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

2019 Benefits Predictions Human resources professionals constantly juggle compliance, regulations, recruitment and organizational goals with the need that’s demanded by their internal and external audiences. Here, HR experts weigh in on the trends they are following for a successful 2019.

Plan Design: Don’t Iterate the Old Plan, Give Me Innovation

This year will b a big one for de sign as more benefits advisors and employers break away from incremental additions and subtractions and begin to move in ery new directions. Sure, there will still be some of the usual enrollment song-and-dance of a incremental increase of coverage costs to employers, followed by a “new plan” that often takes away yet more from employees.

But employers, consumers and brokers are getting smarter faster, and 2019 will see another big shift toward plan design innovation.

Voluntary benefits’ inclusion will grow as plan design seeks customization to plan mem ber needs. Susan L. Combs, of Combs & Company, predicted the emergence of more creative benefits, such as college loan re payment companies; the inclusion of loss of life advocates in plans to help those who have lost a family member but still need to remain present at work; and a greater range of benefits for females. Y15

FOCUSREPORT: CORE PROCESSING In today’s competitive marketplace, credit union core systems must be flexible enough to integrate new technology solutions from third parties. Learn how core providers are keeping their systems open to future possibilities in this Focus Report. Y6

Post-Disaster
Member
Service
Emphasize the
human touch. Y14
The Core
Marketplace
Find out which
vendors lead the
pack. Y8
he 2018 holiday shop-
ping season may be a
faded memory by now,
but industry profes-
sionals said new data about pay-
ments during that fourth-quarter
rush highlights six things strategy-
minded credit union executives
should remember today if they
want to make the most of the 2019
holiday season.

1. CU Members Spend More Than Others During the Holidays

The National Retail Federation
expected 2018 holiday sales to in-
crease 4.3% to 4.8% over 2017, but
for credit unions, that spending
growth rate was much higher, ac-
cording to the St. Petersburg, Fla.-
based payments CUSO PSCU. It
announced last month that mem-
ber credit unions actually experi-
enced 10% spend growth overall,
and that spend was up 12% for
debit cards and 6% for credit cards
during November and December
2018.
“I think there was a lot of re-
ally good momentum in terms of
unemployment being down and
wages doing pretty well. And I
think as we headed through the
large majority of the year, con-
sumer sentiment was pretty darn
good. Consumer confidence was
up, so I think we had some really
good momentum going into the
holiday season, and thus
CUs Prep for 2019 Holiday Spending

TINA OREM torem@cutimes.com PAYMENT STRATEGIES

Y16

Luring CUs
Into Payday
Lending
DAVID BAUMANN
dbaumann@cutimes.com

he CFPB’s proposal to loosen rules governing payday loans won’t convince more credit unions to enter the business, credit union officials said.

“I think that there will need to be some additional push to get [credit unions] to put this more on a front burner,” Hank Hubbard, president/CEO of One Detroit Credit Union, said.

“Our motivation is the member
need,” added Hubbard, whose
$36.7 million credit union has
offered alternatives for payday
loans for the past 10 years. “It’s an
expensive service to offer with a
high loss ratio.”
But the CFPB cannot make
the changes needed to encour-
age credit unions to enter the
business, according to one credit
union official whose institution
offers short-term loans. The NCUA
would have to take additional ac-
tion to change its Payday Alter-
native Loan program to help lure
credit unions into that business,
Luis Peralta, SVP at the $4 billion
Kinecta Federal Credit Union in
Manhattan Beach, Calif., said.