Page 145 - AugDefComp

News & Views | Q3 2020 Page 2 of 4

• closing or reducing hours of a business they own;

• having wages or self-employment income reduced;

• having a job offer rescinded or start date delayed.

It is important to note that the Act does not require plan sponsors to verify whether a participant meets the definition of qualified
individual, but allows for participant self-certification. Individuals must meet the qualification requirements in order to obtain
favorable tax treatments authorized by the Act and plan sponsors and providers can help those considering making withdrawals by
providing the IRS’ definitions and related guidance.

If a plan decides to offer any of the optional provisions (items 1, 2, or 3), NFP recommends that the plan’s governing body officially
vote on the items and document the decision in meeting minutes. Additionally, the plan document must be amended to reflect the
provisions, but governmental plans have until 2024 to finalize amendments.

This is a brief summary of the retirement-related provisions of the CARES Act, and certain provisions have additional important
requirements. If you would like greater detail about the Act and your options and responsibilities, your NFP advisor is available to
discuss with you.

COVID-19 and the Impact on Retirement Savings

The Transamerica Center for Retirement Studies recently issued its 20th annual survey of workers and their attitudes towards and
preparation for retirement. The overall goals for the study – one of the largest and longest running of its kind – are to illuminate
emerging trends, promote awareness, and help educate the public. Over 5,000 workers from different demographics were surveyed
in late 2019, regarding their financial well-being, visions and expectations of retirement, savings / planning / preparations for
retirement, and the role of employers in helping employees save and prepare for their later years. A supplemental survey was
conducted in 2020 to assess how the effects of the pandemic may have changed the initial survey results.

Key findings and the pandemic’s effects include:
• Workers across all demographics are at risk of not saving adequately for retirement. While this was true long before the
pandemic, the risk appears to have increased with job layoffs, furlough, and other pandemic-related economic impacts workers
have endured.

• Almost one-fourth of workers say their confidence in being able to achieve a financially secure retirement has declined since
the pandemic began, and one in five workers has used their retirement savings during the recession.

• One-third of workers had taken loans or withdrawals from their retirement accounts prior to the pandemic, which can severely
impact their ability to achieve long-term growth. Another 22% of workers have or are planning to take withdrawals due to the
pandemic.

• Attitudes generally are positive towards retirement, with most workers expecting less stress, travel, and spending more time
with family. Many workers expect to work past age 65 and transition to retirement. After the pandemic, most expect to work
further past 65 in order to rebuild retirement savings.

• Workers continue to highly value retirement benefits, with 80% saying this is a major factor in their decision to accept a job
offer or not. Most find auto-enrollment appealing and would use auto-escalation if offered. A majority of workers (two-thirds)
wanted education and advice, and would be motivated by a plan that is easier to understand.

A similar study by Magnify Money found that during the pandemic, 47% of workers have stopped or reduced their retirement