It depends upon which decade they were born as to how much they should aspire to save, to enable them to have the benefit of a similar standard of living in retirement to that enjoyed during their working life.
According to estimates made by experts and through studies undertaken, those born in the 1980’s will need to salt away about $1.8 million. The younger millennials – those born in the 1990’s - are worse off as they will need upwards of $2.5 million.
These equations have been arrived at on the assumption that, from their savings, the millennials could generate $30,000 - $40,000 and that the rate of inflation will be a modest 2%.
However, the math changes if more than $40,000 dollars is required or if inflation runs at 3%, which is the long term historical average. It has been estimated by a financial adviser that in those circumstances, $3 million would be required in savings.
Doubtless, 20 and 30-somethings will find it very difficult to put aside a chunk of money each month, as young adults in America are faced with two major financial hurdles that prevent them from having a lot of extra wealth to invest for retirement i.e. high housing costs and student-loan debt. Data from the Pew Research Center states that for the first time in over a century, more Americans between the ages of 18 to 34 are having to live in their parents' home than with a spouse or partner and in addition, college graduates under the age of 35 years with student loans are paying one-fifth of their salaries on repayments.
According to a survey from Franklin Templeton Investment, despite 70 percent of the younger employees feeling anxious when thinking about retirement savings and investments, 40 percent of them have no strategy in place. This highlights the importance of financial education for younger generations who are in the early stages of their careers and have the most to gain from thinking about retirement now.
Employers should encourage their younger workers to contribute into company-sponsored retirement plans. Despite the fact that the younger millennials need to save approximately $1,000 dollars a month for 48 years and also need to get a 5% growth on their investments to hit the $2.5 million dollar target, if they increase their savings only slightly the employers will have done their jobs responsibly. Every dollar counts.
he market for American Internships was rather sluggish in 2016 and the challenges for potential interns are increasing. The total number of internships posted was actually lower than in the last two years, presenting an 8.3% decrease compared to the openings in 2015 and 2% below those of 2014.
However, the concentration of postings in March has risen steadily over the past 5 years, showing that there is a narrow season for internship recruitment. This peak happens ahead of when many students are beginning to think about summer opportunities and if a prospective intern waits until the end of the semester to apply for an internship, they have waited too long. After March, demand diminishes until a second, rather smaller, opportunity occurs for term-time internships as the school year begins in September.
Employers are expecting interns to arrive on their first day already expert in critical skills in software and business, together with specialized knowledge of particular fields. Internships offer experience, not training. Analysis has shown that there is a more complicated relationship between broad business skills and industry specific skills, which sheds new light on what interns are required to know to succeed. There are a number of skill groups in postings for internships and there is a slight interaction between them, with some skills overlapping.
The main internships requiring industry specific skills are Marketing, Engineering and Sales. Social media and marketing research skills are required for a Marketing internship, whilst Sales will require business development and sales management skills.
General skills are required in 27% of internships, whilst 73% require industry related skills.
As a rule, internships are for undergraduates as 71% of the posts require a bachelor’s degree or less, whilst 29% look for graduate enrolment. However, there are exceptions such as in the fast-growing area of Data Analytics - and again, in Economics and Policy - where more than four in ten internships call for a graduate degree.
Analysis shows that geographically, Engineering is the most sought after specialized internship. There are noticeable areas where there is most demand for different internships; Marketing is required in California and New York, IT Development in Massachusetts and Science and the Environment in Alaska and Maine. Business has been excluded from this analysis as it is so widespread and applies to so many areas.
The Employer Participation in Student Loan Assistance Act (H.R. 795), re-introduced by Republican Rodney Davis on February 1st, 2017, is seeking to allow tax-free student loan repayments to be made by employers. This bipartisan bill would amend Section 127 of the Internal Revenue Code, which presently allows an employee $5,250 exclusion from tax to cover such essentials as books, tuition, equipment and fees. Currently, student loan repayment benefits are not included and the $5,250 tax-free allowance has not been raised since inception.
The bill, which has been introduced to the House and referred to the Ways and Means committee, has support from both Republicans and Democrats in addition to prominent HR organizations such as the Society for Human Resource Management (SHRM). It would allow for employers to reimburse student loan repayments but it would fail to increase the amount the employer could offer the employee, which some employers wish to do as education costs are becoming more expensive.
