monica Soto, Angie López, Ramon
Santiago, Amarilys Perez, and Maritza López
early 60% of employees want
more information and advice
about retirement and investing,
according to a recent Transamerica1
survey.2 Sistema Universitario Ana G.
Mendez has responded to this request,
resulting in positive changes for its plan.
N
Background: Sistema
Universitario Ana G. Mendez
Sistema Universitario Ana G. Mendez
(SUAGM) is a university system in
San Juan, Puerto Rico, that employs
about 1,400 people across three
campuses and 13 university centers.
Participation in the university’s
Employees Savings and Investment
Plan has been low. With tough
economic conditions in Puerto Rico,
SUAGM has found it difficult to
motivate employees to participate in
Investment
education is
critical in
Puerto Rico.
Normally,
SUAGM offers
regular mini
education
seminars, but
realized they
needed to provide additional education to accomplish the following goals:
Increase participation
Expand employees’ knowledge
and understanding of investing
Educate employees about new
investment funds
Empower employees to take an
active role in retirement planning
Solution: More information
and the personal touch
Working with Transamerica Retirement
Services, SUAGM planned a six-day
401(k) Day event. SUAGM used
Transamerica’s payroll stuffers and
posters to announce the event and
generate excitement around the
Savings and Investment Plan.
Approximately 250 employees
attended and took advantage of:
1
Transamerica or Transamerica Retirement Services (TRS) refers to Transamerica Financial Life
Insurance Company (TFLIC). TRS markets the products and services of TFLIC and its affiliates.
2
Sixth Annual Transamerica Small Business Retirement Survey, Transamerica Center for Retirement
Studies, 2004.
Workshops – Employees attended
enrollment workshops to learn
more about the enrollment process,
and AdviceSolutionsSM workshops to
learn how to use Transamerica’s
Web-based planning tool.
Computer labs – Allowed employees
to enroll online and gave Participants
access to their accounts to make changes.
Computer training – Online Web
navigation training walked employees
through Transamerica’s enhanced
Web site.
Seminars – Employees learned about
investing basics and the plan’s new
(Continued on page 4)
Dear Sponsor:
Persuading Participants to start saving for retirement is a
challenge. In this quarter’s “Sponsor Exchange” we feature
Sistema Universitario Ana G. Mendez and highlight their
efforts to increase participation in their retirement plan.
We offer a glimpse into the mindset of Echo Boomers, the
youngest employee group in today’s workforce. Using
data from the Sixth Annual Transamerica Small Business
Retirement Survey, we provide you with recommendations
on education and resources that will enable Echo Boomers
to plan for retirement.
In this edition’s “In Focus,” we highlight our new
Retirement Savings Tips, developed to enhance your
Participant education program and reinforce the benefits
of retirement planning.
And finally, we touch on how you can help Participants
defend their retirement savings from inflation.
Sincerely,
David Shute
Worth A Look Publisher
www.TA-Retirement.com
Echo Boomers Want to Save,
So How Can You Help Them?
ontrary to popular belief,
younger employees do care
about saving for retirement.
In fact, according to the Sixth Annual
Transamerica Small Business Retirement
Survey, 70% of Echo Boomers1 want
more information and advice from
their employers about retirement
planning.
C
But, despite their desire to save,
participation among Echo Boomers
remains low (37%).2 Sponsors have
a golden opportunity to provide the
education, tools and resources that
Echo Boomers crave so they can
adequately prepare for retirement
and increase
participation.
Encourage the use of Transamerica’s
online tools (www.TA-Retirement.com):
It’s Payday – illustrates the benefits
of tax-deferred investing.
Loose Change – shows how a
small contribution impacts a
paycheck.
The Compounding Game – shows
how a 1 or 2% contribution
increase grows over time.
Setting realistic savings
goals is key
Echo Boomers have not accurately
determined what they will need to
retire – 41% guess, and 26% base
Focusing on
basics reinforces
importance of
saving early
Ninety-three
percent of Echo
Boomers feel that
employer-sponsored
retirement plans are
a very important
benefit, but more
than half (63%)
don’t think
they know enough about their plan
to participate.
“These workers are very concerned about
saving and want more information –
especially from their employers. It’s
important that employers find a way to
reach their younger workers through
targeted education,” says Catherine
Collinson, retirement and market
trends expert for the Transamerica
Center for Retirement Studies.
2
Highlight the features and benefits
of the retirement plan and explain
retirement basics through targeted
communication (such as posters or
payroll stuffers) or onsite workshops.
