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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;

HEALTH INSURANCE

Attracting New Employees

Everything old is new again. As open enrollment gets underway for next year’s job-based health insurance coverage, some employees are seeing traditional plans offered alongside or instead of the plans with sky-high deductibles that may have been their only choice in the past.

Some employers said that in a tight labor market, offering a more generous plan with a deductible that’s less than four figures can be an attractive recruitme t tool. Plus, a more traditional plan may appeal to workers who want more predictable out-of-pocket costs, even if the premium is a bit higher.

That’s what happened at Digital River, a 650-person global e-commerce payment processing business based in Minnetonka, Minn.

Four years ago, faced with premium increases approaching double digits, Digital River ditched its traditional preferred provider organization plan in avor of three high-deductible plans. Each had different deductibles and different premi ums, but all linked to health savings accounts that are exempt from taxes. This year, though, the company added back two tradi tional preferred provider plans to ts offerings for workers.

Even with three plan options, “we still had employees who said they wanted other choices,” KT Schmidt, the company’s chief administrative officer, Y15

s a low-income designated financial institution, the $340-mil- lion Albuquerque,

N.M.-based Rio Grande Credit Union has dedicated multiple resources and services to helping those frequently with limited access to financial services.

“We are constantly looking for
ways to improve Rio Grande Credit
Union,” Mike Ath-
ens, president/
CEO, explained.
“It’s about ensur-
ing our efforts con-
tinually align with
the needs of our
communities.”
For the growing
RGCU, which has six branches
and another on the way, it’s about
more than respecting the credit
union mantra of “people helping
people”; it’s about reaching out to
bring new members on board.

It starts with opening an account, which is like starting a relationship with any other financial institution but with one big exception. To open an account, potential members can use an individual taxpayer identification number instead of the usually-required Social Security number. Athens said, “We don’t treat ITIN members or underserved members any differently. That’s our difference.”

ROY URRICO rurrico@cutimes.com

Reaching Out to the Underserved

Y16

Athens

FINTECH

FOCUSREPORT: CREDIT & DEBIT CARDS

Credit and debit card programs may become the primary bond between CUs and many members. In this Focus Report, experts share their top ways to boost card programs in 2020. Y6

CU Card Portfolio Health

Give yours a full assessment. Y10

Member Credit and Debit Trends

Both usage and
delinquencies
grow. Y8
hen it comes to
their banking
needs, consum-
ers want the best
of both worlds.

They want the branch and ATM networks of traditional financial institutions, and they want great technology for online and mobile banking, the latter of which direct, or branchless, banks are successfully delivering.

What’s more, direct banks are winning more young consumers compared to credit unions, community banks and regional financial institutions, and this trend is likely to continue, according to new research by BAI, a Chicago, Ill.-based nonprofit independent organization that serves the financial services industry.

Although the research revealed concerning challenges for credit unions, BAI’s information showed the strengths and weaknesses of direct banks, which may help financial cooperatives understand how they can compete against these up and coming servicers.

Karl Dahlgren, managing director of research for BAI, pointed out that direct banks aren’t going away any time soon, and traditional financial services organizations should continue to view them as real competitors. Y17 PETER STROZNIAK