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Retirement Saving Plans Gain Appeal

The Hague, August 15, 2013

The Transamerica (Aegon’s brand in the US) ‘Drive to 10’ project is now a reality, and helping customers across the US secure their financial future. But what’s so special about the number 10 and retirement saving plans?

The title refers to the minimum percentage we believe a customer needs to contribute to their retirement saving plan. Although the appropriate amount for a given individual might be different, 10% represents an increase from where most employees are today; and is a worthy goal for a plan's overall average contribution rate.

Hassle Free Enrollment

The first element of the program involves helping customers bridge the gap from just thinking about action to actually taking action. This has been achieved through 'hassle free' enrollment using simplified postcard sized forms, computer tablets on loan to companies to enable instantaneous electronic enrollment at the worksite. Sophisticated but easy to use smart phone apps to enable enrollment anytime and anywhere will also be introduced in the near future.

Retirement Planning Enrollment

Intelligent Retirement Plan Design

The second element of the program concentrates on intelligent plan design. This includes working with employers to help them understand the importance of plan features that drive up enrollment levels and contribution rates – like automatically increasing saving rates on employees' birthdays or when they receive a pay increase.

Intuitive Retirement Planning

The third element is monitoring. This is key to motivating customers and telling them what they could be doing for a sunnier retirement outlook. The tools provided have a common look and feel using simple weather icon imagery which is simple and intuitive, and they focus on the retirement income goal, expressed in terms of annual as well as monthly income rather than total accumulated wealth. The latter has little meaning for most customers.

On Track Report for New Customers

Newly developed, consistent tools are available throughout the customer experience, ensuring that customers become familiar with the approach. The Retirement Outlook Estimator enables customers to establish how much they need to save to achieve their personal retirement outlook. The On Track®* report offers customers a snapshot of their retirement outlook along with personalized guidance for improving it. The report is also available online. And the RetireIncomeTrack®* is an on-demand report based on a personalized customer questionnaire, which shows participants how to optimize the income generated by their retirement assets, with a balance between their specific risks and goals.

Participation Increased by 300%

Over the entire participant base, over the past two years, the number of participants with a retirement outlook has also increased by about 300%, while the percentage of people with a partly sunny or sunny outlook has increased by 150%! More people are paying attention and moving in the right direction to be able to enjoy a more comfortable retirement.

In addition, a Participant Scorecard was developed for plan sponsors to help monitor and promote changes at the plan level. It uses the same weather icons to show progress against custom benchmarks. Individual plans using this report and promoting the OnTrack suite of tools have shown significant one-year increases of more than 10% in the number of participants with a sunny or partially sunny outlook.

 


* Important: The projections or other information generated by OnTrack® and RetireIncomeTrack® regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results derived from the OnTrack tool may vary with each use and over time. Please see OnTrack and RetireIncomeTrack below for more information regarding the criteria and methodology used, each tool's limitations and key assumptions, and other important information.

 


RetireIncomeTrack IMPORTANT DISCLOSURES AND INFORMATION

This information is presented for educational purposes only and is not intended as investment advice, an offer to sell, a solicitation of an offer to buy, or a recommendation of, any security, product or strategy. Nor should this information be regarded as a prediction or guarantee of the cash flows that will be generated by utilizing the products and strategies that are discussed.

IMPORTANT: The projections or other information generated by RetireIncomeTrack® regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. They are intended to be used as illustrations only, are not intended to be used as the sole basis for making an investment decision, and the results may vary with each use and over time. We do not offer tax or legal advice. Please consult with your own tax or legal professional as to the tax or legal implications of any of the statements made herein.

By using projections based on expected correlations between returns of certain asset classes, based on historical correlations and forward-looking estimates, this investment analysis tool uses the statistical technique of Monte Carlo simulations to generate outcomes, taking into account current (and adjustable) spending levels, individual risk appetite, longevity, available income sources, inflation and interest rates. The scenarios generated by the Monte Carlo simulations represent a spectrum of possible results. They are not representative of the performance of any client account(s). All graphs and other information are hypothetical, do not anticipate investment results, and are not guarantees of future results.

Actual investment returns, standard deviation, inflation, interest rates and cash flows generated by the products and strategies utilized will vary from the projections shown, perhaps significantly. In addition, other products and investment strategies not considered may have characteristics similar or superior to those analyzed in the graphs. Capital Markets Forecasts. Expected returns, standard deviation, inflation rate etc. underlying the graphs are based on PMC/Envestnet's Capital Markets Forecasts. This document is available upon request from your advisor.

Sequence and Timing of Returns. The impact of the timing of investment returns (and withdrawals) from retirement savings accounts can be significant, and can have a material impact on your ability to sustain a specified income level throughout retirement. There is no guarantee you will receive the investment returns assumed in the graphs and/or receive them smoothly over time. When planning over many years, small changes during the early years can lead to large differences in later results. Actual results are generally not received smoothly and, in fact, can vary greatly from the mean return from year to year, which could have a significant impact on future income. 

Fees, Charges and Expenses. The graphs shown above reflect estimated quotes for insurance products. The graphs also reflect estimated commissions, brokerage fees, sales loads, mortality and expense charges, other insurance-related or rider charges, underlying fund operating expenses, and other transaction-related fees or charges. You will not be able to purchase or participate in the products and strategies modeled above without incurring certain fees and charges. These fees and charges will reduce the retirement income generated from the products and strategies reflected in the graphs.