A little information can go
a long way
Many Echo Boomers (88%) agree that
they do not know as much as they
should about retirement investing and
the majority (71%) would like to
receive more information and advice
from their company on how to reach
their retirement goals.2 Transamerica’s
“Made Simple Series” of seminars
provides education on investing and
the economy:
“Investments Made Simple” – focuses
on investing basics, the fundamentals
of investing for retirement, and
developing investment strategies.
“The Economy Made Simple” – takes
the mystery out of economics by
explaining such concepts as how to
spot economic trends and defining
Bull and Bear markets.
You may also want to consider reinforcing these seminars by pairing them
with the new “Retirement Savings Tips”
described in this issue’s “In Focus.”
estimates on current living expenses.2
In order for Echo Boomers to understand
how much they’ll need to save, they
must set realistic savings goals. They
can assess their needs using additional
Transamerica Web site tools:
Point, Click and Save!SM helps establish
retirement goals and create a plan to
start saving.
The Asset Allocation Questionnaire
defines their investor type, evaluates
risk tolerance and determines an
appropriate asset allocation mix.
AdviceSolutionsSM helps develop an
investment strategy.
You can get Echo Boomers to focus
on retirement if you:
In addition, encourage Echo Boomers
to read “Put Your Retirement Income
Picture Into Focus” in this quarter’s
Participant version of Worth A Look
to learn how to set realistic goals.
Saving Up helps determine if a
savings plan is on track to meet
retirement needs.
Give Echo Boomers what
they need
Now that you know Echo Boomers are
truly motivated to save, you have the
opportunity to give them the right mix
of education, tools and resources to
help them plan for the future.
“Employers can ensure that their
retirement plan-related communication
efforts address all of their audiences
and not just their older, more
experienced workers. Effective
communications are key,” says
Collinson.
1
Individuals born between 1979 and 1986.
2
Sixth Annual Transamerica Small Business
Retirement Survey, Transamerica Center for
Retirement Studies, 2004.
Help Participants
Guard Against Inflation
articipants need to think about
beating inflation since it can
erode their retirement savings.
They need your help figuring out
how much to save, and how to
defend against inflation.
“Safe” investments, such as
U.S. Treasury Bills, barely outpace
inflation over time.5 Remind
Participants that maintaining a
mix of investments in all asset
classes will help defend their
portfolios against the market’s
ups and downs.
P
Help Participants figure out
what they need
Data from a recent study conducted
by Aon Consulting and Georgia State
University indicates that Participants
will need between 75% and 90%
of pre-retirement income to live
comfortably.1 But, only 42% of
workers have tried to calculate
what they will need to save to
achieve this.2
Review portfolio regularly and
rebalance – As the market moves,
Participants may see a shift in their
original asset allocation, so account
rebalancing will be necessary.
Life events such as marriage or
the birth of a child can also affect
savings goals.
Understand retirement planning is a
long-term commitment – Encourage
Participants to contribute as much
as possible to the plan, over the
long term. Remind them to stick
to their long-term goals and risk
tolerance, and discourage market
movements from dictating their
asset allocation.
Direct Participants to Transamerica’s
online calculators to determine
retirement savings goals. The calculators
automatically factor in an inflation
rate, but allow Participants to change
that percentage to provide more realistic
savings information.
Educate Participants about
investing
More than 70% of Participants do
not know as much as they should
about retirement investing.3 Utilize
Transamerica’s comprehensive
Participant education and guidance
program to provide tools, resources
and online workshops. Consider
hosting an onsite educational seminar
from Transamerica’s Made Simple
Series, such as “Investments Made
Simple,” which focuses on investing
basics, the fundamentals of investing
for retirement and developing
investment strategies.
Provide Participants with
defenses against inflation
Participants will protect their retirement
savings from inflation if they:
Remain diversified and invest in stock
funds – Historically, stocks outperform
inflation by more than 7% annually.4
With your help, Participants will be
able to adequately save for retirement
and maintain their purchasing
power even as the cost of goods and
services rises over time.
1
Replacement Ratio Study™: A Measurement
Tool for Retirement Planning, Aon
Consulting/Georgia State University,
September 2004.
2
2004 Retirement Confidence Survey, Employee
Benefit Research Institute (EBRI), American
Savings Education Council (AESC) and
Mathew Greenwald & Associates, 2004.
3
Sixth Annual Transamerica Small Business
Retirement Survey, Transamerica Center for
Retirement Studies, 2004.
4
"Beating Inflation," Foundation for Investor
Education,
http://www.pathtoinvesting.org/categories/investingess
entials/inflation/inflation_021.htm
5
The Bear-Proof Investor: Prospering Safely in
Any Market, John F. Wasik, 2002.
