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Credit Union Times
MARCH 6, 2019 | VOL. 30 | NO. 7 | 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
Care Costs Strain Employers
Small employers are particularly
feeling the heat of rising health
benefit costs, according to th
Mercer National Survey of Em-ployer-Sponsored Health Plans
2018.
Among smaller employers
(those with 10 to 499 employees), co ts rose by 5.4% on average, while mid-siz and large
employers with 500 or m re employees held cost growth to 3.2%,
according to the survey.
For all 2,409 employers polled,
average total health benefit cost
per employee rose by 3.6%, com
pared to an increase of 2.6% in
2017. While overall cost growth
remains moderate, averaging
3.3% annually over the past five
years compared to 5.7% over the
prior 10-year period, it continues
to outpace inflation.
In 2018, employees paid, on
average, 25% of the total cost of
coverage through paycheck deductions – nearly $3,200 per em
ployee on average not including
out-of-pocket costs.
Among smaller employers, the
verage PPO in-network deductible rose sharply in 2018, topping
$2,000 for an individual. Most
large employers did not raise
PPO deductibles, the plan type
ith the highest enrollment.
“Employers are very awar
of the burden that high health
care costs places on employees,”
Sharon Cunninghis, who leads
Mercer’s Health business in the
U.S., said. “We’re helping them
implement cost-saving Y15
CUs Open
Core
Strategies
ROY URRICO
rurrico@cutimes.com
ransforming to a more
member-friendly business model, more
quickly incorporating
third-party vendors, and achieving developmental efficiencies are
a few reasons why credit unions
migrate to open core systems.
For this second installment in a
two-part look at open cores, credit
union executives presented their
perspectives on the strategy.
The $150 million Tucson Old
Pueblo Credit Union, a client of
the Farmington Hills, Mich.-based
“We needed
to integrate with
more third-party
vendors. All our
processes were
scattered and separate, and the system we were on was not doing any
development,” Manny Chavez, senior systems engineer for TOPCU,
said.
The Tucson, Ariz.-based credit
union considered several Y17
TECHNOLOGYFOCUSREPORT:
BUSINESS GROWTH
To grow business, credit unions must first widen their opportunities for new
business. In this Focus Report, some of the largest credit unions share the
details of their field of membership expansion strategies. Y6
Chavez
Schenck
Retention
Attention
Create a loyal
member base. Y14
Commercial
Lending
Growth
Enlist your
peers’ help to
succeed. Y10
ince Hurricane Maria
ravaged Puerto Rico in
2017, the island has returned to normalcy, especially in the cities of San Juan,
Ponce and Hatillo, where one can
feel the bustling energy building
momentum.
The $24 billion Pentagon Fed-
eral Credit Union, headquartered
in McLean, Va., is doing its part to
keep that momen-
tum going. In Janu-
ary, PenFed Presi-
dent/CEO James
Schenck traveled to
Puerto Rico to of-
ficially open a new
$4 million branch
that created 30 jobs.
“A lot of folks, tens of thou-
sands, have left for Orlando and
New York City, so what Puerto
Rico needs is other businesses
like PenFed to continue to in-
vest in Puerto Rico, because ev-
ery community needs jobs, and
when you create jobs you create
strong communities,” Schenck
said.
To attract new investments,
Puerto Rico is offering aggres-
sive tax incentives. Moreover, the
entire island was designated last
year as an Opportunity Zone un-
der the Tax Cuts & Jobs Act, which
will offer 10-year tax deferrals for
real estate firms that invest in de-
velopment projects.
PenFed Invests in Puerto Rico
PETER STROZNIAK
pstrozniak@cutimes.com
GROWTH STRATEGIES
Y16