Target Withdrawal Rates and Cash Flows. Withdrawal rates and cash flows shown are based on assumptions described above, and are not a guarantee or predictor of future investment performance, withdrawals or cash flows. Cash flows generated after utilizing products with lifetime guarantees (i.e., single premium immediate annuities) derive income and mortality from a composite of rates and factors representing an average of quotes from up to 10 insurance carriers, updated monthly and as needed. For certain products and strategies (i.e., those without a lifetime guarantee), your withdrawal rate is often the most important factor impacting how long assets and cash flows will
last. There is no single withdrawal rate or level of cash flow that is right for everyone. You should choose the withdrawal rate and target cash flow level based on your individual risk tolerance, time horizon, assets and liabilities and financial situation. Thus, although a target withdrawal rate is assumed in the illustrations, this rate may be too low for some and too high for others. 

Retirement advisors offer securities and investment advisory services through Transamerica Financial Advisors, Inc. (TFA), Member FINRA/SIPC and Registered Investment Advisor. Transamerica Retirement Solutions and TFA are affiliated companies. The QWEMA Group Inc. or any QWEMA software does not advocate or recommend or endorse any particular product or asset investment allocation and does not provide any investment advice, guidance or recommendations of any kind or nature. 

IMPORTANT: The projections or other information generated by RetireIncomeTrack regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results and are not guarantees of future results. Results may vary with each use and over time.

A Monte Carlo analysis uses computational algorithms which rely on repeated random samplings to generate results expressed in terms of average results. The Plan Outcome Build an Optimal Retirement Plan tool expresses outcomes based on three expected levels of certainty—50%, 70%, and 90%—that the results will meet or exceed a mean average outcome.


About Probability Illustrations, Limitations, and Key Assumptions
The probability illustrations OnTrack® generates are based on "Monte Carlo" simulations of 500 possible investment scenarios for a given time period, and assume a range of possible returns. The illustrations are generated according to models developed by Ibbotson Associates, a leading independent provider of asset allocation, analytical and wealth forecasting software. The "retirement outlook" graphic reflects the difference between the model's estimated annual income (an amount that corresponds to a 70% probability of achieving your income goal in the investment scenarios simulated) and your annual income goal.

To forecast the probability of achieving your income goal, the model considers historical performance and other information for selected investment asset classes using all available and relevant data (from 1926 and 1970 forward for equity and fixed income, respectively), as represented by the common benchmark indexes noted below:

• Cash: Citigroup 3-Month Treasury Bill
• Short-Term Bonds: Barclays U.S. Treasury 1-3yr Term Index
• Aggregate Bonds: Barclays Capital U.S. Aggregate Index
• Long-Term Bonds: Barclays Capital U.S. Long Credit A Index
• High-Yield Bonds: Barclays Capital U.S. Corporate High Yield Index
• TIPS: Barclays Capital U.S. Treasury: U.S. TIPS
• International Bonds: Citigroup WGBI
• Large-Cap Stocks: Russell 1000® Index
• Mid-Cap Stocks: Russell Midcap Index
• Small/Mid-Cap Stocks: Russell 2500® Index
• Small-Cap Stocks: Russell 2000® Index
• REITS: FTSE NAREIT Equity REITs
• International Stocks: MSCI EAFE Index
• Emerging Markets: MSCI Emerging Markets Index
• Commodities: DJ-UBSCISM

The model does not consider other asset classes such as hedge funds or private equity, which may have characteristics similar or superior to those used in the model. Unless you choose otherwise or your employer supplies different information, the probability illustrations assume retirement at the age at which you qualify for full Social Security benefits and an annual retirement income goal of 80% of your projected final working salary. Social Security estimates are based on the Social Security Administration methodology and your current salary. The probability illustrations also assume a consistent contribution percentage and asset allocation (no future changes or rebalancing), annual inflation of approximately 2%, and annual salary increases based on a calculation that incorporates multiple factors including a salary growth curve and inflation. Mortality assumptions are based on the Society of Actuaries tables.

The models are subject to a number of limitations. Returns associated with market extremes may occur more frequently than assumed in the models. Some asset classes have relatively limited histories; for these classes the models use historical data for shorter time periods. There is no guarantee that your income goal will be achieved or that the aggregate accumulated amount will ensure a specified annual retirement income. Also, the model results may vary with each use of OnTrack and over time.

IMPORTANT: The projections generated by the simulation model regarding the likelihood of various investment outcomes are hypothetical, do not reflect actual investment results, and do not guarantee future results. Moreover, even though OnTrack's estimates are statistically sound based upon the simulations it runs, the tool cannot foresee or account for every possible scenario that may negatively impact your financial situation. Thus you should monitor your account regularly and base your investment decisions on your time horizon, risk tolerance, and personal financial situation, as well as on the information in the prospectuses for investments you consider.
Securities offered by Transamerica Investors Securities Corporation (TISC), 440 Mamaroneck Avenue, Harrison, NY 10528. TISC and Transamerica Retirement Solutions are affiliated companies.

Written by: Aegon