Students of 2016 were reported to have graduated with the highest student loan debt in history, more than $35,000. Although they were able to borrow at historically low interest rates, more needs to be done to help pay down their debts as it is affecting the economy. Fewer people are managing to start their own businesses, make property purchases and especially for millennial employees, make retirement savings.
A small number of employers have already decided to begin offering student loan repayment assistance. This will help graduates pay down their loans more quickly and help businesses attract and retain young talent in their employment. Although the administration of this is an arduous and time-consuming labor for most companies, one California based company has begun offering loan repayment contributions of up to $6,000 a year for up to 5 years, as a benefit. Employees have to apply for this benefit within three years of their graduation. Millennials account for about 20 per cent of this company’s employees and so they are hoping to boost those figures by offering a benefit especially attractive to people of that generation.
T. Rowe Price Group, a global investment management firm, has been sued by a 401(k) participant who is saying the company’s plan offered only T. Rowe Price investment options, without considering less expensive ones.
David G. Feinberg vs T. Rowe Price Group Inc. et al. was filed on February 14 in US District Court in Baltimore. The participant claimed the plan “favored the economic interests of T. Rowe Price Group Inc. and its affiliates over the interests of their employees.”
The lawsuit also alleges that the defendants frequently offered the higher cost retail class versions of their mutual funds in the 401(k) plan, despite the fact that significantly cheaper versions of the funds were available. Thisfavored the economic interests of the company over the interests of its employees.
Feinberg is seeking class-action status in challenging the management of the retirement program. According to the lawsuit, the T. Rowe Price U.S. Retirement Program had more than $1.7 billion in assets in 2015 alone.
In a recent email, a T. Rowe Price spokeswoman said that the group believes the suit is without merit and intends to defend itself.
This case follows on from several similar 401(k) self dealing lawsuits filed within the last year against financial services firms.
Facebook is making headlines yet again in the human resources space. Earlier this month Facebook Chief Operating Officer, Sheryl Sandberg, announced employees will now receive up to 20 days of bereavement leave in the event a family member passes.
Sandberg lost her husband in 2015 and said that “amid the nightmare of Dave’s death when my kids needed me more than ever, I was grateful every day to work for a company that provides bereavement leave and flexibility. I needed both to start my recovery. I know how rare that is, and I believe strongly that it shouldn’t be.”
The Society for Human Resource Management’s 2016 Employee Benefits Survey Report revealed that just over 80% of companies provided any paid days for bereavement leave last year. On average, four days of bereavement leave were awarded following the passing of a spouse or child. In the event of a domestic partner, foster child, grandchild, sibling or grandparent passing, only three days were typically awarded.
Facebook has historically been known for granting generous amounts of paid time off. Paid leave for new parents includes 100% weekly earnings for four months.
HR experts explain that this is an extremely significant move for Facebook since it is paving the way for employee appreciation, employee satisfaction and employee benefits.
A New Jersey jury recently awarded an engineer $51 million after claims he was discriminated against because of his age. Human resource experts say this may be the largest award ever in an age discrimination case.
Robert Braden had been employed by Lockheed Martin for almost 30 years when he was suddenly laid off in July 2012 as part of an organization-wide reduction in force (RIF). Months after, Braden filed a charge of age discrimination with the Equal Employment Opportunity Commission (EEOC). He claimed he was the oldest of 6 people in a company unit but the only one from the unit fired.
Braden said that he felt as if he was selected for the layoff due to his senior age (66). The two other employees in Braden’s unit had the same title, were significantly younger and allowed to keep their jobs. He also alleged that the company had a pattern of giving younger employees better reviews and better raises in order to keep them at the company. Older workers were given lower ratings and lower raises because, “they had nowhere else to go.”
Braden withdrew his claim with the EEOC so he could sue Lockheed Martin in a New Jersey federal court (2014). Lockheed Martin defended the claims and said Braden had a below average record of performance, lacked many skills and was not terminated because of any discriminatory reason. The jury ended up siding with Braden and awarded him almost $50 million in punitive damages and $520,000 for lost wages.
The government have revealed plans whereby people planning their retirement will be able to withdraw up to £1500 from their pension pots, tax-free, in order to pay for financial advice.
Pension Advice Allowance, as the plan is being called, was first announced in the Autumn Statement 2016. The plan will allow people to withdraw £500 on up to three different occasions from their pension pots, tax-free. The only catch is that the money has to be put towards the cost of pensions and retirement advice.
