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Credit Union Times

FEBRUARY 13, 2019 | VOL. 30 | NO. 5 | CUTIMES.COM

Must Reads

INVESTMENTS

‘Pensionize’ 401(k)s and IRAs In a world of defined contributions, American workers have three challenges – inadequate savings, leakage (or loans/early withdrawals) tied to their retirement accounts and the need for retirement income. Plus, just half of all DC plans offer a way for investors to transform balances into periodic retirement income, with only one in five offering guaranteed lifetime payouts.

This situation prompted Steve Vernon of the Stanford Center on Longevity, Wade Pfau of The American College of Financial Services and researcher Joe Tomlinson to explore and devise solutions to “pensionize” retirement plans. Their work, first published last year and then updated this year, finds that only one-third of workers contact financial advisors, and most lack the necessary skills to convert savings into retirement income and typically have short planning horizons.

But research from the Stanford Center on Longevity (SCL) and Society of Actuaries (SOA) has found a “straightforward retirement strategy,” according to the three authors. “Choosing a specific solution that will help workers generate retirement income requires them to make informed tradeoffs between potentially competing goals,” they explained, such as “maximizing lifetime income; providing access to savings (liquidity); planning for bequests;

HUMAN RESOURCES

Voluntary Benefits Mature

There’s n question that voluntary benefits have come of age. Gone are the days where voluntary benefits are simply a “nice extra” for employee benefits. To day’s diverse, multi-generational workforce has such varying characteristics, lifestyles and preferences that employe s no longer can provide one-size-fits-all benefits even in th voluntary arena.

The current tight job market has employers vying to recruit and retain top talent. So it’s no surprise that voluntary benefits are now a mandatory “must have.” A broad benefits packag sends a good message to em ployees and potential recruits. It positions a business as a company that listens, cares and is worth working for.

Voluntary benefits offer em ployees a variety of specialized benefits so they can choose the ones they want. And the rang of options is impressive – from voluntary benefits that supplement “core” benefits such as health, life and disability insurance, to the plethora of others that span identity theft p otection to pet insurance t employee purchase pr grams and even student loan refinancing arrangements and egg harvesting.

So what can we expect in 2019 in the voluntary benefits arena? Here are some predictions on what we’ll see the vol untary benefits industry focus ing on next year. Y16

Incentive programs are popular at credit unions, especially among sales staff, but do they really help the institution’s bottom line? Experts weigh in for this Focus Report. Y6

Becoming Gen Z’s Ally

The Ameri-
can Dream is
changing. Y9
Web Search
Trends
Attract business
with a few site
tweaks. Y8
FOCUSREPORT:
MARKETING &
BUSINESS
DEVELOPMENT

Connecting
With
Payday
Borrowers
JIM DUPLESSIS
jduplessis@cutimes.com

ince their earliest days, credit unions have existed to serve people usually overlooked by big banks and targeted by predatory lenders.

The rise of payday lending in the 1990s challenged credit unions’ role, using a business model that combined a keen understanding of their customers’ vulnerabilities, a sophisticated army of state capital lobbyists and a deceptively simple product.

The result has been that despite attempts by consumer advocates and regulators to curb their practices, about 12 million Americans a year were taking out payday loans as recently as 2016.

These loans often carry interest rates of 390% or more, must be paid back within two weeks, and can trap borrowers in a cycle of debt.

This fact raises the central question that all consumer advocates need to answer, said Alex Horowitz, a researcher with the Consumer Finance Project of The Pew Charitable Trusts: Y18 LENDING

Horowitz
intech companies may
have turned many parts
of the payments world
upside down, but the
tried-and-true debit card is still
one of the most frequently used
forms of payment, and credit
unions are optimistic about the
future of their debit card portfo-
lios, according to a new study by
CO-OP Financial Services.

The survey of 240 U.S. credit unions, done in partnership with Mastercard and Mercator Advisory Group, included credit union executives, debit card product managers and other employees.

“Debit is a payment vehicle that has been around for a long time, and there’s a lot of buzz,” CO-OP SVP Dr. Kathy Snider told CU Times. “At the end of the day, debit is known, it’s trusted, it’s secure.”

Issuance Factors

Debit cards are such an integral part of checking accounts today that over a third (38%) of the respondents in the CO-OP study said their credit unions have issued debit cards to at least 70% of their checking account holders. That’s fueling optimism among credit unions – many expected their debit programs to grow and be profitable, according to the study.