ING Study: Majority of Government Workers Unprepared for Retirement…and Looking to Save More
Landmark research from ING Institute for Retirement Research examines the financial realities of today’s state and municipal employees, and the greater role 457 plans can play to help them achieve their goal
A new report from ING confirms that many state and local government workers are experiencing the same retirement pressures that exist today in the private sector.
According to the findings, a majority of these employees (61%) said they were unsure or uncomfortable about their ability to set aside enough for retirement. A significant number (43%) have become less confident about their savings since the market downturn. Yet most, (72%) have not changed the amount they are investing to address these concerns.
The recent study1, conducted in conjunction with market research firm, Synovate, polled more than 1,000 Americans holding government jobs across the country. The goal was to learn more about their views and attitudes on a number of personal and financial topics, including planning and preparing for retirement. The respondents—full-time workers between 20 and 70 years of age—represented a cross-section of the more than 8 million men and women employed by state and municipal entities.2 "It’s clear that the burden of retirement planning has been increasing for all workers today— even the millions of government employees who have long relied on pensions as their main source of retirement income," said Bill Jasien, head of government markets for ING U.S. Retirement Services. “As more government entities scale back on their pension programs to offset tight budgets and increased financial obligations, workers in this sector will need to better understand and leverage the savings opportunities offered by their employer’s defined contribution plans.”
ING’s research offers a unique look at a slice of the workforce that has never been studied at length before for specific insights into its financial behaviors and retirement perspectives. Other key findings and areas of focus from this study include the following:
Investment Preferences: The study found that government employees, on the whole, appear to be a conservative group. An overwhelming majority (74%) considered themselves risk-averse in their personal lives. This carried over to their investment philosophy, where half (50%) said they were financially conservative, preferring to protect their savings rather than assume the greater risk that comes with potentially higher investment growth.
Pension Expectations: Most respondents (71%) expected to receive a traditional defined benefit pension from their employer, and those eligible for this benefit believed it would make up more than half (54%) of their retirement income. However, despite their reliance on an expected pension income, about half (49%) were worried the amount could change during retirement. More than a third (35%) didn’t know how their benefit would be determined.
Retirement Preparedness / Plan Participation: Roughly two-thirds (64%) reported having access to a voluntary retirement plan at the workplace (typically a 457 deferred compensation program). Of this group, nearly three-quarters (74%) said they were actively making contributions to these plans. However, their balances did not represent substantial sums—half (50%) had less than $50,000 in their accounts. Another one-in-five (20%) didn’t know what their balance was.
More than half (51%) also said they would like to invest more into these plans, but for various reasons did not.
"This research underscores that employees in government positions are no different than their counterparts in the private sector when it comes to retirement planning—they continue to need effective tools, resources and education to better prepare," added Jasien. "Government workers must also realize that the assets they are saving in defined contribution plans today are no longer just ‘nice-to-have’—they are becoming essential for achieving a comfortable retirement."
ING has been in the retirement plan industry for over 40 years, and provides retirement plans and support to approximately half the states and 4,300 towns and municipalities across the country. The business holds top rankings with more than $277 billion in combined assets under administration and management. It is one of the few providers that serves all sizes and segments of the defined contribution market, including corporate, government, healthcare, K-12 and higher education employers.
As an industry leader, ING is committed to gaining greater insights into the defined contribution landscape, including the many factors that affect how people save for retirement. Through research, studies, tools and work done by the ING Institute for Retirement Research, ING aims to be a resource for plan distributors and employers seeking new ways to understand participant behavior so they can help investors achieve positive retirement outcomes.
For more details on these findings, or for other original research, please visit the ING Institute for Retirement Research at www.ingretirementresearch.com and select the “publications” page.www.ing.com/US
1. The web-based survey was conducted for the ING Institute for Retirement Research by market research firm, Synovate, between May 27 and June 1, 2010. Respondents were 1,026 individuals between the ages of 20 and 70, currently employed full-time by state or local government entities in the U.S. (excluding kindergarten through grade 12 public school educators). The results of this survey are reported at the 95% confidence level and with a margin of error of +/-3% for the overall sample.
2. U.S. Bureau of Labor Statistics, 2008.
Press inquiries:Joe Loparco
ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services to over 85 million private, corporate and institutional clients in over 40 countries. With a diverse workforce of more than 107,000 people, ING is deditcate to setting the standard in helping our clients manage their financial future.
In the U.S., the ING (NYSE: ING) family of companies offers a comprehensive array of financial services to retail and institutional clients, which includes life insurance, retirement plans, mutual funds, managed accounts, alternative investments, direct banking, institutional investment management, annuities, employee benefits and financial planning. ING holds top-tier rankings in key U.S. markets and serves approximately 30 million customers across the nation. For more information, visit www.ing.com/US.