* INVESTORS WANT MORE IN DC PLANS: Investors today want more options and advice in their defined-contribution plans, according to a survey of plan sponsors.The number of investment choices in defined-contribution plans now averages 16, down from 20 in 2001. That compares with an average of 11 investment choices in 1998, according to a triennial survey of plan sponsors by institutional investment consulting firm Callan Associates. The survey polled 95 plan sponsors with more than $100 billion in total assets and 1.1 million participants.
Asset allocation or lifecycle funds remained an important plan offering, with 74 percent of respondents including them in their menu of choices. One-third of the survey respondents are currently offering advisory services to participants, with another third indicating that adding an advice component is a priority for 2005. Of the respondents currently providing advice, about 60 percent rely on an independent Web-based provider, while only 21 percent use their record-keeper's proprietary model for these services. In 2001, of the defined-contribution plan providers then offering advice, 43 percent used their record-keeper. However, Callan noted that only 36 percent of plan sponsors have procedures in place to monitor outside, third-party advice providers on an ongoing basis.
One third of survey respondents indicated that they would be willing to incur an annual per-participant record-keeping fee to minimize the impact of investment management fees on plan assets.
Survey results showed that the number of plans maintaining a documented investment policy statement increased to 86 percent, from 78 percent in 2001. Meanwhile, three quarters of the survey's respondents said that they conduct quarterly meetings to address oversight responsibilities, including investment policy and 404 compliance.
* FPA MEMBERS: REFORM SOCIAL SECURITY NOW! Financial planners overwhelmingly agreed that the Social Security system needs to be reformed now to avoid insolvency in the future. In a survey conducted by the Financial Planning Association, nearly 93 percent agreed that Social Security's pending insolvency crisis must be fixed immediately.
Roughly 96 percent of the FPA members responding to the survey believe that their aggregate client base of six million is "somewhat" or "very concerned" over the future of Social Security as it affects future income in retirement.
The government projects a reduction of benefits beginning in 2041, with the trust fund taking in less money than it pays out as early as 2017.
The survey included responses from 2,697 individual planners, or about 10 percent of the FPA membership.
Survey respondents were asked to "spend" 20 points on various solutions to the issues - including no changes to Social Security - in attempting to identify a consensus on one or more solutions.
Ranked highest in points "spent" was the creation of some form of either fully private or partially private accounts, at 17,778 of 52,811 points spent by respondents, or 33 percent of all points allocated.
Following next in preference were 21 percent favoring the elimination of the payroll tax cap on wages above $90,000, and 18 percent supporting an increase in the retirement age. A separate question asking directly if the retirement age should be raised garnered 58.4 percent in support, and 38.3 percent in opposition.
* SBLI ROLLS out ANNUITY: SBLI USA Mutual Life Insurance Co. has launched Select Choice, a single-premium, tax-deferred annuity. The company's new offering comes with an initial one-year interest rate guarantee, plus additional one-year renewal rates at the end of subsequent guarantee periods and never going below the annual rate of 3 percent. Select Choice is available to anyone up to the age of 85 with a minimum investment of $5,000.
Currently, the product is offered only in New York.
Withdrawals of up to 10 percent can be made once each contract year without surrender charges.
Withdrawals may be taxable transactions, and prior to age 59-1/2 may be subject to a 10 percent Internal Revenue Service penalty. For more information, contact SBLI USA at (877) SBLI-USA or visit www.sbliusa.com.
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