Trusted News for Credit Union Leaders
Credit Union Times
NOVEMBER 13, 2019 | VOL. 30 | NO. 39 | 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;
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
pstrozniak@cutimes.com
Wanted:
The Best of
Everything
MEMBER SERVICES