3
Sponsor Exchange
(Continued from cover)
investment funds in “Investments
Made Simple,” and received an
overview of Transamerica’s online
tools and resources in “Tools and
Resources Made Simple.”
Giveaways – Employees received
mouse pads, pens and shopping
bags as well as 401(k) Day t-shirts
and pins.
Overall, feedback on their 401(k) Day
was very positive. “Employees are more
trusting of us, having experienced
hands-on education and personal
encouragement at the event,” says
Angie López, Benefits Analyst, SUAGM.
Results: Goals Achieved
The Sistema Universitario Ana G.
Mendez, Inc. Employees Savings and
Investment Plan has seen a 15%
increase in participation.
The average contribution percentage
increased from 1% to 4%, with more
IN FOCUS:
Participants taking full advantage of
the company match – 35 cents for
every dollar contributed, up to 4%.
“We find that the company match
helps encourage participation,”
explains Angie.
What does the future hold?
Participants made changes to their
investment elections after receiving
investment education and learning
about 22 new investment funds available through the plan. “We decided to
offer more investment funds because
it will allow Participants to take more
control of their retirement planning
and their own life. Participant
accounts are more diversified now,”
says Angie.
SUAGM continually benefits from its
partnership with Transamerica, tapping
into its expertise to coordinate 401(k)
Day and day-to-day Plan administrative
skills. “Working with Transamerica helps
me do my job better. Transamerica’s
online services make it easy for
Participants to manage their accounts,
and make it easier for us to manage
the Plan,” says Angie.
“The 401(k) Day helped increase my
knowledge of the plan and investments. As a result, I increased my
deferral percentage. I am very satisfied
with the plan,” says Maritza López,
Benefits Analyst, SUAGM.
If you have a Transamerica success
story or any information you’d like to
share, please contact LaTanya Hayes at
[email protected] or
(213) 742-2526.
New Retirement Savings Tips
Can Enhance Participant Education
f you are looking for a way to boost
Participant education, Transamerica
has just what you need: Retirement
Savings Tips. These brief, high impact
video presentations are a wonderful
enhancement to any Participant education
program. Both highly informative and
entertaining, these unique electronic tips
are designed to educate your employees
on the benefits of retirement planning.
I
You can download these tips from the
Transamerica Sponsor Web site
(www.TA-Retirement.com) onto your
Intranet site. Much like a payroll
stuffer, these tips keep your employees
engaged in planning for their retirement
while promoting awareness of your
retirement plan.
We are currently offering four different
Retirement Savings Tips:
The Benefits of Attending an
Enrollment Workshop
WORTH A LOOK is published quarterly by Transamerica
Retirement Services. The newsletter’s mission is to
provide timely, relevant information that employers can
use to increase retirement plan participation and to
respond to the needs of plan Participants as they strive
to achieve their investment objectives.
4
Given the success of the 401(k) Day,
SUAGM plans to hold similar events
in the future to continue increasing
Plan awareness and educating
Participants.
The Benefits of Investing in a
Retirement Savings Plan
The Benefits of Rebalancing
The Tax Benefits of Investing in a
Retirement Savings Plan
There are a number of ways in which
these tips can be used to help bring
awareness to your retirement plan and
various aspects of retirement savings.
Below are a few suggestions for how
you can begin using the tips to
complement your Participant education
program:
E-mail Communications – Create employee
awareness by sending periodic e-mails
containing a link to the tips on your
Intranet site. Focusing on one tip, your
employees are better able to digest the
core message and apply it to their
retirement planning strategy.
Intranet Access – Post one or more tips
in one location on your Intranet and
distribute an announcement to
employees so they can view the tips at
their convenience. You can also post
one tip at a time so your employees are
introduced to a new tip every quarter.
Timely Topics – Select a particular tip
to help bring awareness to specific
retirement planning topics throughout
the year. For example, you could
introduce the Enrollment Workshop
Retirement Savings Tip during your
retirement plan’s open enrollment
period, or the Tax Benefits Retirement
Savings Tip during tax season.
Benefit Meetings – Show a tip at a benefits
meeting or educational seminar. After
the meeting, send an e-mail to all
employees that includes a link to the
tip, so they can take a closer look.
We are confident you will find the
Retirement Savings Tips to be a great
addition to your Participant education
program. Look for additional tips in
the future.
Publisher: David Shute
Editor: Annie Muir
Sponsor Web site: www.TA-Retirement.com
To e-mail us, see “Contact Us” on the Web site.
1150 South Olive Street, Los Angeles, CA 90015.
© Transamerica, 2004. All rights reserved.
TRS 3426-0305