Trusted News for Credit Union Leaders
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.
Overall, debit card accounts
will grow about 3% to 4% a
CU Debit Trends Look Positive
TINA OREM
torem@cutimes.com
PAYMENTS
Y17