2013 Retirement Webinar Series

Transcription

1 2013 Retirement Webinar Series

2 2013 Trends in Retirement, Focusing on Your Plan s Financial Wellness Byron Beebe, Virginia Maguire, Rob Reiskytl, Aon Hewitt Alisa Hunt, Kimberly-Clark 1

3 Agenda Section 1 Section 2 Section 3 Section 4 Why Financial Wellness? Tools and Resources Motivating Employees to Take Action Case Study Kimberly-Clark 2

4 Why Financial Wellness? 3

5 Employer Focus 80% of plan sponsors are likely to focus on financial wellness in 2013 Over 60% of employers will measure retirement adequacy 4

6 Financial Wellness is Top of Mind It s not just lowerpaid employees who need budgeting help. How can I keep track of what I spend? We want to provide tools for employees to reach their financial goals. Employers Participants Employees How do I correct my credit score? We have a lot of employees in their twenties who may need help managing debt. How do I balance saving for retirement with my other financial goals? 5

7 Financial Needs Millennials Young Families Families With Older Children Pre-Retirees Retirees Saving for Saving for Saving for Saving for Saving for A home Paying down debt Financial decisions A home College Retirement Paying down debt Credit issues College Retirement Financial help A plan for the future Insurance needs Retirement Starting a business Retirement planning Timing Lifetime income Starting a business Tax-efficient retirement income Estate planning Medical options and cost Tax and Estate planning 6

8 Path to Transformation Spouse Participant Family Expand Reach Other Long-term Savings Go Broader Retirement Savings Debt and Credit Go Deeper Health Impact on Retirement Income Lifetime Income Financial Literacy ENABLERS: Research Technology Help Access to Data 7

9 Tools and Resources 8

10 Polling Question As an organization, which financial wellness topic is most important to your employees? 9

11 Financial Wellness More Than Retirement Financial solutions today are holistic and can be targeted Retirement Planning Lifetime Income Taxation Retiree Medical Investment Management Advice Guidance Targeted Messaging Financial Planning Major purchases Medical expenses Risk management Estate planning Debt Management Budgeting Debt reduction Credit Benefits and Resources: DB and DC Plans Social Security Retiree Medical Funding Education and Modeling Tools Benefits and Resources: Financial Planning Financial Health Appraisal Credit counseling, Budgeting tools Online, phone, in-person help 10

12 Help People Improve Their Financial Future Create the Foundation Analyze the workforce Define tools and resources Create a brand/theme 11

13 Can Employees Retire at Age 65 On Track Not On Track Average financial need for comfortable retirement: 85% pay replacement (including Social Security) 11 times final pay at retirement (beyond Social Security) Aon Hewitt The Real Deal 2012 Retirement Income Adequacy at Large Companies 12

14 Increasing Awareness How can individuals quickly see if they are on track to retire comfortably? 11.00x Multiples of Pay Milestones 7.00x 4.00x 1.75x 0.00x Age Aon Hewitt The Real Deal 2012 Retirement Income Adequacy at Large Companies 13

15 Increasing Awareness How much should employees save for retirement each year? It depends on when they start, and when they want to retire All contributions (employee and employer) Percent of each year s pay Start Start at 35 at 30 24% Start at 25 19% 15% (age 65) 12% (age 67) (age 65) 15% (age 67) (age 65) 18% (age 67) Average percentage shown; approximately 3% range around average allows for changing assumptions. Calculations assume consistent savings rate every year during working career until retirement at age 65 (or 67) with targeted retirement resources of 11 times pay at 65 or 9.4 times pay at 67, 7% annual return on DC assets during accumulation, 4% annual pay increases, and unsubsidized future retiree medical coverage 14

16 Financial Wellness Message Measure Manage General Messaging Help employees establish goals. Promote awareness, resources and tools. Seminars, Webinars, Benefits Fairs Review and promote various aspects of financial wellness. Retirement Specialists Call Center representatives with specially trained in counseling participants on financial issues also through in-person meetings Benefit Statements Electronic or paper statement of current and projected amounts. Projection Tools Modeling and what-if scenarios, including aggregation across accounts. Plan Efficiency Plan sponsor assessment of overall plan, fund, and participant performance over time Retirement Checklists A guide for those approaching retirement, including references and links to helpful resources Guidance and Advice Tools and advisors designed specifically to provide decision support for investments, deferral amounts, timing, and more Income Solutions Leverage institutional plan structure/funds to provide lifetime income alternatives to plan participants 15

17 Motivating Employees to Take Action 16

18 Help People Improve Their Financial Future Create the Foundation Analyze the workforce Motivate Action Use multiple channels Define tools and resources Promote what you have Create a brand/theme Target specific actions 17

19 Push to Encourage Action People may need a nudge to help them take action. 1 Inertia Bias for status quo 2 Temporal Discounting Present vs. Future 4 Loss Aversion Losing hurts worse than winning feels good 3 Choices Liberation or Paralysis? 5 Social Norms What is everyone else doing? 18

20 Customer Preferences Define Approach 19

21 Driving Behaviors and Outcomes Benefits Hubs Flash/Video Personalized Communication Are you on track to retire? How old are you? How much do you earn? Modeling Tools Gamification Attitudinal Segmentation 20

22 Case Study Kimberly-Clark Alisa Hunt 21

23 About Kimberly-Clark Corporation Headquarters: Dallas, Texas Founded: 1872 in Neenah, Wisconsin Employees: 58,000 worldwide Operations: 37 countries Global Brands: Kleenex, Scott, Andrex, Huggies, Pull-Ups, Kotex, Poise, Depend, Kimberly-Clark Health Care, Kimberly-Clark Professional 401(k) plans primary retirement vehicles for US employees 15,000 eligible active employees 93% participation rate 8.6% average savings rate 22

24 About Kimberly-Clark s 401(k) Plans Current plan features Auto enrollment utilized for new hires since 2006 Default at 6% of pay Automatically escalate, by 1% per year up to 10% maximum Default into managed account QDIA Automatic escalation and automatic rebalancing available Roth 401(k) Advisory services: Online advice service Managed accounts 23

25 Engaging Employees 401(k) Month Sticky Note Postcard Poster Table Tent 24

26 Engaging Employees 401(k) Month Microsite Videos Weekly s Benefits Site 25

27 Results Microsite Usage Open Rate 65%-77% Video Views 7,724 Saving Activity Survey Results TBD TBD 26

28 Questions & Answers 27

29 Retirement Webinar Series June 26 The Empowered Fiduciary of Defined Contribution Plans Register at 28

30 Contact Us Byron Beebe U.S. Retirement Market Leader Aon Hewitt (216) Virginia Maguire Director, Product Strategy Aon Hewitt (404) Rob Reiskytl Leader of Retirement Strategy and Design Aon Hewitt (952)

31 About Aon Hewitt Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit Aon plc This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon Hewitt's preliminary analysis of publicly available information. The content of this document is made available on an as is basis, without warranty of any kind. Aon Hewitt disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Aon Hewitt reserves all rights to the content of this document. 30