The Economic Secretary to the Treasury announced that the £500 allowance can be used a total of three times, in a single tax year. This will allow people to access advice at different stages of their lives. Additionally, the money can be redeemed against the cost of regulated financial advice and extends to ‘robo advice’ in addition to face-to-face advice.
Research revealed that only 22% of people approaching retirement know the value of their pot. Less than 15% of people would be confident planning for their retirement without financial advice.
UK savers with a pension of £100,000, according to Unbiased, save an average of £98 more every month if they take financial advice.
The Government published a response to the consultation on the introduction of Pensions Advice Allowance, and HMRC will have a three-week technical consultation on the draft regulations.
The Pensions Regulator (TPR) announced that for the first time ever the number of participants in defined contribution plans in the UK outnumbered those in defined benefit funds, primarily due to automatic enrollment.
In the annual DC report, TPR said defined contribution arrangements had 14.8 million participants (2016). Defined benefit plans only amounted to 11.7 million.
Executive director for regulatory policy, Andrew Warwick-Thompson, said that 7 million workers joined pensions for the first time thanks to automatic enrollment. Warwick-Thompson however, did express concerns over the fragmentation of defined contribution arrangements. He said, “we strongly believe that it is unacceptable to have two classes of DC pension saver – those that benefit from the premium scale and good governance and administration, and those that do not.”
Details of a trustee initiative will be released later this year and will include clear objectives that will help raise standards of trusteeship and take regulatory action against those who fail to meet a required level of competence.
Since the government’s pensions freedoms were introduced in April 2015, savers have cashed in £9.2 billion from their pension pots.
According to recently released HMRC figures, over 1.5 million payments have been made using pension freedoms. Additionally, 162,000 people accessed £1.56 billion flexibly from their pension pots over the last 3 months.
The Economic Secretary to the Treasury, Simon Kirby, explained that giving people freedom over what to do with their savings is just the right thing to do.
Those who are choosing to access their pensions are also able to take advantage of the free and impartial government provided guidance service, Pension Wise, which has had over 3.7 million website visits and over 100,000 appointments to date.
New research conducted by Aires, a relocation services provider based out of Pennsylvania, says the practice of offering relocating employees a core set of benefits in addition to optional, flexible add-ons is becoming more of the norm.
According to the data, about 25% of Aires’ clients use this kind of flexible approach in order to create personalized packages for talent. This practice has been increasing in popularity pretty steadily over the course of the last few years.
Core benefits include reimbursement for things like travel, household goods, automobile and storage options and different kinds of cash allowances. Flex benefits, on the other hand, include things like reimbursement for home-seeking expenses, temporary housing, home sale and purchase assistance and spousal assistance.
Companies that utilize this kind of core-flex procedures typically set model parameters around the flex benefits, often times allowing the employee to dictate different pieces that will be included in their model.
One human resource expert suggests these packages are increasing in popularity because they become customizable to each situation. Giving employees the ability to dictate what goes into their package based on what is most important to them, according to HR experts, increases engagement and satisfaction.
On January 20, the International Association of Machinists and Aerospace Workers (IAM), the largest union representing workers in this industry, announced it will petition the National Labor Relations Board (NLRB) to conduct a union election.
Unfortunately for Boeing this is the second time in two years this union has expressed its desire to organize employees in North Charleston where 787 Dreamliners are currently assembled. The IAM first filed a petition with the NLRB two years ago but withdrew it before the scheduled vote.
In the press release announcing the NLRB filing, the union cited “numerous workplace concerns that remain unaddressed, including subjective raises, inconsistent scheduling policies and a lack of respect on the shop floor,” as leading to the arranging of this campaign.
IAM’s lead organizer at the Boeing South Carolina plant, Mike Evans, said employees aren’t asking for anything out of the ordinary. They just want to be treated with respect and with the same set of standards that are present in other Boeing plants.
Boeing released a statement saying it “firmly believes that a union is not in the best interest of Boeing South Carolina teammates and their families.” If the NLRB allows a vote to take place, employees will ultimately decide whether or not they’ll turn over their rights to the IAM or maintain their direct relationship with the company they work for. Obviously, Boeing wants to avoid a vote at all costs especially if there are murmurs of a strike.
The political situation in the United States isn’t helping the situation either as there are many uncertainties surrounding NLRB members