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Credit Union Times
FEBRUARY 20, 2019 | VOL. 30 | NO. 6 | 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
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.
As it stands now, the PAL program’s parameters are too restrictive, Peralta said.
The CFPB earlier this month proposed allowing short-term, Y17
REGULATIONS